Ladies and gentlemen, welcome to Teleperformance First Quarter 2020 Revenue Conference Call. I now hand over to Mr. Olivier Rigaudy, Deputy CEO and Group CFO. Sir, please go ahead.
Thank you. Good evening, everyone, and thank you for all your presence tonight. I hope you are in good shape. I'm hosting this call from France with Investor Relations team connected from home, too. Cui, that you know very well, and Julien that is also with us. I'm going to present you the group review as of end of March 2020, and what we have done to cover this crisis, and the outlook for what we believe we can say today. I leave, first of all, to Cui the floor to give some precise stuff in advance of my comments. Cui, go ahead.
Thank you, Olivier. Good evening, all. Hoping also that all the participants to the conference call are safe and healthy in these extraordinary times. Welcome to this event held for the first time from home. Financial results related to the first quarter of 2020 revenue and the update of the COVID-19 for our business has been released today after the closing of the market. As usual, Olivier's presentation will be followed by a Q&A session. Slides are available on Teleperformance website in the Investor Relations Press Release Documentation section, and a replay of the conference call will be available later today on the group website in the same section. Today's call contains forward-looking statements that address our expected future performance, and that by their nature, address matters that are uncertain.
These expectations are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For a detailed description of these factors and uncertainties, please refer to the Risk and Control section in our universal registration document 2019, available on Teleperformance website. Now I turn the call over to Olivier.
Thank you, Cui. Before we go in-depth in Q1 figure, I would like to share with you some key facts and figures reflecting the achievements made during this period in these extraordinary times that we are living today. So, if you move to slide three, what we have done over these last weeks, we have tried to prepare successfully Teleperformance to weather the storm and to manage the after-crisis period, the future in uncertain environment. We are driven to the three key priorities to fight against the risk. First of all, protecting employee. We have put in place a world system to hygiene program and hygiene standard in the group, 80 countries around the world. We have put 155,000 employees working from home, which is roughly 2/3 of our operation workforce.
We are only 5,000 people working there at home at the end of 2019, but even end of January. In six weeks, we have been able to move 5,000 to 150,000 people working at home. I just wanted to stay a minute there just for you to have an idea of what does it mean and what is really represented in terms of work of the dedication of the different team, but we are very proud to have done that. In doing so, what we have done, we have not only protect employee, which was the first priority, but we have also been able to protect job by supporting brand and government in ensuring business continuity. I can tell you that roughly close to 90% of our people, of our clients are served by home working employees. It has not been so easy to make it happen.
Of course, you need to have the agreement of the client. You need to be sure on the security path, but we have been able to get the agreement of the client, and most of them are very happy to have that because the continuity of the business is gone. People are continuing to be served. And in some case, and I'll come back to that later on, you have a sharp increase of some client activity while you have others that are decreased, but you have sharp increase which is linked to the situation. Protecting employees, protecting jobs, but also protecting the company. We have launched a reduction cost program on SG&A, mainly in freezing salary, freezing increase, freezing a lot of projects. Cutting costs mainly on SG&A to make sure that we are going to get out of this period safely.
While, in the meantime, with all the team of the finance team and support by your banker, we have been able to secure an additional credit line of EUR 655 million, adding to those we have already had, those treasury. Today we are roughly in the range of EUR 1.5 billion available credit money to support the price. On top of that, during this period, we have been able to confirm our rating with Standard & Poor's that is confirmed BBB- with stable outlook. That's why I know of three issues: protecting people, protecting jobs, protecting the group. Clearly, what we call work at home deployment has been one of the main response to address this priority.
Of course, we have our strict system implemented on site, but also we have, I would say about 7 million masks that have been delivered as we speak in the different countries, in different centers. That was our key fact and figure, and I can tell you it has been a huge work over these last six weeks, seven weeks. If we come back now to the figures that you see, that growth in 2020 for the Q1 was 6.2% like-for-like, despite the effect of the COVID-19 operation. Clearly here you have two periods. Of course, we have a fantastic growth in January and notably in February. That has been partially offset by a flat performance in March due to the first COVID-19 impact. In March, in fact, you have two fortnight, if I may say.
