Good morning, ladies and gentlemen, and welcome to the conference call on ENGIE Q1 2020 financial information, organized by ENGIE, along with Ms. Claire Waysand, Interim Chief Executive Officer of ENGIE, and Ms. Judith Hartmann, Executive Vice President and member of ENGIE's Executive Leadership Team. For your information, this conference is being recorded. Thank you for holding. Ms. Waysand, I now hand over to you.
Thank you. Hello, good morning to all. Let me first say that Judith and I sincerely hope that you're all doing well together with your families. We are here at ENGIE, and we are happy to share this morning with you some insights into Q1, and we also want to take this opportunity to talk about our priorities facing the crisis and beyond, so I will start by these priorities, and then Judith will go into Q1 and the measures we're taking on the financial front, so last time we talked was around three months ago for the annual results. A lot of unexpected has happened since then. At this stage, we only have a limited view of what the length and the impact of the COVID crisis will be, but I will share with you our priorities in face of the COVID crisis and beyond.
First, our priorities in the face of the COVID-19 crisis. Very early on, when faced with the crisis, we have decided that we had to establish new priorities for the group with three objectives. First priority, ensuring the health and safety of our employees, our contractors, the persons they interact with, and their families. In particular, all the people that could work from home have been doing so in the last few months. At the beginning of May, this represented a bit less than 40% of our people. Looking ahead, in a number of countries, people who can work from home will continue to do so. And of course, we have ensured the safety at our sites. We have ensured throughout the crisis that we adapt to local regulations and to safety requirements. Looking ahead, this will of course continue.
And at this stage, we strive to restart all the activities that had to stop. Second priority, ensuring business continuity wherever we were necessary. We are happy to report that all our critical operations have remained operational throughout the crisis. This ranges from energy production and supply to critical infrastructures, but also services activities, heating, cooling, and services to hundreds of hospitals in the world. Wherever our clients needed us, we have continued our activity. Third priority, in face of the COVID crisis, ensuring the group remains financially sound throughout the crisis. I will be very brief on this, as Judith will describe in more detail our decisions and action plans to ensure a strong liquidity and balance sheet faced with this adverse shock in order for us to go out of the crisis with a sound financial position. So three priorities in face of the COVID crisis.
At the same time, as I said, and as we had said during our annual results, we still have strategic priorities that we need to deliver on in 2020. So three strategic priorities that I will share with you. First, delivering on geographic selectivity. We aim at having a greater focus on markets with significant existing or potential scale. This will imply for the group having exited from more than 25 countries by the end of 2021. These are all non-strategic geographies we will be exiting with limited contribution to results. Second priority, delivering greater selectivity for our Client Solutions activities. We will focus on service activities that allow us to best demonstrate our value added and drive our clients towards carbon neutrality. Third priority, delivering our extension of renewable capacities.
As you know, we have delivered three additional gigawatts in 2019 at 100%, and we aim at increasing our capacity by nine gigawatts over the period 2019-2021. So in short, ensuring the company responds in an effective way to the COVID crisis and sharpening our focus on energy transition and value added are the broad priorities for this year, and they will ensure that the group is well positioned in the coming months. So with these words, I will let Judith lead you into Q1 and share our main financial actions. Judith.
Thank you, Claire. Hello to all of you. I sincerely hope that you and your family are all well in these unprecedented times. I will start by summarizing the key points of today's announcements. Results for Q1 demonstrated a resilient performance despite the first effects of the COVID-19 pandemic. We have mobilized quickly, and adaptation and mitigation plans are in progress, and we continue to work on our strategy acceleration of greater operational and geographical selectivity. We started Q1 on a positive note despite an unseasonably warm winter. Group COI rose 2% organically, excluding the impact of warmer French temperatures despite the gradual development of the COVID-19 crisis. Some of our businesses have proved to be relatively resilient, but no business has remained untouched by the current global pandemic. We are seeing differentiated levels of impact across our different business lines.
As the situation evolves and we navigate diverse lockdowns and business recovery around the world, we will gain better visibility to assess the full financial impact of the crisis. We are taking strong steps, which I will continue to outline in further detail later in the presentation. Indeed, we're working hard in order to mitigate the negative impacts brought about by the pandemic and ensure that we manage costs and investments to optimize our financial position both now and for the subsequent recovery. As the world emerges from the current crisis, I have no doubt that the energy transition will remain a dynamic and profitable growth industry, which ENGIE is poised to lead. As we continue to work through this, our capital allocation focus will be strictly governed by growth and returns criteria by activity and geography.
Before we continue, I would like to take a moment to thank all ENGIE employees. I have been very impressed with their resolve and their ability to adjust quickly to the changing environment. Many of them are on customer sites as we speak and have ensured that all critical infrastructure assets continue to run. I would also like to specifically thank our IT department for the smooth transition of tens of thousands of our employees to work from home. Let's now have a look at our key numbers for the Q1, which in the context of the growing crisis were very resilient at group level and favorable, excluding temperature effects in France. EBITDA and COI were EUR 3.1 billion and EUR 1.9 billion, with EBITDA rising organically plus 1% and COI decreasing organically -2%.
