Earnings Call: Q2 2020

Jul 30, 2020

Thank you. Good morning, ladies and and welcome to this conference call on the Veolia H1 2020 Results. I will present these results with Estelle Bakalos, our COO and Claude Lavelle, our CFO. And we will then take all your questions. Before starting, please note that the conference call will end at 09:00 sharp as PDF has agreed to slightly postpone its H1 call so that analysts and investors who bring both stocks can listen to the two calls. I will start by the key highlights of the first half, obviously marked by the COVID outbreak. And I am on Slide five of the slideshow. The large part of various activities have proven resilient such as Essential Municipal Services, but other businesses have been more impacted such as C and I waste or construction works or industrial maintenance. Our reaction to the outbreak of the crisis was swift, comprehensive and efficient. An adaptation plan was immediately put in place targeting €200,000,000 of additional cost savings in 2020 on top of the existing €250,000,000 efficiency program for the year. The great success of this plan at the June has enabled us to increase it to $250,000,000 Recovery began in May and was very strong in June with June revenue reaching 97% of June 2019. Savings on Honeywell CapEx have also been decided that all development CapEx have been maintained to fuel our expected growth in the year ahead. Moreover, Veolia enjoys a very strong liquidity position. With this very encouraging end to the semester, we aim to recover our 2019 level of operational performance as of Q4 twenty twenty. More details on figures on Slide six. Revenue in H1 is down by 5.6 at constant scope and exchange rate. That is minus €912,000,000 but only minus €88,000,000 in the month of June. EBITDA is down by 17% in the first half or minus $4.00 €3,000,000, but only minus 27,000,000 in June. This EBITDA decrease goes down to current EBIT and to current net income, which stood its current net income at $7,000,000 in H1. Thanks to CapEx savings and working capital improvements, free cash flow is down by only 40,000,000 compared to H1 twenty nineteen. And then finally, net financial debt is down by €600,000,000 compared to last year. During the crisis, and I am on Slide seven, the group provided the full range of its essential services in all its geographies, including in the most affected countries, while offering maximum protection to all those of our employees who were at their workstation every day. We also reassured all of our other employees enabling them to come back to their place of work as soon as possible. And this policy has been very well received in leading the group to quickly return to a nearly normal activity. Moreover, the very swift pull out of the adaptation plan has allowed us to generate €120,000,000 of savings at the June, of which €50,000,000 have come from the government's job support schemes. These quick results have enabled us to increase the initial target of sales coming from this adaptation plan from 200,000,000 to €250,000,000 in 2020 and Estelle will give you details in a few moments. We also decided to reduce our renewal CapEx by €500,000,000 during the year, which has already bumped foot in H1 and protected free cash flow. On the other hand, as already mentioned, development CapEx have all been maintained even if some had to be postponed by a few months due to the sanitary crisis and the development project will fuel the group growth as of next year. These development projects are summarized on Slide eight. They related to new discretionary growth CapEx devoted to increasing our hazardous waste treatment capacities in China, in The Middle East and in Singapore, as well as our plastic and organic waste recycling capacities in Asia. They also include acquisitions in other waste activities in The U. S. As well as a new water waste and energy developments in Central And Eastern Europe. You see on Slide nine, the Group's achievements of our two cash stripping plans. The usual relationship program targeting €250,000,000 in 2020 is on track at the June with €131,000,000 achieved in H1. The additional adaptation plan achieved €120,000,000 of new savings at the June, of which as already mentioned EUR50 million coming from government job support schemes put in place in various countries where we look at it. This quick success has allowed us to increase the target from EUR200 million to EUR250 million. Million A portion of these savings will be recurring beyond 2020. In total, in this very special year 2020, the Oleas Quest savings will reach more than €500,000,000 Estelle will now summarize the main impacts of COVID on our operations. Estelle, the floor is yours. Thank you, Antoine. I will now give you a little color on the impact that COVID has had on our various geographies and various type of businesses. And on the way, we have reacted both quickly and strongly. On Slide 10, you will see that the vast majority of our geographies have shown good resilience. Asia and Latin America has kept growing, although at a