Alten S.A. (0O1S.IL) Earnings Call Transcript & Summary

Hello, everyone, and welcome to the Alten conference. We're going to talk about the sales of the fourth quarter '23. [Operator Instructions]. We're going to hand over to Mr. Benoliel.

Good evening. I'd like to thank you for participating in our phone conference concerning the activity of 2023. As you may have read in the press release, the sales of the year 2023 for Alten stood at EUR 4.68 billion, up 7.6% compared to the previous year. In France, the activity progressed by 10.2%, by 6.4% outside of France. In the fourth quarter, the rhythm of growth slowed down compared to the previous quarter, compliant with what we anticipated. But the sales were in line with the high estimation that we communicated in October last bringing annual gross like-for-like to 9%. In France, the organic growth was 10.2%. And outside of France, it stood at 8.4%. In the fourth quarter, the growth stood at 3.2%, 11.3% in France and minus 0.3% outside of France. Since we sold an activity last year in the U.S. and in the U.K. like-for-like figures, the growth was higher necessarily, which stood in the last quarter at 5.8%. And organic growth was 11.3% in France and 3.3% internationally. In the fourth quarter, we were penalized by a defavorable basis effect of 0.9 days left and 22 internationally. The working days had an incidence on the activity of '23 since in total, in '23, we counted 1.5 working days less than in '22. So that penalized our organic growth by 0.7% roughly. The rate of activity in the fourth quarter was 91.8%, and it stood at 92.2% in the last quarter of '22. In '23, the activity rate of the group stands at 91.8% compared to 92.6% last year or slightly down by 0.8%, which is normal since the rate of activity came back to a standard rate this year, which, as you know, was 92%. The group's staffing levels are consistent with a slowdown in growth. In the second quarter, they're almost stable compared to the end of the first half year. We had sold off cPrime, which is our company in the U.S. and the U.K. at the end of '22, and the group had 53,000 staff at the end of last December -- in '22, I'm sorry. Out of 53,650 staff, we had 47,240 engineers. At the end of June '23, the group had 57,400 staff, including 5,550 engineers or a group of 3,300 engineers in the first quarter, so [ 26 ] organic. By the end of December, we stood at 57,000 including 57,000 engineers in the first quarter, our group integrated 744 engineers coming from acquisitions, but also deconsolidated as I can put it that way, 1,380 consultants in India subsequent to a transfer of activity linked to the Alliance Group. To summarize for '23, the staffing levels of engineers was up by 2,700 engineers to 2,740 organic, 700 in France and 2043 outside of France. And acquisitions, net of exits represented 17 engineers. Precision is important because this is quite individual that someone, that as many consultants would be leaving subsequent to an operation, and I will probably get back to this in the Q&A. As I was explaining at the end of June, the group had progressed by 2,626 engineers organically, and they progressed at the end of December by 2,743 engineers organically. And you can see the organic growth in the group has strongly slowed down in compliance with the stabilization of the activities that we've been seeking out for a few months in the second half year. And most of the growth in engineers was due -- was happened in the first half year. Out of the 50,000 -- 53,000 engineers at the end of '23, 11,800 are in France and 38,200 are outside of France. Concerning the activity of the group, whether it be in geographical area or vertically, the comments and analysis have not changed from the last publication. France had realized a good performance. It even went slightly over its growth rate in the fourth quarter. Southern Europe and Benelux have not slowed down or only slightly. However, the other geographies are strongly down in the second half year. In France, despite 2 working days less than last year, which represents an impact of 20% in organic growth roughly, the activity was up by more than 10%. Essentially, drawn forward better to Aerocivil and France Security. In Iberia, it was up by 14%. All sectors are strongly up with the exception of bank finance sector, which slowed down in the last quarter. In Germany, the activity continually went down since the end of the first quarter, down from 18% from the beginning to minus 4 at the end of the last, which is penalized by less working days than last year, and the annual growth of 5%. As I explained to you during the conference in October, this was the automotive sector, which was dominant in Germany, which was strongly down, particularly in equipment producers where the budgets are down and have been since the -- back to school in September. The deceleration was accentuated in aeronautics were down to 26% with a few percentage, which did not happen in France. And the 2 sectors represent 70% of sales, which explains -- explained by the degradation of activity in Germany -- the downswing in Germany. In the U.K., the integration of methods that we acquired last year and they were consolidated starting from July '22, has been taken into account for calculating the growth starting from the second half year '23. This company that we acquired a bit over a year ago, represents 40% of the activities of that country. And there was a very slow growth in the first quarter, has a slight decrease in the second half year. So the integration of methods diluted the organic progression of the U.K. starting in the second half year, which also included one working day less than last year. In the historical scope, the group in the U.K., growth is maintained at more than 10% even if the main sectors, auto and aeronautics has been slowed down, although they were still dynamic. In Italy, growth is still at 24%. All of the sectors are progressing without any exceptions. In Benelux, the growth is 15% -- it stays at 15%. Thanks to automotive and rail and slightly down in electronics and semiconductors in the Netherlands. In Netherlands, we also saw one working day left in '24. In Scandinavia, the situation is extremely close to that -- the one we observed in Germany. The activity slowed down throughout the year going from 12% in the first quarter to minus 4% in the last quarter or an average growth of 4% over the year because of the auto and trucking industries and other industries for Sweden. And in Finland, equipment areas. So this is identical for all points of view with from [indiscernible], Germany. In Eastern