Excluding negative temperature effects in France, EBITDA would have increased by 4% and COI would have increased by 2%. Financial net debt stands at EUR 27.9 billion, showing a gross increase of EUR 2 billion versus the end of 2019, mostly due to gross investments. Our CFFO improved slightly year over year as a result of timing effects from commodity-related margin calls and lower taxes paid. Now we'll take a closer look at the main drivers of COI performance. Before diving into the underlying performance by business line, I would like to start with the impact from scope and foreign exchange as well as temperature in France. We had a negative effects impact in Q1 of EUR 27 million, mainly attributable to the devaluation of the Brazilian real against the euro.
The scope impact of EUR 66 million is a result of our capital allocation, reducing our coal exposure and investing into our strategic businesses. Indeed, the disposal of our stake in Glow in Thailand and to a lesser extent the disposal of coal plants in Europe in 2019 were partly offset by the positive contributions from TAG in Brazil and acquisitions in Client Solutions. Q1 2020 French temperatures were warmer than last year and also warmer than the historical average.
The impact from these warmer temperatures in France was EUR 82 million, of which around EUR 50 million in Networks, namely gas distribution, and slightly more than EUR 30 million in Supply. The COVID pandemic started to have an effect at the end of March, but of course, it is in the Q2 where we expect the strongest impact. Let's now look more closely at the Q1 organic performance by business line.
In Client Solutions, we started to see the first impacts from COVID-related lockdown measures in many countries. In addition, as we described at the end of last year, we continue to invest in the future of the business line and are still absorbing startup costs mostly from ENGIE Impact. We also saw some underlying softness with selected climate impacts on district heating and cogeneration units. Our backlog continues to increase, standing at EUR 12.3 billion at the end of Q1, which is the highest level we have ever recorded. In Networks, our gas distribution business was negatively impacted by a decrease in French distributed volumes due to both record high winter temperatures and some pressure of the pandemic on commercial and industrial users, as well as lower volumes in Romania and decreased industrial volumes in Latin America. This was partly offset by 2019's annual tariff reviews for French transmission networks.
Our Renewables business continues to build momentum with impressive execution on the ground. The teams are working on the commissioning of three gigawatts of renewable generation this year. We saw improved hydro conditions in France thanks to high winter rainfalls and increased wind and solar volumes on the back of recent asset commissioning. Thermal was down on a year-over-year basis, mainly due to strong 2019 comps and lower spreads, which were partially offset by the return of the U.K. capacity market. We were also impacted by lower prices in Chile and a PPA expiry in Turkey. Nuclear saw a strong year-over-year improvement thanks to the higher achieved prices and lower OPEX. Supply was down substantially year on year, hit by climate effects due to warmer temperatures in France, but also in Belgium, lower performance in Australia, and the current COVID-19 crisis led to lower B2B consumption.
These negative effects were partly offset by better margins in the French retail business and an increase in regulated tariffs in Romania. Among our other business units, our energy management activities delivered strong performance as did GTT in the period. Indeed, our trading unit benefited from a good performance of market activities in Europe and Asia and positive impact of some supply contract optionality in a context of strong price volatility. I would like to focus on the COVID-19 impacts by business line. As you know, we have withdrawn our guidance and are currently not in the position to give a new full year outlook. Indeed, we've had only a few weeks, only two weeks of impact in our actuals, and even there, the countries were in varying stages of lockdown measures.
None of us know the length and ultimate duration of the recovery or the recovery profile of the crisis, but I thought it would be helpful to outline what we're currently seeing and give some color on the drivers expected post-lockdown. In Client Solutions, the COVID-19 impacts vary by business model. The containment measures taken by various governments, particularly in Europe, have caused a large number of construction projects to be put on hold and have reduced the level of activity under recurring O&M contracts as many or most client sites are temporarily closed depending upon the sector and location. We have been seeing reduced activity in projects down 75% during confinement and recurring services down 60% during confinement, while there has been limited impact on asset-based solutions given the contracts and feed-in tariffs.
These factors are bound to improve after the strict lockdown periods, but uncertainty remains in Client Solutions through the upcoming prolonged recovery period. These factors include the duration of site closures and confinement measures, the extent of governmental support on temporary unemployment, the profile of post-crisis recovery, and risks of double dips to be seen on a country-by-country basis, and potential impacts from customer claims. In Networks, we saw lower gas volumes distributed in France and lower industrial volumes in Latin America. As you would expect, our network infrastructure assets are very robust and resilient with a moderate impact on the P&L subject to positive compensation in subsequent periods. We currently expect a rather low impact from COVID-19, primarily related to phasing as the regulatory mechanism allows us to recoup in the future the shortfall in 2020 distributed volumes.
