Earnings Call: Q1 2020

May 6, 2020

Ladies and gentlemen, welcome to the First Quarter twenty twenty Reset Conference Call of Veolia. I now hand over to Antoine Ferro, CEO Colar Ruel, CFO and Estelle Braklianov, COO. Gentlemen, the floor is yours. Thank you. Good morning, ladies and gentlemen, and thank you for attending this conference call on the Euliaq Q1 twenty twenty results. I am this morning with Estelle Vakanov, our COO and with Claude Lavelle, our CFO. I will first, with Estelle, present the key highlights of our activity in Q1 and explain our action plan to face the COVID crisis. Claude will then give you details on Q1 performance and results. And finally, we will take your questions. So I begin and I am on Slide five of the slideshow. We had a very good start of the year with January and February showing continued solid growth in line with previous years. The COVID crisis has, of course, strongly impacted the month of March. Overall, the impact of COVID on our Q1 activity and results has been moderate. Revenue is down 0.5% on a like for like basis. The COVID impact is estimated at around minus €200,000,000 and without COVID, the revenue would have increased by 2.3%. The impact of COVID on EBITDA is estimated at minus €80,000,000 in Q1. EBITDA is down 2.9% on a like for like basis and without COVID, it would have grown by 4.8. This EBITDA effect impacts current EBIT, which is down 13% compared to Q1 twenty nineteen. Without COVID, current EBIT would have progressed by 4.7%. Cash is of course very closely and strictly managed. Net financial debt stood at €11,500,000,000 at the March, down €400,000,000 versus last year. The group's liquidity position is very strong, totaling €9,600,000,000 of which €5,400,000,000 of cash and €4,200,000,000 of undrawn credit lines. And I am now on Slide six. Veolia is obviously fully mobilized to face the COVID crisis. Until mid April, we had two operational priorities. First priority was to provide all our essential services, municipal water, municipal waste collection and treatment, and district heating with backup teams in case of contamination, and also to ensure our other activities for which all our facilities have remained open, so activity has slowed. Second priority was to ensure maximal protection for our employees in terms of health first, but also on the economic front in order to maintain their first report during the crisis. Since mid April, we have added two new priorities. The first one is to be able to welcome back all our employees at their place of work as of the May, with reinforced sanitary safety and with a good fear of contamination. Our objective there is for our employees to feel safer at their place of work than everywhere else. Finally, the last and fourth operational priorities, and I am now on slide seven, is to restore as quickly as possible a normal activity rate for those sectors which have been reduced or stopped construction, maintenance and industrial services. Asia is now recovering vigorously. And in Europe, industrial sites are reopening and construction works have resumed. Moreover, our commercial activity has remained vigorous, like for instance in Korea or with the deployment of a new offer of disinfection of our office buildings and industrial sites already commercialized with success. Today, the three first priority targets have already been met and the fourth one is progressing quite rapidly. Meanwhile, and I am now on Slide eight, we have been managing cash very closely. I've already mentioned the very strong cash position and liquid position of the group. CapEx on the existing perimeter has been reduced, but growth CapEx and M and A end up fueling our future growth are maintained. I have also already mentioned the moderate impact of COVID on our Q1 results. This impact will be stronger in April, where the situation was comparable to the last two weeks of March, but it will improve as of May. In order to face this impact, we immediately took strong mitigation and adaptation measures. They include in 2020 exceptional cost cutting of EUR 200,000,000, which comes in addition to the EUR $250,000,000 cost cutting objective of the year, as well as of €500,000,000 reduction in mainly maintenance and control CapEx. These actions on which Estelle will provide the details are going to bear fruit from Q2 and until the end of the year. Estelle, the floor is yours. Thank you, Antoine. Antoine has just highlighted the impact of the sanitary crisis even more so the associated lockdown measures on activity in Q1, which is 192,000,000 sales or about 3% and minus 90,000,000 in EBITDA. The figures, however, are very different from one business segment to another and from one geography to another. By business segment first, we see the essential services we're providing to municipalities as well as our services to hospitals or pharmaceutical customers, have been very little impacted. We have even benefited in some cases from additional work orders or increased volumes. On the one hand, on the other hand, sorry, construction as well as on-site services for car manufacturers have been almost completely halted upon our client requests. In between, we're satisfied by the relatively good resilience of hazardous waste activities, thanks in particular to a well balanced client mix. What we call C and I, so which is Commercial and Industrial Waste Collection has been more impacted with volume health during the lockdown periods. By geography now, in Asia, we've hit a low point in February, and we've since observed a gradual recovery in China. In