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

Good evening, everyone, for being here for this video conference for 2024, it was a tough year, as you may have seen, for our activities. Some of you may have read the press release, which was released by mistake a few hours or minutes before the closing of the stock exchange. We would like to apologize for that. I hope that this won't happen again because I think it was in the first time, and it may have been -- the because of the agency -- communication agency. So for 2024 for Alten, this quite expected rebound for the second quarter. And fortunately, there was a slowdown of the activity that we had observed in the end of 2023 worsened in the second quarter of 2024. And for all sectors of activity, even though the macroeconomic environment has deteriorated, the causes of this slowdown are heterogeneous and it really depends on the sector. For 2024, the activity of the group remained almost stable, while the latest expectations showed a 0.3% to 0.7% recovery. We had revised our growth expectations and forecast when we had our October publication after a September start that was more difficult than expected. At the end of December 2024, the revenue of the group was EUR 4.13 million which is down. And in France, the activity has increased by 4.8%. On a like-for-like scope were down 0.2%. It's, however, up in France because up 4.8% because we've made no acquisitions, but it's down by 2.6% out of France. We've had 1.5 billing days more than 2023 or a 0.5% increase on like-for-like organic growth. For the fourth quarter, we're down 0.5%, up 2% in France, but down by 3.5% outside of France. On a like-for-like, scope were down 2.7% in our activities and 2.6% outside of France, but up 2% in France. The activity rate is about 91.3% for the last quarter. It was 91.8% in the fourth quarter of 2023, which is rather satisfactory, especially given the fact that we've had a lot of projects that were postponed since last September. The headquarter of the group has slightly increased. 58,000 against 57,000 at the end of 2023, including 50,900 engineers, 1,580 comes from acquisitions, 230 were sold and 418 have left the group. This is because of the organic decline. So we've lost 158 people abroad and 290 people in France. 11,510 engineers are in France -- while -- engineers are in France, well, 39,390 of our engineers are working out of France. The activity has grown across the different sectors for BFA and telecommunications, but major slowdown at the left -- for the third quarter, we didn't expect it, especially in the aerospace and automotive sector. Life science, defense, energy have remained buoyant, however. In the APAC region, the growth of activity is around 10%. All the sectors are growing significantly, except for Life Science, that's slightly down -- or finance rather and Life Science. In the APAC region, you have the appendix with the growth rate per quarter. The growth has increased in 2024, unlike Italy, where the slowdown has -- well, the decline has slowed down throughout the year, except for the banking and finance sector. In Germany, the decline of the activity has worsened throughout the year, reaching 14% year-on-year. As you know, the automotive sector, which accounts for 47% of our revenue is struggling and has been down 18%. The German manufacturers are all down in the third quarter. OEMs are down in the fourth quarter as well. And generally speaking, OEMs in Sweden and in Germany, if we compare our headcount and our projects within OEMs or part manufacturers, they're down 45% year-on-year, but we end the year with a slowdown that is higher than 60% if we compare to the beginning of the year. Civil Aeronautics, which represents 20% of our revenue in Germany is stable but down in the fourth quarter. In the U.K., activity is down 12%, mainly because of the public sector, which accounts for 45% of the revenue in the U.K. down throughout all of 2024, down up to 20%. Civil aeronautics, which represents 18% of the revenue in the U.K. is also down by 10%, but the activity has stabilized in the second quarter. However, the automotive sector, which accounts 15% in the U.K. has gone up. The growth has slowed down throughout the year. But globally, it remains above 15%. In Benelux, activity is stable, but the slowdown has worsened in the second quarter because of Belgium, especially for automotive and life science. In the Netherlands, activity is stable with semiconductors that has increased in the second quarter. Scandinavia, the slowdown of the activity is 12%, and it was and then reached to 18% in the last quarter. The automotive sector in Sweden, tools, tertiary coming from Sweden are mostly hit. Automotive in Sweden, it accounts for 52% of our revenue. Part manufacturers are significantly down above 50%, while OEMs are also down by around 20%. Eastern Europe, down by 5.5%. Poland, which represents 2/3 of the revenue of the region is growing. However, Romania, the decline has continued to worsen in the second quarter, almost 15% down because of the tertiary and automotive sectors. Northern America, the activity is slightly down by 1%. In the U.S., it's down 3.5% because of a decline in the automotive sector, especially with Stellantis and Life Science in the last quarter. Canada, which accounts for 20% in the area, the activity is down across all the sectors by 20% -- or 5% growth rather, Mexico, 25% growth on finance and automotive