The extent of secondary impacts on this business line will ultimately depend on the timing of worksite reopenings and the pace of our international activities over the coming months. Renewables saw limited impact from the crisis as current projects, supply chains, and facility operations are largely unaffected. However, there could potentially be delays in selected asset commissioning, and in parallel, this business line was impacted by the devaluation of the Brazilian real. Going forward, we may see some delays on commissioning and sell-downs, and the timing of a favorable ruling in Brazil remains uncertain. Thus far, the thermal business line has not experienced any COVID-19 impacts. However, the compounding uncertainties, including on power prices and spreads in the current environment, make it difficult to forecast precisely. Also, it is yet to be seen if there may be a negative impact on demand in some countries.
The nuclear business unit did not see any COVID impacts at this stage, and workers are continuously mobilized to secure energy supply and ongoing LTO works. Similar to the thermal business line, nuclear is impacted by the evolution of power prices, and we continue to monitor the schedule of maintenance works. Supply has seen lower B2B consumption and difficulties in B2C services. The outlook for the slope of recovery in industrial demand and the duration of the impact of lockdown measures on B2C services, as well as the impact potentially of bad debt, remains to be seen. Again, at this time, we are not in a position to provide updated guidance, but I hope these details give you a better idea of the impact the global pandemic is having on each of our businesses. As I stated previously, we have taken decisive action in response to the global pandemic.
Our first priority was to ensure the health and safety of group employees, their families, and those of our service providers. A comprehensive risk management crisis management framework was put in place. Also, all employees whose roles allow this are working from home, while many client-facing staff remain in the field to provide essential energy supply and services, and again, I'd like to commend our teams as to date there have been no disruptions to critical activities, and I want to emphasize that these operations are only maintained subject to comprehensive health and safety protocols. Given the uncertainty of the scope and duration of the COVID crisis, ENGIE's board of directors acted with prudence and withdraw the 2020 guidance and made the very difficult decision to cancel the 2019 dividend. These decisions were not taken lightly, and the strategic intent is to resume dividend payments once the crisis has passed.
While we entered the year with a very strong balance sheet, we have taken actions to shore up the balance sheet even further. As of March 31st, we have over EUR 19 billion of liquidity, and ENGIE's ability to issue a EUR 2.5 billion bond in March further improved our financial position. Now, I would like to provide some details on impact mitigation actions we are taking. First, our absolute priority is to enable our employees to return to work and serve our customers and to be safe and confident doing so, and in this sense, to closely monitor and react to the dynamic evolution of the impending economic restarts, not only on a country-by-country basis, but literally customer side by customer side.
Our teams are engaged in strict operational expenditure management on fixed and variable costs. These actions include in Client Solutions, we're variabilizing costs to the fullest extent possible.
This includes reducing contract labor when necessary and exploring government support on temporary unemployment. We are recalibrating our business development expenses to reduce spending and target our most strategic projects. Our procurement group is implementing demand management and is optimizing partnerships with major suppliers. We expect our capital expenditures to decrease this year through a combination of postponing some projects and increased selectivity in the projects we choose to pursue. When possible and without putting assets at risk, Maintenance Capex is also reduced or postponed. As we move through the coming weeks and months, we will be further refining our views on focus and selectivity in light of post-COVID realities. In conjunction with these decisions relating to our business, I would like to add that ENGIE has launched several solidarity initiatives to support all its stakeholders throughout the crisis.
To mention a few, mobility solutions have been provided to caregivers, and exceptional financial support has been proposed to smaller and our most fragile suppliers. A specific social security coverage has been implemented for all group employees throughout the world. Managers' pay has been reduced to fund aid initiatives to help people and communities left vulnerable by the crisis. As a worldwide actor, we are strongly convinced we have a major role to play in helping our communities to weather this crisis. On the next page, I'd like to walk through some of the actions we're now taking to accelerate our previously stated strategy of greater business selectivity. Indeed, Claire mentioned this remains very important to us. Market-level profit pools and return expectations are indeed being scrutinized to drive greater geographic selectivity differentiated by business segment.
There will be greater strategic emphasis on markets with significant existing or potential scale with attractive growth profiles. We have stepped up our market rationalization target that we shared with you before. We have an ambition now to exit over 25 countries by either exiting or discontinuing development by 2021. In 2019, we exited nine countries, and we're hoping to show progress during the next few quarters and come back to you on this. We expect a limited COI dilution from this. So this will help us to focus our efforts where we can make the most impact for our customers, but also for our own value creation. In addition, we will further rationalize our Client Solutions activities, exiting businesses with low profitability or that are non-core to the strategy. Let me now focus on the evolution of net debt and our liquidity position.
Financial net debt increased by EUR two billion to EUR 27.9 billion from December 2019, primarily due to growth investments for the future. At the end of the Q1, the net financial debt to EBITDA ratio amounted to 2.7, a slight increase compared with December 2019. The average cost of gross debt was 2.8, up 10 basis points compared with December 2019. Economic net debt to EBITDA ratio stood at 4.3, an increase of 0.3 compared with December 31st, 2019. ENGIE continues to maintain one of the strongest balance sheets in our sector, and I've already mentioned our EUR 19.2 billion of liquidity. In times of crisis, this is even more important. On March 20th, the issuance of a triple tranche senior bond for a total of EUR 2.5 billion further improved our financial position.