The first fortnight has been good, and the second one has been impacted by the COVID-19. If we change now to the following slide four, you have the detail of the figure and what I just mentioned about the like-for-like, which is 6.2% like-for-like for the quarter, while reported is 6.4%. It's just what I just mentioned. If we move now on page five, you have this decline. This, I would say, this is precise. Very few currency effect, which is in fact an improvement of the U.S. dollar, which has been offset by the decrease of mainly the Colombian pesos and the Argentinian pesos, but also the Brazilian real. Here you have the like-for-like growth, which is roughly EUR 18 million in this quarter. Let's move now to precisely to the different, I would say, parts of the company.
You will find on page six the detail by region and by core service and specialized service. What is interesting is to see that the core service and this has been able to deliver a growth of 6.8%, while the specialized service only 2.2%. This 2.2% is of course, a mix of very, very good performance of LanguageLine Solutions, on which I'll come back in a minute. A significant impact on TLS, where the travel ban and the difficulty to move, the fact that nobody is moving anywhere, has reduced dramatically the activity in this part of the world, in this part of our activity. Let's move to the English world. So, the English world is 4.8% like-for-like on page seven. Again, satisfactory growth in the first two months of the year.
Of course, very slight loss in March, despite the first impact of the COVID-19 in North America. Everything has been impacted except for healthcare, the internet service, and automotive industry. As of today, in the U.S. 90% of the employees are working at home. We had a significant growth in APAC, very strong growth in Malaysia along Q1. What is very promising, a return to solid revenue growth in March in China. The revenue are still down in U.K., despite the fact that we have been able to deliver growth in March linked to the implementation of our hotline service for the government on the pandemic. As a whole, that is the larger figure. If we now move to Ibero-LATAM, I would say, not a surprise, double-digit growth in March, despite the slowdown compared in March with the first two months.
I would say very few things to say that everything is going well in Colombia, Brazil, and nearshore business. Even in Mexico, that we're able to deliver growth. Financial service, e-tailing, and internet service industry expanded at good pace. What is absolutely amazing in this region, we have been able to very quickly implement a work-at-home solution. As of today, it's 80% of the people in this region are working at home, which is a little significantly higher than the origin. We are close to giving an example to 100% in Portugal. That is absolutely amazing. As far as Europe is concerned, you have a growth which is lower, which is more mixed, which is either by region and by business. The business contracted sharply in March, especially in Tunisia and Italy, where there was strictest lockdown policies.
You have an increase, which is significantly even smaller in Greece. Of course, in the multilingual hubs, that is 100% also working at home. Scandinavia, Turkey, Egypt, and Russia, where we have opened last year a new site. Another month, which is a little more mixed than Ibero-LATAM, but still good. If we move now to India and Middle East, we have this sharply retreat in March due to the drastic lockdown in India. Lots of sites have been closed there during the month. We have been able to expand work-at-home solution to minimize this impact. Roughly 60% of the agents in India are working at home, 58 to be precise. We have prioritized international offshore contract, and we took the advantage of that to increase the termination of the less profitable domestic contract.
We know that we had another issue because we are not able to serve all our clients. So, we decided to put all our strengths and all our effort on the international parts to maximize not the sales, but the results. If we move now to specialized service, it's very nice, as I may say, LanguageLine Solutions has been able to deliver double-digit growth in Q1. In fact, for LanguageLine Solutions, this company is already living with working at home. It's a business model, so it's not a big change. There was an impact in March, mainly for the people that were working in healthcare and decided to postpone their non-COVID-19 operations. It reduced a little the business, but as a whole, the business were good.
Of course, there is a sharp decline in revenue in TLS, notably in March, but also it started already in January with China, where operations were significantly reduced. That is linked, of course, to the general situation. That's where we are at the end of Q1. If I move now to page 12, just to give you ideas. What we know, we know that the margin will be negatively impacted in H1, mainly due to Q2. We know that April is probably the worst month. May and June should start to recover progressively.