slow pace due to some project delays. Japan, in particular, has enjoyed 8.8% revenue growth, thanks to a very strong municipal water business and new industrial water projects as well. For other regions, rest of Europe, Africa and Middle East, Pacific and North America, have resisted well with very slight revenue declines between 12%. In The U. S, for instance, net of the recent sale of our district heating business, revenue is down by only 1.6%, thanks to a very solid hazardous waste activity and resilient municipal water. France remains the hardest hit due to a very strict and long lockdown, but I've enjoyed a vigorous rebound since June. I will now detail this impact by business starting with municipal water on Slide 11. Altogether, this activity has proven its resilience with a very limited drop in water volumes compared to last year. In France, for instance, volumes have been flat. We have seen lower volumes in cities such as Marseille in the South Of France, which had been offset by stronger ones in our main other cities. Same situation in Southern Eastern Europe, where a lower volume in The Czech Republic due to lack of tourists in France has been offset by increased volume in the other countries. The situation is obviously very different in our construction activities as shown on Slide 12. Those were suddenly and massively impacted by the lockdown as most of our works were simply stopped. We adapted our ways of working to social distancing requirements, and we were able to convince our customers to reopen, leading to a massive bounce back in activity. As we speak, our activity level is even slightly higher than last year with some catch up effect. So Lead Waste now on Slide 13 bundles together quite different situations, starting with our collection activities first. As expected, municipal collection has resisted well. On the other hand, commercial and industrial waste collection has been steadily hit by the lockdown, but the rebound has been massive and quick since June, as you can see on the graph very clearly. France and Germany are back to 100%, and The UK, which answered and exited lockdown later, is back to 80% as we speak. As far as treatment is concerned now, priority has been given to our incineration facilities, and we've been able to maintain utilization rates above 90% in all our geographies through the crisis. In terms of landfills, after a significant decrease during the lockdown with construction waste lifting in particular, volumes are back up to more than 90% of twenty nineteen volumes in June. Last but not least, in terms of pricing, I'm very pleased that we've been able to maintain our pricing strategy all the way through. Moving to hazardous waste now on Slide 14. Our solid and balanced portfolio of industrial customers enabled our activity to hold up well. Revenues was down by only 3.5% in H1, with EBITDA margins maintained at above 15%. I'm very pleased to see that volumes are now back to a level of almost 95%. Switching to district heating now on Slide 15. This activity is very resilient, and this was fully confirmed in H1, as you can see on the graph as well. On Page 16, to summarize, most of our activities have shown good resilience in the past few months. And for those that were most affected, the rebound has been quick and massive, thanks to our swift and effective response. To mitigate the impact of the crisis on our results, we immediately introduced a specific recovering tax trend, targeting additional cost savings of 200,000,000 in 2020. I'm pleased that we were able to deliver 120,000,000 in additional savings in h one, which enables us to increase this target to 250,000,000 now. Of course, this adaptation plan includes some one off initiatives such as furloughing or travel bans and a recruitment freeze, but some more sustainable measures as well. For instance, the digital transformation of our operations has been accelerated, and we won't go back to pre existing methods. Just to give you a few examples, we have adjusted our maintenance plans to reduce level of activity and totally redesign our shutdown plans for the next eighteen months. Digital payment software to bill has become the norm in many new countries. Artificial intelligence has supported our fleet management in order to adapt our daily rounds to customer needs. Basically, we're seizing every single opportunity to learn from the crisis in terms of operational performance, digital solutions, and so on and so forth, So had to be featured and more agile going forward. Difficult to assess already the exact split between what is one off and what is recurring. But I believe that roughly one third of those measures could generate recurring savings. Those recurring savings will help offset the few percent points of activity that Matteo will be missing at year end, allowing us to target the same level of performance at year end as in 2019. Back to you, Antoine. Thank you, Estelle. And to conclude this presentation of the key highlights and before handing over to Claude, we will give you all the details. Slide 