As a reminder, with this new issue, the total outstanding amount of green bonds issued is EUR 11.2 billion, confirming ENGIE as the largest corporate issuer of green bonds. On April 24th, S&P lowered its long-term rating to BBB plus and its short-term rating to A-2, and on May 5th, Moody's affirmed its long-term rating of A3 and changed the outlook from stable to negative. Our actions are in line with our commitment to keep a strong investment-grade rating and keeping an economic net debt/EBITDA ratio equal or lower of four times over the long term, so in conclusion, I would simply reiterate our key takeaways today. Results for Q1 demonstrated a resilient performance despite the first effects of the pandemic. We started indeed Q1 on a positive note with a group COI up 2%, excluding the impact of French temperatures.
The global crisis is providing uneven impacts across our business lines. Many of them are very resilient, but Client Solutions are being disproportionately impacted. We're coming out of the lockdown, and progressively we will see improvements, but some uncertainty remains. This is a once-in-a-lifetime event, and we continue to assess the impacts on the business and mitigation efforts that are ongoing. I can assure you that the entire company is actively engaged to limit the negative impacts of this pandemic, and we are ready for the rebound. Finally, I would also like to again thank all of our employees who are working together during these extraordinary times to continue to serve our customers and to drive our performance. With this, Claire and I will now be happy to take your questions. Operator, over to you.
Thank you. If you would like to ask a question, please signal by pressing Star 1 on your telephone keypad. If you're using speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. And please limit your questions to two per person at a time. Again, press Star 1 to ask a question, and we'll pause for just a moment to allow everyone an opportunity to signal for questions. Okay, and we'll take our first question from Vincent Ayral in JP Morgan. Please go ahead.
Yes, good morning, everyone. I hope you're safe, and at the end of the lockdown, France is going smoothly. You probably already know what will be my first question. We believe in ENGIE's business, it's resilience, yet whilst you've provided some color in your presentation, one cannot help but notice that there is no quantification given here in order to help investors assess the impact of the ongoing crisis. So my question will be directed on this. Do you have, or could you help provide an order of magnitude of the impact on Client Solutions and on the other businesses, as most competitors do, a week of lockdown? And as well, you've been talking about mitigation efforts. What type of quantifications do you have in front of that? What can we expect?
This is to help us have an idea about where the 2020 numbers may land, depending on assumptions we make on the duration of the lockdown and the speed of the ramp-up. The second question is on the post-COVID, I would say, more important even. I understand that the environment is still volatile, yet as of today, how far are you from the 2022 guidance you initially provided? Basically, if I were to put it another way, how comfortable are you with the current consensus? Thank you very much.
Hello, Vincent, and indeed, I'm not surprised that this is the first question that we get. Indeed, the quantification in the Q1, we have debated this in terms of should we give more details there. But when you think about it, there was in most countries a two-week impact, and in fact, even that completely depended on the country, so Italy going earlier than France and some of our countries in varying calendars, so we are a more global business than some of our peers, and in this instance, the different lockdowns, quite frankly, periods make it hard to give a number, most importantly because I really think whatever number I give is going to be misleading and doesn't actually help you to project the future here. Every week has been different from the one before, mostly on client solutions, of course.
And you saw on our page seven that most or many of our businesses have a lot of resilience, but really mainly the variations are coming from Client Solutions. So at this stage, it is hard to quantify and give specific numbers here. On the mitigation, I can reassure you that we are looking at significant topics here. So we're not waiting, obviously, to have a full view on how the crisis might translate into the P&L before taking strong actions. I mentioned a few of the items, Client Solutions, which is the most impacted. Variabilizing the cost is, of course, incredibly important, but also our procurement actions are going to be significant. And then, of course, there are certain costs that have disappeared almost automatically, which will be the case for some of the traveling activity, as you can imagine.
But so rest assured, we're on this, and it's going to be significant and, of course, on top of Lean 2021 that was already planned. When it comes to a more broader outlook on guidance, so like I said, we're not in a position to do this right now, and we are monitoring this very closely, and we will come back to over time as we get more clarity. So it's hard to also talk about 2022 just because, again, there is quite a lot of uncertainties.
May I have a follow-up question here just because, as you must have noticed, there is a very significant discount on the ENGIE share price as there is a lack of clarity on the business resilience, and it's a core question for the share price and for investors. When can we expect to get some numbers? I'm sorry to be quite to the point, but it's very important in this situation. Thank you.
So, new guidance, we will check it, of course, at every quarter. Next rendezvous that we have is in July, and that will be a timing that we could consider, and we will confirm it once we're closer to the timing.
Thank you very much.
Next question is for Peter Bisztyga from Bank of America Securities.
Yeah, hi, good morning. It's Peter Bisztyga here. Two questions from me, please. Firstly, you mentioned that you may seek government employee wage support to help variabilize some of your costs. Presuming you do this in France, do you think that might impact your ability to reinstate the dividend for 2020? And then my second question, I was just wondering if you could elaborate on your comments about potential claims in Client Solutions. What sort of claims are you exposed to? What percentage of your Client Solutions business is exposed here, and to what extent can you mitigate this, either by claiming force majeure or through your own insurance? Thank you.
