Good morning, ladies and gentlemen, thank you for standing by. Welcome to today's Thales Q3 2020 order intake and sales conference call. There will be a presentation followed by a question- and- answer session, at which time, if you wish to ask a question, you need to press star one on your telephone and wait for your name to be announced. I must advise you that this conference is being recorded today. I would now like to hand the conference over to Monsieur Bertrand Delcaire, VP, Head of Investor Relations. Please go ahead, sir.
Yes. Hello. Good morning. Welcome, and thank you for joining us for the presentation of Thales's nine-month 2020 order intake and sales. I am Bertrand Delcaire, the Head of Investor Relations at Thales. With me today is Pascal Bouchiat, the CFO of Thales. This presentation is on your webcast live on our website at thalesgroup.com, where the slides and press release are also available for download. A replay of the call will be available in a few hours. With that, I would like to turn over the call to Pascal Bouchiat.
Thank you, Bertrand. Good morning, everyone. Before moving on to the numbers, and as usual, I wanted to highlight a few key messages. I'm now on slide two. First, as we explained during the H1 results presentation in July, after the disruptions that we faced in Q2, we targeted returning to close to 100% internal productivity over H2. Thanks to the mobilizations of the teams, operations recovered strongly in Q3, which enabled us to post much-improved sales growth. Organic sales growth actually turned positive if we exclude the aeronautics global business units. Second, the past few months have provided us further confirmation that the dynamics on our defense markets remain solid. The French government presented its 2021 budget a few weeks ago.
In spite of the COVID-19 crisis, the defense budget continues to track the trajectory that was approved in 2018 as part of what is called the LPM, the military programming law. The budget will increase by EUR 1.7 billion in 2021, i.e., around + 4.5%. I could also mention Australia, our second-largest defense market, which will affirm its commitment to a 7% year growth in its defense budget, or Greece, which recently announced its intent to buy Rafale aircraft. These continued dynamics drive a significant pipeline of orders, including several that we expect to book in Q4.
Finally, we recently announced a string of ESA contracts in space exploration, which are coming on top of the successes in Earth observation that were mentioned during our H1 results. In particular, as shown on the slide, Thales Alenia Space will be a major supplier to Artemis, the NASA's lunar mission.
It will design the two European modules of the space station that will orbit around the moon for a total value of more than EUR 600 million that will be booked progressively in the next years to come. These awards demonstrate the robust dynamics we are seeing in the institutional space market. Turning now to slide three, which summarizes our key figures for the third quarter and the first nine months of the year. Figures for the first nine months are, of course, marked by the disruptions we faced in Q2. More interesting are the Q3 figures, which show a strong recovery. Organically, order intake was only down 8% and sales down 4% compared to last year. As I will show you in a minute, excluding aeronautics, both KPIs actually turned positive in Q3.
I'm now on slide four with our order intake dynamics and key commercial successes for the first nine months of 2020. The nine-month order intake was marked by the impact of the COVID-19 crisis on civil aeronautics demand and by the phasing of large orders, which you see on the right. Looking specifically at Q3, order intake declined by only 8%, and excluding aeronautics, we actually achieved a low single-digit growth. Year to date, we booked six orders of more than EUR 100 million, including two in Q3, the third tranche of Scorpion, the French military vehicles program, and also a support and services contract for the French Army.
Going forward, we see a significant pipeline of large orders unfolding in Q4, starting with MKS 180, this German frigate program. Surprisingly, the decline in small orders below EUR 10 million primarily reflects the impact of COVID-19 on demand in civil aeronautics and also biometric passports. Moving now to slide five, looking at the sales. The chart on the right shows the different drivers behind reported and organic growth. The currency effect was a small negative over nine months of 0.8% of sales. It was concentrated in Q3, where it represented almost 2% of sales. It was particularly strong at the DIS, which was impacted by the devaluation of several emerging market currencies. The significant scope effect, EUR 697 million, was, of course, primarily due to the Gemalto Q1 2019 sales. Turning to organic growth, the breakdown per quarter shows a major swing.
After the 20% decline we faced in Q2, sales achieved a strong recovery, - 4.3% in Q3. As expected, we were still impacted by the mega drop of demand in civil aeronautics, around 45% in Q3, driving a 30% decline for the whole aeronautics global business unit. Thanks to the mobilization of all teams, we achieved a strong recovery of sales in the other businesses, which actually managed to grow by 1.5% in the quarter. Looking briefly at each segment one by one, I'm now on slide six. In our space, orders were down 13% compared with the first nine months of 2019, at EUR 2.3 billion, this reflecting two opposite trends. The major negative impacts of COVID-19 on our civil aero businesses and the recovery of space orders.
