Alten S.A. (ATE) Earnings Call Transcript & Summary

Hello, everybody. Very happy to co-present with Bruno Benoliel and Cyril Malarge, the presentation of this half year results for the year '26. And as usual, and in a very precise way, we will convey to you a vision of what happens on the market, in particular, as regards Alten. As regards the results, as you could see in the announce, the revenue that we know is at EUR 2.1 billion, which means almost double for the whole year and even better than that. And the organic growth is of 1.6%, but in fact, 1.2% because of the M&A, which was a little bit less performant for the start of the year. So 1.6% as an absolute value is not really a matter to celebrate because apart from the different crisis, we have an average of 8% to 10% organic growth before. So I hope it's just symbolic showing that we are on our way to reach a positive organic growth. International and France. Well, France is driven by aeronautics and defense activities with Airbus. They have enabled to be performant within this organic growth, even if the other sectors are very well performing, energy, automotive, because we have been doing what had to be done, in particular, to offshore in the low-cost countries. As regards the results themselves, the revenue -- is sorry, you have muted your microphone, sorry. So 8.9% compared with the 7.3% of revenue at June '25. Well, compared with that, that's the revenue for France. And hopefully, I hope we will have a global year around 10% operational results. 8.9%. This improvement compared with the first half year '25 is linked to a very performing control of sales, HR and administration as well as the gross margin -- potential gross margin, which was quite stable and is also due to a very -- an excellent management of our project as well as the cross contract and other contracts. The gearing is good as usual at 14%(sic) [ minus 14% ]. As regards to headcount. If you look at December things were difficult, but we caught back up. What I can say. Things have improved since the end of June. This is a growth dynamic, which I don't think we should be carried away with, but we should be fairly optimistic about what's going to happen next. Okay. So if you look at this slide then, we're going to look at the last few years. Now it's important to look at this correctly because there's a real message that has to come out of that beyond the figures. And you need to go to the last column for the first half of 2026, obviously. But what you really need to understand are the first 2 columns between the first quarters, if you look in 5 years, we've doubled our turnover. We changed size. It's no longer the same group. If you look at the size, if you look at the volume and if you look at our geographic sharing in the 25 main countries where we're present, things have changed. And what does this mean? Well, it means there's a very important change in the group's organization. Our clients have changed as well. So beyond the actual size of Alten, we've seen that our clientele has become more international. We're no longer dealing with one client. We're not always dealing with them at national level. Every client has to be dealt with in 2 or 3 countries, not just 1 country anymore. So you can imagine this has been a huge change. And then of course, you have -- in spite of this, this all took place, as I say, in spite of COVID and those 2 years, we're managing the group and this change in the market. If we look at Alten as being in the top 5, perhaps the top 3 in the world of engineering services. We have to say that '24 and '25 were difficult years. We see quite flat years were difficult. And in spite of all the offshoring, et cetera, we can see that the turnover has been divided in 3 if you look at things that have been relocated. And in spite of AI, which is increasing the needs for engineers in some projects, but we've offset that with new projects and new types, the new different kinds of needs that we have. So we really hope that 2026, '27 are going to be fruitful, and we're going to see growth taking off. Now I'd like to hand over to Cyril, who is going to talk about the results more specifically.