Yes, hello, Peter. Thank you for these two questions. First question, yes, indeed, we have benefited from government support in the form of chômage partiel, partial unemployment in France. We have done this in moderation, but we have done this in particular for technicians on the ground that have been affected by a stop of their activity. So this has proved very useful. Does it prevent us from doing anything? The answer is no, clearly. And our intention, as was stated when we took the decision on the dividend, is to be in a position to distribute a dividend as soon as possible. And clearly, there is no link for French authorities between having chômage partiel installed for the companies, and you probably have in mind that that's the case for most companies by now in France, and being able to distribute a dividend, to paying a dividend.
So that's for your first question. Second question, we are indeed looking very carefully at a series of claims, both that we are receiving and also that we could be in the position of addressing on two topics, force majeure and also in some cases change in law. We are following this very closely with both at BU level, of course, and also at group level. And it's really a case-by-case analysis that has to be made. It all depends on the local regulations and also local contracts. So yes, it is an issue. It's being followed very, very carefully, and it will continue to be so throughout the crisis.
Excellent. That's very helpful. Thank you.
Next question from Emmanuel Turpin and Société Générale.
Good morning. My first question will be on Client Solutions. Could you please give us absolute numbers for either EBITDA or COI, breaking down this business between the asset-based and the asset-light, please? And I guess coming back on the questions that were asked previously, Q1 must have been a tale of two halves, with January, February probably lightly affected, on March, much more vividly affected because of the lockdown. And I guess you get reporting on a monthly basis. So could we have maybe the COI or EBITDA impact March year on year? That would help us maybe calibrate what to expect for Q2, where I guess it would be two months of more severe impact. My second question would be on your plan to leave 25 countries this year. Is it on top of the nine of last year, or does it include those nine countries?
I guess you mentioned that it would be of a limited dilution. Would you mind giving us an idea of the aggregate amount of EBITDA and COI that you can make in these 25 countries? And as a bonus question, could you update us about the state of the search for the new CEO? The full year results, Chairman Mr. Clamadieu explained that the company was in the process of looking for a search agency. Have you appointed a search agency? And what can you say about the timing that was put out between six and 12 months for complete resolution of this situation? Thank you.
Thank you, Emmanuel, for these questions. I'll start with the first few, and then Claire will take the last one. So on Client Solutions, indeed, of course, January and February was not impacted, and then it's really mid-March when we started to see a significant impact. But again, when you think about the country mix, if I gave you a number, like I said, I don't feel it helps to project the future because of the weeks being different from one to the other and the countries being different from one to the other. But you can assume that on the decline of Client Solutions that you saw in the Q1, that probably a good two-thirds are related to COVID. And again, I understand your impatience on this.
We will, of course, as soon as we can, give more details, and certainly, again, in July, we will have a much better view to be able to talk about this. On your question on the 25 countries, indeed, it includes the nine countries of 2019. You will remember last year we had talked about exiting 20. We did nine last year. We've just increased it to above 25, and we continue to be very committed to this because we believe it's going to focus our efforts and make us more relevant in each of the countries where we are and more competitive. In terms of COI impact, very limited, definitely below 1%, but you can assume it's a couple of dozen million of COI, so very limited, which is, of course, further proof that we needed to do this simplification. Claire, on the CEO search? Yes, thank you.
Thank you, Judith. On the CEO search, well, you have referred to what the chairman said at the time of the annual results. So this remains very much the framework in which the board operates. So what is said at this time is that the framework is six to 12 months to appoint a new CEO, but it's still the current working assumption. And to your question of has a search company been appointed, the answer is yes. Two search companies have been appointed. So the process is ongoing.
Thank you very much. If I may, just a clarification, please, on my question on customer solutions. So if we don't get more granularity now, as you say, Judith, that the situation varies from country to country. If we basically step back on Q1, we had two weeks of extreme impact, and that's basically for two-thirds of the drop in EBITDA. I guess for Q2, we had at least three times the duration of the tough impact, right? So should we take three-quarters of the impact of Q1, so let's call it EUR 80 million to 100 million, and then multiply that by three to have an impact on Q2? Or are there any mitigation measures you've taken already helped lower this impact? Thanks.
So indeed, thank you for asking this follow-up question. It helps me to clarify. No, indeed, you cannot extrapolate this. You have to imagine a people-intensive business like this that depends on customer sites. When you first have the lockdown in each of the countries, you have a very significant drop of people going to sites. And then already during lockdown, you start to see a ramp-up as people get organized around social distancing, around masks, and all the protection equipment that is needed. So even during lockdown, it gradually gets better. Needless to say that now that a lot of the countries have opened their activities again, it's going to be very gradual, and you will see this translate in the numbers. So you cannot multiply it and just assume that that's the Q2 number.
Thanks.
Next question from Ajay Patel in Goldman Sachs.