This is not written, but clearly April will be difficult, and we hope that May, with all the policy that has been announced across Europe, but not only across Europe, also elsewhere, in starting again, and we hope that we will be able to recover it, especially in the countries that were locked down, and we hope that it will help us. Second thing which is interesting to notice is the ongoing positive commercial momentum. Surprisingly, our business development team are very, very active, even if they cannot meet the people, but doing that remotely with virtual visits, with virtual stuff, has enabled a fantastic possibility of developing new business and new clients, and we think it's good for the future. We are not able to deliver a new guidance at this stage.
We need to have a clearer view of this second quarter to be much more precise in our figures. If we believe that, like you, that the things are going to improve gradually in Q2, especially May and June, and also starting July and after, we are reasonably confident that we could take advantage of it in H2 with all the measures that we have taken to take advantage of that in term of commercial, as mentioned earlier, but also in finance. We think that we are going to continue to deliver our client needs across the world and to show that Teleperformance is probably one of the most resilient company of the BPO world. That's what I wanted to let you know. I'm still, of course, open for questions that you might have, and I'm ready to take these questions. Thank you.
Ladies and gentlemen, if you wish to ask a question, please press zero and one on your telephone keypad. We have a first question from Edward Stanley from Morgan Stanley. Go ahead.
Hi, Edward.
Hi, Olivier. Thanks for taking my questions. I've got three, please. If you say April is probably the worst month or you hope that it improves after that, can you give us an idea of either the last couple of weeks of March which started to get very bad or what you're seeing in April, particularly in India, I guess, if we're trying to model that? I'll ask my other questions.
It's difficult to do that. I'm not going to enter in detail of each month, but especially March is complex because March depends a lot of when countries have decided to lock down. It's difficult to read. What is clear is that probably April we are going to be down double digits, while we believe that in May we should be better, to be probably better than that, to be considerably better than that. To what extent, I have no idea precisely. It's difficult to tell.
That double digit was for April rather than Q2 as a whole?
No, April. I'm just speaking of April. I'm not speaking of Q2.
Okay. I was interested to see the EUR 250 million cost saving strategy, which seems pretty large. I didn't realize that there were that many levers to pull. So can you tell us what specifically has amounted to EUR 250 million?
It's only G&A. By nature, it's a non-recurring, you won't have that in a full year basis because the time it worked. What has been done. Of course, no more travel, which is a significant impact in Teleperformance because people are traveling and traveling a lot. No more projects, no more hire, no more free time. Not speaking of agent, but speaking of the management, no more hire, freeze increase, no more travel time. We have a lot of project that has been freeze or significantly reduced. Of course, there will be some other costs that will happen in the meantime. In front of that, we explore the development of the work at home. I don't know what will be the final figure at the end of the year for 2020, because you won't have the impact of the full EUR 250 million in the full year.
We are doing that, yes. It's a mix of a lot of things. As you know. That is number two.
Okay. On the second half of the year, the outlook sounds relatively positive. It sounds like it's around, well, comparatively positive. It sounds like this is around mainly new clients that you've acquired. Can you give us a feel for in which verticals you're acquiring clients, why you're acquiring clients? Are your competitors going first? Are they outsourcing because they can't manage this?
I don't know. I'm not sure. First of all, we do believe that we need to be close to our client. We have engaged a large connection to be close from the client. To tell you what will be the volume, exactly the volume that is going to be delivered in H2, the one that knows that, please give me the figure because I don't know. What we've seen in the business development, important discussion, development, and we see that as very, very effective. I don't know if we gain market share or if it's much more trend that was already launched, I would say, the coming months, that is happening today. What has been decided very early in this crisis is to be very close to the client.