Europe, as Antoine highlighted, most countries have been locked down since mid March with the lowest point of activity probably reached around mid April. In Latin America or in Africa and The Middle East, the epidemic peak has not been reached yet. And we are closely monitoring invoicing and cash collection there. I'm now on slide 10. And to say that, of course, the situation is evolving quite fast. And with Antoine and Claude, we are monitoring weekly activity levels by geography, which is what you see on that slide with a few examples. So typically on the left hand side, you have the construction activities in France with SAD and VVT, which have been practically stopped until mid April, but which since then are progressively recovering. So you can see that on the graph. Hazardous waste to cities in China, which have reached a lowest point at 75% capacity utilization in February, are recovering rapidly with 92% as we speak. Regarding our Health and Swet facilities in Europe, we've hit the lowest point in week 16 and are seeing some progressive increase since then, with in particular the reopening of civic amenity sites. In The US, hazardous waste plants have been utilized at food capacity during the whole months of March and April. Altogether, regarding hazardous waste activities, we still enjoyed a 6% growth in revenue over the first quarter in this activity, which is quite good. Now I'm on Slide 11 with our mitigation measures and our recovery adaptogen. So to start with, our initial 2020 target of $250,000,000 Very happy to see that with $64,000,000 of savings achieved in Q1, we are perfectly in line with these initial targets. And we haven't waited for the end of the crisis to launch a new ambitious plan, the Recover and Adapt plan, which includes $200,000,000 of additional cost savings in 2020, as well as $500,000,000 of CapEx reduction. All our BUs and all our geographies are mobilized to contribute to this exceptional cost cutting plan, which is addressing almost all our cost lines. Just to give you a few examples, we are of course reducing all our G and A expenses, travels, external expenses are cut sharply, and all recruitment frozen. We are renegotiating contracts with the suppliers to reduce lease costs, for instance, during the crisis periods. We are reducing subcontracting, developing internalization to promote internal employment. We are as well adjusting repair and maintenance planning to postpone the works, which are not necessary when some assets have been unused for weeks. And of course, we are using the various government scheme of furloughing, but we have also been cutting temporary labor very sharply. Just a specific mention on our digital roadmap, which I'm very happy to see it has allowed us to put in place those initiatives quite swiftly as the tools and the teams were ready. I can say that some digital projects have even been accelerated. I'm on Slide 12 now. Regarding our 2020 CapEx reduction plan, which is minus 20% on the initial budget, the rule is very clear. Priority is given to growth projects, which will fuel profitable growth in the future and starting now. And conversely, we will significantly reduce CapEx on existing assets. Besides those cost saving measures, I must say our relationship with our clients as well as our very specific and powerful client mix has been key during the crisis and will continue to be so thereafter. Our large portfolio of many flexible clients, but also the pharmaceutical clients, the food and baths, or the hospital ones we've got, all those relationships have been reinforced by the crisis. Not only have we been able to answer their normal, I would say their contractual needs, but also face their exceptional demands. We have, for instance, launched a very large scale offer of disinfection for public buildings or unusual facilities in half a dozen countries. We've registered an increasing demand for our medical waste treatment services, as well as for indoor air quality services. And finally, we've been reflecting on our processes in order to keep up with some good ways of working we have implemented in the last few weeks. When we are out of the crisis, we want to remain even more agile, leaner and digital than we were before. In summary, we will continue to seize all opportunities to continue to reduce our cost base and our reach our offer. Thank you, Estelle. To conclude these highlights, it is certainly too early to accurately assess all the consequences of the COVID crisis for our 2020 results. That is why we have suspended our initial guidance. Strong mitigation and adaptation measures have been put in place. We will cut 2020 CapEx by €500,000,000 and we have added €200,000,000 of cost cutting to our annual objective. But I am convinced that our strategic program, IMPACT 2023 presented at the February, remains completely relevant. Of course, its implementation is delayed and its planning will be adapted. The strong financial, commercial and technological capabilities of Veolia will allow us to pursue our ongoing and very promising development projects and to seize the best opportunities that will arise when the crisis ends. Our mission to become the benchmark company for ecological transformation remains unchanged. I now hand over to Claude Laurin, who will give you more details on Q1 results. Claude, the floor is yours. Thank you, Antoine, and good morning, ladies and gentlemen. I'm on Page 15, where you have the main figures for Q1. As Antoine told you, the revenue was resilient, minus 0.5% at constant scope and ForEx, with a moderate