17 summarizes our objectives for the rest of the year. With the strong rebound of our activity in June, we aim to recover our 2019 level of operational performance as early as Q4 twenty twenty in the absence of the second wave of the sanitary crisis. We would then be in a position to begin 2021, having offset all the consequences of the COVID crisis and to pursue our strategic plan, thanks to the maintained development CapEx. Indeed, the sanitary crisis has by no means done away the global ecological emergency and the strategic program which we presented to you last February, impact 2023 remains completely valid. Zulia will in fact be ideally placed to benefit from the stimulus packages underway in many geographies, a significant part of which will be dedicated to the ecological transformation. And this is exactly the goal we have set ourselves with our impact 2023 plan to be the benchmark company in the world for ecological transformation. This ambition is more timely than ever. Finally, let me remind you on Slide 18 that this ambition is based on our enlarged vision of our company's usefulness to society as expressed in our corporate purpose. This vision of a multi dimensional performance that benefits all our stakeholders will translate into measurable financial and non financial objectives on which the businesses of our executives will be based. All of these objectives focusing on what we bring to shareholders, employees, clients, the planet and society at large are shown in this chart, which was also presented to you last April. The broad and extended vision of our groups usefulness and performance is in my mind, more appropriate and relevant than ever in the new economic environment. And Veolia will honor its commitments. And I now hand over to Claude for the details of our first half. Claude, the floor is yours. Thank you, Antoine, and good morning, ladies and gentlemen. I'm on Slide 20. As Antoine told you, the H1 performance has been marked by the COVID outbreak, impacting first, the revenue, especially in Q2 after the 192,000,000 that we presented for Q1, revenue which is down by 5.6% at constant scope and ForEx in H1. With pretty much the same level of EBITDA to revenue impact as Q1, as a reminder, when we lose during the lockdown 1,000,000 of revenue, we lose 40% to 50% of that amount in EBITDA. Therefore, is down by $4.00 €3,000,000 compared to last year or minus 17.3% at constant scope and ForEx. Current EBIT at €438,000,000 is down slightly more at €419,000,000 versus last year. This slight increase is a variation in absolute value due to the COVID impact on our JVs for €16,000,000 That leads to a current net income group share, which is positive at €7,000,000 for the first half, which is encouraging for the second part of the year. Net industrial CapEx has been well managed by our BUs under the framework that we have put in place with the RECOVER and ADAPT plan. Therefore, the H1 CapEx are limited to EUR873 million, and we will achieve the CapEx reduction of EUR500 million that we have committed to, which means full year CapEx of around €2,000,000,000 Thanks to a very focused and disciplined management of our cash and a better level of our working capital, the net debt is much lower than last year at 11,800,000,000 Finally, ForEx was not favorable in Q2 with the total impact for H1 that you can see in the table on the right hand side of the slide. This is due to the fact that the euro is stronger in relation to many emerging currencies, especially in Latin America. I'm on Slide 21. Let's focus on Q2 numbers in the table. Q2 experienced a significant decrease in all our geographies, starting by France, minus 16.1%. Water volumes were stable, but works were down in April and May, as Estelle told you, and are fully resuming as we speak. Waste volumes hit a low point in April, with C and I at around 50%, followed by a strong recovery in May June. June trend was much better with but few volumes were still missing. We also experienced some waste inventory release in June, which helped the monthly volumes. Regarding Rest of Europe, minus 6.7%, Central Europe was the most resilient geography because of its Energy and Water business. Waste volumes were lower in The UK, Germany and Northern Europe, but are recovering since April. And June, as you can see on the slide, is well oriented, plus 0.2%. For the Rest of the World, minus 5.7%, It's a mixed bag. The segment is impacted, of course, by the disposal of our district heating in The U. S. Last year. Asia had a better Q2 than Q1 with a business which is back to normal in June. But as we told you, some developments have been delayed. LATAM is still dealing with the virus as we speak. Global businesses are down by 20.8% in Q2. This is due to the very strong hit in April and May on construction activities, the temporary lack of volume for hazardous waste activities in Europe and the reduction of Industrial Services. As you can see, due to the efforts that we have made to resume construction work in France, the segment is almost back to normal