Well, thank you, Simon. Well, what are the messages then that we have to retain for this first half year? Well, there are 2. First of all, we can see that we're returning to organic growth. That's been confirmed. And our objectives then for 2026 have been upscaled. So if I look at the first one, this idea of getting back to growth, well, the first main country is -- well, look at France, is doing well. It's performing well after the first very flat quarter, up by 1.7%. This is very structural. This is good. Why? Because the markets in the future are going to be interesting, ASD Aeronautics, aerospace in France, we're hoping that's going to be good. We're talking about 3% of the revenue in France, so it's important. Rail is also fairly dynamic here. That has an impact in France. So as opposed to that, we'll have to look at the automotive industry, which is less than 1% in France. And we are in the public sector. So this is an electoral year. We're going to perhaps be less impacted than others. We're looking at a scope, which is our core heartland, if you like, and things are doing very well. The second element is Germany. Germany is doing well. In the second quarter, it's up 4.5%. With automotive, everything is going up in Germany. And this is going to allow us to amortize the lack of growth in the previous years. It's still there, but it's better. And we're going into a positive organic growth, thanks to the growth of all of the other sectors. In the U.K. then, we're growing. Q2 we're up 2% after a flat quarter, and this has been by energy and defense. Now if we look at the market for the 5 years to come then in terms of growth, bear in mind when we do so, that aeronautic, spatial defense and energy, mainly nuclear, well, these are structurally growing matters, and they are worth about 40% of Alten's revenue. So we want to see that going up given the position we have for the upcoming years. And the second element you must retain -- we are in a risky phase with the automotive industry. We've gone from 20% of turnover in 2022 to less than 14% today. So we can say that perhaps the most difficult part is behind us, but we must be very cautious at group level. Secondly, then when I talked about the improvement in results in the full year for 2026, well, our objectives, we've upscaled them. We've put them -- we've set them at a higher level. You can see we're going to try to aim for 1.7% to 1.9%. And that is thanks to the performance that we saw in the second quarter and the visibility that we have in the second half of the year, as you said, Simon, it was a good summer. The second 6 months kicked off pretty well. So we can allow ourselves some hope for growth in 2006, 2007 (sic) [ 2026,2027 ]. Well, what's next? Results then were around 9.2% the first half of the year was very positive. We went from 7.3% to 8.9%. Now is it going to be a dominating trend? I don't know a dominant trend. We'll have to see. Now the visibility that we have on the second half of the year allows us to believe in the growth at regular speed that we've seen up until now, and we think there's going to be an increase in results, not just in France, but elsewhere. So this is the company itself and not just one country, the company itself that is following a certain dynamic. Now next slide. Well, let's talk about headcount then and the growth of a number of engineers that we have. We've gone, as Simon said, went from 51,000 to 52,200 between December last year and June this year. And so the message is clear. All of the zones are growing. As you can see, headcount is going up in each. Look at North America, look at France, we've got 300 more. Europe outside France has gone up as well. Well, you have the size because you can see they've all gone up. You can see the 2 colors. So it's extremely interesting because then again, we're looking at all the zones are performing rather well. So we're fairly confident about the future in the second half of this year, and this really should confirm the trend that we've seen up until now. Now -- We are going to be very synthetic here. But I think it's interesting to share with you what's happening in different markets. So let's begin with this slide. Let's look at ASD, Aeronautics, Space and Defense. These 3 market segments. You can see this accounts for a certain amount of turnover for the group. It's really a driver within the group. Clients -- well you've got usual clients, you're familiar with all of them, Airbus, Safran, Rolls-Royce, Dassault, Thales, et cetera. And we're on a market which is doing well and looks -- the outlook is very good for the 10 upcoming years with growth being pulled forward by studies, by research, design of new projects by manufacturing, by the supply chain efficiency and effectiveness, optimization of TCO and maintenance and maintaining services for the services industry. So we want to make sure that we are a leader across the board here, and we are. So you have the figures. Now with spatial -- well, the whole lot comes down to about 16% of turnover. And again, I've already mentioned these clients. And these clients, many of them have just signed new contracts as well. So that's very positive. This is going to be supported by Europe as well. So it's a niche market, which is really growing, and I think it's going to be fruitful in the upcoming years. [indiscernible] Naval security is 9.7%. You've got Leonardo, you've got Thales, Naval, MBDA, Saab in Sweden, Navantia in Spain, the usuals to coin the phrase. So this is an open door. It's a European market, which is fairly bullish at the moment. And we hope to see growth -- 2-figure growth in this market. And our specificity here is this is a market that we can see delivered country by country. So in France, it's France, it's dealing with France. In Germany, it's Germany and the U.K. and U.K. it's the U.K. You see it's market for market definition. And this is how we want to address this market. We really want to do it country by country rather than doing it in a comprehensive manner. Then let's move on. Let's look at the automotive market. You've got the figures, 13.7% of market share of turnover, pardon me, with our major clients. You've got the same ones that you would expect to find Stellantis, Renault, Volkswagen, Volvo, BMW, Traton, Ford, Mercedes-Benz. Now what we can say that this is obviously a market which structurally speaking is not growing. It's quite obviously not growing. So -- but we have seen a little growth in some areas, even though it's less important, we are stabilizing sequentially speaking with manufacturers, we're suffering like everybody else with equipment suppliers, as I said in the beginning, for us, it's no longer an issue because the toughest years are behind us. We're quite content with the figures we're seeing with our current know-how we employ a certain amount of people in this field. Let's say that we see we have -- we estimate that we have a role to play in the growth of this sector. For rail then, where are we? Well, with 3% of market share with, again, the usual suspects, Alstom, et cetera, communication systems, signaling systems, we are very nicely represented in France and Germany, a niche market where we are the major players. With industrial equipment then 8.1% of the group's turnover. We can see that industrial equipment activities are stabilizing with regards to electronics and semiconductors. Well, we think that the priorities of our clients is to get their parts as quickly as possible rather than really going into R&D. So we have a very nice vision within that market as a result. Energy then energy and environment is a very strategic market, thanks to the acquisition of Worldgrid a few years ago, Worldgrid. So we have a very nice stance in the nuclear field. You can see 11.9% of turnover and here we deal with EDF, Schneider, Altera, Technip, Total, Siemens, major investments for the future and new projects in the field of oil and gas, very positive. So it's a given moment, we're not sure when, but a given moment, this is going to really become our second most important sector for Alten. So we're going to continue to focus on this sector. How about Life Sciences? Well, 7.4% of turnover, Sanofi, Johnson & Johnson, et cetera. This is a real bit of a tough reality, tough CRO market to run clinical studies, major players who are now transferring to the U.S. So we're slightly down in growth there, but it is a future market for the company. Telecom, structurally, again, it's a market which is not growing in France with SFR, et cetera, we're working upstream with these players to make sure that we have a role to play. Well, it's been difficult because the sort of the business scenery has been changing -- now what about insurance? We're 8.5% of turnover. And there again, you will find major French banks, Portuguese banks and our traditional clients. It's a market which is fairly flat. It's a very heterogeneous market. So we are following the trend. Well, in France, we're actually -- we're staying flat. But in Spain and Portugal, we're actually growing. So again, extremely important for us. And finally, retail services and the public sector, where do we stand? This is a market where we're generating a slight level of growth in the first half of the year, particularly in the U.K. and Spain, in Italy as well and indeed in France. So that is a very -- it's a whirlwind vision of what's happening in the market. Now what we'd like to do is share something very important with you. Because we've made a great deal of headway in the AI field. And on this first slide, we're going to look at what's happening in go-to-market. We've been working a great deal on go-to-market. We've formalized a catalog of various offers, and these we have set per sector of activity. Now we've trained our teams, and we have dedicated teams in order to go and discuss these projects with our clients. We've got KPIs for unrolling this offer, rolling it out with our clients. And in front of you now, you can see on this slide, per sector the details -- well, it's not really details, it's a few elements of how we're going to implement this catalog of offer. And each and each one of these subjects, there are clients and projects. I don't want to get into the details because all the information is there anyway, but you can see that we have really made a great deal of headway. You can see we're very present in aerospace. We're looking at the data, product design, other examples, the supply chain, very nice offer there, also in automotive. We can see, if you look down the side for all the different segments, we have some very nice references, especially things that stuff that we're rolling out in other accounts. AI with us is not simply a slide. There are real projects, real clients behind these projects, the target of our projects. And if we move on to the next slide -- this is your go-to-market because it's within a much wider remit. As you know, we have a Chief AI Officer who is on the Executive Committee, and he is responsible for sharing this information with Alten, with everybody in Alten with dedicated teams. This is really steered from the top, and you've got 3 pilots, 3 streams. I've talked about the go-to-market. You also have the deployment of our products and the implementation of structures and platforms. Now three-quarters of all our employees are being trained in AI. So we've been able to go fairly quickly to this. With the go-to-market stream, I focused on the offer 30% of all the group projects have AI contained within them and 80% of all of the proposals are AI infused. Now that's quite interesting. It's quite a high figure. So a great deal of training has gone into this for our teams, and we've structured partnerships to go hand-in-hand with this. We are working with Mistral and with Google, in particular, and with others. We have rolled out the program with Mistral, and we did that in the first half of this year. So rolling out AI in our projects, well, we saw that speeding up in the first quarter, a new work package, which was developed with an average of 10% of productivity generated, thanks to this new AI-infused project. And we've continued to do this, haven't, we've continued to scale up and roll out these projects as quickly as possible, but as carefully as possible. Roughly about 50 people between Morocco and India who are working on these accelerators to help our teams to help them respond to calls for tender and to unroll all the different projects that we put in place. Well, if you look at the streams, platforms and infrastructure, well, we've really targeted the implementation of our infrastructure platforms deployed around Mistral, OpenAI, Anthropic Claude and agentic environments. We have a policy in place to help us master manage the token -- well, we've got token cost optimization rules in place to help us do that. Now I'm going to hand back to Simon, who's going to talk about mergers and acquisitions.