Europe. We also have had to face a decrease in activity even if the global growth is satisfactory standing at 17% in 2023. In Poland, which represents 65% of the zone grew by 20% and Romania also increased by 15%, thanks to auto and energy, despite 2 working days less in the second half year. In North America, the growth in activity has continuously slowed down and sort of was flat on the last half year in the U.S. These are automotive sectors, which are essentially oil and gas and than tertiary that have slowed down. In Canada, it's mainly the bank and finance has slowed down. Lastly, in Asia Pacific, the published growth of 3% roughly is null in the second half year. I'd like to remind you that you have to reprocess data about Asia Pacific of the strong decrease in activity in Singapore because at the end of the project in oil and gas. Singapore represented 12% of the APAC area in '22, and it only represents 3% now in '23. So we're down 75% due to that. Recalculating Singapore, the impact is down 10% and cumulative data at the end of the year and growth is still satisfactory. So it's plus 10%, which reflects the reality of the activity in this zone with the Alten Group. In China, which represents 35% of the zone was penalized by a strong slowdown in telecom, which is significantly down, down to 5% only. On the contrary, auto, the automotive industry [indiscernible] 35% in China still is up by 30%. In India, 30% of sales in the APAC area are also up by 12%. And 2 countries are significantly growing, which are worth of noting. Japan, up 11% of the zone, a slowdown in the last quarter, with a peak of 17%. So the global growth was 29% in electronics and tertiary. And South Korea, continuing to grow, represents 10% of the zone, growing by more than 25%. Thanks to auto. If we analyze our activity now and vertically, nothing new compared to the publication in October. But a summary here reveals that automobile is up by 15%. The strong increase in automakers globally up 25% with a rhythm of increase, which is not weakening with the exception of General Motors and Ford in the U.S. and one in Sweden. The slowdown in activity were equipment producers, notably in Germany, which did not grow over the year. in Germany, where some are even actually down -- there's a downswing for many of these. In rail industry, the activities are up throughout the year, with the average growth of 7%, but Q4 was more than 10%. Aerospace is -- remains very dynamic, especially in civil aviation. The spatial activity is growing, but much more weekly, where civil aviation is more than 25% with a slight slowdown in Q4 in Germany, which hit the equipment producers. And active -- defense and Naval security activities progressed's over the year. Reserve growth was stabilized around 30% in the second half year. Energy is down by 8%, thanks -- are due to the oil and gas activities, which represent 2.2% of sales and now it's down 33% this year in oil and gas. We had to face up to the end of big projects in Africa, in the U.S. in the Gulf as well as the withdrawal of in the second half year of '22, which weighed heavily on the activity. We don't see any reason that this activity would, for the moment, pick up again in '24. We have no information in that direction. Other energy sectors, nuclear equipment and chemicals are up on an average of 10%. Life Sciences, whether it be pharmaceuticals or medical equipment are growth homogeneously to the 25%. In an industrial equipment and electronics and semiconductors growing by 8.5% with a slowdown of significance in electronics and semiconductors, which was strongly growing, almost stable in the second half year. And other industries only slowed down in the last quarter. Telecoms, the regular -- the share of the group has grown. It is stable, slightly decreasing in Q4. The operators are continuing to grow, where equipment [indiscernible] are down because at the end of many projects, many 5G projects that were ongoing and others, it's not because those are over. In the finance and banking sectors and insurance, Same thing is for retail services and the media and public sector. These were up only by 3.5% this year, growth, which was mainly in the first half year. And bank finance, the slowdown in activity is quite clear in France. It was a decrease in banking, whereas even if the activity slowed down in North America, it's still is positive in the last quarter. Other retail services and media and public sector were also slowed down in the last quarter. So that you can see that ultimately the analysis of our activities in '23, we can consider our geographical areas and vertical areas, is quite contrasted. With the exception of oil and gas, which is down in telecom, which is a decrease as well in sales, which are stable and all sectors, we're continuing to make progress, even if most have slowed down in that second half year or they may not have grown in the second half year with the exception of automobile, aeronautics and other sectors, which represent globally for these 3 sectors, roughly 40% of the sales. With respect to external growth, even if other companies -- no deal has been finalized since last year since the month of October. We should close normally, a few deals during the first quarter. Total in '23, we have acquired 5 international companies for '24, as we had anticipated, the activity slowed down in the second half year. So this wil be the prlongation of the second semester '23, even if it's too early to identify a trend. As you know, generally, we have a better visibility in what could happen in the first half year at the time of the analyst meeting, which will happen in a month's time. After the first contact with the start-up of new projects at our customers, we think that globally, the activity should intervene in the second half year, at least in some sectors, such as automotive and Germany were [indiscernible] indications on the part of our clients which plan on the restarting of projects at the beginning of the summer. The macroeconomic situation as to whether it's starting up again in the second half year or not. And due to this fact, the onboard growth for '24 is modest because it's 2.5%. And and the calendar is waiting for a calendar, which we expecting in France and a bit less outside of France. As usual, in January, we are not giving any guidance in this period of the year because it's too early. We hope that we will have a satisfactory growth even if it will be less necessarily by '23 -- than '23 in '24. I'd like to hand over to you now. I think that some of you may have questions for us. So I am available to you for this purpose.