Hi, good morning. Two questions, if I may. Firstly, just a follow-up on the variabilization point that we had during the call. Could you give us a rough idea, maybe just for projects and recurring services? What proportion of the costs are fixed and what is variable? And this whole process will move towards variabilizing the costs. What kind of improvement that we could see? Just to give us a sense of what order of magnitude that we can see in terms of improvement. Secondly, in terms of, I know that activity is low during this containment period, but what's the ability to shift work patterns so that you could recover some of that inactivity later in the year, or is that not possible? And then lastly, in terms of the dividend, we have that EUR 0.80 canceled at the moment.
Is the intention to when we do reinstate the dividend that EUR 0.80 is what we go back to, or is it just like everything else that that number could change depending on what the business looks like in 12 months, 24 months' time, whatever that may be? Thank you.
Ajay, thank you for these questions on variabilization. To give you a sense of the kind of cost split in these projects and recurring services, it tends to be around 60% variable, roughly, and 40% fixed. We're going into both of those elements, of course. Some of the things, as you can imagine, we mentioned the partial unemployment already. We had also, in all of the countries, we had people take vacation days where it was possible. We're obviously looking at reducing subcontracting costs. That's typically very variable. We are, obviously, the cost of running the business to travel, the parts are down. Those would be some typical things that we're after and that can have an immediate impact. You're right. Of course, where we can, we will shift work. In fact, we have laid out our partial unemployment here in France.
We've laid it out in a way that we've gotten the engagement of our employees to overtime once we come back in the recovery, and indeed this will be, of course, an important element of what we are going to try and make up for, and then on your question on the dividend, again of course I want to reiterate that we are committed to come back to dividend. It's, of course, too early to talk about absolute levels. It's typically at the beginning of a year that we will look at this, and so we have a good, what, 10 months ahead of us before we decide on the level of dividend.
Maybe just adding a few words to this perfect answer, just to say that indeed, some of the work will be shifted later in the year. I mean, some activities like maintenance activities were to some extent stopped. So these will, of course, resume. It's also the case of a number of chantiers, I mean, work areas on the ground where, in some cases, the clients had to slow down the activity, but we can expect a rebound in these activities. Yeah. And finally, I wanted to mention the fact that in the current context, you will have seen that there are ongoing debates on how to restart, kickstart the economy, Plan de relance, both in the European context and in the French context. And this, of course, may well create a number of business opportunities for us.
So we are very much contributing to this thinking, feeding ideas, and looking forward to the finalization of this Plan de relance.
Thank you. May I have one clarification, if you don't mind? I think to Emmanuel's question earlier, you said roughly that two-thirds of Q1 was the sort of COVID impact of the two weeks of reduced activity, one-third to do with other things. That's about EUR 60 million. And I know that you said not to extrapolate that because things improve, right? Activity levels, you get it organized, you variabilize the costs. But as a worst-case scenario for an eight-week period, would extrapolating that be a stupid thing?
Yeah, I can only reiterate not to extrapolate it. Really, every week has been different from the last. We're mobilizing tens of thousands of people. There is a lot of granularity that goes into this customer side, by customer side. We had a lot of effort once we saw the crisis was going to hit Europe around getting organized on masks. We have now ordered and received millions of masks. Everybody is equipped. We have had no stoppage of work because of this. But again, you cannot extrapolate because it is a very granular work, side by side, customer by customer, that the local teams are working on with, of course, our global support here.
Okay. Thank you very much.
Next question from Louis Boujard at ODDO.
Yes, hi. Louis Boujard from ODDO BHF. Thank you for taking my question. I have two. The first one, I would like to come back to Vincent's question and the 2022 earnings outlook. I was wondering if you could tell us if you see more risk than the forex risk, notably on the Brazilian real, and also on the power market prices risk on your 2022 earnings. In particular, do you think that eventually the COVID could have a longer-term impact than only in 2020 when you will have to make your assumption for 2022 guidance updates? My second question is regarding, in order to change from the customer solution business, regarding the thermal generation business. Indeed, we know that in France, we have had a sizable decrease.
We are going to see a sizable decrease of the nuclear input in France in 2020, 2021, and 2022 onwards following the information from EDF provided a few weeks ago. Do you think that the impact is going to be rather positive for your thermal fleet because of the increase in the spark spread, or do you see that it will be rather negative because of the diminishing load factors? What should be the net effect of this impact in your view, in your business in Europe on the thermal business? Thank you very much.
Thank you, Louis. So on the 2022 guidance, indeed, there will be, of course, an impact of foreign exchange and power prices. Like I said earlier, the real is under a lot of pressure. You've seen this, obviously, in other companies, and that is the single biggest impact. The US dollar is actually slightly positive, so it's helping to offset. But foreign exchange is an impact at this stage on a mark-to-market basis, also on the outer years. And then, of course, on commodity prices, it is a nuclear output, the outright power that is impacting us the most, to a lesser extent, by the way, than the foreign exchange. So yes, this will be an impact. But you brought up, of course, an important topic, which is even that is still fluid, right, in terms of markets. And so the current mark-to-market could become better or worse.