sector. Finally, Asia Pacific, the activity is stable. We're still penalized by Singapore. If it wasn't for the projects that stopped last year, it would be up by 3.5%. China has gone up by 5%, but slowed down because of the telecommunication and the automotive sector. India has grown by 8%, but the growth rate has slowed down in the second quarter because of electronics and the automotive sector. Japan, down by 20% until the third quarter. But in the third quarter, we managed to strike a balance, thanks to an improvement of the tertiary activity. Korea, 10% of the area of the zone is also slightly down by 3% because of the automotive sector. So if we look at the activity by sector, I'll give you the main trends. The trends that we, however, already mentioned because I've covered most of the regions. So without surprise, the automotive sector that was up in the beginning of the year, but this growth eroded and stabilized in the third quarter. But it started declining starting September. It was up 15% at the beginning of the September -- at the end of September. Part manufacturers in Scandinavia, the decline is unprecedented, down 20% first half of the year and down 30% in the second part of the year, mainly because of Germany. So that's declined by 24.5% over the year. Railway is up 6%. Aerospace, up 6%, but started slowing down in the second quarter. That was mainly anticipated because of the announcements made by Airbus in July, but the slowdown was more important than expected and more important than what Airbus and part manufacturers had anticipated. Naval and Defense have gone up 5%, but the rate of the growth has slowed down by 1/3 in the second quarter. Energy, the energy has increased over the year, 2% -- or 7.5% and then 2% in the first semester and then 7% in the second semester, thanks to oil and gas, which has gone up, which is a first in 10 years and also thanks to the nuclear sector. Energy equipment remained stable. Life Sciences that was stable at the beginning of the year became down -- was down in the second part of the year. Pharma equipment, electronics, semiconductors is down 1.8%, even though it went up and is now growing starting the second quarter. Other industries, mainly transformation, processing and equipment has remained stable throughout the year when the electronic and semiconductor sector, which were down in the first part of the year, has started growing again in the second part of the year. Telecommunications, which accounts for 5% of the revenue is down 6.7%, both with operators and part manufacturers. Finance is down 8.5% and the decline has started slowing down at the end of the second semester. Retail services, public services, which accounts for 17% of our revenue is down by more than 6% because of the budget cuts in public services. So you can see that this last quarter is in line with our latest forecast and confirmed a slowdown that is worse than what we anticipated in the summer, especially in auto and aerospace, even though the latter was up in the last quarter. Regarding mergers and acquisitions, the WorldGrid acquisition was finished at the end of November 2024. Only a small business that represents about EUR 5 million in turnover will be transferred the second semester of 2025 because of social processes in place. The carve-out process is long lasting. It's complicated. It is steered under PSA for the entire second semester. The company's integration in our systems give way to a long transition, but the operational business will be under Alten as of the 1st of December. Alten also divested a small business in China and Japan for strategic reasons. It represented EUR 8.9 million in 2024 and 230 consultants. Regarding our outlooks for 2025 now. The second semester was tougher than expected because of a slowdown -- an economic slowdown that was worse than expected in most sectors, including the automotive sector, the aeronautic sectors and in the public sector. Many of our clients seem to be surprised to have been faced with such difficulties. In the other sectors, life sciences, other industries, telecommunications and tertiary services, we had well anticipated the slowdown. And in this gloomy economics, the defense sector, the rail sector are continuing to grow. We'll see if the measures taken in the U.S. will give way to a rebound in the U.S. and then probably trickle down to a rebound in Asia and in Europe. But it is too early to anticipate a change in these trends. 2025 is starting just as 2024 was. Just like every year, we're not going to provide figures in January, but we are only going to tell you about onboard growth and the business days. So in 2025 compared to 2024, there's 1.5 less business days and our degrowth will be about 3%. Our 2025 performances will depend on the second semester, and it is too early to say what it will look like. Alten also confirms that its operational profitability for the business in 2024 will be negatively impacted by a level of intercontract that is higher than usually, even if slightly slow -- slightly so. The G&A is not covered as well as during the previous years, SG&A rather. And this will bear fruit in 2025. It started bearing fruit in 2024. We will also see results in 2026. We have made commitments for that. We also confirmed that in October last, we made an operational margin that is over 8.6% of our turnover, 8.7%. Please sir, if you can open the floor so that our participants can ask their questions as usual.