Well, thank you, Cyril for this presentation. I'll finish the AI. We are assessing today the reduction in the number of engineers needed in the Alten's core business model by 7% per year. So what we're talking about, the same type, the same volume of projects with AI, AI means we can have -- we can be down 7% in productivity per year. And it's not us that are going to benefit from this improvement because the clients have negotiated and 80% of new calls for tender in front of us in 80% of them, we have to ensure that the client can see that we've imposed AI and we've set them into our products and the clients are negotiating this reduction of roughly minus 7% across the board in all of the projects. So in spite of that, we've managed to see organic growth. And that's why I think we have to be suppose, cautious with our figures, 2% in organic growth when you encompass the growth of minus 7%, and this is in the volumes required by AI performance. We are still growing organically. So what does that mean for the future? It's not because AI is in place and it's going to replace a certain number of jobs or partially replace them or even engineers, young engineers that our market is going to collapse. We are going to continue to grow, and we will continue to win market share, and we will win new projects in spite of AI, if you like, and we will continue to grow organically. The last 3 years, I've had this question fairly regularly. So it's a fairly positive comment I'm able to make there. Now let's talk about M&A. A little disappointed with the market around the world, the number of acquisitions made in the first quarter. When you see the size of them, it's roughly 700 people -- and that's roughly -- our goal is 3,000 to 4,000 per year. We have our objective, and this objective would allow us to -- we have -- we're able to buy more than that, but we don't want to just buy any old thing in order to ensure that we maintain the status of M&A, and we don't want to buy for buying sake. Now there have been times where we've had our eyes on -- we've had CapEx, et cetera, and we've not been able to purchase and we've had companies that have left us. But I think as you can see from this slide, our M&A has been fairly limited, but there's a strong message to take from this. We've got a lot of signed. Due diligence is a great deal of due diligence underway, and we're very surely going to make some quite interesting announcements in the weeks and months to come. I'm not sure if it will be before the end of the year or the first quarter of 2027, but this will help us catch up a little bit. You know Alten, you know that we were cautious there, and we want to look at prices, and we want to look at the quality of the companies we're interested in acquiring. Now concerning capital, well, it's not really changed. If you look at buybacks, share buybacks, we did this when securities were slightly lower. All of this to ensure that there is a message of confidence out there. We believe in ourselves. We believe in what we're doing. What you can see when the securities were extremely low, we bought shares and that leaves us a little less cash, obviously. But we make sure that we could self-retention more than 5%, 5.43% to be accurate. founders were still around 15% and the employees with their employee sharing somewhere around 2.34% and the rest is institutional investments. And that is the end of the main indicators for the group. And now I'd like to hand over to Bruno, who's going to talk more in detail about the financial KPIs.

