Bureau Veritas SA (BVI) Earnings Call Transcript & Summary

Hello, and welcome to the Bureau Veritas Half Year 2020 Results Call. My name is Dan, and I will be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions] I will now hand you over to the CEO of Bureau Veritas, Didier Michaud-Daniel, to begin today's conference. Thank you.

Thank you, Dan. Good morning, good afternoon and good evening to everyone. Thank you for joining Bureau Veritas half year 2020 results on the webcast and on the call. François Chabas, our group CFO, is here with me to present our results. At the time of the full year results call back in February, China was already in lockdown. With China representing 20% of the group's revenue and 22% of our employees, we were closely monitoring the impact on our local operations. The potential gravity of the virus spreading outside China became quickly apparent, so we took immediate measures to ensure the safety of our employees, contain costs and maximize cash across the group. We placed the all of Bureau Veritas on a crisis management footing, and we launched 3 clear actions. First, the health and safety of all Bureau Veritas employees, a specific crisis unit was set up dedicated to monitoring actions, tracking staff and ensuring all possible measures were put in place to protect our people. Second, to protect the financial solidity of the group, we formalized cost control actions across the group, including anticipating lockdowns likely to come and proactive cash maximization initiatives. Third, to ensure business continuity with and for our clients, both in the field and remotely using digital solutions and tools. All these actions were rolled out across the group with frontline staff having responsibility for their particular areas of management. In a decentralized and diversified groups such as Bureau Veritas, we know we can rely on the discipline and efficiency of all our teams. Indeed, I would like to take this opportunity to thank all our employees for the dedication, loyalty and huge effort made during these challenging times. Today, we can see that the crisis appears to be far from over. With a number of virus cases continuing to increase in places where we have large operations, we must remain vigilant and highly prudent about how the next few months will unfold. When we look at our first half performance, the impact of the pandemic is obviously significant. The resilience and diversity of our portfolio has been of considerable benefit. Revenue totaled EUR 2.2 billion, down 9% organically. Adjusted operating profit came in at EUR 216 million. This significant decline was partially offset by the cost containment measures we put in place. Thanks to our early actions, we delivered a strong cash generation with a free cash flow of EUR 270 million, up 91% versus last year. Our disciplined anticipation in cash management, together with our Move For Cash program, have delivered a major reduction of our working capital. With regard to our clients. Our teams have been very reactive in seeking ways to assist and support our clients through the crisis based on our range of digital solutions, tools and development capacity. We moved rapidly to launch innovative solutions with Restart Your Business with BV and Supply-R. We launched Restart Your Business with BV, a street of solutions to accompany clients in restarting their operations as quickly as possible with appropriate health, safety and hygiene conditions. To develop this solution, our proactive and innovative teams have leveraged off our expertise in certification processes and the management of health, safety and hygiene risks. This enabled us to build and launch this service with a full digital platform across the group in a very short period of time. The take up by many of our clients has generated a considerable level of interest and momentum, clients from all sectors and all geographies. We have supported, for example, Accor, Sodexo, L'Oréal, Tournaud, Meliá Hotels, Wells Fargo, Unibail-Rodamco-Westfield and Tata Steel. Government departments have also called us to assist, the French Ministry of Education, the Turkish Ministry of Tourism, the Australian Justice Department, to mention just a few. Another innovative service launched this month is Supply-R. What is Supply-R? Supply-R is a unique solution that brings together a customized risk assessment of supply chain based on field data collected through independent on-site verification of critical suppliers. We have developed this solution, thanks to our digital expertise. Our 5 key takeaways from the first half are as follows: first, the work to diversify the group over the past 5 years has proved beneficial. Second, we moved fast to identify as proactively as possible all means to reduce our costs. Third, we took initiatives to optimize cash generation by ensuring that we collect and protect cash to mitigate the impact of the revenue and margin shortfalls. This way, we preserved our strong balance sheet. Fourth, the ability of Bureau Veritas to adapt and to innovate in a crisis to support both our employees and our clients. Lastly, we are ready for the new normal, a work putting more emphasis on hygiene and safety issues, transparency and sustainability with more recourse of digital tools, virtual meetings, new ways of working. We were already well-advanced in this field, and we will accelerate even more. François will now walk us through the financial performance. François?