As I mentioned earlier, we are seeing a lot of activity in the institutional space market. In Q3, we booked the first phase of two of the five Copernicus missions we are involved in, and we expect the three others by the end of the year. The other hand, the commercial telecom satellite market remains soft, excluding C-band related orders, only four geostationary satellites were ordered year to date worldwide. Sales improved materially in Q3 compared to Q2, -18% versus -38%. With an organic decline of around 45%, civil aero sales improved slightly but remain heavily depressed. Considering the travel restrictions that were imposed again at the end of the summer, we naturally remain cautious on the level of civil aero demand in the coming months.
The bulk of the recovery came from the strong productivity improvements in the rest of the segments, in military avionics, in microwave tubes, in space, which altogether delivered low single-digit growth in Q3. Now, moving on to slide seven with transport. Transport order intake saw a pickup in Q3 at 19% organically. They were down only 6% over the first nine months of the year. Mainline orders recovered in Q3, but we continue to see delays in urban rails contract awards. Sales in transport were down by 12.3% organically. As mentioned previously, part of this negative growth was expected because of the fading down of work on major urban rail projects, which have been driving very high comps since the end of 2018.
This was aggravated by the COVID-19 operation disruptions, especially in regards to carrying on-site installation and testing activities, and to a lower extent, by delays in urban rail contract awards. Turning to slide eight, looking at the defense and security segments. Defense and security orders amounted to EUR 3.9 billion, down 27% year-on-year. This was primarily due to the volatility of large contracts above EUR 100 million. We booked five such large orders this year, against nine last year, in a context of delays at finalizing contracts. As I mentioned earlier, we have a significant pipeline of orders being finalized, and we expect to catch up in Q4 and to deliver once again a full year book-to-bill clearly above one in this segment. Sales were organically down by 3.3% and reached EUR 5.47 billion.
Thanks to the mobilization of all the teams, many businesses recovered strongly from the operational disruption they faced in Q2, including surface radars, military communications, and combat aircraft. Now, moving on to slide nine, with Digital Identity and Security, the last segment. I won't comment order intake, which, as you know, is not meaningful for this segment. Pro forma over nine months, sales were down only 2%.
Overall, a solid performance considering the impact of the COVID-19 crisis on the biometrics and IoT markets. Sequentially, sales growth improved slightly in Q3 compared to Q2. As expected, smart card sales moved into negative territory in Q3 after an above long-term trend performance in H1. Biometrics and IoT remain affected by the health crisis. With respect to Q4, we expect smart card sales to face high comps and biometrics and IoT to remain a bit weak because of the sanitary crisis.
All of that brings me to the last slide 10, with our 2020 financial objective. As you understood, Q3 order intake is in line with our expectation and, once again, we have a solid pipeline of orders for Q4, which allows us to confirm our full-year order intake target, namely a book-to-bill ratio above one. Thanks to the mobilization of the team, sales growth recovered strongly in Q3, more than 15 points above Q2. This quite solid performance increases our confidence in the group's ability to meet the full-year objectives, EUR 16.5 billion-EUR 17.2 billion. We confirm as well our 2020 EBIT targets, EUR 1.3 billion-EUR 1.4 billion. We are making good progress on our global adaptation plan, which enable us to confirm the EUR 750 million targets for 2020 cost-saving actions. The negotiations on the mix of structural cost measures are ongoing.
It's too early to update the restructuring cost assumptions embedded in this guidance, EUR 130 million. Of course, we remain extremely focused on cash management in this quite unprecedented crisis. Thank you very much. Many thanks for your attention, and I will now be pleased to take your questions. I guess the line should be open for Q&A now.
Thank you, ladies and gentlemen. We now begin the question and answer session. As a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, please press star one if you wish to ask a question. Your first question comes from the line of George Zhao from Bernstein. Please ask a question.
Hi. Good morning. First question for transport. In the press release, you talked about order weakness from delayed signature, notably caused by financial difficulties of some operators. We didn't see that language from last quarter's release. Have you observed anything incrementally worse over the last three months as it pertains to the demand impact on the customer's ability to sign contracts? My second question would be on the book-to-bill for aerospace, coming below 70%. Is that really driven by the civil aeronautics? We saw the slight uptick in revenue in the quarter. Did the orders improve sequentially for civil aeronautics? Thank you.