We have our first question coming from Mr. Nicolas David. .

I had a first question regarding the head count figures that you mentioned, 58,000 people at the end of the year, does this include the WorldGrid?

It's an excellent question. And indeed, I should have said so, this figure does not include WorldGrid. WorldGrid will be consolidated as of the first of January this year. And so the figures as of the 31st of December '24, do not include it. So I struggle to reconcile because you were already at 58,000 at the end of September, if I remember correctly.

So I struggle to reconcile because you were already at 58,000 at the end of September, if I remember correctly.

Exactly.

So there hasn't been any additional M&A impact?

Yes, let me give you the figures as I usually do. If we look the entire year, organically speaking, we have lost 448 people, 158 worldwide and 219 in France. And in Q4, we've lost 714 people in France and in internationally the 534 outside of France to cover the intercontract costs. This last quarter, we consolidated a company that we had acquired throughout the year. The VMO company in Vietnam. So, we thus have 694 engineers there as of the first of October. So there's about 1,000 consultants as a part of that business, but a lot of them are external. And we deconsolidated the business that we sold as of the first of December. And we had 230 people.

That is much clearer. There were a lot of people who left in the fourth quarter, I bet mostly in the automotive sector. Does this mean that there will be exceptional costs for MOA for the first quarter?

We had some -- during the first semester, we will have some in the second semester as well, which will be at least the same. There will be restructuring costs, the cost of people living as well, transaction costs there will be also the acquisition cost of WorldGrid and its integration costs that will continue throughout 2025 and they are far higher than what we usually see at Alten and the cost -- because we're trying to rationalize premises everywhere in order to cut costs as well. We started that in 2024.

I saw in the press release that you mentioned Civil Aviation as being one of the growing sector that was for the whole year, right? Not to say that during the fourth quarter, had been doing well in that sector.

Clearly not the case for Airbus, but I'm not sure how to understand this sentence. So Civil Aviation continued growing, continued its growth even through the last quarter, even for the aerospace industry, both aerospace and civilization, even if aerospace has decrease so they've had a 3% growth during the last quarter. But the first semester growth dynamic was much more favorable, and it was based in part on sectors that had positive growth as well as a much more dynamic civil aviation sector. So overall, if finally look at civil aeronautics, the first semester had a 12.5% growth, whereas the second semester, between parts manufacturers and manufacturers is only growing by 5%. So growth has slowed more than we expected. We had anticipated a slowdown. I had explained this in July. I explained that it was going to slow down quite significantly because Airbus had communicated on budget cuts and a lower number of projects. But actually, in September and October, at the end of September and October, many projects were postponed, and we hadn't planned on this, and the slowdown was worse than what everyone had anticipated.

Does this plus 3% includes Airbus?

Yes, absolutely. Yes, of course.

Airbus is still growing in the fourth quarter. In the automobile sector, Airbus was slowing down in Germany for the fourth quarter, but not overall. There is relief that it might be worth for Airbus or both for France and Germany or?

I don't think that we will see a slowdown.

And for the automobile sector, I understand that you like visibility, but in quarter-to-quarter, are there reasons to believe that we are -- we have hit rock bottom and -- or can it continue to go down, in particular for parts manufacturer or does it get?

I think that's -- for equipment manufacturers, it can continue to get worse, but that would be marginal. Now for manufacturers. Yes, effective there has been a decrease quite severe stuff during the last quarter. So I'm not sure what will happen in the first quarter. We don't expect things to bounce back quite yet. But these are different problems from one sector to another. The Aeronautics sector is faced with the supply chain problem, capacity to deliver and thus, cash flow issues, whereas for the automobile manufacturers, there have been strategic decisions that are called into question. Some projects have been put on hold for that reason. It's not my position to comment on their strategy, but our clients have all made different strategic decisions. And in Europe, they are faced with strict regulations and some of them does have to think about how to best abide by these new constraints. And in the meantime, to put their projects on hold. For those of you who read the specialized press, you know that you know what is happening. And some of them are far behind the Chinese. They need to invest in technologies. Does that already exist? Is it worth it? Or should they just acquire them rather than to develop technologies that will only be mature in 5 years? So there are discussions and decisions to be made, and it's underway.

Another question by Mr. Laurent Daure.

Several points to cover with you. When I look at your press release for 2025, you said that our business should stabilize over the first part of the year in sequentially speaking. In your vision, are there areas where there's growth and other where there's decreases and this cancels out? Or is everything the same for Q4 -- for Q4, rather?