Thank you, Didier. Good afternoon, good evening, everybody. Well, during this crisis, as a CFO, my obsession has been to protect the group's margin and the group's cash obviously. Margin-wise, we put in place an austerity plan for our worldwide operations, involving, amongst others, a freezing recruitment, the freezing salaries, pay cuts, when and where possible, furlough of employees when appropriate and limiting SG&A spend and in a broader sense, most nonrechargeable expenses to the strict minimum. Cash-wise, we took a number of proactive actions. First of all, the drawdown of our EUR 600 million syndicated credit facility, the signing of an additional liquidity credit line of EUR 500 million with 1 year maturity and 6 months extension. And we finally obtained a waiver from our banks and USPP noteholders to relax our financial covenants for the next 3 semesters. This gives us sufficient liquidity at room to face a very volatile macro environment. As you've seen, we saw 2 free cash flow optimization measures, including a strict CapEx control, focusing mainly on maintenance, 2 very limited acquisition spend on H1. And finally, an accelerated invoicing and cash collection leading to a very strong performance at the end of June of our working capital over revenue ratio, which went down almost 500 basis points to 7.1%. Looking now at the portfolio over the first semester. We posted a resilient revenue performance in the face of the COVID-19 dock, thanks to our diversified portfolio. In a nutshell, around 80% of the group's revenue has shown a good level of resistance with Marine up 3.4% organically, suffering from little disruption so far; B&I, Industry, Agri-Food & Commodities, down only 6.6% organically on average within a minus 5.4% to minus 7.7% range. The remaining 20% made of Certification and Consumer Products was severely hit by the lockdown measures. Certification provides mainly non-critical services. So we experienced postponement of audits, and this despite the deployment of remote solutions during the lockdown period. And Consumer Product was further affected by the difficult situation of U.S. retailers and several bankruptcies. Moving to the revenue bridge on Page 13. We delivered EUR 2.2 billion in half year 2020 with an overall decline of 11.1%. Organically, decline reached 9%, including a negative impact of 15.6% in the second quarter. The resilience and the diversity of our portfolio cushioned the business disruption resulting from the lockdown measures across the world. External growth contributed minus 0.5% on the net Scope, reflecting the impact from prior year disposal, mainly the HSE consulting business in the U.S. and it reflects as well the absence of material transaction over H1 obviously. ForEx had a negative impact of minus 1.6%, mainly due to the depreciation of some emerging countries' currency against the euro, partially offset by the appreciation of the U.S. dollar and [ thick ] currency by the end of June. Now a few key points regarding the half year 2020 results. Despite the revenue shortfall, we succeeded in keeping margin close to the 10% threshold at 9.8%. Adjusted EPS is down a little over half to EUR 0.19 and free cash flow is up 91%, as mentioned by Didier. I will come back to the details of cash flow in a minute. And finally, improvement in our net debt level continued despite the crisis, down a further EUR 200 million from the position at the end of December and down EUR 500 million from June last year. Turning to the adjusted operating margin. As you can see on the slide, the decline just below 10% is largely explained by the drop in organic margin. Overall, this margin shows a revenue drop through to profitability of 59% in H1. The level of drop through between Q1 and Q2 has been influenced by the situation in China. In Q1, with a sudden lockdown and we had limited time for cost adjustments and very little possibility to take restructuring measures in our Chinese operations. Then in Q2, as the crisis starting to hit all the geographies, we saw the positive impact from our proactive cost actions across most countries. As to be expected, all business activities, apart from Marine & Offshore posted lower margins, due to the impact of the COVID-19 shutdown on the activity. Marine & Offshore delivered 185 basis points of improvement to 23.1% compared to H1 last year, is benefited from the operating leverage, positive business and geographical mix as well as operational excellence. Adversely, the most impacted margin were those of Certification and Consumer Products due to the sharp revenue decline and the negative mix effect. Together, they represent around half of the group margin decline in the first semester. For Certification, the margin declined to 7.7% due to the decline in revenue, basically in Q2. Also, it was cushioned by a more flexible cost base due to the greater use of subcontractor. The drop-through was 50% in H1 on Certification. For Consumer Products, the significant margin dropped to 8.9% is a straight drop through from the revenue decline. Restructuring measures were put in place in Q2. And to give you a bit more color from a negative margin in Q1, we achieved above 20% on Q2 as a