Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to your Bureau Veritas 2018 first quarter results. During today's presentation, you will be invited to ask questions by pressing star one on your telephone keypad. I must also advise you that your conference is being recorded today, on the 26th of April, 2018. I'd now like to hand the conference over to your host, Didier Michaud-Daniel. Please go ahead.
Thank you. Good afternoon and good evening to everyone. Thank you for joining Bureau Veritas Q1 2018 Revenue Call. Nicolas Tissot, our CFO, is here with me to present the financial review. Q1 2018 confirms the acceleration of our organic growth compared to last year. Our five growth initiatives continue to gain traction. Revenue for the quarter was EUR 1.10 billion, up 4.7% at constant currency, with organic growth of 2.6%. All our businesses grew, apart from Marine & Offshore. Five out of six businesses grew at 3.6% organically on average. Among the best performers, Certification growing at 6.7%, Consumer Products at 5.9%, and Buildings & Infrastructure at 4.1%. This growth is primarily led by our five growth initiatives, which are up 6.2%. On the M&A side, acquisitions continue to bolster our growth, adding 2.1%.
We have closed five strategic acquisitions since January, supporting the Buildings & Infrastructure, Agri-Food, and OPEX growth initiatives. As anticipated, the currency impact was negative, -8%. Our full-year outlook is confirmed. We can move to page six. Before having a deeper look to the group's performance, as released yesterday, new changes to the organization will go into effect on May 1st. The management of our Commodities, Industry and Facilities business in Europe will be split in two, with the objective of being fully aligned with our market-centric organization. Africa will be now covered with France, including government services. In parallel, we will concentrate our efforts on the rest of Europe, notably Italy, Spain, Benelux, the U.K., and Germany. We are pleased to welcome Jacques Pommeraud, coming from SAP, and Laurent Louail, coming back from BV operations in Australia to the Executive Committee. Page seven.
In 2018, we have started the year adding around EUR 80 million of annualized revenue with five acquisitions, all supporting our growth initiatives. EMG and Lubrication Management, which we announced during our full-year results, focusing on B&I and OPEX respectively. And three acquisitions in the Agri-Food space, completing our footprint, notably in Asia, which total EUR 6 million of annualized revenue. Labomag in Morocco, Shandong Xinya in China, and in Japan Food Research Laboratories. Now, I will hand it over to Nicolas for the financial review.
Thank you, Didier. Starting with the revenue bridge for the first quarter of 2018, organic growth reached 2.6%, despite a slight negative impact of calendar day. Acquisitions had a 2.1% contribution to top-line growth, with a negative impact of 0.3% at the group level due to the 2017 divestment of non-strategic NDT activities in Europe. Forex had a negative 8% impact, which is mainly attributed to the appreciation of the euro against the USD and pegged currencies, as well as emerging countries' currency. Should the euro-USD rate remain in the 120-125 range, we would expect the full year 2018 top line to be negatively impacted by around 4%, and adjusted operating profit to be negatively impacted by around 6%. All in all, revenue growth reached 4.7% at constant currency.
Turning to growth by business, first point is that most of the portfolio, five out of six businesses representing 93% of the group's revenue, reached a very healthy pace of organic growth of 3.6% on average. Three businesses reached mid-single digit growth, and Industry returned to positive organic growth. Only Marine & Offshore remains under pressure as anticipated. Secondly, B&I achieved double-digit growth at constant currency, boosted by a strong contribution of recent acquisitions. Growth remains supported by both the base business and our five growth initiatives. The base business is up 0.9% organically year-over-year, with most of the activities performing well apart from Marine & Offshore, and oil and gas CapEx related activities. Excluding these, the base business grew organically at 3.4%. In addition, our growth initiatives have continued to perform well, up 6.2% organically.
Looking further at our five growth initiatives, they have delivered a sustained pace of organic growth. B&I performed strongly, up 12.5% organically. OPEX grew slightly, penalized by challenging comps as we started several large contracts in Q1 2017. We expect growth to improve throughout the year. Automotive is impacted by the end of a large contract in China. The contribution from acquisitions was strong as all our M&A efforts are supporting the growth initiative. Overall, we delivered a 12.8% total growth at constant currency and therefore continue to progress as planned with the deployment of these growth initiatives. I now turn it back to Didier for the business review.