We don't know. What I would say is, luckily, over the last few years, we have reduced our exposure on these commodity prices. And certainly, with the kind of swings that we've seen, 30% changes, we would have had a much bigger impact in the past. So this is actually helping us to remain resilient. And then on your question on thermal, this should be a positive for us, net. And so that's good news.
Okay. Thank you very much.
Next question from Rob Pullen in Morgan Stanley.
Hi. Yeah, good morning, everyone. So lots of questions have been asked, but a few more. So first of all, could we just clarify the dividend commitment regarding resuming payments once the crisis is passed? When do you expect that to be? Should we interpret your commitment as being to pay the 2020 dividend? Or in the bear case whereby a vaccine is not available for several years, does this mean no dividend as long as you are accepting French government support? And the second question, hopefully a lot easier, is just on net debt. Would you be able to give some indication of the COVID impacts on net debt from here into year-end, obviously taking into account potential bad debts and working capital impacts? Thank you very much.
On the first one, this is a strong commitment of the board, I would say, to resume the payment. Now, it is early days. I mean, at this stage, like I said, we have about 10 months ahead of us to decide this. But it is probably a safe assumption that there is a certain that it's going to be a payout ratio that we're going to look at. And yes, you're right. Of course, the crisis will not just stop on a Friday and on a Monday. Everything is great. But on the other hand, I think collectively, we're much better prepared to deal over time with the crisis. I gave earlier examples. Literally, every week, now every day, we have people go back to work. And so I wouldn't assume the same impact as the initial impact.
We are not concerned about not paying dividend related to the French state. Claire, maybe you want to elaborate on that one.
Yes, absolutely. Thank you, Judith. Let me go back to this point, and thank you, Rob, for asking the question because apparently, I was not clear enough in my first answer. There is absolutely no prohibition from the French government, no indication that we shouldn't pay dividend because of the chômage partiel, because we are using temporary unemployment schemes. That's very clear for this company, and that's very clear for all French companies, French headquartered companies, by the way. So no link between using the temporary unemployment and the ability to pay dividend. It was, I mean, not the case this year, and it's not going to be the case looking ahead. So there is no link. I mean, the kind of government support the French government had in mind was things such as loans with guarantees.
Companies that would enter into loans with guarantees would have a certain number of obligations and, in particular, would not be able to pay dividends, but it's not our case. We do not intend to benefit from these guarantees. We have a robust liquidity position, robust balance sheet, as Judith was saying. We are clearly in a position where the only thing we are benefiting from is temporary unemployment, like I would say almost all companies here headquartered in France. There is no link between benefiting from temporary unemployment scheme and the ability to pay dividends. Thank you, Rob, for giving me this opportunity to clarify.
Thank you for the clarification.
Very early in the crisis, we decided not to delay any payments on tax and social contributions, and so it's not an impact on us. We have a very strong liquidity position. On your question on net debt, which, of course, is somewhat related to working capital impact and bad debt, Q1, we have not yet seen any impact of this. So now it could be, of course, it's too early, but I would also say on a positive note that many countries, many governments have put in place action items to support their companies, and especially also the small and medium-sized companies. So that, I believe, really is going to help to reduce that risk. We remain committed to a four-times economic net EBITDA ratio over the medium and long term, and so that's clearly how we run the business.
We have put in place, maybe you have seen it, a working capital facility for some of our suppliers. I believe that's an important topic. We have a strong balance sheet. We have high liquidity and low-cost debt, so for us, this is one way of supporting the entire system around us because we're all going to benefit if we can collectively keep the economic impact low, and that, of course, is done in a way that it temporarily increases our working capital need, but we can stop it basically any time, and we'll look at it very carefully, of course, over time and make sure that it doesn't increase our debt. We can stop it when we want to, so thank you for that question.
Thank you. Thank you very much. If I could just follow up, Judith, on that last question. I mean, what sort of quantum did you have in mind of offering that liquidity to your customers, just for our understanding? Thank you.
It's liquidity to our suppliers of EUR 250 million, and we have, in fact, so we've started it. I want to say two, three weeks ago. The amount is much smaller at this stage. For me, it's not necessarily, obviously, a target to get to 250. It's more of a broad statement of we're there. We're looking at this very closely. We're supporting our most critical suppliers, sorry, and make sure that they get over this crisis and so we can continue to benefit from their services and their products.
Thank you. I'll turn it over.
Next question is from Sam Arie in UBS.
Thank you very much. Good morning, everybody. Thank you for the presentation and all your Q&A today, which is very helpful, as always. I think the question I wanted to ask is, obviously, it's a very challenging time for the business, but you've pointed in today's presentation to some areas where you're rethinking, if you like, the strategy and the direction that you're taking the company in. On the other hand, when you talk about those, it also seems that those changes, such as rationalizing the number of countries you're in, are quite limited in their impact. You also said, I think, on an earlier question, that the CEO search process might be six to 12 months, so I guess could be the end of this year before that's concluded.
So I suppose what I'm trying to understand is, are you really at this point having a serious review of the overall group strategy and direction, or are you just rather trying to point at kind of incremental tactical changes that you can think about during the year this year and that help you kind of deal with the situation in front of you? I'd be interested to just hear you talk a bit more about that wider strategy question. Thank you.