semester. Looking now at the operating profit on Slide 17. In H1, the amortization of intangible assets resulting from acquisition increased due to the depreciation of certain legacy businesses. Those assets relate mainly to a niche business servicing offshore platforms, and to commoditize all trade inspection activities in the U.S. In addition, we booked asset write-off for a total of EUR 22 million in the first half. This concerned laboratory reorganization in our Consumer Product and Agri-Food Commodities. And lastly, we further implemented a structural margin improvement action and continued to adjust our cost base. As a consequence, we recorded a restructuring charge of EUR 21.7 million in H1, actions were here as well mainly taken in Consumer Products and community-rated activities. For the full year 2020, we expect the total restructuring charge to remain in the range of EUR 25 million to EUR 30 million so having done the bulk of it in the first semester obviously. Coming to the net financial expense, increased somewhat in H1, mainly due to a slight increase of financial charges due to a higher average gross debt, following early debt refinancing. And it's also due to the fees arising on the early repayment of 2 programs we had, the USPP and Schuldschein. Repayment have been done in H1. Looking now at the tax rate. The adjusted effective tax rate of the group increased to 37.9%. The increase is mainly explained by the weight of taxes that are not directly calculated by reference to taxable income, such as withholding tax and value-added contribution. For the full year 2020, we expect our adjusted ETR to be in the range of 35% to 36%. Moving now to the cash flow statement and the 91% increase in free cash that you can see on Slide 20. The underlying improvement has been driven mainly by a strong working capital requirement inflow. You see a positive impact of EUR 113 million, representing a swing compared to previous period of almost EUR 275 million. 2/3 of this has been generated by our action to reduce accounts receivable and the balance is coming from the deferral of cash payments related essentially to employment contribution and tax charges followed by governments. Obviously a strict approach to CapEx, which stood at 1.9% of revenue compared to 2.1% in the first semester 2019. We expect this to be around 2% for the full year 2020. So by and large, a solid cash flow statement. Interestingly, looking at the working capital. You'll see that in the first half, our move for cash program continued to demonstrate positive effects. We further reduced the working capital ratio by close to 500 basis points versus June last year. We've reached 7.1% against 11.7% same period of time last year. And looking backwards, in June 2016, our working capital has been reduced by nearly half. Obviously, it reflects, I would say, 3 main points. First, an optimized invoice to cash process on which we have been focusing our efforts as early as possible this year. Second, accelerating of billing and cash collection in the first half across the group, with our collection team across the network being energized by the reinforced central task force. And finally, we've also benefited from the accelerated cash collection at a time of revenue decline in Q2. So be aware that the working capital in H2 in the second semester will be obviously impacted by the deferral from H1 to H2 of those cash payments, I have mentioned before, related to tax and payroll charges. So to summarize on working capital. Its reduction remains a top priority for the group. We'll continue and reinforce our actions moving forward. As a consequence of this good performance, we can now have a look at our financial structure. The adjusted net debt stand at EUR 1.6 billion, which is down EUR 200 million compared to December last year. Our healthy financial profile at the end of the half year reflects a strong free cash flow. As mentioned before, EUR 270 million in H1, very limited M&A; EUR 17 million of spend net of divestment and no dividend outflow, following cancellation earlier this year. So we closed the semester with a leverage ratio of 2x, only slightly up from the 1.9x in December last year. As regard our debt profile, it's been lengthened to an average maturity of 5.6 years, extended in terms of bank covenants and with all maturity already refinanced until 2023. At the end of June 2020, Bureau Veritas had EUR 2.1 billion in available cash and cash equivalents and EUR 500 million in undrawn committed credit line. In the second half of the year and in the face of -- as Didier mentioned, continued uncertainty, margin protection, cash preservation will continue to be our main priority. So to sum up on this financial part. I would like to share with you that, I think, first, we took action to protect the margin as much as possible with cost containment measures. We maintained a strong financial position, having taken proactive action to ensure liquidity. And lastly, at the same time as taking major cost adjustment measure, we have taken care not to lose any expertise or skill vital to serving our clients when the market pick up again. I'll now hand it back to Didier for the business review.