Just 2 questions from me. So if you could just repeat your last comment on the growth for 2024, you said it should be modest, [indiscernible], around 2.5%. I didn't catch that, if you could just repeat that or clarify that point. And then the second, if you could just maybe comment on what you said on the activity improving in the second half. So maybe what's driving the confidence in that and what's the visibility on that? And basically, which sectors will rather recover in the second half. And if that means you think growth during the year should bottom out in 2Q? Is that what you mean by that? [Audio Gap] Maybe just a quick follow-up on that and then one more as well. [indiscernible], I guess better implies that growth will bottom out during -- in 2Q? Is that what we should imply. And I know you're not -- you don't disclose the margins on this call, but given the growth you saw in Q4 and your comments on the first half '24, how should we think about the margin outlook for next year? I know that you had some costs in 2023, which will not repeat in '24 and maybe your utilization level will not be a headwind as well. So if you could just talk about some of the moving parts on the margin as well into '24. [Audio Gap]

Is there anything you could say on the level of price increases that you're able to put through in the current environment? And if maybe that could also contribute to the margin. [Audio Gap]

We now have a question from [indiscernible]. So we're going to -- while we -- Mr. [indiscernible] fix this, we have another question from Laurent Daure.

I had a couple of questions. First of all, you talked about a transfer of 1,400 consultants in India. Could you give us some more details into that.

We had a consultant work in India for the Reliance network, which went up to 1,500 people -- went slightly lower than that. So a consultation was done at the end of October, early November from Reliance to really take a look at this MSA with a drastic reduction -- cost reductions. And so we answer but with price levels that weren't what they were -- what they wanted at all. So that contract was denounced, it was expiring. So they re-internalized part of the consultants, and they request asks us to transfer to another local company that took over and took the consultants and then seems to have [indiscernible] the rates that they were expecting.

And whats that represent regarding turnover.

Not much, $20 million. Okay. So it's a small headwind for organic growth. Did it started the Q4 end of November, but we're going to treat that as a transfer as we did with cPrime, turnover for 2023 seems to be -- based from this exit.