effect from COVID, minus two point eight percent that occurred mostly during the March in Europe. The underlying growth without COVID is plus 2.3%. EBITDA was more impacted, minus 2.9% at constant scope and ForEx, with COVID impact for more than 7%. The underlying growth is 4.8% without COVID impact. EBIT was down further, minus 13.3% at constant scope and ForEx due to the EBITDA decrease, less provision reversal and a lower contribution from our Chinese JVs, as we will see later in the presentation. Without the COVID effect, underlying EBIT growth was 4.7%. Our free cash flow was very close to the 2019 in Q1 at minus EUR595 €5,000,000 with the usual impact of the working capital in the first quarter of the year and a good management of our CapEx, leading to a net debt of €11,500,000,000 On Slide 16, we have split the first quarter into two phases. The two months of January and February showing a good trend in all our segments, as Antoine said, plus 1.2% with a good start in France with a good start in Water and Waste, plus 3.1% in the rest of Europe, despite a mild weather in Central Europe. The minus 1.2% for the rest of the world includes the district heating disposal in The US. Excluding that effect, the segment was growing at plus 5.7% in the first two months of the year, and plus 4.9% in our global businesses with all activities performing well. You can see the COVID effect in March as it has been described by Estelle, a significant decrease in France, minus 11.1% due to our waste activities and the impact on commercial and industrial waste. The water volumes remained solid. And in Global Businesses, minus 18.3% due to the very strong impact on the construction activities in France and the on-site services. For example, the PSA Group decided to completely shut down its operation in Europe, leading to a significant impact for our industrial service activities. The rest of Europe is less impacted, thanks to the resilience of Central Europe, where our activities are mostly municipal and also the lockdown in The UK that came later in the month. For the rest of the world, U. S. And Natam activities are almost not impacted as the lockdown came later as well at the March. Asia is still growing with plus 2.2% in March despite the COVID. This is due to the strong Embark growth in that region. Let's move to Slide 18, where you can see the usual revenue bridge. ForEx had very little impact in Q1 and the scope effect is mostly due to the district heating disposal in The U. S. The minus EUR 192,000,000 COVID effect is mostly coming from Europe. As we said, Europe lockdown had a significant impact in March. Asia impact is much more limited in terms of revenue. But as I said, growth is slower as the COVID is delaying our ability to grow in that region. You can note the good start to the year with a strong commercial effect, EUR120 million and the price increase of EUR80 million, coming from the decision we have taken to continue to increase our waste prices and the positive impact of the price indexation in French Water, plus 1.5%. Moving to Slide 19, you have the translation of the revenue impact into EBITDA with a very small ForEx impact. Again, scope coming mostly from the distributing disposal in The U. S. And COVID effect, minus EUR 80,000,000 coming mostly from Europe. There were much less impact in Asia from COVID. And Japan had a good Q1, thanks to good municipal water activity. The mild weather in Central Europe led to a minus EUR 9,000,000 effect in Q1, and the magnitude of the cost cutting continues to be strong with EUR 64,000,000 in Q1, in line with our EUR $250,000,000 target for the year. As Estelle said, we continue to implement our cost cutting plan despite the crisis and the lockdown. This figure doesn't include the additional €200,000,000 plan that Estelle mentioned earlier. Moving to Slide 20, the waste activity grew in Q1 by 1.6% at constant ForEx, thanks first to the pricing policy that we have implemented, leading to a significant 2.4% price increase in Q1, especially in the C and I collection and in hazardous waste treatment. In the very specific context of Q1, The waste volumes are resisting quite well at minus 1.8%, keeping in mind that in the meantime, 30 of the economy was shut down since mid March in Europe, where we have most of our waste volumes. We have estimated the COVID impact at minus 3.5%, which is close to the GDP drop in Europe for that period. Incineration continues to run well in France and in The UK, whilst in France sorting was reduced, with our lowest point in France in early April and we are seeing a pickup on volumes at the April. UK had a good Q1 with more volume due to the tax on foreign waste imposed in The Netherlands and the late implementation of the lockdown. U. S, very small impact on volume from the COVID in March, it will come in Q2, same for Pacific. For hazardous waste in Europe, we experienced the low points the April and some improvements since then. On Slide 21, you have more details about the €64,000,000 cost cutting achieved in Q1. Again, this number does not include any of the €200,000,000 plan we mentioned earlier. As you can see, despite the COVID, we continue to implement our savings plan. As I said, we are running out of standards, our digitalization processes across our operations. But explain why the operational savings are representing 55% of the total savings for the quarter, in line with what we did last year. I'm now on Slide 22. The COVID effect on EBITDA, minus EUR 80,000,000 is translated into current EBIT, where the drop is slightly