in June with a minus 2.3% compared to last year. Overall, Q2 is at 89% revenue compared to last year, and June shows a strong move upwards at 97%. I'm on Slide 22, where I got the revenue bridge. As I said, the ForEx had a negative impact, 0.8% negative on revenue during the semester. The scope effect is mostly the divestiture of the district heating in The U. S, partly compensated by tuck ins closed over the last twelve months. You can see on the slide that the major impact, of course, is the volume impact for minus €813,000,000 which is on sale date due to the COVID effect. The weather impact is significantly reduced compared to Q1, minus €2,000,000 in H1 versus minus €13,000,000 in Q1, thanks to the cold weather in Central Europe in April and May. Regarding recyclates, paper was a good surprise in Q2 due to the lack of paper collection and a robust demand from the industry. Since the peak in April, the paper prices are now normalizing, but it was not enough to compensate for the Q1 price decrease. A source of satisfaction, we have been able to maintain a good level of price increase despite the crisis and the volume drop in Q2. This is reflected in the price effect for plus €143,000,000 I'm on Slide 23. You can easily see that the impact of the most affected segment in our activities, which is the commercial and industrial waste. To give you an order of magnitude, C and I waste collection and treatment represents roughly 40% of our total waste activities. As you can see on the slide, the total waste volumes are down by 14.7% in Q2, which reflects the impact of the lockdown on C and I waste in Europe. On the price side, Q2 price increases remained strong at plus 1.9%. As I said, we are very disciplined on waste pricing. Regarding the geographies, France has restarted its sorting facilities in May and kept a high level on incineration volumes, as Estelle told you. The UK did not stop its operation at all. Incinerators producing most of the margin remained full in Q2, but The UK experienced a drop of land feed volume and on C and I collection. Asia, hazardous is back to normal in June, and The U. S. Was impacted by the lower activities from the refineries, partly compensated by new business. Hazardous Waste Europe is recovering sharply after a low April, now above 90%. In total, our global hazardous waste revenues are down by only 3.5% in H1 year on year to €1,200,000,000 I'm on Slide 24. As you can see on the slide, EBITDA variation can be explained by four main items: scope effect, minus €37,000,000 due to the disposal of our district heating business in The U. S. Scope effect volume effect, minus €431,000,000 due to the COVID impact, partly compensated by our RECOVER and ADAPT plan. Our usual cost cutting plan of plus €131,000,000 as we were able to continue to implement our cost cutting plan during the lockdown. We will achieve the €250,000,000 target for the year and the usual price cost squeeze for minus €69,000,000 One more thing to mention is the contribution of the energy prices, plus €47,000,000 in Europe, as a result of our hedging policy that we have put in place. We have sold 90% of our electricity on January 1, which is protecting this activity from the price drop we have seen in Q2. Let's review now in more details our activities by geography. And I start by France on Slide 25. Water volumes in France remain well oriented. If you take into account that the economy went down in Q2 by roughly 14%, And overall, the water volumes were flat in H1. The water distribution activity has proven to be a very resilient business. And the tariff increase is in line with Q1, plus 1.5%. The impact you can see on the revenue is mostly due to the works associated with our contracts that have been stopped during the lockdown in France. Regarding our waste activities, as we said, the lockdown has a very significant impact in April, and we even shut down some of our sorting facilities, whilst we kept our essential services for collection, incineration and landfill in operation. May was better with the restart of all our operations, and June was much better, almost close to a normal month, as a result of volumes coming from waste inventory release that were brought by citizens to civic amenities just after the lockdown and that were sent for final treatment afterwards. The EBITDA in France is significantly down by 22.5% with two main reasons, the drop in waste volume and the stop of the work in our French Water operation. Let's move to the rest of Europe. I'm now on Page 26. As you can see, Central Europe was a very resilient business, plus 0.7 in July. Northern Europe, which is mostly Germany, was hit by the lockdown, and it's recovering quickly. Italy, Iberia are very stable in revenue because of Essential Energy Services. The EBITDA of Rest of Europe is down by 12.1% at constant ForEx, which reflects the effect of the lockdown in all our European countries, mostly on our waste activities as well our lower on-site industrial services. I'm on Slide 27. The COVID effect was moderate on the Rest of the World