Yes, hello. I do not want to go back on the analysis of organic growth. Maybe as regards the change -- exchange rate, here, we have a second half year, if you remember, which was lying above the 3%. It has been impacted by an important exchange rate. Revenues on this basis has been impacted by 1.6%. All the flows are -- all our financial flows and business is being done in several currencies, so 26% altogether, which means that we have a negative variation on exchange rates on our flows. This has been obtained in the cable business as well as engineering. This negative exchange rate consequence should be rounded up during the second quarter and the first quarter compared with the first quarter '25. Half year turnover. We published last July these results. I'm not going to dwell upon the different analysis. I would just like to point out that ASD, naval, train has been okay. The same in U.K., thanks to energy and public sector. Our position has improved considerably. Good go back to organic growth in Germany. And this is really worth mentioning because of the automobile activities, it represented 45% of our German turnover. It's only a quarter, which is left. So we have derisked our activity, but the development in Germany was very good in ASD. It represents 30% of the German turnover, but also other sectors like telco, energy, in particular, and also IT, lesser in a lesser way. An excellent activity in South Europe, where the growth has been accelerated. We still have problems in Benelux and also in Eastern Europe, Netherlands, in particular, because of the car industry and also in the Nordics. The improvement is visible in North America. The activity in North America has been penalized by the automobile activity. Canada represents 30% of our Northern American activity is growing. We expect to be back on the right track as regards to organic growth latest at the beginning of '27. Then the organic growth has also been confirmed in Asia Pacific, thanks to Japan and China. The second quarter has shown significant improvement in the Nordics, and this should be confirmed, by the way. Results of the first half year. So just for you to remember, the year '25 and in particular, the first half year '25 is a year which was not normal, we could say because of the bad performances in several geographies and also the operational margin was at 7.3%, but again, not normal. 26% positive from the organic growth development, productivity and a very clear improvement of several activities. So this is why we have an operational margin and the revenue, which has increased from EUR 152 million to EUR 187.3 million and the 7.3 percentage of revenue of this operating profit has increased and reached 8.9%. This has nothing to do with what we do in normal years again or normative years. The bp progression, as we said before, is for 60 bps due to the operating profit and the SG&A represents 70 bps. Now we have the very conservative vision of the presentation of our accounts. This has to do with HR. Whenever there is a reduction of activity, we integrate that in gross margin obviously that was less this year than last year. The improvement on the margin yield due to the project management in Germany in particular. For SG&A, we profited from the absolute gaining back of value. It has already been positive during the second half year '25. As well as a dilution of cost because of the coming back of organic growth. And this is also the consequence of what we have enhanced last year. Because of the plan and the share-based payments have not increased. The amortization of intangible assets recognized in business combination. This is recurring from year-to-year. It comes exclusively from the acquisition of Worldgrid. You have the PPA, which has been presented in the annex document. The nonrecurring results of EUR 12.5 million. This is because of restructuring plans that I have indicated before. It accounts for, let's say, EUR 10 million, EUR 6.3 million for Germany. We still have to cut down the headcount. Italy for EUR 1.6 million and the Life Science activity for EUR 1.4 million. And then the proceeds from disposal. These are the fees for legal expenditures. That's only EUR 2.6 million half year result. As we indicated, we sold an activity in Life Science which was linked with the CRO activities based on an in-house solution. We didn't have the critical size, and this is why we became very quickly -- we started losing money. And this is why we have an operating profit of EUR 158 million, which grew by 26.9% compared with last year. Financial income is very easy. You will see on the next slide, we have an income tax expenditure of EUR 47.7 million. And this leads to the net income group share, which has improved by 38%, moving up from 82.6 million to a little bit more than -- the financial income analysis at Alten is not deeply analyzed here. With the IFRS standard, well, out of that, the financial result is at EUR 6 million composed by different financial products like cost of net financial debt of EUR 5.7 million, interest on leasing contracts, which is EUR 2.8 million. And then we have FX income, EUR 1.1 million decrease and other net financial incomes. Split up according to regions. The performance has improved in all our countries. We have said it before, the performance has led us to progress on our margin, 200 bps in France from 5.5% to 7.7 -- 7.5%, sorry. Here, we have the corporate non-allocated costs. We have 9.5% margin in France. The improvement of margin is for 60 bps accounts on the improvement of the net operating margins and for 130 bps, it is the improvement of SG&A, which is a little bit better than the global improvement of the group on SG&A. We have an operating profit that increased by 150 bps, thanks to the increase of operational margin in almost all our countries. As was said before, it is true for all the countries of the group and not only 1 or 2 countries. Within the Nordics, the situation remains difficult. This is the only place where we have an operational margin, which is below 5%. In Germany, the operating margin was near to 0 in '25. It has improved and is very close to 5%, like the Asian-Pacific geography. Benelux, North America lies at 10%. But U.K., South Europe and Eastern Europe, we have an operating margin of a little bit more than 5%. We have a healthy balance sheet. Once the dividends have been paid, 1.7 million. That's a good result. Then the position in net cash is good as regards to the development between the end of '25 and the 30th of June '26. The operational cash flow is of EUR 180.7 million, which is 8% of our turnover. We go back to an operational cash flow, which comes close to the activity one, which is absolutely normal as regards to what we are doing. The taxes paid are at EUR 37 million, which is less than the tax burden because the -- what we paid in '25 -- as regards the activity -- well, they have been paid because of the activity of '25, but then the rest, which is due and paid in '26 is based on the final figures of '25. The cash need for cash is and this is due to EUR 65 million, of which we have a part which is due to organic growth and 40%, which is due to the increase of DSO seasonal between December and January. We had 86.5 days in December, and it went up to 90 days by the end of June. I would like you to remember that the DSO was of 90 days. So we have increased by a few days to the comparable day between end of June '25, end of June '26. The fiscal debts of the groups are linked to seasonality and activity. The variations are not significant. As you can see, the CapEx are low. It's only 0.4% of our turnover. It's a little bit less than for a normative year, which means that the free cash flow is at EUR 105 million, that's 5% of the turnover and increased by 33% compared with last year. And this is -- I mean, despite the return of organic growth. And on the next slide, you will see that for guiding 12 months because we need to to guide, we have 6.4% of the revenue. Our cash flow is 6.4% of our global revenue. Very quickly to the flow analysis and the other elements, the investments, financial investments are at EUR 73 million. That's the down payment and M&A. Dividends are stable. That's EUR 51.5 million with the payment end of June. The share buyback, we had spent EUR 65 million end of June for information, EUR 1.8 million investment for 2.4% of the capital, which has been bought back. Other financial flows, EUR 8 million, that's financial interest and exchange rate consequences on foreign currencies, which means that we end up the half year with a cash flow, which is quite important, EUR 313 million, a gearing of minus 14% after payment of acquisitions, paying of dividends and the share buyback. We are -- well, I mean, I'm not going to comment on the following slides because I just said what had to be said. You will be able to read that. As a summary, what you have to remember on financial results of this group is -- and it joins what Cyril and Simon already explained. Alten returned to growth -- organic growth during the second quarter '26, thanks to civil, aeronautics, space, defense, naval, rail and energy, altogether 42% of the turnover. The automotive is still slightly declining. Slightly. It is -- we have a stabilization of the main activities, even if the situation remains a little bit complicated for OEMs because once you have a decrease, such a decrease, there is no possibility to decrease further. So there will be a stabilization of the activity. The operating margin has increased very importantly during the second half year. It represents 8.9%, 9% of our global turnover. Apart from the Nordics, all the countries have improved their OPA apart -- yes, as I said, apart from the Nordics. The OPA has increased by 23% and the free cash flow by 33% compared with half year '25. The activity is completely self-financed, thanks to the cash generation, which is particularly important. That leaves perspectives for the year '26 that we have increased, of course, as long as the geopolitical situation remains unchanged. We have a growth, which should range between 1.7% and 1.9%. And it is, in particular, end of September, beginning of October that we have the best visibility on the new projects which are going to start on the customer side during the last quarter. And this is why the operating margin has been increased. We have roughly 9% by the end of July, and we have 9.2% for the whole year as regards to the positive elements that we communicated upon. And now I'm going to hand over to Simon. He's going to tell us more about the growth strategy for the coming half year and the coming years.