Thank you, François. Thank you very much. Let me now share with you the key H1 2020 factors for each of our 6 businesses. I'm going to start with Certification, which is the business most affected within the portfolio, down 21.9% in the first half. Obviously, we slowed down mainly on essential audit initially planned during the first half were postponed, notably training and customized audits. On the positive side, Certification of organic food products grew and sustainable development and CSR showed strong resiliency. We were able to perform some audits remotely, which amounted to 13% of the program. Restart Your Business with BV offer is expected to contribute to the gradual improvement of the business from Q3 onwards. Consumer Products now. So for Consumer Products, organic revenue declined by 20.8% in the first half of 2020. The pandemic has shown that the diversification strategy towards new geographies, products and clients, whilst well-underway, is still work in progress. I cannot pretend to be satisfied by our Consumer Product division performance. Our performance varied widely between the different segments. Softline, this business segment has suffered from its overexposure to the U.S.-China trade channel, particularly in retail, where we have seen a collapse in activity and an increase in the number of client businesses going under. The uncertainty around trade tariffs has also brought additional pressure. Hardlines, Toys and Audits. The business has been weak across more geographies and notably in China and in the U.S. The toy sector is under significant pressure, even though we have already reduced our exposure. Inspection and audit services showed a good level of resilience in H1, led by high single-digit organic growth in China. The momentum continues to gather for social and CSR audits. Electrical & Electronics now. The activity suffered from difficult trading conditions with large U.S. retailers and the effects of the COVID-19 shutdowns. The electrical automotive segment was particularly challenging, notably in China. Mobile testing held up quite well and the group's 5G-related products infrastructure continue to ramp up. Our Asian test platforms in South Korea and Taiwan are now fully operational. As François mentioned, margins were back up much closer to normal levels of above 20% in Q2. In the Consumer Product division, we continue to roll out our strategy to diversify the geographical footprint and client sector mix of this business. Moving now to Marine & Offshore. The business delivered a solid 3.4% organic revenue growth in the first half, benefiting notably from double-digit growth in new construction and the good level of in-service activity as we continue to deliver essential services to clients around the world. The solid momentum of new orders continued, totaling 3.2 million gross tons at the end of June 2020, close to the order book of 3.5 million gross tons last year. Once again, the group significantly outperformed the market, which is sharply down. This highlights our strong position in the most dynamic segments, such as the LNG fuel ships. During the semester, new digital tools were launched, such as e-learning modules and the rising number of adult surveys were led remotely. Agri-Food & Communities. So for Agri-Food & Communities, the business held up with the decline of organic revenues of 7.7% -- a decline of 7.7% in the first half. The main supply chains in Agri-Food and the Metals & Minerals continued operating. In Q2, the Oil & Petrochemical business suffered from the lower demand for oil. Government services were impacted by the lockdown measures taken in some African countries. Industry now. Revenue declined by 6.8% organically in the first half of 2020. This performance reflects the positive consequences of having diversified into the OpEx and non-oil and gas markets over the past 4 years. Power & Utilities' OpEx-related activities were broadly stable, primarily led by Latin America, thanks to the ramp-up of large contract wins with various power distribution clients. As regards Oil & Gas, CapEx activities representing today only 3.6% of group revenue were under pressure with muted opportunities. Conversely, OpEx continues to grow and offers a good pipeline. For Building & Infrastructure. As with industry, our move to diversify the geographical footprint of the business and develop the activity over the past 4 years has played a key part in limiting the decline in organic revenues to 5.4% in H1 on this impact of the shutdowns across many of the group operations. After strong negative organic revenue in Q1, our Chinese operations delivered positive 8.6% organic growth in Q2. Regarding the 2020 outlook. The crisis is still with us. And given the uncertainty, it's very difficult to predict how the next few months will unfold. We are currently working with 3 different scenarios for the full year 2020. First, the situation improves enough to see a slow recovery; second, the current situation continues with localized lockdowns, which may enable some muted recovery; third, the economy worsens again. This is why for the remainder of the year, we must remain prudent. So to conclude, the absolute priority for all of us at this time remains health and safety. We will continue to contain costs and maintain our cash and strong financial structure. At the same time, we are accelerating our strategy towards meeting the trends of the new normal. We are talking about digital and fiber tools, supply chain relocation and the increased spotlight on ESG. Execution, by the way, is already underway. This would have been the central theme of our Investor Day that we have had to cancel in September for obvious reasons. We expect to reschedule this for the second half of next year, and we'll announce the date shortly. Thank you for your attention. Thank you for listening. François and I, are now pleased to answer any questions you may have.