Thank you, Nicolas. We are going to start with Marine & Offshore. As anticipated, the business was down 8.5% in Q1 as a result of double-digit decline in new construction in a context of changing comparables and still a low level of activity in Asia due to the time lag. Slight decline in current service due to the unfavorable timing of inspections and some price pressure, although the level of laid-up ships was stable. The reduction in offshore related activities due to the lack of deep sea projects and the reduction of risk assessment studies continues notably in Asia and in Americas. On the upside, new orders amounted to 1.8 million gross tons at the end of March 2018, compared to 1.3 million a year ago, confirming the recovery of the market.
The order book, which stood at 12.9 million gross tons at the end of the quarter, has now stabilized, being slightly up compared to December 2017. Commercial wins include contracts of bulk LNG in China and South Korea and also in specialized segments. We expect full year organic growth to be slightly negative. The in-service activity should remain resilient. Given the lead time, the new construction should further decline. All in all, H1 will be negative with Q2 better than Q1, while we still expect H2 to be stable to positive. Page 15. Looking further at the Marine & Offshore markets, we can observe further positive trends in new construction, in particular containers and LNG carriers, the most complex ships for which BV has a leading position. According to Clarksons data, the level of new ship orders worldwide is expected to be back to its 20-year average in 2019.
Agri-Food and Commodities. The business continues to improve with revenue up 3.1% organically. By subsegments, Metals and Minerals confirmed recovery up 8% in organic growth, supported by double-digit growth for upstream activities across most geographies. Trade remained stable due to very strong costs and a general slow start to trading conditions. Agri-Food recorded a healthy 8.3% organic growth for the first quarter, led by solid performances for both agri and food products. This is primarily led by Latin America and Asia as our footprint is expanding. Oil and Petrochemicals is up by 1.6% organically, reflecting mixed situations by geography. Solid performance in Europe, thanks to market share gains, slight growth in Asia, and strong growth in Africa. At the same time, it has been more difficult in North America due to unfavorable weather conditions.
Lastly, Government Services were down by 7.1%, still penalized by the end of PSI contracts in Guinea and Mali. We expect improved growth over 2017, fueled by recovering Metals and Minerals markets, healthy Agri-Food businesses, and stabilizing Government Services. Turning to Industry. The good news is that as a result of our successful diversification, Industry is back to positive growth, up 1.5% organically after 10 consecutive quarters in negative territory. Oil and Gas CapEx-related activities, now 15% of division revenue, remain under pressure with the end of large contracts. Oil and Gas OpEx was stable as volume increase is offset by price pressure. We achieved a 12.7% organic growth in Power and Utilities OpEx, one of our key focuses with the ramp-up of large contract wins. For 2018, we expect the business to return to slightly positive organic revenue growth overall.
Our strategy of diversification will continue to pay off. Throughout the year, we expect to see Oil and Gas CapEx markets bottoming out, with decline in H1 and stabilization in H2. In B&I, page 18, revenue increased by 4.1% organically, with a stronger organic growth in construction-related activities and a more GDP-like growth in the Buildings in-service activities. Q1 was negatively impacted by one less working day, which will reverse in Q2. Even though market conditions are improving in France, construction and in-service activities were both impacted by the negative calendar effect. We saw double-digit organic growth in Asia, driven essentially by China with 16% organic growth and by the more mature Japanese market, up 11% organically. Our geographical diversification is well underway. Chinese business now represents 14% of B&I revenue and North America 11%, due to our recent acquisitions including EMG.