Not only by mail, by phone, by social media, to help the people to understand what they have to do, how to move on when we're working at home, just to be close to the client. Beacuse we have a lot of testimony of our clients that people are, not all of them, of course, are happy of that. Of course, I'm not mentioning that, but there are people that have difficulties, and I'm just trying to balance the stuff. Hotels, transportation, all these people, this is difficult for them, of course, and we have less volume. As a whole, if things are, I don't know, frankly, and the one that know, please tell me. I don't know how it's going on in Q2, but we are prepared to move on into the things that are doing well in H2. That's the way I can tell it.
You see what I mean?
Okay. I'll just add one quick follow-up on something you said earlier. You said working from home will incur costs. Can you give us a feel for how much cost per agent are the capitalized or operational costs?
No. It's difficult to tell you. What I can tell you is that when you move so quickly, you have of course, a time where the productivity is not perfect. The first two weeks are not the best. At least we have overcome this situation. We have some investment to do. We believe that there will be some CapEx needed to that. In the meantime, as we are reducing your CapEx in development, we believe this is going to be rush up more than positive. More interestingly than what's happening in 2020, what is sure tomorrow is that the level of working at home will not come back to 5,000 people in the world. I'm convinced that I don't know where we are going to stand, but we should stand probably at higher level than what we are today. 20%-25% of our workforce. I don't know.
I am not able to tell that today. Clients that were reluctant to move to working at home are discovering that this is working. Not for all, but it is working. That might help for the future and especially for the expansion of the group to tomorrow.
Perfect. Thank you very much.
We have another question from Bilal Aziz from UBS. Go ahead.
Good evening, everyone. Thank you very much for taking my questions. Olivier, I know you've broken down the master figures in Specialized Services. Perhaps can you give us the full quarter figures for TLS and LLS for the first quarter? Second question, was TLS still profitable in the first quarter? In a scenario for saying travel restrictions or a slower return, and do your cost savings cover any closure of application centers within that business? Very finally, does the EUR 250 million cost saving program include the investments in Project Eagle, which I assume have been postponed, or is it all incremental to that as well? Thank you.
There has been a reduce on the Project Eagle, so it's true. There are some things that have been postponed or reduced, but there is a part of it that is done, of course. About TLS, clearly TLS is the most difficult part of the group today. This is a very tough time because finally, nobody's traveling anymore, so we have no more sales, I would say, in TLS. The impact of the clients and TLS is huge. It's huge because even if the people have been able to cut costs dramatically, and I can tell you that the company is doing very well in doing so, but you have no more sales, at least for the no more sales. Very few sales for the Q2. I'm not sure it's going to start again very quickly in Q3.
So, we have some centers that are closed, of course, as we speak. It's probably where we have a center. It's small center, it's not big center. Clearly, the major impact in terms of profit is in TLS. Don't dream. We are here to serve our clients. We try to adjust as much as we can. Clearly, TLS is going to be a difficult time and start in two years. That's true.
Great. Thank you.
I don't know if it's brilliant, but it's a lot.
No. Sorry.
We have another question from Suhasini Varanasi from Goldman Sachs. Please go ahead.
Hi, good evening. Thanks for taking my question. I have one on the employee cost, please. Given the kind of decline we're seeing in some of your end markets, like the travel sector, are you considering any employee furlough schemes? Is that cost benefit included in the EUR 250 million?
No, employee cost is direct cost. Most of it is direct cost. It is a margin. Of course, there are some employee reduction in G&A, but the big impact is much more on the margin. Of course, there are some up-something costs. In your country where you had severe lockdown, so it has an impact on the margin. The employee cost, the impact is much more in the margin. I'm not too sure to have understood your question because you are far away. I don't know where you are locked down, but I've had time to understand the question.
Sorry, just a second.
Sorry. Yes.
The governments across Europe have launched employee furlough schemes, right?
Yeah. Of course.
Have you taken advantage of any of those schemes?
Yes
To reduce the cost?
Yes. In Italy, in Spain, in France, in Germany. The big impact are the big countries. These impacts, these countries are important. Of course, clearly, we took advantage of that, yes.