And you talked about the employees, employee months. How are we doing with the attrition.

There's a lot of trials that has been done, and we're back to levels of 25%.

But for 2024, are these to be between 20% and 25%? Or do you think it's stabilizing.

I don't know. I think it's going to go down, but I think it's going to stay in this range.

Other question on 2024, if you look at some regions in which we still -- we see the very dynamic Italy, Spain, France and if we -- as you think, what is your -- how confident are you about this overperformance is it going to stay.

The growth can possibly will slow down. It's not impossible. I'm not sure we're going to have a 25% growth for a third consecutive year in Italy. So of course, eventually, there's going to -- it's going to slow down like Benelux, for instance, has capacity, but we are confident and we believe that the -- it will stay quite dynamic and substantially higher than the average in our group.

For all regions, France included?

For France, we've seen a good rebound in Q4.

And in Italy because Italy we've seen exceptional performances for years. Can you give us some granularity on this..

Sure we have excellent management team.

But did you get new customers?

We have some clients that have developed and that have grown, but it -- so a lot came from our existing clients.

I don't know what the ambitions you have in for a 3- to 5-year period on this region?

There's no business plan in particular.

Okay. Well, lastly, I know that's something that we touch on with the first question. But for banking, we've got -- we have some feedback which isn't great.

Yes, I confirm.

So what's the risk of having not a flat but showing degrowth.

We've done it -- we've seen it in France for the fourth quarter. In France, we've seen degrowth on Q4. And so therefore, H1 will see the growth in. For H1, we've slowed down quite a lot in North America in banking, but it is stabilizing now. On the contrary in other geographical zones, Italy for Eastern Europe as well or even Asia, the activity in the banking sector is quite stable. So it doesn't seem to be a global trend. And France, France is really the country that is the most affected by this. France, regarding banking, it's 8% of the turnover -- 8% of the French turnover is banking. In Italy, I think we're at 17%. So to sum it up, it's not going to be great, but -- so to answer the question you're about to ask, if I look at France, Aerospace is 30% of turnover. And the automotive industry is 12%. So there's two strong sectors, if we compare them to the 8% of banking, the impact will be quite diluted. This is why I say the growth rates for 2023 won't be the same for 2024. I mean then again, we've been saying this for years for Italy, but we're not going to do 25% again in Italy. Even if it slows down, I think there's regions where we will see some overperformance. Are there any other questions.

So I have a question that I'm going to read because I got it from text from [indiscernible] about the visibility on the sectors that went well in France, aero, auto and defense.

As you all know, we have projects with good visibility of 3 to 6 months. So to answer the question, aero -- for aerospace, we have long-term projects. and there are no signs of slowing down of the activity to the point where we're expanding in [ Toulouse ] at Airbus' request. France has a strong position in [indiscernible] -- so we have -- MBDA, for instance, as a client in -- in defense, talking about defense security. There is a strong demand that is going to develop where -- because the -- we've seen a lot of progress during 2023. Also noting, we've seen a lot of projects. We won a lot of projects [indiscernible] for French completed [indiscernible] transnational projects with tenants, where we still quite confident. The main topic -- the main topics at hand for automotive is going to be about productivity. I was talking about the German companies, but the French are seeing the same issues with maybe the difference that R&D has already been offshore, but where the German companies are more in the very early first steps.

[Operator Instructions].

I had several questions. So going back on the embarked growth of 2.5% in this growth -- the -- does it take the Reliance contract into account? Or is it excluding activity transfers.

It's taken into account. So how? As we did it for cPrime, I consider that our revenue for 2023 -- our turnover is -- so it takes into account because the project is closed, but the engineers leave with it. So for 2024 growth will be compared to 2023 without this project. But again, it's not going to have a considerable impact because we're talking about EUR 20 million.

Second question, I wanted to check if I had the right number. If we [indiscernible] minus EUR 650 million plus EUR 1,480 million, so we had minus EUR 650 million. It was consolidated -- I consolidated 2 companies that counterbalance.

So the minus EUR 1,480 million is correct. But in [indiscernible] we acquired a company that with 576 consultants, one that we bought in Poland that was consolidated in October with other consultants. So 168 for Poland and 576 in India which wasn't included on the 30th of September.