Thank you very much, Bruno. A comment on the slide with the variations on the cash flow, there are a few things that happened only during the first half year, the share buyback and the payment of dividends. And this is altogether EUR 116 million that you won't have for the second semester. So you can imagine the cash for the second half year. Now as regards the conclusion, the 2 slides of conclusion, summing up all that has been said till now, the complicated environment, the size of Alten that's really a change within the organization. We have -- that's a change for the top 5 companies for engineering with a lot of people employed. And well, we are not really afraid of that. Even if globally, it means conquest to compensate the drop of the requirements of engineers and the necessity to keep up with the organic growth. Now all these elements altogether and what is going to -- and what is happening means that we are particularly optimistic to grow. We have a very ambitious plan for the coming years. So that's the plan 80,000 engineers. But of course, it will take to be able with Cyril, to set up a very strong international organization on the management with the global accounts at international level. It used to be national. The capacity to deliver, which means a technical organization that has to produce a global project. This is already done. I think the technical management and organization is already the best that we have within the profession because we have the possibility to deliver offshore, and it's not bound to one country anymore. It's transnational with the technical managers who are already transborder. And then we will also have to show our customers that we have strong offers in terms of AI as well as projects. And then the retail, as I said before, it's going to improve. And the capacity that we have to capture in M&A, the interesting and optimistic signs will be important despite the fact that it's complicated because we already have 90% of our targets, which has been -- have been captured. And then when they are put back on the market, it becomes extremely difficult to grab them. But we have good hopes to identify good targets in Europe. Now it's the end of this presentation. Thank you very much for this presentation, and we are ready to take your questions.

Okay. Let's move on to the Q&A. We have a first question from Mr. Nicolas David.