higher, EUR 87,000,000 compared to last year. This is due to the negative impact of the COVID on the Chinese water concessions volume of EUR7 million, leading to EUR392 million of current EBIT for Q1. If you exclude the COVID effect, current EBIT is up 4.7% at constant scope and ForEx. On Slide 23, the COVID impact of EUR87 million at current EBIT level translates into €63,000,000 at the current net income level after taxes and minorities. On top of that number, in Q1, we have less capital gains this year, as last year, we had the Foshan disposal in China with a capital gain of EUR 18,000,000. Due mainly to those two effects, current net income is down by EUR 88,000,000 compared to last year at EUR 121,000,000. If you exclude the capital gains, the difference is reduced to minus EUR 72,000,000, with current net income at EUR 117,000,000 this year. And if you exclude the COVID effect, current net income is up 3.9% at constant scope and ForEx. Moving to Slide 24, we have solid financials at the March 2020, thanks to a good management of our CapEx with a 10% reduction in Q1. We have maintained a good level of discretionary CapEx at EUR68 million, of which 50% in Asia, to prepare the group for the post crisis recovery. As Antoine told you, we will continue to invest on discretionary CapEx and reduce as much as possible maintenance and contractual CapEx. The net free cash flow at minus €595,000,000 is in line with Q1 twenty nineteen, thanks to a good management of our working capital, which is comparable to Q1 twenty nineteen. This leads to a net debt of €11,500,000,000 at the end of the quarter, lower than Q1 twenty nineteen, thanks to the divestiture of T and AI in The U. S, partly offset by new M and A projects. On Page 25, you can see the different items of the net financial debt variation, including the net financial investment, new acquisition closed in Q1 for $287,000,000 The largest portion of it is the Alcoa acquisition, a very large hazardous waste site in The U. S. That we presented on February 28, with a very large landfill and two incineration units. Moving to Page 26, as our activity is quite predictable, we used to manage the cash on a weekly basis with a detailed review with our treasury department. Since the beginning of the crisis, we have put in place a very close monitoring of our cash position at group level on a daily basis. This is helped by the cash management improvement plan that we put in place two years ago to better manage our cash position, the receivables and the cash forecast in all geographies. At the start of the crisis, we also focused the attention of our PU CFOs on cash management at their level, but also on back office management, invoicing and collection. Invoicing is a key function that is running well, thanks to the digitalization effort that we have implemented everywhere in the group, as Estelle mentioned. As you can see on the slide, Veolia has a very strong cash position and a robust balance sheet. And we were entering into the crisis with a leverage of 2.66 at the 2019. This allows Veolia to be in a very robust cash position to face the crisis. On the cash side, we have enhanced €4,500,000,000 of cash at the March, and we have reinforced this position with a recent issue of a EUR 700,000,000 midterm note on April 7. On top of it, we have EUR 4,200,000,000.0 of undrawn confirmed credit lines and no significant bond repayment before November 2020. Finally, our BBB rating has been confirmed by S and P in April. On Slide 27, as a reminder, we have put the bond repayment schedule by quarter from 2020 to 2023. We have already refinanced Q4 twenty twenty with the two midterm notes issued in January and April for EUR 1,200,000,000.0. So 2021 and 2022 refinancing are not a problem. On Slide 28, as Antoine said earlier, the 2020 guidance is suspended, and we are taking strong adaptation measures to face the crisis with a new Adapt and Recover plan with EUR 500,000,000 of CapEx reduction and EUR 200,000,000 of additional cost cutting. Thank you very much. Thank you, Claude. And the floor is yours, ladies and gentlemen, for the questions. Thank you. We have the first question from James Brown from Deutsche Bank. Sir, Hello. I have three questions. Thank you for the update. I have three questions. So the first is on the cost cutting. So you highlighted the additional £200,000,000 of cost cutting. I just wanted to confirm what's included in that because it seems a little bit of a mix of temporary things and potentially more sustainable areas of cost cutting. But I just want to confirm, does that include all of the COVID response? Does that include the kind of temporary redundancy plans and the savings from kind of lower fuel costs or less kind of visits from kind of trucks or just in terms of scope, what's included in that? And and then secondly, on cost cutting, how how easy are you finding it to cut costs? Because we had SUEZ report results last week, and they were saying they were actually finding it a lot easier to variabilize costs and that tend to kind of fix costs that they thought were fixed in the past have become variable and that they've actually done a bit better in terms of cost cutting. The second question, you mentioned the GBP 500,000,000 of CapEx reductions. I was just wondering whether that impacted on any of your revenues under your contracts because some of your contracts, obviously, they have CapEx kickers and you get your revenues rise to reflect CapEx. Was just wondering how much of that CapEx was just taking slices out of maintenance CapEx or delaying