The outlook for the business remains overall positive, with strong growth in Asia, notably China and LATAM. Improving growth momentum in Europe, notably in France, driven by both CapEx and OpEx. Certification. Certification is again our top-performing business in the 1st quarter of 2018, delivering 6.7% organic growth with a good performance spread across most regions and categories. Growth was supported by renewed standards like ISO 9000, 14000, and IATF in the automotive sector. We also launched new products and services which supported our growth. These include enterprise risk-taking on cybersecurity, anti-bribery, and business continuity, which together grew at 20%. Supply chain and sustainability grew by double-digit. We expect the business to remain robust and deliver sustained growth with a stronger 1st half. Although we anticipate a weaker 2nd half due to the end of the transition of revised standards. Consumer Products now.
Consumer Products recorded a solid organic growth of 5.9%, with growth across all regions and categories. Electrical and electronics grew by a mid-single-digit organically, primarily driven by automotive and to some extent, IoT testing. Hardlines also achieved high-single-digit growth, while toys significantly recovered up low-double-digit following a stable quarter in Q4 2017. Softlines delivered a high-single-digit led by new contract wins in Europe. Commercial wins in the quarter include contracts with Google, HTC in the U.S., China Mobile, and Continental in Germany. In 2018, we expect Consumer Products to maintain mid-single-digit growth, reflecting strong growth in electrical and electronics led by SmartWorld on automotive initiatives, solid growth for hardlines helped by stabilizations in the toys sub-segment. The outlook for full year 2018, our outlook is confirmed.
We expect an acceleration in organic growth revenue compared to full year 2017, a slightly improved adjusted operating margin at constant currency, and improved cash flow generation at constant currency. Thank you. This concludes our presentation. Nicolas, we can now open the Q&A session.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. To ask a question today, please press star one on your telephone keypad and wait for your name to be announced. To cancel your request, please use the hash key. Once again, that's star one if you do have a question, and you can use the hash key to cancel your request. Your 1st question today comes from the line of Will Kirkness from Jefferies. Please go ahead. Your line is now open.
Good evening. Thanks for taking the questions. I've got three, if that's okay. Firstly, on FX, it looks like it's moved to the bottom of the previous range you guided to. That's likely to be at least a 30 basis points headwind to the margin for the full year. Just wondering if your underlying progress can offset that. Secondly, the base business is down at 0.9% for the first quarter from 2.6% in the fourth quarter. Just wanted to check whether that slowdown is really all attributable to Marine. Lastly, just on Consumer, the new contracts you've won. Just wondered just a bit more about those processes, perhaps in terms of competitive dynamics, or whether it was service, what drove those contract wins? Thanks.
Okay. I'm going to start with the FX with the impact. Nicolas, you want to comment?
Yeah. We do confirm that if we remain in the current 120-125 range for the euro-dollar parity, we still expect to be impacted negatively around 30 basis points on the margin, which is reflecting a top-line impact of 3%-4% negative and a bottom-line impact around 6%. We confirm these numbers. As you can expect, I will not guide on whether we'll overcome this with the underlying margin evolution.
Okay, Nicolas, thank you. Your second question is about the 2.6% of organic growth compared to fall last year. Clearly, it's coming mostly from the Marine division and the fact that Marine has quite a negative growth. Knowing that, and I'm sure you remember, last year in Q1, it was more or less flattish, it was -1%. Of course, as we know, there is an impact, which is a late cyclical impact. This impact has started second part of the year last year and Q1 this year. For the Marine business, the good news for me is that Q2 should be slightly negative, flattish, and H2 should be slightly positive, which is showing that we are clearly recovering in Marine & Offshore.
If you think, for instance, that at the end of March, we have recorded already 1.8 million gross tons, when in 2016, we recorded for the full year, 1.9 million gross tons. There is clearly a recovery. The second reason why this 2.6% organic growth is at that level is the fact that we have one less day in the first quarter, which represents probably something like 30 basis points impact. You can make your calculation, and you will see it is quite an important impact, knowing that in Q2 we will have one more day. Regarding the Consumer Products division, I think your question was about contract wins in CPS?
Yeah.
We are doing very well with CPS because we decided to implement a new strategy three years ago to be less dependent with the top retailers in the U.S. We pushed for what we call mega vendor strategy. By doing so, we are working now directly with the vendors, and you can see that we perform very well. I am optimistic for the year, thinking that by pushing the strategy for tier 2, tier 3, we are more diversified, meaning that we should be a lot more resilient, and we expect a mid-single digit type of organic growth for the year.