Is it possible to give us an idea what percentage of the employee costs are therefore.
No, I'm not able to answer you. I'm not able to answer you today. Especially because worlds have changed all over the months, I think I will be clear in a month from now. But today, I'm not able to give you a precise figure. It is difficult to follow. One of the difficulties is the fact that this crisis is evolving every day. Everything is changing every day, it's difficult to precisely have all the impact. I cannot answer you this. I cannot give you this answer today.
No problem. Thank you. One question on working capital, please. Are you facing any difficulties collecting your receivables, especially from the hard-hit sectors?
Yeah. Good question. We have some demands. Some people wanted to lengthen their delay of payment, but not so much so far. We have not seen major impact. We are, of course, looking to that very precisely. This is going probably to happen much more now, so we are very precise on that. So far, we have not seen major impact. Of course, we are following that very precisely, especially if the crisis continues intense, because we are likely difficulty.
Understand. Thank you. Last one, please. You mentioned that April was down double digits. Is it 10 to 20, over 20? I mean, double digits.
What was down?
April. You said April. In the month of April, I think you said revenues was down double digits.
Yes.
Correct me if I got it wrong.
No, clearly double digits.
Okay. Thank you. That's all from me. Thank you.
Okay, we have another question from Laurent Gélébart from Exane. Go ahead, sir.
Good evening, Olivier. I would have two questions. The first one regarding cost-cutting, which part is cyclical? Are you will come back next year? Which part is structural, sustainable, lower SG&A level of costs? The second question regard productivity. If people work at home, normally, they are not traveling any longer, so they may work a longer period of time in a day, so they may be more productive. This is going to help you going forward or not?
You're right. At the time you put in place the work at home, you have inefficiencies. I'm telling you the truth. When you move 150,000 people in six weeks from centers to home, I can tell you it's not done, let's put it this way, easily. Now it starts to be a little more, I would say, manageable. The start has been tough, of course. The productivity in this time, we are not everywhere, but of course, you change all the ABs and you change everything. This has an impact, of course, on the margin, but this is now over and this is partial. It could continue, but this is, of course, something. The structural part, I don't know. Of course, most of the staff are contractual, but you discover that finally you are able to manage this company without traveling.
Whether it's structural or contractual is difficult. I do believe that we will need, at a certain point of time, to continue to travel. Frankly, to stop traveling as we do since now, as we have done since now seven weeks or eight weeks, even more, because we start to travel mid-February. The last problem was the 20th of February. It's contractual, but I'm not sure. I do believe that we can reduce it to zero. I don't believe that. Clearly, it's a big impact. People are traveling across the world everywhere.
Yeah.
When you stop that from nothing, it has an impact. Of course it has an impact.
Okay. I have a last question regarding the way your contracts have been set up. Normally you get, let's say, a base fee plus a bonus depending on some KPI you are able to fulfill. I guess that quality KPI this time is a bit difficult to fulfill.
At the beginning it was difficult, when we get the agreement of the client, there was a discussion about to freeze bonus and minus, of course, both sides. Of course, to be very close to the client to understand what was going on, local integration to react. All the legal team spent their time last week to review all these Statement of Works and MSA to freeze that because the clients were absolutely delighted to continue their service. And of course, they understand that the KPI could be chaotic, at least at the beginning, and they agreed to freeze that. Yes.
Okay. You don't expect ± from that versus the prior situation?
No.
Okay. Assuming that the lockdown are no longer in place, everybody come back to work, but still we have the economic crisis. How do you believe the volumes on verticals will react all your customers? Do you believe it's back to normal?
I don't know when it's going to be back to normal. Today, it's difficult to tell. The main impact of the group was much more of an offer impact, ability to sustain, of course, demand impact. The offer, the fact that absolutely it were significantly down, people because they were afraid. You can understand that. There was a lockdown because there was a lot of difficulty to come to work because no transportation was possible or things like that. The main impact for us this first half, or this so far, was mainly offer. The demand part, of course, is existing as mentioned, in transportation, and we are significantly decreasing transportation business, in hotel business and all that, of course. But the main impact for me is offer. I need the lockdown is gone or reduced. It will significantly help, I believe.