projects? How much of it was actually going to be feeding through into revenues? And then, thirdly, in terms of the 80,000,000, quantification terms, the impact in in q one, so as their results was was saying, we should view the q one impact from COVID as being approximately equivalent to two weeks of of full lockdown, and therefore, we should be timing it by by two or a little bit more than two in terms of thinking of the April impact. I'm not sure if the same way of thinking is appropriate for for you, but maybe you could just put the eighty million in perspective in terms of how we should think about the impact going forward. Thank you. Thank you, mister Brandt. Esther will answer the two first questions and include the the third one. So, Helena? Hello. Just regarding your first question, in terms of the cost cutting, to start with, I guess, we've highlighted the ratio of the first quarter, which is basically when we lose €100,000,000 in revenue, lose something like 40,000,000 of EBITDA. I think it's a starting point. So all the cost cutting measures are going beyond that and are in addition to this. So, in other words, this cost cutting is everything we do extra, on top of the rival costs. So it doesn't include, for instance, the fact that we're consuming less fuel during the lockdown or less reactive. Of course, that's already in our one equals 0.4, if you want, in the results. So that's everything on top. So everything which needs a specific effort, specific plan. So be it recurring or be it exceptional for this year. What will be exceptional? For instance, banning old travels or banning old seminars or recruitment, it's gonna be for the entire year. Is it gonna go for the next five years? Probably not. So I wouldn't consider that recurring, that's exceptional. But that's a specific measure. On the other hand, we will have stuff which will deliver this year and which may be recurring. If I'm giving you an example, we are, as we speak, rebooting all our waste collection with less activity and using digital. It may be that in the end, we are less with a more effective fleet management even post the crisis, and that could be a recurring saving. So it's in addition basically of all the variable costs, which we've seen in the first few weeks of the crisis. Regarding your CapEx question, I guess The total in March? The total in March. Sorry. The total in March is we haven't included anything yet in the first quarter. So it's starting from April onwards. So no extra cost cutting measures are included in current results. Of course, the 64, which was the initial savings plans are already in the results, as Claude has highlighted. In terms of the CapEx versus revenue, no, we don't see any direct impact between the fact that we cost CapEx and the revenue. Basically, we are maintaining all the CapEx which are sustaining growth in the future. It's good project we believe into and they are as good as they were two months ago. So we are building new plants, for instance, we are still building a new capacity of hazardous waste treatment in China and we haven't done those at all. So basically, like I wouldn't see any impact from the fact that we're cutting CapEx in the revenue line. In terms of April impact, James, to answer your question, what we see in April, we see, as I said, a little bit more impact from the geographies, the wave three of geographies entering into the lockdown. And on the other hand, in Europe, the start of recovery at the April. So the order of magnitude of the impact in April for the COVID is roughly twice the effect in Q1. In March. In March. Yes. In March. Okay. Next question Thank you. Thank you. Next question comes from Olivier Van Dusselaar from Exane. Sir, please go ahead. Yes. Good morning, everyone, and thank you for for taking the time to to answer our questions today. I have four four quick questions, if if I may. One is on waste pricing. We've seen that waste pricing has been very resilient in the first quarter. I wonder to what extent lower volumes might actually drive any request from clients to renegotiate that, or if you could give us a feel maybe on when the next renegotiations will be coming and effectively how sustainable you believe those waste pricing trends are going to be through this crisis? Secondly, on working capital. So you're flagging that you're that you're keeping a close eye on on the evolution of working capital. I wonder if in April, if you've seen any signs of working capital slipping anywhere and if that's been material to some degree. Also, if if you see any government legislation enabling different types of consumers to actually delay the payment of their bills, whether you see that as actually having an impact on your on on your cash collection. And then the cost of debt, I think it was slightly up year on year. I I wonder what you expect going forward from here. You said that you've you've already refinanced the the the q four debt. So is is there a negative impact to the cost of carry? And and and would you expect a year on year decrease in in in cost of debt debt in in the coming months? And then the final question is on the on the on on on scope effects. So your your strategy plan had a had both a disposal leg. I think there was still 2,000,000,000 left, and then an m and a leg. You you you flagged that the timing has been is being revised, so I guess delayed on that. But but to what what what's your feeling in terms of current market conditions on on on the on transactions? And and and when would you expect the markets might might might be normalized