Okay. Can I just check then, have you won global framework agreements essentially, and then you have already seen the revenues coming through with their suppliers?
Yeah. It is true, we also now work directly with the suppliers. We have some, as you said, and you know the business well, some framework agreements. On top now, we work directly with the mega vendors, and by certifying their product, they can knock on the door of the top retailers in Europe and in the U.S. It strategically makes a lot of sense because we have less big contracts from many, many mega vendors. In term of diversification, we stabilize the business at a level which is a lot better. This is the way we decided to work three years ago, and it is paying off today.
Okay. Thanks very much.
My pleasure.
Thank you. Your next question today comes from the line of Paul Sullivan from Barclays. Please go ahead. Your line is open.
Good morning. Sorry, good evening. Good evening, everybody. Just a few from me. Firstly, just coming back to marine, on that 1.8 in terms of the GRT, do you sense that can strengthen from here as we go through into the second quarter and third quarter? I don't know the visibility you've got on new orders coming through there. Secondly, on certification, what are your thoughts post-September? I don't know if you can sort of quantify the boost that you've seen over the last sort of 12, 18 months, as we reach that sort of standard deadline, and then what happens sort of to replace those revenues thereafter, and how big the sort of drop-off could be. Just finally, M&A contribution over the year, or full-year impact from M&A announced to date. If you could just verify that would be helpful. Thank you.
Paul. First on your question on the Marine division. As you know, we do not guide on quarterly new orders. Of course, by being at 1.8 million gross tons already. Last year, we recorded 4.9 million, the year before 1.9 million. 5 million last year and 1.9 million the year before. Being at 1.8 million in the first quarter means that we are on a good trend to achieve at least last year's orders. On the Certification question, which is a very good one, you are totally right. In fact, we benefited from this standards update. Clearly, after September, it will slow down a little bit. We are going to have a very good H1. H2 will be a little bit lower. We took the opportunity of the fact that we knew that it would come, to develop some new certification schemes and new certification programs.
For instance, in terms of cybersecurity, data protection, and also specific schemes on the supply chain. On the M&A, your question, I don't know if you have the answer, Nicolas, the precise answer. The good news clearly on the M&A is that we are on the right track. If you think about our strategic plan, we need to achieve EUR 150 million of revenue per year. Being, of course, selective and selecting the right potential acquisitions. We are on the right track to achieve this number this year. Meaning that M&A should probably have a positive impact of 3% on average on 2018 top line.
As you saw-
A little less than 3%
We were quite active during the beginning of the year on the M&A front, that means that we have already a great deal of that in the bag today.
Okay, Paul?
We lost you, Paul.
It appears we've lost Paul, I'm afraid. We'll now take our next question from the line of Rajesh Kumar from HSBC. Please go ahead. Your line is now open.
Hi. Good evening, gents. Thanks for taking the question. In your, oil and gas business, you talked about volume growth was very strong, offset partially by what you saw in pricing. Could we get some color on how that trend has progressed on pricing? Is it stabilizing, getting better, or getting worse? That would really help. The second one is, when you hear about trade wars and things like that, have you carried out any sensitivity around your business? Which are the segments which might be affected or benefit from any such move, please?
Okay. I can answer your first question. Clearly, the pricing erosion is going down, but as you know oil and gas companies decided to cut cost in the past two or three years. We can still see some pressure coming, of course, from renegotiation, in particular in OPEX of contracts last year, which were on average probably something like 5%. Of course, because we had to give some discount last year, it has an impact this year on the OPEX oil and gas. We have not seen yet any recovery in term of CapEx. We talk a lot about it, as you know, and the oil price, the barrel is at $75. For the moment, we have not seen any significant tender which could support our growth in 2019. This is what I could say for oil and gas. I'm sorry about your second question.
There was a line issue, so I could not hear you.
There seems to be a lot of discussion in the press about trade wars in terms of how U.S. or Europe might behave. What are the potential opportunities and risks you might have assessed for Bureau Veritas?