Third question on methods. Can you give us some inside of what they can do in 2024, the fact that they're really focused on public sector, does that give us perspective that are kind of iron related to macro. But the issues that we had in 2013, was it more about integration management or 2024 be similar to 2023 for methods?

Method as historically hasn't seen significant growth and same goes for profitability because they have a very large number of freelance, they're all freelance even though they worked in the company for years, which is quite common in the U.K. It's more than half of the staff. So that also looks at -- it takes us all on the raw margins, so that it's obviously weaker margins. So mostly public sector, which is -- it takes a lot of time in the U.K. So the [indiscernible] rates are high, way higher than our standards at least. And we weren't -- we didn't have a alignments with the manager or [indiscernible]. So the team is changing at matters. There's going to be a new manager, which should come from a competitor, a company where the oil goods are around 10%. So we hope that it's going to -- we hope it's going to give a good impacts on all these elements, so intercontract sales, et cetera. Can't say much more on that.

Did the decision making cycles are longer than in private, which isn't new.

Of course.

And another question on U.S. versus Europe. Do you have more visibility, if you were highlighting the elements where we saw the first signs of restart. Is there -- can you see a difference between the U.S. and Europe? Do you see signs of [indiscernible] different to Europe?

On the macro level, no except for automotive, which is linked to a large project that was won oven with Alten Tech U.S. There's no significant difference.

And my last question on Life Sciences, you were saying plus 5% on the year. Is it something that you think can be repeated with 2024? Because historically, you would do more on life science.

Life Science has grown a lot, and the growth rates were very high until 2, 3 years ago. And since that mark, if we look at the big -- the big players in Pharmaceutical whether this or manufacturing we've seen by some retail, which low budgets and if I -- I'm going to -- if we look at Sanofi, I don't know if I should name them, but they reduced the rates quarter. So there is -- we see a significant decrease in the growth in Life Sciences, which I believe, to be more structural. I don't think we'll see 15% growth rates in Sanofi, Novartis, Merck, et cetera.

And my last question. If you look at 2024 compared to your 3-year plan, the goal set by Simon were -- you think they can be reached in 2024 or will 2024 be lower? And [indiscernible] on 2025, 2026.

Honestly, I can't really answer this question. I don't have a crystal ball. We have a budget which is the first focus for the year from my point of view is ambitious. I show more caution for 2024. We have 50%, 60% of the group that is showing a flatter trend.

So we're now going to move on to the next question and go back to Mr. Nicolas David.

A couple of questions. I wanted to come back on the embarked growth is 2.5%. Because when I look at the network organic recruitments for the year, which -- and the growth -- imputed growth on stuff. I've get to a 5% growth for organic. There's been a lot of recruitment in Q1 to last year. But if you don't recruit at the beginning of the year, I do understand that if I get the average from Q1 -- so Q1, we get to 2.5%. Is that how you should interpret it.

So yes, there's -- so the reasoning as you -- sorry if I compare -- if I look at the 31st of December -- so I'll take the 31st December, use the same activity rate. I compare it to 31st December of -- the first of January 2023, with the average of 2023. So we get a differential, which on average is 2.5%. And our project is on the -- so embarked growth, what it means if I take the end of 2023. And I don't recruit anyone. So flat year with no sequential growth what will be my turnover. So it's an annual -- this is not just Q1. And so it takes the also prices into account.

Regarding pricing, does it take into account the embarking and not price increases in itself?

Yes, which is -- but there are mix effects on prices which aren't mutual the increase in offshore has consequences on the evolution on the revenue [indiscernible]. No. The price -- there's 2 different things. There's a price increase versus a salary increase. That's [indiscernible] and business management. That's how [indiscernible] to do that correctly. And then if we look at -- if we only reason with the top line of the turnover, will there be pricing embarked. It's not because we're at 2.2% increase -- it doesn't mean we're going to see them in, the revenue is going to depend on the turnover. It's going to depend on the engineering mix, the geographies, which changes. And where we see growth on high costs or low-cost countries So -- it's not mechanical. Price increase doesn't get added to the growth like this. But for 2023, we've seen pricing -- net price increases, but it's -- you can't really tell.

And the offshore rate increase, how much was it for 2023?

1,500 people offshore for 2023.

Including M&A? Are we talking about M&A.

Yes, of course.