again on on those type of, those type of configurations? Thank you. Thank you, Olivier. Sir, we will take the first question and go to the orders. Hello. With regard to your first question on the waste price, if I understand well, what I can say is until now, we are going we are seeing still quite a lot of price increase in waste, pretty much everywhere, be it in hazardous waste or in dry waste. We've enjoyed a few price increase, which I have in mind. I won't mention the name of the customers, but there are large ones in March. So we are going on with this strategy of increasing the price as much as we can. We haven't seen yet customer asking for price reduction. Probably, we will at one point. Precisely when I'm anticipating that from the smaller SME customer, which will be probably in difficulties come this summer. And we are preparing all the arguments against those price decrease, of course, which includes the fact that the CODIX, I would say, new norm, but the way we will work is social distancing and wearing mask and everything has a tendency to increase naturally the cost base. So I guess we have arguments against those price decrease, and our intention is to stay as we are exactly. Okay. In terms of working capital, to answer your question, Olivier, in April, we have not seen any material change in terms of working capital. So as I said, the collection system is the invoicing system is working well, the collection system as well. We had some fear about the back offices of our clients, but they are working well as well. So we have no material impact on the working capital as we speak. And as we monitor the cash every day, we really have a very strong focus on it. In terms of the cost of net debt, we have issued a new midterm note early this year with a little bit with at 1.25% interest rate. We will have a slight negative impact of the cost of carry. And also that we have to refinance twenty twenty one January bond, which is coming at maturity in January. So we will stay on the safe side. So we will take the best opportunity in terms of window for the midterm note issuance. So it may have a slight negative impact on the cost of carry, but nothing major compared to the cost of net debt for the group. And in terms of strategic plan, the disposal, of course, are delayed because M and A today is delayed. But there is absolutely no reason not to continue to do the asset rotation that we have planned in the strategic plan. As Antoine said, the strategy remains valid. So we will continue to work on the disposal that we have planned in the strategic plan. But of course, it's delayed. So we will have very little impact this year for disposal. You very much. Question? Thank you. Our next question comes from Vincent Ero from JPMorgan. Sir, please go ahead. Hi. Good morning, everyone. I hope everyone is safe. I will try to get to two questions here. So the first one is, is basically the crisis. Is it presenting any opportunities in m and a? Obviously, small players are clearly more fragile regarding working capital, cash cash issues. Are you seeing actually opportunities appearing on the radar, on this side of things? I understand that you may not act in the coming couple of months, but, this is, something interesting regarding, your asset rotation. So that's the question number one. And question number two is, the 2023 guidance. So you say that basically remains relevant. Obviously, some delay in implementation, But the question there is, how should we look at it? So 2023 guidance, let's say 1,000,000,000, net income, that's that that was one of the targets. Bit of delay, maybe we can remove, 50 to a 100 max. But on the other hand, there could be some opportunities on m and a, so that could be some offset. So getting a bit of a sense on the different levers, I know we should look at that going forward. Thank you very much. Thank you, mister Hiral. But the first question could be the case that the prices will bring some opportunity for small m and a, why not? Or for medium size. It is too early to see that clearly, and we'll wait for some weeks or months to see if there is some special opportunities. But for sure, we have the financial position to to see with them if they are clear. About the second question, I already tell you that, the strategic program impact 2023 remains relevant. I also said that, of course, its implementation, will be delayed, and its planning will be adaptive. We don't know, this delay today because it will depend on the price duration, of course. So, it is too early to answer your question. We will see which, the evolution of the crisis and the duration of it. Next question. Thank you. Next question comes from Emmanuel Chopin from Societe Generale. Sir, please go ahead. Yes. Good morning. A few of my questions have been answered. I will carry through on COVID. You alluded to an interesting concept, which is a concept of waves of impact on your different geographies. I guess, wave one, Asia, wave two, probably Europe, only you were mentioning wave three starting to impact more recently. Trying to get down to the concept of peak impact from the crisis and if we focus on EBITDA or EBIT, what would you say was your peak impact? I don't know about the peak week, for instance, in your Wave two geographies, Europe, that could help us anticipate the impact on the Wave three countries? I guess it's another way to look at your answer to the questions about what we could expect in April, knowing that April may not be the peak everywhere. The second question on COVID is relating to cost cutting. I