Yes, indeed. I hope you can hear me well. I would like to raise my questions as regards the margin. And first of all, the guidance for the whole year, you have a margin of 5%, but it's less in the year-to-year vision. Why is it going to lower in the year-to-year forecast? It seems that we are back to a normal -- to the normal. It doesn't sound intuitive to have this drop of or this aim of 5%. Could you tell us more about the gearing? You would have less gearing on the TSA. Is there something logical behind that? For the engineering, you have done an enormous amount of work. So ASD, the telcos are diminishing. Maybe AI is going to help us on the margins? And what are we going to do for projects?

I mean it's mainly a question as regards margins. Well, concerning the margin for the second half year, it's going to be higher than the first one, obviously. And even if we look at the second half year '25, it's going to be higher than the one for the first half year '25. So there is a dynamic development of first and second half year, which is due to the calendar effect or consequence even if it is less important than for all the activities which are embedded in a package, et cetera. I do not share the same analysis than yours. And what is true also, and this is why I mentioned that the margin difference between half year last year and this year is important, but it will be less this year for 2 reasons. The first one is that the margin for the first half year '25 was not part of the normal, and now we are back to normal. So it sounds logical. And also because we did an enormous effort on SG&A, and it was reflected in the -- it was reflected in our activities. So it will be less visible between half year '26 first and second half year. We have other investments to do to schedule the development of our group, all the different projects that have been mentioned. We are in going international transport, et cetera. So we do not expect a dramatic improvement of SG&A rate. And then also, we are going to consolidate a certain number of acquisitions, which are going to account for the margin. As I indicated before, the operational margin is going to be less than the normal. And so it takes 1 to 2 years to bring it back to the group level. So the dynamic is particularly logical and relevant. Now to come back on the 10% Indeed, it is how to increase the margin within geographies where it is less than normal. For Asia, we are at 5%. For Nordics, they will, in time, react and we are going to see the improvement dynamics, which is going to impact the project. And even long term, it will mean a reduction of the relative rate of SG&A, but it will be longer in time. And I would say as a complement, we are growing and we have more margin in the growing phase than the reduction -- and then in favor of work packages, we have higher margins because we master better our capacity to generate profit on the work packages.

If you look at asset divestment, I'm not sure I had the right figure because I had 9.6% in margin as a sustainable margin. I think perhaps you have some room for maneuver with regards to this 9%. Just to give you a quick follow-up on growth. I have some very positive comments, particularly for the Nordics and the United States. That being said, growth for the year is roughly around 2%, which is less than the second quarter last year. So what can we do in order to offset all of this?

The publication of the third quarter takes into account that which today is gaining ground and that those are the projects which are being launched. So that's usually as of the 15th of September, we've had better visibility up to October, that is. And I think this allows us to really set the figures. Of course, you must also bear in mind that the comparison that's in place, we had a very good bounce back at the end of 2025. So that means that you have a knock-on effect on how you're going to read the figures. And that might allow you to believe that this growth is going to slow down in the second half of the year, whereas in reality, we're continuing to recruit or continuing to win new projects. So we do have this growth dynamic, which is fairly highlighted. And I think this itself is going to lead us to -- will be under 2% in the second quarter, perhaps, but this will allow us to reach the figures that we have communicated. So I think it was easier to do like that than to focus on 3% for the first part of 2025. Thank you. So let's move on to the next question. Yes, there is one, Frederic Boulan.

I want to talk about AI. You talked about inflation around -- well, 7% figure of 7%. Do you think this is going to be sustainable in the upcoming years? Or do you think this is going to be very much concentrated on this particular year and next year? And how can this be offset by a widening of our scope? -- scope, widening in the client activities? And could you describe the change in expenses with our main clients -- are we going to maintain, keep this 7% savings or we're going to retain it to invest in projects which are wider and which would allow us to increase our turnover from our clients?

Well, what you must remember is that it's not really -- the 7%, this minus 7% is what? It's a figure that shows that we're focusing on work packages and doing what our clients want. We're trying to give extra services to our clients, and this is what we can see in the teams. And you have to make the difference between the gross impact of AI and the reality on our staff levels, which you can see through the impact on our teams. There is a difference. That's the first point to retain in mind when we talk about this minus 7%. And the second element is that this engineering market is not a market where we have 200, 300, 400 people in one place is very different. We're driving our clients' products with clients who have small teams, 5, 6, 7 in a team. Well, the impact of AI is going to be less on them than on the turnover. We think AI is going to be more qualitative in order to deliver services more quickly and with better quality. Now I can see that there's a difference from the IT world. And here, the impact is very different compared to that. And lastly, we've trained all our teams, all the business managers we've more than trained them. They've been through e-learning, online training. They've given us a business plan based on the scope, and they were certified for this so that they can be more proactive in delivering the new uses, new business models. And we didn't do that up until now. And this is in order to be able to take a stance upstream with offers which are perhaps hitherto unsolicited by the clients. And of course, we are using AI in an offensive manner as we are on the offensive to try and win clients. A figure which is of great interest to me that we've with the program and at program that we established with the team, this team was -- this project was used in 80% of the calls -- replies for calls for tender at 80% at the beginning of the year, but now it's 50%. So we're still using teams. We're using this intelligently and adapting the AI to the project and the package that we're trying to implement or offer. And if I may add, when you talked again about this 7%, this is what we see in the current contracts. Is this a trend that you would -- do you think is going to set in? Or is it ephemeral? Is it structural just to improve effectiveness and this perhaps will not last over time? To be honest, it's very difficult to reply to that question. This is not a homogenous 7%. You take some activities, it can be between 10% and 80% in testing. So it really depends on many things, what's coming out every week, what new tools, what new functions are coming out. So the questions that I ask now are all about training my teams, looking at the platforms, and that's our responsibility to make sure that all of this is available for our teams and make sure that our teams want to use these tools. So it becomes natural. That is our job to ensure that this becomes natural behavior in order to avoid being subjected to the areas of the market. So this 7% is the estimation that was done by our AI officer for the 4 years in front of us. It's in the specifics of engineering services, the economy of production engineered by AI with the reduction of certain tools with our clients and some tools that we furnish to our clients. So as Cyril said, it goes in some cases, up from 0% to 80%. But on the specific stance of Alten, the averages 7% over 4 years right up until full deployment. Now what will happen afterwards? -- who knows? We don't know. But our challenge is to offset this need for engineers, which is going down by 7% with higher tariffs or by extra offers or by conquests for an organic growth, which means that the 2% of organic growth that we're going to suggest could correspond to the 9% 5 years ago or 7 years ago when it was rolled out. So it's just an average. It's an estimation and assessment done by the AI officer. Well, that really leads me to think about AI. We had TMA before, I believe. This was -- and then it was offshore and then it was something else. It's just new developments. It's -- this one is called AI, but it's the same dynamic as we've seen in the past with new developments. We have to continue production but with different tools and be more effective. Next question Mr. Laurent.