Today, we talk again a lot about trade war. If you think about steel and aluminum, we are not exposed to this type of business, so it has zero impact, clearly, with these two major points. For the rest, we are extremely diversified, as you know, and the spectrum of activities and markets and product means that I do not see today, clearly, any negative impact on our business. We are mainly on prototype testing-related products. Again, there is a limited volume. After, if you think about the soft lines and even the hard lines, I do not think that the middle class in the U.S. will accept a 30% price increase. I do not see it changing so much tomorrow.
Last but not least, we have diversified also the geographical exposure, notably because we are in Asia, not just in China now, but in low-cost countries, I would say. We are also diversified because now our clients are in the U.S., clearly, in Canada, but also in Europe.
Okay. That's interesting. For example, if we look at consumer testing, you do a contract with, say, Walmart or one of the U.S. retailer, but the service is being delivered in Asia, in Asian cost base, and that enables you to earn an attractive margin. Do you see that dynamic somehow being affected by such a change? I'm not actually thinking about steel and aluminum only. I was talking more broader across the business.
On Walmart, as you know, is selling mostly soft lines products than hard line products.
For the moment, there is no more tax on these products. Again, if you put 30% of tax, I do not see what the reaction of the middle class is going to be in the U.S. For the moment, the risk is extremely limited. On top of it, as you know, we were testing most of the products in China. Now we do it in other countries in Asia.
Okay.
Tomorrow we could relocate in the U.S. because we also test products in the U.S.
Understood. No, that's very clear. Thank you very much.
My pleasure.
Thank you. Your next question today comes from the line of Tom Sykes from Deutsche Bank. Please go ahead. Your line is open.
Thanks. Yeah. Good evening, everybody. I wondered just, is it possible for you to give the aggregate expenditure on acquisitions that you've made in the first half of this year at all? Also just, I know this is a revenue call, but the consensus free cash flow number is forecast to increase by 14% this year, after FX. Do you think that's a credible outcome for this year, even though you've obviously guided to constant FX free cash flow improvement? Then just on the Agri-Food and commodities division in metals and minerals, do you see any potential for the growth rate to improve, or are you hoping just to maintain that level of growth? Would you see after a slow start in trading conditions in oil at all, or in metals and minerals, any improvement in trading conditions, please?
Okay. Thank you for your question. The first question, of course, I'm not going to answer in the details. What I can tell you is that we are still making acquisition at a multiple, which is, for this one, between seven and eight. Why between seven and eight? Usually it's seven in average. Between seven and eight for this one because EMG is a bigger one and of course the multiple was a little bit higher. I'm not going to give you more information at that one. For the free cash flow, it's too early to talk about it. I will give you more details after H1. We are talking about organic growth during this call. I will be very happy to give a more precise answer to your question after H1. Last but not least, you are right.
Agri-Food, as you know, is doing very well, and we still anticipate a very good organic growth this year. Coming from the fact that we won very big contracts in Brazil, and second, the fact that last year we built more than 10 labs overall in food. We know already that these labs are going to be, along the year, filled with a lot of samples. Your point is very valid. The second one is about metals and minerals. Metals and minerals upstream as we started, clearly, and we can see progressively all of our labs being loaded by samples. In term of trade on metals and minerals, it will continue, clearly, to do well and accelerate.
Regarding the oil and gas, clearly we can see now that all the reserves which have been made during the time the oil price was very low, are now coming on the market. We tested them in the past. There is a little bit of slowdown at the beginning of the year, but it should recover progressively along the year.
Okay. That's great. Thank you. Just as sort of follow-up, I know you're not really answering the questions on the cash, but are we right to assume just with the movement in FX, the fact you've made the comment about your net debt in the statement, and you've spent the money on acquisitions, that actually the leverage has gone up slightly because of the movement of the Euro versus other currencies in your mix of debt?
Your point is right, I should probably add the fact that we have decided to launch a new initiative within Bureau Veritas, which we call Move for Cash.
Yeah.