expect that the shape of the new cost cutting benefit over the year, so the timing effect of this benefit will not match the negative impact of the COVID, right? And I was wondering if you could help us maybe anticipate how this 200,000,000 will spread over the remaining three quarters as you explained that there was no impact on Q1. Next question is about waste to energy plants. I believe that the volumes incinerated was up in Q1. Can you confirm that you've managed to keep your incinerators saturated on that indeed for incineration as for the rest of your treatment, there has been no drop in gate fees? And lastly, you mentioned growth CapEx down a little bit in Q1. At the same time, you mentioned that you had not canceled any growth CapEx projects. If you project for the rest of the year, so you are not looking at really dropping your growth CapEx on while we may expect a bit of delays in some projects because of construction constraints, Is it right to assume that this should not have any material impact on your, I would say, growth plans contribution revenue and EBITDA contribution from growth CapEx for maybe 2021, excluding potential acquisitions, of course? Thank you. Thanks, Emmanuel. We will we keep the next question for Claude, but same answer the first one. Yes. Hello. Regarding the when is the peak week? So guess as far as we can tell, I would start my sentence with that because we all are in an uncertain world, certainly. In Asia or actually in China, we've seen the peak in activity level in February. The peak down, I mean, all the the trough in February, and, you know, and it's coming back up at that point. So the worst moment, lowest point was February, certainly. In terms of France and actually Europe outside The UK, which is delayed by, I guess, one or two weeks, sick debate. So France was more week 15, which is the April. As you can see in the graph, I've put on Slide 10. You can see the lowest point being on week 15, so April. In terms of the rest of the world, the peak hasn't really been reached yet. So I think for The US, it's probably going to be somewhere in May. And Latin America and Africa and Middle East, I don't know. It's probably more May, June, which is the common assumption. But like we'll see how it goes. In terms of your second question regarding the timing of the savings extra, the EUR 200,000,000 extra in our Recover and Adapt plan, I guess you can consider it's going to be spread throughout the rest of the year. Some of those savings are, I would say, but starting now and some others are asking a bit more effort to start their fruits. So I guess it's from now till the end of the year is the best assumption I can give. So yes, it's not the same time the saving of timing won't be probably the same as the timing of the impact we'll have from COVID. It's the entire year we should have a look at. Yes. But we could we can say that probably the the biggest part would be at the end of the year. At the end of the year. Yes. So in terms of the incineration plants in diverse countries where we have some, I can confirm that they all are full as we speak, and we've managed to derive, you know, the tonnage, which were going either to third parties, plants or geographies or to landfill within our Inspirations plants. So yes, they are full both in France and The UK, which are the two main geographies where we have them. And Emmanuel, to answer your question on the growth CapEx. As we said, we want to concentrate the CapEx on discretionary growth CapEx. And I will give you an example and it's to fuel the recovery after the crisis. And I will give you an example in China. We told you that we had some problems with construction in China with some we stopped some construction of hazardous waste plants in China. Now we have restarted those plants, and we are accelerating the schedule in order to catch up with the initial schedule in terms of new plants in that country. So for us, it's clearly priority number one in order to be at full speed in terms of growth CapEx for 2021. Thank you, Claude. Next question? Thank you. Our next question comes from Philippe Orpesson from ODDO BHF. Sir, please go Yes. Good morning to all of you. I have three questions. One is concerning the minus €80,000,000,000 Could we just exclude looking the time frame, which is completely different between the geographies? Could you just exclude the Chinese or Asian impact, as you mentioned that Feb was the weakest point in this area, just to have a good idea of what could be for Europe and at some point from the rest of the world, this monthly impact? First question. The second question is concerning the reduction of maintenance CapEx. Does that mean that some of the works maintenance works you have to do are going to be delayed on 2021, and this means that you have we will have to, in fact, correct the amount of investment we were forecasting for 2021 by increasing it from the portion of the maintenance not done in 2020, but realized the year after? That's the second question. And then the third one is concerning the 200,000,000 of cost cutting. Are we discussing about the net impact? Of there is some, let's say, cost of implementation, or are you able to keep all of this amount in your own accounts? Many thanks. Claude, for the first question. I said for the third one, I will take the second one. Okay. So in terms of the split of the EUR 80,000,000, to answer your question, Philippe is on Page 19, where you have Asia in Asia, you have two effects. You have the EBITDA effect and the EBIT on the JV. The EBITDA effect