Okay. Thank you very much. Your first question on transport. We do need to consider, on one hand, the mainline segments, where we see a good dynamics there, with, in particular, some significant orders that we booked in Q3. Overall, we remain quite positive on this mainline segment, as opposed to more of the urban rail segments, where we see here more weakness. As we mentioned, I guess it was as we released our H1 figures. Yes, true, some operators facing quite a steep drop in terms of passenger traffic and putting them, of course, a more difficult situation when it comes to awarding a new contract. Basically, this is what we kept seeing in Q3. I wouldn't mention that the situation has worsened in Q3 for the urban rail signaling business.
I would say it is pretty much in line with what we have seen so far since the beginning of the pandemic. On aerospace. Yes, it's quite obvious that the negative book-to-bill that we've seen is really, how to say, driven by this quite low level of demands in the civil aeronautics business. Yes, in this business in particular, we are today operating at a level of book-to-bill, which is below one. It is going to be the case for the full year. Yes. Now, the more we move on, the more we see, I guess, order intake and level of sales in civil aeronautics converging, because as you know, this is a business where the cycle is quite short. Yes, it's true that today the civil aeronautics business is driving a book-to-bill, which is significantly below one.
All right. Thank you.
Thank you.
The next question comes from the line of Ben Heelan from Bank of America. Please ask your question.
Yes. Morning, Pascal, Bertrand. Thanks for taking my question. I was wondering in civil aeronautics, if you could break out the impact and the trends that you saw in Q3 into IFE aftermarket and the line fit avionics work that you do, and potentially any color of how you see those trends progressing into Q4. Pascal, I know you mentioned in core, in your prepared remarks, that orders are not super important for Gemalto; they were very weak in Q3. Could you help us to understand why? You highlight that there's going to be tough comps for that business moving into Q4. Could you help us understand what you expect from an organic perspective in Q4 on revenues? Thank you.
Okay. Good morning, Ben. On civil aero Q3, IFE line fits. Overall, we mentioned that on our civil aero business, we have seen a drop in sales in Q3, which is, I would say, is pretty much in line with what we are seeing in Q2. Overall, I would say it's pretty much what we see across our global civil aero business. You mentioned IFE line fits. Overall, it's pretty much what we've seen. A drop in line fit and drop in aftermarket, which overall are pretty much similar. It's true that we might see, in some months, a bit of improvement. Then, next month is showing a new drop.
We might see, and this is what we have seen in Q3, a level of sales for each particular month, which might be a bit different. Overall, when you consider a three-month period, basically Q3, this is what we have seen pretty much across all our civil aero business and no specific points to report to you showing a dynamic that would be quite different from aftermarket versus line fit or IFE versus more the cockpit avionics business. On the DIS and Gemalto, what do we see, and how could we anticipate a Q4? You probably have in mind that in our DIS business, in particular in the first half of 2020, we benefited from quite a strong level of demand in our smart card businesses, by the way, both on the banking and also on the telco segments.
We knew that we would see a progressive reduction in demands, in particular in the banking segments. After this quite a strong level of demands in H1 and in particular in the U.S. Basically, this is what happened in Q3, and we think that it will continue in Q4, where this banking segment has to be compared to quite a strong Q4 2019. First point. Overall, the level of demand, as we see, still remains overall quite solid. It's probably more Q4 2019 that was exceptionally high in terms of level of demands. I mentioned in my presentation the situation, in particular, on biometrics. To a more global standpoint, the overall secure documents segments, where it's true that we keep seeing today, and because of the COVID-19 crisis, a clear reduction in demands as compared to the same period of last year.
It is quite simple, the less people travel, the less we see a passport renewal in particular. Our side of security is doing quite well in DIS with in particular, in Q3, which has been quite strong. We need to see how Q4 will look like. It's a short- time cycle business, but overall, the level of demand is there. Last point is IoT. Where overall, we keep seeing quite a soft level of demands in this business. A bit of recovery in the automotive markets during Q3. However, we remain quite cautious on this market, even for the automotive segments, where we might see up and down throughout the next few months. Overall, this is the picture I can share with you on our IS business, which overall has shown quite a strong level of resistance against the increasing of the crisis.
Okay, great. Thank you.
Thank you.
Your next question comes up from the line of Olivier Brochet from Credit Suisse. Please ask your question.