We are really now working hard on cash. It's a little bit too early, as I said. I would like, of course, to compensate, if possible this year, what we spend for acquisitions. Again, after H1, I could give you more details about it.
Okay. Thank you very much.
Okay. Sure.
Thank you. As a reminder, ladies and gentlemen, it is star one if you wish to ask a question, and you can use the hash key to cancel that request. Your next question today comes from the line of Edward Stanley from Redburn. Please go ahead. Your line is now open.
Hi there. In the presentation, you say that in the industry division that you can refocus on gas and offset some of the weakness in oil and gas, or the -17% in CapEx. I wonder how big that market opportunity is in gas and how quickly you can refocus on that, or whether that's actually not a massive delta that you expect for the rest of the year. Secondly, I'm looking forward to your 2020 ambition of 5%-7% organic growth. If I look at the growth initiatives, which have gradually been, albeit very high, fading over the last few periods. Do you expect a re-acceleration in your five growth initiatives? Because otherwise it's quite tough to bridge to that 5%-7% organic growth that you expect.
I'm going to start with your second question. When you think about the fact that you were at 6.2% of organic growth for the five initiatives, of course, you shouldn't measure from a quarter to another, because, for instance, you had the Chinese New Year in February instead of January. You have one less day. It would be better if we could compare probably at the end of H1. Knowing that at 6.2%, we are clearly still delivering a good organic growth with our initiatives. I do not see any slowdown today. In fact, we should have a good year again this year with these five initiatives. On the oil and gas, if I understand well, your question was about refocusing on gas. Am I right?
Yeah. On the industry slide, you say that for the 2018 outlook for oil and gas CapEx, you are going to focus on gas because there are no large CapEx projects coming.
Yeah, that's absolutely true. You will see in the near future that we've already won some very nice contracts. Refocusing, if tomorrow there are some new CapEx in oil, we will be there, of course. We want to, of course, keep a close eye on the future CapEx in oil. Gas is really an opportunity, we are working on gas as well.
Okay. Thank you.
Okay.
Thank you. Your next question today comes from the line of George Gregory from Exane. Please go ahead. Your line is open.
Good afternoon, everyone. I had three, please. Just starting, going back to the subject of currency. The impact on profits, I think you suggested, Nicolas, would be around 6%. Previously, I think you'd indicated 4%-6% back with the full year numbers. I'm just wondering if there is any particular dynamic that is leading the impact on profits to be towards the bottom end of that prior range. Secondly, on the subject of marine, I noticed earlier this week, Clarksons warned of clients postponing transactions on financing fears. I think that was a pretty new trend for them, given that it was only a month ago that they were flagging continued growth. Just wondering whether that is an indication you've seen or any thoughts on that comment. Finally, just going back to the topic of trade wars.
We've seen some restrictions around certain Asian phone manufacturers who use U.S. components being banned from using those U.S. components. Presumably that kind of dynamic poses a risk to prototype development, E&E prototype development out in China. Thank you.
Okay, thank you for your question. Maybe, Nicolas, you would like to comment on the currency side?
Basically, we are still with the same vision. Simply, we were looking at the evolution of the Euro dollar currency, and we've seen the evolution closer to 1.25. We are more guiding today with that type of assumption, which leads us to more a 4% negative impact on the top line and more a 6% negative impact on the bottom line. I would say the shift is simply reflecting the evolution of the currency as we saw it in the last few weeks, and this is still with the same basic assumptions on the sensitivity.
Okay.
After when you look at the evolution of the currency, you could see today we are trending.
We are again back
1.20. At that level, are we going to be at Sorry, 1.21?
Yeah, correct.
Yeah. It's going to be closer to 4%. Again, we should talk about the impact on the margin and so on in H1. It's too early, it should not be the theme of this call.
Okay, very clear.
I'm sorry, I will come back on this very important question, of course, you are right to ask it. Again, for the moment, it seems that the currency, the dollar rate is at 1.21, we will see where it's going to be in the next two or three months. On the marine, clearly, when you look at the current ClarkSea Index, the market has restarted. I have the opportunity to meet some ship owners in the past two months, they confirm that this market has restarted, we could be more optimistic in term of orders for the future. Again, recording 1.8 million gross tons already at the end of March. We've not seen that for quite a while. It's giving good signals for the future. On the trade wars, you talk about the U.S. components and the potential impact.