Good point ending. When we talk about stabilization, we talk about sequential stabilization. We hope that in some areas, we've hit rock bottom. We don't necessarily expect to bounce back yet. It is going to get worse in some sectors, probably. There have been many more projects canceled or put to an end than it would have been. And it's usually the case when I tell you that we have negative growth. I take this into account between the 31st of December and the first of January. It is higher than usually. So compared to where we start the year, there are going to be increases and decreases depending on sectors, but I hope that overall, we will manage to stabilize the business.

But what are your -- which sector concerns you the most?

Well, for automobile manufacturers.

Are there other segments, other areas -- geographical areas where you are worried about this stabilization?

Actually all sectors, Laurent. See Life Science, for instance, Sanofi has made announcements. So things might get worse as well in life science. It might be compensated by an increase in the nuclear energy and the energy in general, semiconductors are restarting with seamless at the beginning of the year. Is it going to continue or not? I don't know. Things seems to stabilize in the banking sector. It's difficult to say as of the 20th of January, we cannot have reliable perspective yet.

Another question regarding WorldGrid. Two questions. First of all, what's the consolidation date? First of December or first of January?

First of January, which is the reason why the head count was not included as of the first of December. And to be even more precise because you are professionals, WorldGrid's balance sheet will be consolidated as of the 31st of December. So when you look at the accounts next year, the goodwill will be externalized for WorldGrid because the cash was handed, but the P&L will not be. So P&L consolidation because I think that's what your question underpins, that will be as of the first of January.

And the beginning of the process we lack visibility regarding costs and the actual margins of this asset. I hope that now you're starting to have a better vision. So what's the starting point in your opinion regarding these margins?

Well, I will answer this question during the next conference because this is what we're currently working on. We just received the December information and you consider that we need to work on costs for this asset. It depends what we're talking about. We're either talking about the gross margin, in which case, we can probably improve our consulting activities, but we need to understand why in some places there are activity rates that are quite low. For the core business I don't think there are huge improvements to be made on margins because it's quite well managed. I must say, these are so it's a good company. Now what is below the gross margin. So sales managers, recruitment, DNA, the company is entirely steered by ASOS, which has a recharge system. But when we bought the company we bought it on a stand-alone basis. So now the question is here only recharge costs actually. And in gross margin as well because there are quite a number of consultants that are part of this. When we try to think in an entirely carve-out system just like for WorldGrid, it's different. So this is what we're working on today.

What is the target stand-alone structure that would need to be as lean as past the cost will be as low as possible?

I'm not answering the question clearly because I can't. But that's it.

Do you have the level of the margin for that company?

We don't, but we should have same.

Okay. Well, I have one last question. And I know that it's really early to think about the 2025 margin. But I'd like to talk about your strategy, and I know that you don't have any visibility for the end of the year, but if the business remains at where it is right now throughout 2025, how are you going to manage your cost base? Is your ambition to cut more in order to actually extract a little bit of margin or to continue to invest a little bit to protect your margins on a similar level than 2024?

Well, for 2025, even though we've made efforts when it comes to costs, we have structuring costs that we need to engage, especially for offshore areas, Asia and the U.S. So this is something that we need to keep that. We've already started reducing costs in other geographies that are high-cost geographies. But you can't tell because of the drop in revenue. In terms of in millions of euros, these are significant amounts of money. So 2025, there are 2 main uncertainties at this stage. First, the top line because it's quite sensitive on the gross margin, and therefore, the EBIT. Second uncertainty, and this is something that we're going to try and work on is into contracts. We managed them quite well in 2024. We've managed them quite well, especially given what happened. Our ambition is to improve it again for 2025. And as you know, the sensitivity is quite high. And then we will continue to optimize and reduce costs. So G&A, general and administrative cost, we can do it, but we don't want it to be detrimental to the way that we're working. And I think there is going to be a start up again at one point or another. There will be a recovery, but there are areas where we need talented people, that's not something that we can do without. So we might outsource part of our activity, and rationalize our legal entities and operational entities in order to limit cost. These are the options that we have. These are processes that are quite long though before you actually start seeing the results in the accounts. So even though this is [indiscernible] may be born in the long run but now we don't have visibility on the 2025 margin for these reasons. Anyway, we never give our outlook in January or February. But given the opening day, fewer opening days, this is working for the -- I think we have one less working day in France for -- we had 123.7 in the first half of the year and 122.5 in 2025. So we know that the margin for the first quarter will be much lower.