Okay. Thank you, Olivier.
We have another question from Nicolas Tabor from MainFirst. Please, Nicolas.
Good morning. Can you hear me well?
Yeah. Very well.
Great. The first question would be on the productivity. Do you have any numbers on the number of calls processed late March and maybe you actually can share with us? Okay.
The problem is not really that. There is a productivity effect, the main impact, as I mentioned, I tried to explain you. In some case, you have sites that are totally closed. You have to move this part of the site to work at home. Suddenly things are disappearing, depending where. This is the main impact. That was the main impact. Productivity, of course, it's the fact that suddenly you have to stop. There are some countries where the government decided to stop totally. After they come back partially because they need us to make it work in some countries and people, because we are supporting COVID-19 hotline most of the times.
The productivity impact is the fact that in some case you had a lockdown, you had a total lockdown, let's say in India, but not only in India, but mainly in India. It was a total lockdown. So, we have to move quickly now a little more than close to 60% of working at home. It's not happening in the day, as you can imagine.
This deployment of the working at home, how do you manage that? Because I guess people don't use laptops in the working station usually.
There is a mix of what we call BYOD, Bring Your Own Device. We try to take some computer from the center to home and to buy some computer because everybody's speaking of the mask war. Nobody's speaking of the computer war, because we have to buy also computers, so we bought some of them. It's a mix of all the institutions. Of course, it depends a lot on the country. The story was this one, yes.
Then, when you said 66% of the 150,000 employees working at home, that's 235,000 employees which are operational, as you mentioned previously.
Yes.
What about the remaining 100,000 employees? Because last year, you had 290,000 full-time equivalents and only 10,000 were.
The people working in the management.
Okay
The QA, the supervisors that can work also at home. We try to put maximum people in production. There are people that are locked down, they cannot work, and that is an issue. There are people that are working at home, and there are still people in centers, not so much, but there are still people in the center, where you have the social distancing. What is a key issue for us is the people that are locked down, that you cannot even move. I hope it is going to be reduced in May and June because people have to rework.
Okay, great. Regarding the CapEx, you don't have any rough guidance of where you are then to make it then?
On CapEx, it's always the same story. It's like a train. You want to stop it takes time. Because we were running on a guidance of 7% like-for-like growth, so you might imagine that we had some projects. These projects, some of them have been launched, so we are obliged to finish, and some of them have been stopped. So, I believe the reduction of CapEx will start to be seen mid-May, early- May, mid-May, and to be much more visible in the second part of the year. Today, I cannot give you a precise figure because in the meantime, as I mentioned earlier, we put much more money on the working at home. We have budget, but this is going to be significantly reduced versus a budget that the budget was easy on versus last year. We are growing.
It's too early to give you a precise figure.
Great. Thank you very much.
We have another question from Lucas Serrano from Deutsche Bank. Please go ahead.
Hello. Thanks for taking my question. I'll just have one left. Just on the headwinds in terms of the revenue line. What's the part that's really led by demand coming down from your clients and the part that's led from you not being able to have the employees and having 100% service level? It seems from everything that actually demand is not moving much and all of the kind of headwinds to revenues is from, obviously the lockdown and you not being able to have all of your employees work and the productivity at peak. Is that fair to say?
I would say, the first months, March, April, and probably May, the main stories offer, I don't know if it's 80/20, but maybe 75/25. Except TLS.
Yes.
It's probably the opposite, because TLS, you have no more demand, which is exactly the opposite of the other story. As a whole, I think that today the main story, and has been the main story, has been the demand, the offer, the ability to sell.
Okay. Just on the contract again, it was mentioned previously, but just is there a part that's based solely on what's the service level, how many calls, how many agents you have working, or is this just the base fee plus something based on KPIs and mostly quality? Is there anything that can be verified?