segment, with the revenue down by 3.7 for H1. And if you take into account the disposal of the district heating effect only, minus 11.1%. This is due to the rebound of Asia in Q2, where we are back to normal activity in June after a gradual recovery. Because of the embarked growth, the region is growing by 4.7% in H1. Latin America came late in the crisis in wave three and has not yet recovered, but a majority of our activities is municipal, which explains the good resistance of the business. North America is almost flat at constant scope and ForEx at minus 1.6% inorganic. Our people were able to compensate the loss of activities in refineries, waste recycling by transforming low value waste acid into short actants for industrial clients. The municipal water activity was very resilient with no volume impact. Statistics, minus 0.5%, where the vast majority of our activity is Waste Management, experienced some volume drop in C and I but compensated by better Industrial Services. In Africa and Middle East, Morocco had a very stringent lockdown, leading to significant drop of energy consumption. The situation is getting much better as we speak. EBITDA of the Rest of the World is down by 27.8% due first to the disposal of the district heating in The U. S. At the end of last year and second, to the impact of the crisis on a large part of our activities, only partly compensated by the organic growth in some segments, like, for example, Adult and Waste or Distributing in China. I'm now on Page 28. Just as a quick reminder, our Global Business segment has mostly two businesses, Construction and Technology on one side with VWT and SAD, Hazardous Waste and Industrial Services on the other side. Starting by the construction activity, VWT was stable in H1 due to the three desalination projects in The Middle East that are compensating the lower activity in Europe. SAD is making 70% of this activity in public works in France and therefore was impacted by the strict lockdown in this country. It is now back to 100% activity because of the restart of all the construction sites in France. The hazardous waste business has a low footprint and is coming back step by step to almost normal activity, with today all the 14 incinerators that are running. The EBITDA, of course, decreased by 53.9% due to the active construction works at SAD during the lockdown and in hazardous waste activities in relation with lower equipment volumes. But Q3 and Q4 look much more promising. I'm on Slide 29. You can see the translation of EBITDA into EBIT. We have the same effect as Q1 with EBIT variation in absolute value, as I said, slightly higher than the EBITDA variation. This is due to the decrease in the contribution from our nonconsolidated JVs for minus EUR 16,000,000. As I showed you on the graph, June is also marking a turning point with water volumes in our Chinese concession up 7% compared to last year. Regarding the provisions, the variation is mostly coming from insurance provision, minus 20,000,000 this year in H1, which is a cautious number compared to minus €7,000,000 last year. I'm on Slide 13, where you can see the translation of EBIT into current net income. The cost of the net financial debt is improving by EUR6 million, thanks to the active debt management and the refinancing of our euro debt, which leads to €11,000,000 of savings. We will continue to experience this effect as we refinance our euro debt every year with a much lower interest rate. We issued three midterm notes this year with maturity between August and coupons between 0.661.25%. For H1, this positive effect is partly offset by the cost of non euro denominated debt. The share of our minority shareholders, minus €67,000,000 this year, is going down in line with the net income reduction where we have minority partners. This leads to a positive current net income of €7,000,000 for the first semester. Moving to Slide 31, you have the details of the net income group share of minus €138,000,000 coming first from COVID related very specific costs linked to the protection of our employees for EUR33 million second, from non current asset impairment in Latin America and Moro for EUR74 million and some restructuring charges. I'm now on Slide 32. As I said, CapEx were well managed in H1, down compared to last year, whilst we maintained our discretionary CapEx at €128,000,000 The change in working capital was significantly reduced by €225,000,000 compared to last year. This gives us a good free cash flow at the end of Q2, in line with last year, and a net debt reduced by more than €600,000,000 versus June 2019 at €11,800,000,000 On Slide 33, regarding our liquidity position, it remains very strong, even stronger than March 30. The cash available at group level is now €7,900,000,000 as we have issued two midterm notes in April for $7.00 €1,000,000 and in June for €500,000,000 We have already refinanced the three midterm notes issuances of November, December and January next year, totaling 1,500,000,000 We therefore have absolutely no liquidity issue. I'm on Slide 34. You