Yes. Good morning, Pascal, Bertrand. Thanks for taking my question. I would have actually three. The first one on the free cash flow for 2020. Has anything changed compared to what you were seeing at the end of June? Is, for instance, the strong order intake that you expect in Q4 having an impact there? Second, on currency. If currencies stay where they are at the moment, what should we expect in Q4? Something similar to Q3, and in particular in DIS? Third, how do you see space looking in 2021 with all the other intake that you've had so far this year? Thank you.
Okay. Good morning, Olivier. First question about cash flow. We see today a level of cash flow, which is quite out of firm against last year. Despite, of course, this drop in overall level of EBIT since beginning of 2020 against the same period of last year. We see our cash flow today holding quite firmly. Now, probably a bit too early, and I don't want to change the guidance that we provided to you on cash flow for the full year 2020.
All what I discussed with you end of July remain fully valid. Now, of course, it is also true, and you mentioned the point that Q4 is traditionally quite a strong quarter in term of cash flow generation. It's true that, of course, we are expecting a level of down payments associated with various large orders that should kick in in Q4.
All of that being in line with the guidance that we shared with you for the full year cash flow generation. In terms of currency, it is true that, as we all know, we have seen some devaluations in some emerging countries' currencies, and the same for the U.S. dollar, and it is in particular on the DIS business. Yes, we are still expecting in Q4 at our DIS business, I would say, the negative impact coming from currencies, probably not as negative as it was in Q3. Space, I guess your question was more about our view on 2021 level of sales for our space business. At this point, it is really too early. No. Let's move on step by step. We have seen an order intake in space in Q3, showing quite a strong progress as compared to Q3 of last year.
Q3 last year was also quite a modest level of comparison. Let's complete 2020 before I'm discussing how we should be seeing 2021 in terms of level of revenues for this business. Overall, the message is still pretty much the same for this business. We see a level of demand in the institutional market, whether it's observation, and it was the case in particular with the Copernicus projects, or whether it is exploration, is what I mentioned about this new lunar mission managed by the European Space Agency. We see the institutional market of space being quite strong. On the other side, as I mentioned, Mike Price, we keep seeing a level of demand in the civil tech business, which remains quite low as we speak today.
Thank you.
Thank you.
Your next question comes from the line of Jeremy Bragg from Redburn. Please ask your question.
Hey, Pascal. I wondered if I could ask about the confidence in the defense orders coming through in the fourth quarter, please. If they don't come through, whether it really matters, from a kind of medium- term perspective, if they slip. Also, could you please give a little bit of color about the restructuring progress, the kind of negotiations that you're having there with the unions? The final thing, cheeky one, would you be prepared to give any kind of initial view on 2021, whether you expect organic revenues to be up next year, for example? Thank you.
Okay. Good morning, Jeremy. On defense order, I guess my tone was quite positive when commenting our Q3 ordering take for defense. It is true that end of September level of order intake for defense is quite below what it was a year ago. Now, I made it quite clear that we are expecting Q4 to be quite strong in this business. I'm quite confident on that. As I mentioned, we are finalizing various large- size contracts. I mean, MKS 180 is a good example. This is really a jumbo contract for Thales. Now, of course, as always, we might see here and there, potentially, some kind of cutoff. We might see in a worst- case scenario, some order intake in defense moving from Q4 to Q1.
Of course, in terms of overall level of revenue for 2021, 2022, it will not change the overall picture of defense. Of course, we might see some delay there, which I don't see today. I guess I'm quite positive on our level of Q4 order intake for our Defense and Security business. Second point, restructuring. We are today negotiating with our trade unions. We expect finalizing with them a global group agreement in the next few weeks, of course, by the end of 2020. Discussions are pretty positive between us and the trade unions. At this point, and coming back to our 2020 guidance, it's probably an opportunity for me to remind everybody that our guidance is EUR 1.3 billion-EUR 1.4 billion EBIT guidance, which is based on the level of restructuring, which is around EUR 130 million.
You probably have in mind that end of July, I mentioned that EUR 113 will be probably more a floor than a ceiling on restructuring. This is my view today. We might end up at a level of restructuring charges that could be a bit above this level by, it might be a few or several tens of million euro. This one's probably still a bit uncertain, as we have not finalized on those negotiations. Of course, if it makes sense for Thales to go a bit further in term of restructuring, of course, we'll proceed in order to prepare for the future. Your last question was about 2021 in terms of organic growth?
Yes, that was it. Thank you.