Thank you, Sam, for this question. What I can share at this stage is that we have clearly identified a number of directions, and we've shared these directions with you this morning: geographic selectivity, client solution selectivity, and, of course, continued development in renewables. We have identified these directions, and we are making already very concrete, I mean, we are going to make already very concrete steps in the next few months. The general idea is that, as we had shared at the time of the annual result, we, and when I say we, it's the management team, but together with the board, all share a very strong view that this shouldn't be, I mean, we shouldn't miss a beat in 2020, and we should be in the position to continue to strengthen the company, and that's very much what we are working on.
We are very committed to this, and that's why also we wanted to share with you that, yes, of course, there are the COVID crisis challenges that we need to address, but we're not losing track, on the contrary, on the wider strategic dimensions for the group. The group has to emerge from this period stronger into the future. So we are continuing to think about geographic selectivity and client solution selectivity. We have talked about steps we are going to take in the next few months. They may not be very—I mean, they may have a limited impact on the results, but as Judith was saying, they're already useful in helping the focus of the company. And what we need is a more focused company looking ahead. That's very much what we are working on and will continue to do so.
Okay. Thank you. Very clear, and I'm sure that you're absolutely right in your last comment there, and thank you. We wish you good luck with everything you're dealing with at the minute.
Thank you. Next question from Meike Becker, Bernstein. Please go ahead.
Hi. Thank you very much. If no one else is speaking, I'm assuming that's me. So sorry, that's Meike Becker from Bernstein. Thank you for taking my question. Can you help us with the seasonality, Petter, in your Client Solutions activities, specifically the ones for the asset-light services? I mean, usually, the contribution is very strongly skewed to Q1 and Q4. So how should we think about, A, the activities? Are they seasonal or more smooth through the year in the asset-light business? And sort of on the P&L impact, if we should, when we come to Q2, can draw a line under the strongest impact? So actually, from a P&L and reporting impact, we would then see the effects in Q4 because this is how the contracts are being paid.
So a little bit of helping our thinking and understanding from a seasonality, that would be very helpful for Client Solutions. And then my second question is on your comment on the economic recovery and benefits from a stimulus package. We have heard a lot about this from your peers when it comes to Renewables and Networks investment. It would be great if you could elaborate a little bit on services. What potential could there be for services to be accelerated as part of an economic recovery program? Thank you.
Yes. So I will start by your second question, and Judith will take the first question. On the economic recovery, what do we have in mind, and what kind of ideas are we sharing with a number of governments and people across Europe, in particular? Well, clearly, what the crisis, I mean, first, general remark. What the crisis has shown is, A, there are interdependencies across countries, and B, human species is vulnerable. So the next crisis with that kind of characteristic is the climate change crisis if we don't address it. And we are very happy to see that this is taking a big part in the debate in a number of geographical areas where we are. What can we think about? Two things, as usual. The way to address climate change is, A, to increase energy efficiency, and B, to green the energy.
These are the two areas where the group is very active. Addressing energy efficiency, we can think of a number of actions, in particular in the building sector, and we are very active in these areas, reducing the carbon footprint of buildings, be they private buildings, public buildings, hospitals, universities. That's one. Second, making cities smarter and more resilient and low carbon. That's a second area where we are very active when we are into the market, so that's two energy efficiency areas. Of course, also private building thermal refurbishing is a third area, and finally, on green production, as you know, we have a strong position in Europe in electric renewables, and here are a number of obstacles, which are not only financial, by the way, which can be regulatory obstacles, which can be of the availability of grounds where we can build PV or wind farms.
Removing obstacles to encourage the development of electric renewables is a fourth area. Finally, of course, the green gas. I mean, we very much believe that we are in a position where it's very difficult at this stage to know what will be the most competitive energy mix, low carbon energy mix into the future, and that all technologies have to have their share at the starting line to see which are the ones which become the most cost-efficient. In this area, there's a lot that can be done on green gas, be it biomethane or green hydrogen. These are areas - all these areas are areas where the group is very active and which we think are very relevant in the plan de relance phase looking ahead.
Thank you.
Indeed, lots of things to do on energy transition and obviously a very important thing for all of us that we're going to be working on. And Meike, you asked the question on the seasonality of client solutions and more specifically on asset light. There's actually quite a strong seasonality where Q1 and Q2 are not very strong, and then it really ramps up Q3, Q4. And we expect the COVID impact to be the strongest in the Q2, so one of the smaller quarters, if I may call it that way. So hope that helps.
Yes. Thank you.
There are no more questions at this time.
Perfect. Thank you very much for calling into this call. Again, it's unprecedented times, but as you could hear from our conviction, of course, our strategy remains valid. We're going to continue to work on it. We're committed to reduce the impact and really seize opportunities as they come out of this crisis. And we're looking forward to talking to you very soon again. Thank you very much, all. And most importantly, stay healthy, stay strong, and looking forward to talking to you again, indeed. Have a good day.
This will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.