That's clear. Another question was, indeed, with respect to that, what's the philosophy about hiring in Q1. The activity is not going too badly in the geography. Do we need to see some organic increase in staffing levels? Or do we need to be prudent. And with respect to the organic growth, is that a figure satisfactory? Do you want to do more?

No. The figure is disappointing. We have really done so little in Q4 and even for the second half year. You look at this historically in the group. These are levels of hiring that sort of average Usually, it's 800 in a half years. We can see clearly that we've hired a lot in '21 and '22. In '22, we hired 6,500 people, a lot of activity with 30,000 net hires in H2. We did 1,800 in Q1 '23. And if you look at the curve, we did 1,600 in -- and 85 in Q4. So there was a -- we shut down -- there's a sharp decrease in growth at the end of the first half year which is a consequence a very strong growth in the 2 previous quarters is growth. You can't interpret on a quarterly basis. It's not a crisis in our activity. The fact that we stopped growing means that our customers are maintaining their budgets, which are very high and the level of investment is high because we're much better than the situation in the end of 2019.

You say it's disappointing, you mean absolute terms or -- because you're not -- you're hiring more, you could have grown more, if you had hired more, but because there is a slowdown. I was trying to understand, were you held back by an ability to hire or...

No. We see the rate of activity around 92%. If we hire to put people on to a contract, it doesn't make any sense unless it's just an entry door to join a project. But we're very bullish in our activity almost in the beginning of '23. In the last quarter, given -- it's not true in all sectors of activity, especially in all geographies. When you have a sustained growth then projects will be coming online. We're not going to lose the opportunity because we're not growing. For example, in the banking in France, we've been hiring more in projects. So the justice of the piece in recruitment is a rate of activity. It's a rate of activity, that's very granular, it's per branch, per agency. If you have the apartments of 200 or 300 people. And if it goes up 10%, if you don't have the necessary skills, you have to look outside to win that project. Otherwise, they wouldn't hire. So de facto, this is the [indiscernible] of slowdown in the activity, and commercial activity.

That's clear. So it's disappointing because the activity is not enough.

It's disappointing with respect to the plan.

And so for Q1, not necessarily going to be expecting a big change?

That's right.

When we see the expectations of the market and what you did in '23, are there any factors that would lead us to think that it was because of the Q3, there was an deviation? Or could we stay on those expectations?

No, it makes sense. It's consistent.

We have a question by phone. If you could please say your name before you start your question.

I have a few answers to my questions already. Do you have the sale for '23 pro forma about the transfer, but also if you have activities over 12 months, what would that be in terms of the sales figures for '23. And the second point, could you maybe quantify the M&A in Q4? Do you have any information to give us? And the last point would be the price spoken about -- the difference in aeronautic between France and Germany. It's more difficult in Germany. Could you elucidate give us some facts about that to illustrate the reason for this?

I'm going to answer the first question about the pro forma, it's EUR 4.85 billion. Concerning the last question, in fact, projects with Airbus are, it depends who's a project leader. It depends on the nature of the project as well. It so happens that there are more projects that are started in France than in Germany. So the consequence of that is that things are going well in France. And in Germany, it's a bit slow down. The aero activity in Germany is still satisfactory, but compared to France, it slowed down in Q4, which is not the case of France. And the second question, I can't remember what it was -- the pipeline mergers and acquisitions, M&A, we have today a company in Germany, which is for sale by an investment fund. And there are other investment funds, and there -- the expectations are quite high. I think we'll know a bit more by February. We have one company in Poland. We have a big company in Asia, which has deals as well. We're looking at another case in the U.S. So those are the main items. We have a company in South Europe as well, which is a good deal.

About the ones that are furthest so long, and those are the ones...

There are quite a few. There are a few.

One last question from Mr. Derric Marcon.

I just wanted to check something -- a theory out with you. Your comment about Q1, when you look at the price sharing between Q3 and Q4, there must be a big dichotomy between countries that are still working well or verticals that are still going well, we have hiring and the other sectors where there's a strong slowdown where there's been destocking. I think Q3 -- in October was plus 350 and it winded up at 385. And so in November and December, we destocked a lot in sectors that we're not doing well. So if you start from the principal, so these are the stairs in the stairway for example, in banking in the U.S. in the next quarter, ultimately, we're going to be seeing growth that are brought forward by countries of verticals that are going well. But when it's negative, does destock. Do you agree with that?