Yes. I will be, at this point, a bit cautious. I got this question from Olivier on space and globally for Thales. We are expecting our level of revenues in 2021 to be above what it will be in 2020. By definition, with in particular the disruptions that we face in Q2. At this point, I'm sorry for that. At this point, it's really too early to be more precise on that. Let's complete our 2020 fiscal year, delivering on those guidelines. Also, seeing how we see the COVID situation evolving. I guess that all of us, we see that the overall sanitary context is deteriorating, I'm not talking about Thales, I'm talking about the overall COVID-19 situation, in particular in Europe, with more and more countries putting in place curfews.
Also, even some other countries put in place new lockdowns, in the case of Ireland, for instance. Of course, we are a bit cautious and a bit difficult to anticipate how the sanitary situations will look like in three months, in six months, in nine months. All of that, of course, we think could be quite important, in particular in terms of level of demand. Now, I guess this is quite a positive message. You probably remember that when we released our H1 figures, we made it clear that the disruptions that we have seen in terms of production in Q2 was for most part of them, over. We learn how to operate despite all the sanitary constraints linked to the COVID-19.
I guess that you have seen that our Q3 figures demonstrate what we shared with you end of July, our ability to restore a level of production that is almost a normative level of our productions. All of that with a sanitary situation which is overall under control. This is where, of course, we need to remain cautious as we see day after day global sanitary situation in various countries to deteriorate. I'm of course a bit cautious, but I'm confident, of course, I'm quite confident on all the figures that we shared with you in term of 2020 guidance.
Thank you very much, Pascal.
Thank you, Jeremy.
Thank you. Your next question comes from the line of Tristan Sanson from Exane. Please ask a question.
Yeah. Good morning, Pascal. Good morning, Bertrand. Thanks for taking my questions. I have four . I try to keep them short. The first one is on the behavior of your JVs. You indicated quite a drag from them in H1, Naval Group, your JV with Diehl, U.S. businesses. Can you tell us how they behaved in Q3? Especially if you could expand a bit on Naval Group. I think they just announced a new transformation plan. How you see the business evolving? That would be useful.
Second question is on your cash flow trajectory to refine a bit, to make sure I understand your answer to Olivier. You mentioned firm cash flow versus last year, so I suspect you're talking about like a free cash flow. We were at EUR 1.37 billion in 2019. Consensus is at EUR 0.5 billion for 2020. You're saying free cash flow should be closer to the one from 2019? Does the difference fully come from new order intake, down payments coming from HQ, or is there any other part in the free cash flow bridge that has moved? Third question is on defense spending environment.
You talked about support from mature countries. You mentioned Australia, France, solid defense spending momentum. Can you tell us what you see today more in emerging markets, Southeast Asia, Middle East? What is the feeling you get on the persistence of solid defense spending there? I'll stop it here because it's already a lot. Thanks.
Okay. Good morning, Tristan. First on JV. When going through our JV, some of them are in particular in the field of civil aeronautics, and we have in particular two JV of this kind. One are located in Germany, which is a Diehl Aerospace, which is clearly impacted by the severe drop in demands. What we see overall at Thales in terms of level of demands, we see a pretty similar scenario in term of demand for Diehl Aerospace. Of course, contribution of this JV will be, as you can imagine, quite low as compared to what it was a year ago. We also have a JV of this kind in the aeronautics business in U.S. together with L3Com. Here again, we see quite a strong drop in term of demand.
Of course, this JV line will be quite strongly impacted by, in particular, those two JVs. Naval Group that you probably have in mind that, has seen quite major disruptions in terms of production in Q2. We've seen the situation improving at Naval Group. Now it takes a bit of time. At this point, a bit cautious on H2. Of course, H2 will see a quite significant improvement as compared to Q2. However, I don't expect at this point Naval Group to come back on H2 to the level of contributions that they delivered in H2 2019. Cash flow. Thank you very much for your question, because my answer was not precise enough. Thank you to give me the opportunity to come back on this point.
What I wanted to mean was that because of this quite strong drop in terms of EBIT, as we have seen end of H1 as compared to end of H1 2019, and also considering the quite strong drop in terms of EBIT for the full year 2020 as compared to 2019. Without a specific cash optimization program, we might see quite a difficult situation in terms of cash flow. My message was not this one. My message was that I see a level of cash flow as I speak today, which is quite well under control. It will be the case, the same message that I convey end of H1.