I know that it's hard to answer this question, but if we have to sum up, if the revenue continues on the same pace as right now, given that the decline of organic growth by 2%. your goal is to optimize costs. Is that -- it was stable based on what was published in 2024?

Yes, that will be that's all we're going to do.

We have another question on the phone. I don't have your name or first name. Would you mind identifying yourself?

Emmanuel speaking. Yes, I have 2 questions. Just so I understand well, on embedded decline usually you talk about and embedded growth this period of the year. So right now, I'd say an embedded decline. So do you have the figures? Second question, to date, intercontracts, usually, we have -- we're in the beginning of the year. So compared to last year, how do we stand in intercontract?

Yes, 3% embedded decline. And on top of that, we have the 0.5% working day impact.

So embedded decline is volume plus price?

Yes, exactly. It also factors in the mix impact. Because we're talking about prices. There are different effects here. Different effects there the price effect persist or the negotiations knowing that most of the activity is a work package basis where the prices are one part of the bid that we make, and then we evolve with the negotiations with the clients. There's a mix effect from the activity because through sectors that are going up, others that are going down. And we don't have the same price index depending on the sector. You have the geography effect as well, which plays a huge role into this. Countries such as Germany, Benelux, Scandinavia where the price per capita is higher than in Southern Europe, for instance, where we're growing more, Italy, Spain, of course, or offshore areas. The price per capita is much lower in projects where we have an offshore part. So when we move down our analysis to be precise in my own self, we've included the embedded elements in our mix analysis. When we posted a 3% embedded decline. For intercontract, we don't have the statistics for January yet, naturally. But if we look at the weekly reports, the intercontract levels are very much equivalent, slightly higher but not by much compared to last year. It's hard to draw conclusions right now.

Okay. As a consequence, on Q4 for restructuring you've done the job in the fourth quarter, what can you -- can we expect in the first quarter if the intercontracts are quite managed? Are you expecting a stability?

It will depend on the activity. I can't tell because it will depend on the activity if the activities remain stable, then it will be stable. And if it continues to go down, we will continue to protect the intercontract rates. Of course, we want to keep our talent. We will have to make choices to let people go but we expect to have profiles that are intercontract. I mean, we need profiles that are in high demand on the market. Given that the talent that we keep in other contract. Even though the intercontract period continues to extend, we know that these are people that we need to keep. So we'll see. The turnover has gone down, but it's still quite high around 20%, which allows us to adjust. So to be commit we don't have any net recruiting ambitions, especially because it's hard to give these type of ambitions in a market that is down, and we've actually slowed down our hiring to take into account the factor. We won't recruit as much in 2025 than even in 2024, beginning of 2024, when we would recruit much more.

This is Aditya from Bank of America. There's a couple for me. Firstly, on the full year performance in 2024, you did minus 0.2%. So just a bit better than actually your guidance. So could you just talk about what actually was better than your own expectations in Q4, which geography or which sector? Second question, I know it's too early to give the guidance on the margins. But if I go back to your H1 presentation last year in September, you talked about the aim to increase your offshore capacity, the aim to deploy your technical traction model overseas and overall internationalize your offering. So could you talk about the level of investments needed in that this year and if maybe any cost savings will be reinvested into those initiatives? That's it for me.

So first, Aditya, 0.2% or 0.4% is really very close even if it's better than the highest range, if I may say so, we are very, very close. At the end, we were expecting a decrease in the growth of aeronautics higher than what we finally faced because we heard in September, October that many, many projects will be canceled. At the end, somewhere, anywhere launched. At the energy sector, we saw some acceleration among some activities like nuclear activities that we didn't think it will be so high on one hand, and on the other hand, that we could be able to recruit the people that type of project would require. Also, we had some additional growth among the semiconductor activities. So some plus did offset some minus. And at the end, we were very close to our expectations when we did our forecast mid-October. Regarding now our offshore capabilities, yes, we did increase our offshore capabilities in some countries, mainly India. We also have added some capabilities in Vietnam for Japan, China and we are going to try to rely on that carefully that we bought, very well positioned within the embedded software to develop that business. But at the end, in our business, when we rely on offshore capabilities, we don't increase our gross margin because unlike the activities, the aim is to be able to cope with the productivity expectations of the customers, meaning that if a customer launch a bid, for example, and wants to rely on an average daily rate of, let's say, EUR 300, for example, all activities included, I mean, technical management, project managers, young engineers, et cetera. And if you accept to answer the bid, if you don't have offshore capabilities, and of course, if you don't have the skills on your offshore capabilities to answer positively the bid, you are out of the market. So as we develop those offshore capabilities, we are able today to accompany our customers when they are looking for productivity gains. I'm talking, for example, of the aeronautics activities, but more and more the auto business and the offshore capabilities today are well positioned for the transition that the German automakers are today putting in place because of their search for cost reduction. But at the end, I will say that it is strategic because we save a revenue or we can increase our revenue against the competition, but it does not bring additional margin to the capital because the world gross margin remains unchanged. You know what I mean. So the only way if you want to increase our margins will be to lower our structure, I mean, in high-cost countries, but for all functions, I mean, technical, finance, marketing, HR, et cetera, in order to be able to maintain the same level of overall SG&A costs to be consistent with the gross margin contribution to the P&L.