I have 3 questions. The first one, again, with regards to AI, we talked about these tools, which are replacing some young engineers. In your 3-, 4-year plan, have you anticipated an average age for the engineers stable in stable employment? And what will be the impact that this might have on our margins? That's the first point. The second one, I want to look at the mix. You talked about 70-30. So engineering, IT services. Are we going to see a difference in that mixture, that balance over the next 6 months in terms of growth and in terms of margins? And finally, last question, I would like to know what your vision is for the next 5 to 10 years for the nuclear activities, in particular, you said 2%, 3% of our turnover today. How far can we go in this sector? And what stance should be taken in the new sectors in France? I think we're talking about -- we're looking forward to 2030. Are we beginning to see a genesis of activity in this area then?

Thank you, Laurent. For the first question and the impact on the average age on our engineers, it's sure that fairly naturally, we're going to probably employ less young engineers, but that's really what we're seeing today. The model isn't being brought into question because engineering, as I said earlier, AI is not the same -- it doesn't have the same role to play in IT and in engineering. And this means what it means, quite frankly, that we have not observed a structural impact on recruitment. We recruited more people than last year, for example, or on the average age of the people employed. Now when it comes to the margins, well, we're working on that because that's going to depend on our capacity to hand over to the client, that which we promised, making sure that the proposals are met. The subject is not on the table today because with the client, we're sharing the fact that the margins which emerge are reemployed. We invested 7% of 10 people. That's a lot. 9 times out of 10, our clients are going to ask us to retain their staff. So we have to reconcile that with margins. And we saw this with offshore. With the difference in growth and margin between IT services and engineering, I don't think there's any significant difference. No, actually, there's not one. And this is due to our stance in ASD, which is strong. If you look at our dynamics per sector of activity, you can see we're flat in the yellow part, if I can make IT services and quite strong in growth in IS&T and in engineering, even though we went down in the automotive industry. Overall, I don't think there's any difference in dynamic. I have to say.

Laurent, there are statistics which -- with which everyone is familiar. We update them every quarter, and we look at average experience of engineers that are with us in various sectors of activity, including the engineering world, pure engineering, R&D, et cetera. Clients do have senior employees. We've got project leaders, architects, and they really are in charge of their projects. They outsource some but not all of their projects. We're not going to go and tell Airbus how to design the landing gear. That's their job. We're not going to go in and say you have to get rid of 7% of your engineers. In Airbus and places like that, they do have younger people. Their average age is 29. And that means that the average level of the experience is only 3 to 4 years. So with management, the average is going to go between 0 to 8 years of experience. And this -- actually, this accounts for 40% of our recruitment. In IT, it's different because our clients, they want specialists. They want to outsource as much as possible. They want to develop an application for SAP or for Salesforce or any given software. With any IT department, anything they can externalize or if they -- if you have a BPO offshore or not, they're going to try and outsource it. So there, they're going to need people with more experience. And when you say more experience, say they're older. There's a gap of about 3 years in the average age between people from engineering and people from IT. But to pick up on what Cyril said just beforehand, AI hasn't really had that much of an impact on the average age of engineers. It's really only just maybe 1 year of difference. We're still recruiting as many people. But in engineering. So AI has not killed the profession of young engineers, but it leaves time for schools to train engineers to use projects and to construct their projects differently. This is -- we're seeing a change. We're going to be a development of software tools in engineering and we'll be able to train them and allow us to have architects who become junior engineers. So it's really just an adaptation. It's a slight tweaking of what we traditionally considered to be engineers. It's going to be architects that are going to pursue their training and become engineering and this one can be in any domain that we do, automation, whatever. So these young engineers are going to be able to train further to become more experienced. The nuclear field, what I can share with you is that in Worldgrid, we had EPR2. Which is going to work for the next 5 years. But so we're looking at growth there in 5% between now and the 5 upcoming years. And I'm not talking about the starts that we might have on other SMR projects with Worldgrid, for example, they provided -- well, you have the SMR from Simon. They work on expensive projects, but it's worth the effort because it's strategic for us. It's a very unique offer on the market and somewhere out there, we're continuing to invest in it. And this means that we are hope -- we have hope that EPR2 is the second reactor, whatever is going to stop, and we will then repair it, we'll do maintenance perhaps over the next 20 years, we are able to address the upcoming subjects for the nuclear group. And I mean, that's for EDF, for example. If you're talking about the delivery of a new EPR, pardon me, we have to look at how we work, how we work with the major industrial players. That's where we're at our strengths. So we're looking at least 50% growth for EPR2. And this knowledge and this offer have to be reconciled. Next question from Ines Mao.