There are plenty of agreements. I'm not aware of all of them, but largely the idea is to serve as much of the volume. KPIs are, of course, you cannot be paid for it if you deliver a bad service. It's mainly volume, ability to serve the volumes, the calls, interaction, because not only call, it could be also non-voice interaction and BPO stuff that are continuing to develop, especially in e-commerce and banking and all that.
Okay. The last one on LLS. So, I think you mentioned that there are also some headwinds there because the traditional kind of activity in healthcare is affected by the virus. Is there any potential benefits from the increased activity in healthcare because of the virus? Probably more people going to hospital.
I'm not sure to use the word benefit for the virus, but let's put it this way. What we saw on LLS, we saw probably a reduced growth versus the level of growth that we had and we experienced in the first two months of the year. Frankly, I'm not really worried about LLS. LLS is going to deliver very good growth again this year. Probably less than what we expected at the beginning of the year, but very good growth. There are some things that have been postponed, it has an impact, especially in March and probably in April. I don't see what is going on in May and June. It's difficult to predict. At least in May, maybe in June, I believe this stuff that has been postponed will restart. I'm not so concerned by LLS. LLS is different.
These companies know to work at home. They have been doing that for years now.
Yeah.
Now, they are able to deliver. Frankly, it's probably the less worrying part of the group, the less difficult part of the group because I wouldn't say it's business as usual. Of course, it's not the business as usual. People are making it out, cutting costs, are taking care. They are much more in a traditional position in this part of the group.
Many thanks.
I don't know if there are other questions.
Yes, we have another question from Christophe Chaput from Oddo. Please go ahead.
Yes. Good evening, Olivier. Just two questions for me. The first one is a clarification on organic for the Q2, because you say basically that April is down double digits. May is better. Should we understand that-
Q2 will be down. To what level, I don't know, but it will be down.
Yeah, sure.
No doubt on that.
Does it mean that it could be only, let's say, single-digit decrease?
In Q2?
In May, yeah. Because if April is double digits, May is.
I hope.
Let's say, high single digit and June, let's say even single digit, mid to high, let's say. My point is to say that Q2 is not necessarily decreasing by double digits.
No. I'm not saying that. I didn't say that Q2 is going.
No. It's just a clarification. It's the way you say it. It means that the Q2 will not necessarily drop.
Exactly.
More than 10%. Is that correct?
Again, keep in mind that probably the way it's going to be down, of course, TLS will be significantly down in this Q2.
Yeah. The mix effect will push the margin down for sure.
Probably, yes.
If you look, let's say, at the full year, obviously it is massively difficult to forecast, I mean.
Massively.
Under what level of organic the margin is going to decline? Which means that, let's say that if you put a 0% organic for the full year or 2%, are you able to have a flat margin, which means that below 0% organic you are in.
I don't know. It seems to me difficult that we have no impact on the margin for the full year. If you have a significant impact in Q2, especially with TLS. To what extent? I don't know, clearly. This is difficult to tell frankly.
Okay. The last one is about China. You say that you recover in a certain extent. Do you recover the pace of normative growth that you experienced during the last quarter over there?
Yeah. Even a little more. China was supposed to grow dramatically in 2020, so has been kept at the beginning of the year, and we are back close to our plan. Of course, we have not been able to swallow what has been lost, but at least we are back on track.
Is it a kind of specific area, if I may, which means that if you look at Ibero-LATAM, LATAM or anglophone part of the world, imagine that you do, let's say, with a sharp decrease. Do you expect this kind of area to recover, let's say, more or less fully in Q3 or Q4, let's say?
What do you mean by recover? I don't believe that we are going to swallow the loss that we are going to have, or the reduction of the business that we are going to suffer in Q2.
No, it is not the catch up, obviously.
Yes.
The full year guidance was an organic of 7%. Are you able, not really for the Q3, let's say, but for the Q4, to post a 7% organic, let's say, leaving out TLS.