I see today a level of cash flow which is well under control, and in particular by all our cash optimization actions that we have put in place, including also in containment in terms of capital expenditure. Many other actions. All of that allowing me to confirm what we shared with you in terms of 2020 guidance for the full year. I remind you what I said end of July, starting with, I would say a standard or normative 95% conversion ratio from net income to cash flow. I mentioned that in 2020, we would see the material reversal on down payments on, in particular, large defense contracts. I mentioned a level of down payments reversals of around EUR 200 million. All of that driving a level of consensus, which in my recollection is something around EUR 500 million.
I'm quite happy with this level of consensus, really, reflecting what I've just mentioned, which is first our ability to keep a conversion ratio, which is rather good. Also, still having in mind the fact in 2020, we have quite a material reversal of down payments on several large export defense projects. Defense spending support. Yes, I commented that in particular, France and Germany is also quite positive, as you know. I mentioned also Australia, where the seven persons, I would say average growth has been confirmed. All of that is positive. Now, your question about emerging markets.
We see today in emerging markets quite a strong level of commercial activity with a number of requests for proposal, a number of discussions. What I see in emerging markets is a process to make final decisions in terms of awarding and making decisions to award contracts, taking even more time than it would in the past. Middle East is a good example of that. Hence, the fact that, of course, I need to remain cautious. We are pursuing various opportunities in those countries, but this is where we might have a bit of uncertainty in terms of the exact timing for booking those contracts. Strong level of commercial activity. We need to move from that to getting and being able to book contracts. That's it, I guess, Tristan.
Yeah, that was it. Thank you so much, Pascal, for all your answers.
Thank you very much.
Thank you. Our next question comes from the line of Celine Fornaro. Please ask your questions.
Thank you. Good morning, everyone. Two questions, if I may. My first one would be just regarding transport and the slowdown that you're flagging regarding urban rail, and if that could have an impact regarding your profitability progression. What's the impact on the mix? Also, if you need to do further restructuring in that division, and that could be one reason why you also think you could have higher restructuring charges. The impact on cash if you have deferred payments from some of these customers. My second question would be regarding the cards in Gemalto. Regarding the Q3 performance, if you could just help us understand how much were the cards down in the quarter and if that was relatively slightly less worse than what you expected. Where do you see the biggest drop in Q4?
I think you suggested potentially in banking cards. Why would it all of a sudden happen in Q4? Thank you.
Okay. Thank you, and good morning, Celine. On transport, yes, I mentioned and concerned the slowdown in terms of level of demand from the urban segment. As I mentioned, and driven by the drop in passenger traffic. Will this affect the midterm profitability? My answer is quite simple. If the COVID generates in the midterms less demands in urban, we'll adjust our costs accordingly. Overall, as here we are more on this midterm project in term of execution. I don't see today the need to drive, as is material restructuring on these fronts. What I mentioned in terms of 2020 restructuring level is not at all associated with this softness in term of demand for the urban transport business. I don't see a significant impact on cash coming from this softness in transport.
Your second question was on DIS and, in particular, on smart cards. Overall, I mentioned that in the first half of 2020, both banking and SIM cards managed to get quite a good level of activity as compared to the same period of 2019. We have seen, even throughout the COVID-19 crisis, in H1 a level of demand, in particular, by the way, in the banking area, being quite strong. Some of our clients are considering that there might be some production disruption, and some of our clients asking for some kind of these additional stocks or precautionary stocks. Q3, overall, in the smart card business, a drop which is close to 5% against a Q3 2019. How do we see Q4? We know that Q4 last year was quite strong.
Will we see in the smart cards and in the level of drop in volume of around 5%? I guess it's probably a good rule of thumb. I cannot be more precise than this on this front, but this is probably a good proxy. Once again, on the basis of a quite a strong Q4 2019 level of sales in those two sub-segments.
Thank you, Pascal. If I'm not mistaken, I think you had said maybe a 10%-15% drop in H2. That would be quite encouraging. Thank you.
Thank you much. Okay. If I understand that there is no further questions. Thank you very much for your participation to this call. Maybe an opportunity for me to remind you that even if all investor events are now virtual, which is not that helpful, of course, and in this situation must not prevent you from engaging with us. I would like to tell you that together with Patrice Caine, I will participate in a few conferences and events in the coming weeks. Of course, in the meantime, the IR team, Bertrand Delcaire, of course, they are at your disposal if you have any further questions. Thank you very much. See you, and have a good day. Bye-bye.
Thank you. Ladies and gentlemen, if you didn't have a chance to ask your question on today's call, please do not hesitate to send a question to Thales Group's investor relations at ir@thales.com, and we'll get back to you as soon as possible. Thank you for all participation. You may now disconnect.