I have 2 questions. Firstly, on energy. Can you give us more information, please, on the type of region that is typically at stake? And do you have a typology for clients -- clients that you would have to help locally, you're talking about nuclear. Is that going to become your second segment? Now is that accompanied with what with an increase in offshore population? And my second question, I'd like to come back on what you said about the public sector in France. I know that it's limited, but is there not a risk that we have when we deal with major French companies like Airbus and Thales, if the elections have an impact, isn't this going to have an impact in turn on the visibility that you have for the next 10 years in the aeronautics sector?

The activities around U.K. and France for nuclear activities are good. We also have a very nice position in Spain and Germany apart from that. We also would like to make sure to be able to develop around IT. So we are currently working on a project together with Worldgrid and Alten to develop IT. So it's energy. But onshore activities, it's not only for nuclear, but also for other energy branches. We work mainly for operators. So it is EDF, but also Schneider, for instance, but this is really the target. As regards aerospace, it's a world -- the world traffic is going to double every 10 years. So I mean, honestly, the French elections are not going to impact this kind of development. It's a market which is developing, increasing. Airbus is going to deliver more, the Germans also. So I mean, this is what we have. And -- but now I do not know what kind of decisions are going to be taken and the ones which will have an impact on the economy in general. It's not going to be Alten or Airbus. I think what is its stake goes far beyond presidential elections. Maybe you have another opinion. No. Indeed, says Bruno, if you look at the real subject, that's the arrival of COMAC on this market, and they want to accelerate the development to really make a difference. The C919 has not been certified yet, but it's probably going to be -- so it is the competitor, the newcomer, in fact, within 5 to 10 years. But that's going to be positive for investments in terms of R&D and projects. with all the different projects that go along with it with data, et cetera. But the presidential elections won't have any impact on Airbus activities. Yes. And the public sector, by the way, is this going to be impacted? We are not really exposed to that. Next question. Derric Marcon has a question.

I have 4 questions. The first one as regards AI. We started talking about it 2 years ago. It will go on for a while. Can you tell us a little bit more -- can you tell us more about the expectations of customers who would like to have more with less people? Is this -- is it possible to qualify that to say what kind of projects are concerned and the budget of R&D where AI well, where the customer do not want -- doesn't want to diminish or to reduce the R&D cost because of AI or with AI. Then electronics, could we say a few words about that? Because are they more focused on building new companies and new factories instead of working on projects. But what do you see in the coming 12 months compared with the one that we just went through? The third question regards is about North America with H2, which is better than H1. What are the different improvement sectors that you are aiming at? And then within the figure that you gave, Renaud, have you taken into account the acquisitions which were made, EUR 7 million by end of December last year, and it went on diminishing. The earn-out, I thought was consolidated, but it doesn't seem to be the case.

Derric, I'm going to try to answer your 4 questions. So first of all, the team, which was mentioned by Cyril is the team, which is around the Comex. It doesn't mean that we have only this number of people participating. We have 30 in Morocco, 30 in India, technical management, roughly 15 people. So in terms of investment, -- and we have much more than that. In fact, if we -- without reinvoicing, we have the AI tools, innovation departments really investing on AI. So it goes beyond that. And in terms of business impact, what happens is that when you have teams working on the customer side, they request for similar task for a similar project where you calculate in terms of hourly production. Indeed, the customers sometimes ask for a reduction. But now obviously, we are also in competition with other companies, which are also going to use AI and offer savings. in time and productivity. But we managed to keep up with our position on the customer side because we do more business. And for a project with 10 people instead of going down to 8, we are going to work on another project that we would not have been able to get if we had eliminated 2 people. This is what I call the management gains. It is compensated on Alten side. I mean, the loss of work due to AI is compensated by working on new projects. So it could have been worse. But it is a market share gain because thanks to AI, you save money. But I mean, that's -- it has been going on for 20 years. We have a lot of gains on productivity for quite a while. It was not called AI. It was called IT, but it's the same. And when we say that the turnover in the automotive sector went down, it does not mean that we have less engineers working there. It only means that the daily cost of an engineer wherever he or she is located is devised by 2. So globally, we will have as many engineers in the automotive sector than in the aerospace one. And if we have to put everyone in China one day, well, sincerely, I don't even want to talk about that because I hope it's something to take place.

But yes. But as regards AI, the costs are -- is it possible to invoice the customer? And if yes, how much does it represent at the group level?