It's too early to measure it. For the moment, we do not see any impact, knowing that most of the electrical and electronics components that are used in China for mobile phone and so on, are coming from Taiwan and not from the U.S.
Okay. That's very useful. Thank you.
My pleasure.
Thank you. Your next question today comes from the line of Andy Grobler from Credit Suisse. Please go ahead. Your line is open.
Hi, good evening, everybody. Just a couple of questions from me, if I may. Firstly, on pricing, you talked about pricing within OPEX and some of the overhang from the renegotiations last year. What are you seeing incrementally in terms of any contracts that are getting renegotiated through 2018? Kind of on a similar theme, you mentioned some pricing pressure in Marine within the in-service business. Can you quantify that to any great degree? What is the rationale behind that? Then on a different topic, just going back to FX, you've quantified the impact of kind of current FX rates on EBITA. Is there any offsetting or incremental benefit headwind at the interest line that we should take into account? Thank you.
You could maybe answer the question, Nicolas, on the FX part and the potential interest impact.
Yeah. Obviously, quite a number of lines below the OP, so not only interest, but we have part of the debt in USD which would be impacted by the evolution of the currency, obviously.
I'm coming now on your question regarding the OPEX for negotiation. I would say that, of course, we had some pressure because of, and we know it, the lack of investment from oil and gas company. At a certain point, by the way, they will have to do some inspections because they will need it, clearly. The good news for us, and you will see it, and I cannot talk about it today, is the fact that we can now get some bigger contracts, because with this pressure, some small suppliers are disappearing, and big oil companies prefer coming to big tech companies like ours. Meaning that we should have incremental revenue in the future coming from these renegotiations. On the Marine business, I'm talking about the in-service business.
We had some pressure last year, in particular, with the trade and international trade slowdown. It is probably a discount, but we could estimate it at 2%. It is very low. We have decided to restructure the in-service business, thanks to the digital tool that we decided to implement two years ago. Now we are ready to restructure this business, and we have started this restructuring plan on the in-service business this year, which should pay off in the future.
Okay. Thank you. Sorry, just going back on the interest tax and everything else line or lines. You were quite precise that at current FX rates, that it would be about a 6% impact to EBITA. Can you give any guidance of what kind of percentage impact you would expect or an absolute terms impact you would expect below the line, please?
We are not releasing any elements of margin, profitability, whatever. This would be more, sorry, but this will be more a topic for H1 release, I am afraid.
Okay. Thank you very much.
Thank you.
Thank you. As a reminder, ladies and gentlemen, it is star one if you wish to ask a question, and you can use the hash key to cancel your request. Your next question comes from the line of Aymeric Poulain from Kepler. Please go ahead. Your line is open.
Yes. Good evening. Most of my questions have been answered, but perhaps to follow up, if I may. The first is on the Certification and the initiative you mentioned around cybersecurity and data protection. We have obviously this regulatory environment that is favorable in Europe from May onward and might be even boosted by the recent Facebook scandal. Do you have an estimated size of the market opportunity of data protection for the TIC industry? How do you think you can grab that opportunity over the next couple of years? That will be the first question. Second, the Consumer Products sales continue to be very strong, with some positive development on the mix side as well. I was wondering, I know you don't talk necessarily about margin, but you gave a sense of the outlook for the group.
What kind of operating leverage we can assume from that strong sales performance?
Good try on the margin. We'll answer this question at the end of H1 . Now for the Certification, again, it's a very pertinent question. We estimate the market today to be around, I'm talking about the TIC market, which means ISO 27001. We estimate the market to be around EUR 150 million. We also anticipate the fact that this market is going to grow by 20% per year. You are right, it's a very interesting market for Bureau Veritas. After we know that GDPR regulation is mandatory after May 25, it's going to help us, of course, to grow the business in Certification. Last but not least, we have more and more demands on the cybersecurity front. We are ready now to answer the needs of our clients, and this is clearly a market which is growing fast.