can see the debt maturity schedule and see that we don't have anything to refinance before Q1 twenty twenty two. On Slide 35, you have the details of the net debt variation compared to end of last year with all the effects I have just mentioned. On Slide 36, you have the 2020 outlook that Antoine mentioned during his presentation. Our objective for 2020 is to recover our operational performance in Q4, and thanks to the new development that we have maintained to start 2021 having offset the COVID impact. Thank you very much for your attention. Thank you, Claude. And we can now go to the Q and A session. We have first question from James Brand from Deutsche Bank. Please go ahead. Thanks for taking my questions. I mainly wanted to just try and, get a bit more idea over what the assumptions are around, the comments, that you've you've just made and have made several times in the presentation about ending the year on a similar kind of run rate to the one you ended, 2019. And I guess, obviously, one of the assumptions is not having a a second wave. But in terms of how you're thinking about it, are you thinking maybe that there's gonna be a sustained revenue impact or a sustained volume impact of one or 2%. I'm not trying to put words in in in your mouth there of of maybe one or 2% going into next year, but you've got the cost cutting kicking in, and you've got some new projects kicking in. And and and and those two factors offset the plans. I'd be interested in kind of just getting a bit of a bit of a bit of a clearer idea as to what assumptions you have going into that. And I guess, obviously, pricing as well. You're saying that you haven't you've been able to maintain your pricing, but as I understand it on the waste business, the main price negotiations are often So Estelle, answer your question. Thank you. So first question on the objective by year end, you understood well, which is we anticipate that there may be a few percent points of activity still missing at year end. But thanks to all our efforts, the recovery and adapt plan, we intend to compensate those, therefore, allowing us to target what we've told you today, which is basically EBITDA at the same level as 2019 in q four. Starting therefore the year '21 had been compensated for all the impact of COVID. So you understood well. I'm trying to to describe it in in other words. In terms of pricing, you know, you have the I'm trying to find back the pages, but it's 2.2% of price effects in the way we've seen in h one. And is good. So basically, we're maintaining this pricing strategy, which is aimed in at pricing in terms of the value creation, of course. So have a look at what has value within the waste and price it differently from what has less value within the waste. And therefore, depending on the destination of it, if it's done, if it's recycled or if there is nothing else than landfilling it. So yes, we are very pleased to see that we've been able to maintain that in Q1, in Q2 and altogether in H1. Another question. Thank you. Next question from Emmanuel Turtin from Societe Generale. Please go ahead. Thank you. Good morning, everybody. First question on guidance. Your message on Q4 is indeed quite powerful and looks good for 2021. I would like to focus on bridging between now and Q4. So focusing on 3Q, we had a run rate of COVID related losses, so to speak, of around €27,000,000 in June. And what are you anticipating for Q3? And what are you seeing in July essentially? Should we expect some COVID related losses tailing off as we go nearer Q4? Should we assume, I don't know, 25,000,000 per month for Q3? Any guidance on that would be good. Second question, I noted that your guidance for EBITDA Q4 to be flat versus 2019 was at 2019 ForEx. Could you save us time and give us an idea of the mark to market of the ForEx impact for Q4? And lastly, going below EBIT, do you mind steering us on maybe financial charges on specifically tax on minorities, taxes being sometimes a bit fickle when we have got disruptions of the nature of that this year. Thank you very much. Thank you, Emmanuel. Claude will answer your question precisely. But to be very clear for all of you, by reaching the operational performance in Q4 compatible with the same level of 2019, it is meaning, Estelle explained, EBITDA at constant Forex. You have also now the Q2, the month of June. I give you the Q4. So the link between both would come from Claude, if possible. Yes. So to good morning, Emmanuel. And to answer your question about Q3, what we are anticipating, first of all, July, I would say, roughly similar to June. So it's well positioned as we have seen the rebound in June. No very big difference in July, some positive effect, as Andre mentioned, in The UK. So what we anticipate for Q3 is a couple of dozens of millions per month. We can't give you, of course, a precise number, but this is what we anticipate for Q3 going forward. To answer your question about the ForEx, to me, if I talk about the ForEx for 2020 for Q3, Q4, the main impact could be the dollar and the pound, the