is minus EUR 7,000,000 just for Asia. And the impact for Europe, mostly Europe, is EUR 73,000,000 on Page 19. What's the second question, Philippe? The crisis is for us a good occasion to extend our clients that a good a good maintenance CapEx is not a a fixed amount, but a good job. So we we will take the occasion of this crisis not to replace or to put the delayed maintenance CapEx next year. We will definitively cut them, explaining to our clients that we have now the possibility to get the same objective with a bit less money. You know that in some cases, for our clients, the clients have thought that what's important for maintenance CapEx was the amounts in euro. We have a good look in there to explain to them that we know also to be more efficient, to do this, bad non CapEx. So we not put them next year. Regarding your third question, I don't see large cost of implementation at all. I would see them as very limited. The main reason being that we don't have any layoff plans within efficiency plan, these new cost savings. So I would say very limited. So it's a pure savings. Part of it be recurring, part of it probably exceptional for 2020, no peak batch in 2021. That's the idea. It's I mean, it's real savings that we'll do for this year. Thank you, Michelle. Next question? Thank you. Our next question comes from Olivier Van de Solaert. Sir, please go ahead. Yes. Thank you very much. Sorry, I had just one quick add on question. I think the tax rate in Q1, I think above 27% was probably a bit higher than what we have used to receive that guidance for full year. I wonder if you could give us an indication on how that can land for the full year, please? And maybe for the years to come, if something might have fundamentally changed versus, I think, the previous guidance, which was more around 25%, I believe. So yes, in terms of tax rate, the tax rate has increased a little bit due to less results and less efficiency of tax because we have we are a little bit impacted by the at the results level. What you see in Q1 is roughly what we expect for the full year, something between we don't have, of course, exact number, but something in between 27%, 28 would be a correct assumption. Next question? Thank you. Our next question comes from Fraser McLaren from Bank of America. Sir, please go ahead. Good morning. I just have two follow-up questions for you on what you've mentioned on costs. First of all, just to check that what you're seeing for the April impact on EBITDA includes the first impact from the new cost savings. And then secondly, you mentioned no implementation costs for these incremental savings. But just wondering if you can confirm if that number is net of any extra costs that you face in the new world after COVID. For example, you mentioned in waste that there would be additional costs. I mean, would you expect the price increases that you're seeking to be offset by these new costs and therefore end up with higher margins overall? Thank you. Okay. For the first question, you understood certainly that the new cost cutting, the extractive cutting program has been created March. So the first results are small in April, and it will increase week after week, month after month, and we will but we have the biggest part of the end of the year. So in April, it is was a short. It will come but, obviously, it will it will move on the city. What's the second question? The second question, I guess, you know, we don't know yet what's gonna be the incur cost of operating with COVID. I guess everybody is discovering what I call the new norm. So we'll have, you know, for instance, the cost of masks and PPEs, which is relatively modest. So we're talking millions, not dozens of millions. But we're still to assess the impact of the, I guess, the social distancing and yield, which we don't know yet what it's gonna look like. So I guess it will be difficult to give me a figure as we speak today. Thank you, Phil. Thank you. Another question? Thank you. We have no more question at the moment. Ladies and gentlemen, I remind you that if you wish to ask a question, next question comes sorry. Yes, last one comes from Michelle Verity from HSBC. Madam, please go ahead. Hello. It's Verity Mitchell here. Just a question about, finally, about paper prices, which we see it going up. Would you say that was a a temporary trend because of constraints in the market, or do you see it as something more positive and permanent? Excuse me, madam. We don't see it very well. Could you speak closer to your mind? It's a question about paper prices, which we see are stronger recently. Do you think that's a temporary issue, or do you think that's a more permanent trend? I guess, you know, I'm happy that to highlight that the paper prices bounced back up by EUR 40 a ton roughly in the last one month. The main rationale behind that being that since a lot of lots of recycling centers have been closed in Europe, there is a lack of resource and the paper mills are therefore very keen on and actually have to buy this resource. So the price are going up. So is it going to stay forever? I don't know. But I guess, I'm very happy to see that Pepemils came to the conclusion that actually, our activities are very much needed. And the close of a short supply chain, the local supply chain of turning waste into resource is part of the solution as well in a more, I would say, local world. Thank you, Etienne. Thank you a lot, ladies and gentlemen, for, your attendance, and I wish you a a good day. Goodbye. Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.