Okay, you don't expect the market-
On the Consumer Products, I will answer your question at the end of H1. About the margin. Your point is true.
Just to complete the Certification progress following May 25, you think it's going to be a gradual adoption of these standards? Or do you expect a much more significant acceleration in the second half?
It's going to be a progressive adoption. I don't think it's going to be a huge acceleration. As you said, with scandals like the one that occurred with Facebook, people are more and more concerned about it. We know that this market is going to become a worldwide market, not just a European one. Again, and I can see it already, companies are going to implement it, but progressively. I do not see, again, a very, very important acceleration, a very significant acceleration.
Okay. Thank you.
Okay. My pleasure.
Your next question today comes from the line of Srini Srikonda from HSBC. Please go ahead. Your line is now open.
Hi, good evening. This is Srini from HSBC. Could you give us some color on staff churn you're seeing right now, and also the wage inflation in Asia and the developed world?
You are talking about staff churn, you mean the attrition rate?
Yes, yes.
The attrition rate in our company, if you think about the management attrition rate, it's still lower than 5%. People are extremely loyal to Bureau Veritas. Of course, it's very different country to another. If you are in China, it's more something like 15%-17%, just because we talk about labs and low-level people who want to move, which is good, from a company to another. At a group level, it is 10%, and you have some countries, in mature countries, I think about Europe or the U.S., where the attrition rate is extremely low, mid single digit. It is very different country to country. For me, it is not a concern. Today, it's not a concern for the company. There is a lot of loyalty knowing that our company is a business-to-society company. People enjoy working for it.
Your second question was about the wage stuff, am I right? No? There was no other question.
Inflation.
The wages inflation.
Yeah.
We control it, again, very, very well. You need to know that I decide country by country what should be the wages increase. When you think about the type of margin that we deliver, it shows that we control it very well.
Okay. In terms of attrition, do you see any change compared to last year? Do you see any increase in attrition?
No, no increase in attrition.
Okay. Got it. Thank you.
My pleasure.
Thank you. Your next question today comes from the line of Amira Manai from ODDO BHF. Please go ahead. Your line is open.
Hi, this is Amira from ODDO. I just have two questions remaining. On B&I was wondering if the sequential slowdown versus Q4 last year is mainly explained by the working day less or is there something else? Also on toys, the recovery is a positive surprise. I was wondering if you see this sustainable. Thank you.
Thank you for your question. On the B&I side, clearly it's coming mostly from the working day. As you said, there is one less and in particular in France and in Europe. It's affecting the revenue organic growth, clearly, mostly in OPEX and CapEx B&I. We will see what Q2 will be. Regarding now the toys business, the good news for me is that it has stabilized. It has bottomed out, so we can see some growth. Of course, the comps were becoming quite low, so it's good news for us. Again, we did a very good job by diversifying our portfolio, and now we are a lot less dependent on the toys testing. This is clearly less a drag, but there is not really a big upside on it.
The good news again, it has stabilized at a low point and now it's becoming an opportunity. We focus so much on other products that again, the good news is that we are less dependent. Now it's less than 10% of the Consumer Products division.
Okay. Thank you very much.
Okay. My pleasure.
Thank you. We now have a follow-up question from the line of Tom Sykes from Deutsche Bank. Please go ahead. Your line is open.
Yeah, thanks. Just given the 3.6% organic growth forecast for the year, and that is just implying around about four for the next three quarters, would you just confirm you do expect the next quarter, this one we are in, Q2, to be faster than Q1, and it is not just all second half weighted, please?
Yes, I know the consensus at 3.6%. My guidance is accelerating organic growth compared to 2017. Q2 for sure will be better than Q1.
Okay, perfect. All right. That's it. Thank you.
Thank you very much.
We have no further questions. I hand the floor back for closing remarks.
Thank you for your attention. I wish you good afternoon and good evening.
Thank you.
Thank you. Bye. Bye bye.
Ladies and gentlemen, that does conclude your presentation for today. Thank you all for participating. You may now disconnect.