British pound impact and the sterling. So quite difficult to forecast Q4, but if you have to take into account ForEx, you have to take into account those two main currencies in terms of ForEx impact. What we can say is a couple of dozens of millions of ForEx for the quarter. Could be around EUR 40,000,000, 50,000,000 at the end of the year. Yes, for H2. For H2. For H2. In terms of you are talking about on minorities. And I I guess your question is about the JVs on on so we don't anticipate much variation in terms of tax for our JVs. So no big differences in terms of tax the contribution on net income from our JVs. Meaning, Emmanuel, that the EBITDA performance at constant ForEx will naturally go down to current EBIT and current net income. Thank you for your answers. To put you on the spot, a quick calculation gives me, if I take a couple of dozens of millions per month in Q3, 50,000,000 of ForEx overall in H1 seems to point to around €3,500,000,000 of EBITDA full year as a simple calculation. Does that sound correct? It is not enough. I would do my math then. Exactly. We can talk to you in detail about it, but I think we can we are more positive than that. Thank you very much. Thank you. Next question from Olivier Van Dusselaar from Exane. Yes. Good morning, myself as well, and thank you for taking our questions. I had three, if I may as well. You had a good evolution in working capital in H1 versus what you did last year. I wonder to what extent do you think you can retain that or if it's likely to reverse again in the second half of the year. Secondly, you mentioned how you think you still have some opportunities to further reduce your cost of debt in in in coming years given refinancing. I was wondering if you could give us a bit of color on on that one. And then finally, there were some press articles about potential disposals that you might do in the coming periods. I won't ask you to comment on those specific disposals in which you might be negotiating. But I wonder, in general, how you see the appetite at the moment for M and A in the market and maybe what type of assets are still in demand and what type of assets might be more complicated to sell? That's it for me. For the working capital, Claude? Can I start by the working capital? So what we are seeing, we have a good level of working capital. And what we are seeing is no big issue on payments. So what we expect is a reversal of the working capital at the end of the year as we have seen in the past years. So no big change in the working capital management. Regarding the cost of debt, as you have seen, we have refinanced the cost a little bit early this year to take advantage of quite good situation of the market. So reason why we issued early in June, in April and in January this year. So we have a little bit of cost of carrying this year. So if you have to see what could be the outlook is to have a little bit less cost of carry for next year. And then with the refinancing of our existing debt, you will have a better impact good impact, a positive impact in financial costs for 2021. And as we will refinance 2022, you have seen that we have two issues to refinance in 2022. We'll have, again, a better effect in 2022 as we have to refinance EUR 1,300,000,000.0 in 2022. So positive for the euro cost of debt in 2021 and in 2022 compared to this year. About the rumor of U. S. Water operational disposal, This disposal is not on our 2020 agenda. You know, Olivier, that the group is planning to divest around €3,000,000,000 of assets as part of the INTACT 2023 strategic plan. And we can say that all profit will haven't been realized at the end of this year, but the timing and the assets remaining to sell have not been decided yet. And you know that given the very strong balance sheet we have today, there is no rush for us to proceed with asset diversion too early. Okay. That's very clear. Thanks very much. Another question? Thank you. Next question from Vincent Harald from JPMorgan. Please go ahead. Yes. Good morning, everyone. Got some issues with the Q. So I may have missed a few questions there, but I'll, go back to guidance. Another way to look at it is, I have in front my eyes a consensus of €3,600,000,000 of EBITDA for the full year. I understand from your previous comment that 3,500,000,000.0 is a bit low. I'll call to wire you with this consensus, especially knowing that and the tone of your presentation, seems to be fairly upbeat. So I would be interested in that. Second question is regarding the 2023 guidance. We see that the wording is evolving in Q1 and now in H1. It as it becoming a realistic? Is it that you lost a full year of growth and it's non achievable or is it depending upon basically the implementation of your asset rotation? How do you look at it? Is this an opportunity, this crisis at the end of the day? And, it's too early to make a call in 2023. It's just for us to understand the the momentum on this side of the equation. And, finally, I think your slides were pretty good at showing every month the momentum, for every type