We're going to move on to another question by Mr. [indiscernible]. As you know can please turn on your microphone, what company are you from [indiscernible] maybe it's the name of his business or it's his last name. Otherwise, we have other questions other hands raised. We have a question by Mr. Valentin-Paul Jahan.

I have several different questions. First of all, regarding the automobile sector, can you please tell us how much Volkswagen weighs in the overall turnover? And maybe just the share of the biggest clients, which client is worth how much to have a better idea of the main margins that could have an impact for 2025? So all of the big automobile manufacturers, but is it well divided or do we have 1 big client?

Our biggest client in the automobile sector is Stellantis to several brands, in several continents, they 3.4% of our turnover. And we have Renault, Volkswagen again that presents several brands as well. Audi, Porsche, Volkswagen, Carriat and so on. BMW, Jaguar, Land Rover, General Motors. So really, there's a lot of them. So there's no 1 client that stands out. Our main client is Stellantis worth 3.4% of our turnover. And then the others are just below 2%.

Second question, regarding the aviation sector. So the organic variation for the turnover of the aviation sector at Q4, and then can you tell us a little bit about the growth in that sector for Q1?

I have not said so. But for Q4, the aviation sector growth was 3.5%. And there is degrowth in the space industry because we would be above 5% in the aviation sector alone.

So this 3.5% is decreasing quite significantly. Does this continue during Q1? Or...

I don't know that. For the headcount that is -- so there's minus 3% of growth in -- we don't calculate it per sector. It's too complex because there are projects that are spread out through several geographies and there are projects that are losing momentum throughout the quarter. So we calculates geography by geography in a global manner, and we start with the embedded situation as of the 1st of January. And that said, it is slightly positive, of course.

Okay. Just to make things a little clearer regarding your guidance -- not exactly your guidance.

Yes, yes, of course. What I mean to say is that there is a stabilization. We said that it was a sequential stabilization earlier. So what I understand from it is that it's going to create an organic degrowth in the first quarter of 2025 compared to the first quarter of 2024. With 1 less business day, it's almost a multi-digit organic degrowth. I hope that we won't reach minus 5%, but indeed, we're more at minus 4%.

We have a question by Mr. Derric Marcon.

So I have 3 questions regarding the minus 3% of embedded degrowth in 2024. Is this the -- as of the 31st of December versus the average head count and what you expect it. So it links to the previous question, is it the degrowth that we are going to have as of the first quarter or is it calculated based on the average of 2024? And can you give us more granularity between the French embedded degrowth in that of the rest of the world.

The answer to the second question is no. So that's an easy one. We calculated within the situation as of the 1st of January and not 31st of December. And as I mentioned, it's important because there are projects that stopped because, the project is supposed to end by the end of quarter. So we have quite a step as of the 1st of January. So if we take into account the business situation as of the 1st of January, and if we can check on the business mix as of it was at the end of last year, and we bring that perspective with the 2024 average, we have an onboard degrowth of 3%. So it takes into account the mix effect of the business. Because even if there is a lot of inertia in our business, we still had the offshore being developed throughout the year. In Germany, we've seen a significant decrease of turnover as well as for Scandinavian, the U.K., whereas other countries such as Spain or Italy that don't contribute as much to the turnover have made progress, have improved. So this takes this into account as well.

Okay. But if this is calculated based on an average, can you reach at minus 4% of -- because this is a snapshot based on an average in the beginning of fiscal year. It was harder than in the end. It wasn't that hard. So -- and you reach down a 3% decline on average. So you should be worse. But for growth on board, the scenario that the revenue is flat. We're not growing or declining throughout the year. I don't know, right?