Why not? Frankly, I'm not making a prediction today. Frankly, as I told you at the very beginning, we are not able to deliver a guidance today. There is a guidance in sales and there is a guidance in margin. This is really difficult today. We need much more stability to see that. We hope we'll be able to do that after the Q2.
But frankly, today, I don't want to mislead the market saying that things are going well or things are going badly. What I can tell you is that we had a good first quarter. The second quarter will be probably difficult. We will have a hit on sales, on dramatically, probably a hit also on margin that is going to be affected by the mix from TLS, notably, but also by the lockdown. What will be Q3 and Q4, I must confess that I don't know. We have some forecasts, but I don't know. What I'm sure of is two things. First, the group is solid and has the liquidity to live and is well-managed. Secondly, I do believe that on the commercial part, on the business development activity side, the group is very active. There are the two things on which I'm sure today.
Okay.
I'm sorry you have to be more precise, but it's difficult for us.
I can fully understand for sure, Olivier. The last one for me is, could you help us to understand the extra cost of work at home into the OpEx? You seem to say that the operational profit margin in H1 will be much more affected by TLS.
Also by the lockdown.
Yes, the lockdown is a lack of sales, if I may.
Yes, the platform margin.
For sure. On top of that, you could, or we could add some extra costs related to work at home.
I don't know if it's extra cost or level of productivity. It's difficult to make the distinction between the fact that you change totally your operational forces and what is purely additional cost. I know what is additional cost in terms of CapEx or for laptop or something, but it's not dramatic. It is not huge. The fact that it is not working from day one perfectly, that is difficult to assess today.
Okay. Thank you very much, Olivier. Thank you very much.
I don't know if there are other questions, but I'm ready to take one or two last questions before I move on.
Okay, we have another question from Lucas Serrano from Deutsche Bank. Please go ahead.
Hi, it was just a quick follow-up. We see that some pressure from government, on companies who are using the various measures to furlough people. You said you're using it in various European countries. Are you worried there might be pressure on the dividend from that side?
No. So far, the French government said that dividend might be forbidden if you decided to not to pay social charges or use a grant loan that has been guaranteed by the government, which is not our case. We didn't use that, and we are not going to use that, especially in France. The furlough, it's an issue, only for France. I just remind you that we have 2,800 people in France versus 330,000 across the world. The question is not this one. The board will make a decision on time on this issue, and you will know that on time. Decision has been to postpone the general assembly to end of June to leave sufficient time to make an appropriate decision by the board. That will be done probably in the three weeks to come, I think.
Thank you. That was all. Thank you.
If it's the last question, I'll take it. If not.
No, we have no more questions, sir. We have no more questions.
Thank you to all. I hope you have understood we are living in a complex world, and especially, I believe you, too. What we try to explain is where we are to be clear. I just wanted to conclude in telling two things. We have made a fantastic work to move to this working-at-home situation. There are still uncertainties, there are still impacts that are not totally, I would say, complete and understood. What we do believe that this company is solid, not only financially, but is going to be resilient and take advantage of the situation when the pandemic will end one day. Thank you to all. Keep safe, and we'll be in touch in the coming days and weeks with the team. Cui, could you add to something?
Yeah, if I may complete with information regarding the financial communication agenda, the next event. As you mentioned, Olivier, next investor meeting is financial communication event with Teleperformance shareholders general meeting, as we announced on 23rd March. The first series shareholders general meeting has been postponed to 26th June, while it was initially scheduled on April 16th. Regarding next communication in financials, Teleperformance H1 results will be released on 29th July with a webcast on that day. Of course, Teleperformance will continue to participate in the coming months to numerous now digital conferences organized by brokers. In parallel, don't hesitate to reach out directly if you're interested in digital meetings with us or follow-up questions, and we'll be happy to address your requests. Thank you all, and I'll speak to you next.
Thank you.
Bye.
Bye-bye.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.