of activity and where we were on volumes. So that's that that was very, very useful, I would say. Now the question I have is, regarding waste. Basically, you're back at 100%, in France and Germany, still lagging in UK. But, there were some element of potential catch up there. So what is the situation as you see it as of today as this catch up finally gone through the system? Are we normalized? And if so, at which type of level? Thank you very much. Okay. So Estelle will answer your third question. I will answer the second one, and Claude will begin with the consensus. Yes. First, bonjour, and good morning, Vincent. Today, when I look at the the analyst forecast for 2020, it's I would say that it's a very widespread. So I understand that for analysis, it's difficult to make a forecast. But as you said, the average, the mathematical average is around EUR 3,600,000,000.0. And for us, this order of magnitude makes sense. Thank you, Claude. And it is confirming what I what we said to Emmanuel some minutes ago. About impact 2023 and what we could hope at the end of this plan. I told you that our objective is to begin 2021. First, having offset all the consequences of the crisis on our actual business. So meaning at the same level of profitability we had at the beginning of this year. Second, having maintained all our development projects, organic or financial, and even with some few months late, we will have the profit of this development as we forecasted. Third, in 2021, of course, we will be in a position to develop all our development project of that year, Meaning that we will have lost less than one year of our global program through the crisis. Having said that, should we have not be in a position to get the few months we lost until 2023? It is too early to answer to you. It is not impossible. We will precise that in a few months from now because it is too early. But you see what position will be we will be at the end of the year. And so we have the hope to be able to develop all our InBack 2023 project till this end of the program. Regarding your further question, first thanks for your positive comments on our graph. In terms of the West activity, you're right to say we've seen a very good rebound in June in pretty much all our geographies. UK was still lagging behind, but has reached something around 80% as we speak. So we already we still are seeing some missing volumes in construction and demolition waste in certain landfills or in The UK C and I, as I just mentioned. But it's fair to say we are nearer to a normalization point. I guess, is there some catching up effect? Yes, there are some probably. How far for how long, how deep? It's difficult to say as we speak. July so far has been on the same type of trend as June, except UK, which is better. It's possible that in the end, we'll still be missing a few percent point of activities, as I've mentioned, in waste. Hence, the recovery in that plan, which is here to compensate for the potential effect in our EBITDA and targeting to be coming back at a normalized EBITDA level at the end of the year. So we still have a little bit of work to do, but work is on the way, plus the balance in back is quite strong. Perhaps we have the time to take the last question before Zeus begins its call. Yes. We have one last question from Tarleton Mitchell from HSBC. Please go ahead. Morning. It's Farishee from HSBC. And just a couple of questions. Firstly, on M and A for second half, have you got very strong cash and liquidity position? Are you thinking about continuing your modest acquisitions to try and achieve your guidance? The first question. And and second is just a clarification report. Do you have any staff in France or The UK or other markets still under government furlough schemes? And just one quick third one. Can you just give us a bit of color about your Central European contract renegotiations and, what we should be expecting, in terms of progress for them? Thank you. I guess I guess on the second question, maybe if you could restate, you know, if you say, have we used the various furloughing schemes in various countries? Yes, we have. In Europe, mainly the equivalent in The U. S, so the PAD furlough, the CARES Act in The U. S. So yes, we have the equivalent part of in our €120,000,000 the covenant back plan for H1. As we mentioned, around 50,000,000 of this would be related to paid furlough supported by government schemes. So I hope it's your question. About the M and A during this, Jeanelle? So the M and A, so if your question is, are we going on with our tuck in policy? Policy? The answer is yes, obviously. We haven't slowed down. And we are going on. It's not just to maintain our consensus, it's just because it's good policy, easy to integrate and it goes directly into the bottom line. So, yes, we are going on. It is it is 09:00. Ladies and gentlemen, thank you very much for your presence on that call. Thank you very much. And, of course, you know that our IR department is at your disposal to any question and precision. Have a good day, and goodbye.