I know, but that's what I'm saying that you're calculating based on the 2024 average. Yes, based on the 2024 average. So the more you time passes, the more comparisons you have, yes. And it means that by the end of the year, and if you look at the trend, we should be lower than minus 3%. Right now, our forecast is minus 4%.

On [indiscernible] on board, factoring in the margin, this is something that you used well. Is it -- and what about the projects that have been stopped or they are going to be postponed or it really depends on that.

It depends on what the project that will start up somewhere down the line. When we're talking about projects we start at the 31st of December, they're not paused. They're not on standby. No. There are projects that have been finalized that are over from what we're seeing is that that's how the model is working and the business model is when you have a project that ends you usually have another project that starts. But the volume of project that starts is still lower than the one that end. And then you know the model. Starting February usually we start getting more and more volume. But based on February, we can give more forecast, more accurate -- more than last year that ended or rather than less [ story ] compared to last year. It's just that the discrepancy between the number of projects that ended and the number of projects that are starting up again this year is larger this year than last year.

On the automotive sector, we have competitors. And we're seeing other positive comments in Asia, Europe, the U.S. Is this something that you're also seeing? Or did you not see a difference between your business with European car manufacturers and the ones outside of Europe? And I'm not talking pharma manufacturers here.

Well, right now, if we look at the manufacturers, we resisted quite well with European car manufacturers. Even German, the German ones, except for 1 or 2, like Renault, whether this is related to our historical positioning with this manufacturer that we don't really see a difference between what's happening in the U.S. and in China and in Europe. But I don't see a major difference depending on the continent and for the different OEMs.

Going back to the cost structure of Worldgrid, which is Laurent's comment. The way that you're managing this, by definition, is supposed to be lower than Atos, which did have a lot of costs. But with the cost structure that was supposed to be not as lean as yours or not as efficient as yours?

The answer is yes.

And do you have a vision on the structure that they're reinvoicing to Worldgrid. So when you don't see Worldgrid margin right now, it means that you don't know what Atos is billing. Atos billed cost to this subsidiary. And when are you able to analyze them all in detail right now?

So I don't know exactly to be perfectly honest, and I don't meant -- this is also -- Atos' business, it's difficult and is sensitive to talk about it, but I don't know to what extent they consider that the billing is accurate based on the services that have been offered. Let me give you an example to be clear. Worldgrid had to be insured when we took over, when they started working within Alten. And I know exactly what is insurance cost. But if I have to look at the interims amount that is being rebuild to Worldgrid, and I don't know that. I'd have to ask the teams. We'd have to benchmark and see if it's consistent, et cetera, et cetera. But right now we're doing is such that we don't know exactly how it's split. We don't know the breakdown. So it's not up to me to look at the REIT charge or rebilling systems. This is not our business either.

My main question is -- the remaining question is, what is cost structure that is necessary? And how can we implement it?

So we are as efficient as possible.

The last question. So we understand the seasonality between the different quarters last year. Your assumption -- or you said it with a lot of bad news for the first quarter of 2024. And in itself, does it make 2025 easier than 2024 if we analyze Q1 and Q2?

Well, the activity rate was lower last year. And you were unpleasantly surprised, I remember, by the automotive sector. And I know that in Asia, there were tensions -- that was beginning of 2024, I think. Last year, in Q1, for instance, beginning of 2024, we were at 91.5% in the first quarter. This year, the activity rate is higher for Q1 in our scenario, in our forecast because we worked really hard on our intercontracts. Now the comparison basis is, of course, unfavorable because we struggled throughout the year.

But your organic growth in Q1 2025, you don't think it's going to be much better than 2024. My question was really about the seasonality in Q1 and Q2 because 2024 was really -- the beginning of 2024 Q1 was really terrible and Q2 was better. So I guess it's just even and itself out with Q1 this year being not as bad as our share. I just wanted to know if you had the simulation of the forecast per quarter.

I don't have it on the top of my mind.

This was the last question. I think because we don't have any hand raised, we can close this conference. Thank you very much.

Thank you for being here. Our results in 2024, we should convene on the 20th February rather because then even though it's quite early in the year, we'll still have a few figures from January. Thank you very much for your attention. Have a nice evening. [Statements in English on this transcript were spoken by an interpreter present on the live call.]