So I'm surprised you're not more positive about certain aspect. In February -- I'll tell you in February how I see things. The 350 in October, I communicated that. What you were saying in Q3, we didn't do much. But in October, there was a picked up plus 350? No, we lost staff in some geographies. We reduced the staffing in Germany and in India as well because the demand wasn't as high. We continue to increase in Morocco. So indeed, there are areas where we stabilize things in terms of hiring and others went down. We had let people go. We adjust it in any case. It was only in France where staff continued to grow. In France in Q4, there was real performance there. We did 180 net hires. Which is pretty much for France, if you compare it to the total staff. So globally, internationally, between areas which are working well in other areas, which worked less well, we did destock. There's not a very elegant expression. But I guess we'll reuse it, at least it's clear by -- we had to get rid of around 100 people.

Well, if you're talking about destocking people, you're talking about discrete, the steps are going down on a stairway. At some point, it's going to stop with a high growth you have in other areas, such as still working well.

I agree. But all areas that are going down for the moment, all the verticals that are growing, I'm not sure that it stops in Q1. In terms of sales, but I'm talking about net staffing. I've understood. I think it can continue in Q1.

We have a question from Mr. [indiscernible].

I just wanted to ask a point, still a question of staffing levels and a comment on the pickup of the recovery in Q2. I can -- now about OS1, it means you're going to be coming back in Q3, Q4 with an almost 0 growth. So starting from that point, you can model various quarters. Is it not be more prudent to bet on a reacceleration, so you can have the time to rehire at the end of '24 rather than half of the year and half of the year.

Well, if it's going to pick up in sales, it will be -- we'll see that in September. So generally, it's a period where we have a significant recruitment campaigns. There's a lot of people that change companies during the summer and beginning that show up in September. And we do have indeed we have to react very quickly in terms of recruitment in that context. We're very well organized. We had very good performance in recruiting. Either we have projects that we know are going to start up in September, and we'd have to start thinking about that in June and July, ramping up to have people ready. But with sure, is that in the context of activities in the sectors that are slowing down in countries that have slowed down or in -- where we have no visibility even today, I don't think we'll take a risk. If we don't have clear messages from clients, we're not going to be hiring blindly about contracts that might -- where there might be slippage.

I understand. But what we're trying to just see how -- what's the seasonality of your sales. If we take the hypothesis of -- is lower -- is weaker -- but if you're not hiring in H1, you've got to be in an activity in terms of hiring 0. Do you have the ability in a few weeks to ramp up on that growth of, say, 5%?

Yes. Yes, I'm not worried about that. We have a very powerful ability to -- in terms of recruitment. This can generate a delay of 1 or 2 months because you have to find the people, they have to quit their other job and things like that, which was the case in 2021 because, in fact, we started in onboarding people starting in September and October, but the demand was from June. But you're better off having a month or 2 just delay for hiring rather than hiring people upstream to hypotheses. If you don't have any consultation in reality, the hiring process is kicked off by managers starting from a point in time where they observe there's more -- there are more consultations and more contracts that have won and projects that are going to be starting up. When you feel the activities is picking up, we can take the risk of increasing to do some hiring or no project in particular. That's -- but in terms of the actual contracts won. It depends on the kind of project as well. We wouldn't take the risk to raise the margin in '24 by picking up events or far upstream. That makes sense. And now to summarize, we're starting with a certain level of growth, you can accelerate in take 2 or take 3, and that's it, and hoping the activity will pick up again a little for Germany, as you said, and we have line up with the Q4 that would be accelerating.

That's where you're seeing things?

Yes, that's it. End of Q3 and beginning of Q4, that's where we would be accelerating. That's how they build their budget without revealing any secrets. The last question before we go on to the conclusion.

You have no more questions.

I'd like to thank you for having participated in our conference a lot of interesting questions. I'd like to wish you all a wonderful evening. Our meeting for presenting results takes place on the 22nd of February by teleconference. Once again, we are no longer doing any in-person meetings. So we'll be able to have exchanges again. And we can maybe talk about the way what's been going on in '23, but you've understood the message. And we could give you maybe more indications, at least the first half year of the year that just starting now. Thank you, and good evening, and see you soon.