The first question will come from Julien Fouché of Societe Generale.

Just 2 questions. So firstly, could you comment on what proportion of revenue that you lost in H1 is likely to be lost permanently? And how much you expect to catch up in H2 or in 2021? And the second question is, could you share what the organic growth rate was month-over-month in the second quarter?

So maybe I want to start by your second question. In fact, I'm going to give you June because it's interesting to see after the lockdown in Europe, what June is, and June was at minus 8.8%, showing a clear improvement from, of course, May and April, which was more -- which were more on something like minus 15%. So in June, I would say in more normal conditions, even if the conditions are still not normal, at least in Europe, the negative organic growth was minus 8.8%. Your first question, honestly, not easy to answer. And I'm going to be very cautious on the catch-up in H2. First, of course, we should look at business by business. But maybe we could discuss the business, which were the most affected by the various lockdowns. I'm talking about Certification, of course. I'm talking about Consumer Product division. If you think about Certification, there will be some catchup. But of course, we are talking here mostly our voluntary type of schemes. So meaning that some clients will come back and will ask us to do some certification before the end of the year sometime because their own clients are needed. I'm thinking about a client who called us because he had to be ISO 9000-certified to sell his own product. How are we going to catch up all of it in H2 this year? Honestly, I'm not sure. It's going to be probably spread over H2 this year and next year. Now if you think about the Consumer Product division. Clearly, with the accretion of the tariff war between the U.S. and China and the fact that the elections are still in front of us in the U.S. and also the fact that we are clearly very exposed to the U.S. retailer market because of the business model of our CPS division with Bureau Veritas. I'm not sure we will catch up in the second part of the year. It will come progressively for the second part of the year -- for next year, sorry. So for CPS, of course, I'm still very prudent. In the short term, even if we are working hard and we started to work already last year because of the trade war between China and the U.S. on diversifying the portfolio, diversifying the products, testing opportunities and looking at new opportunities in terms of geographies. So I cannot say more, Julian, than that today. As of today, as you know, the situation is still very uncertain. So the catch-up will occur probably between H2 and next year.

And the next question will come from Paul Sullivan of Barclays.

Just a couple for me. Just firstly, can you give us a sort of indication of how certification is faring as lockdowns ease and sort of indication of growth going into the summer months? Secondly, all your scenarios have double-digit margins. Can you give us any sort of color on the range of outcomes based on the revenues there? Or just give us any sort of guidance or help in terms of how we think about operational gearing over those revenue ranges? And then thirdly, on the consumer margin. Back to over 20% margin in the second quarter, is there any reason why we would see that deteriorate in the second half? Or should we view that as a good number for the remainder of this year?

Well, thank you, Paul, for your questions. I'm going to start by the last one. So in fact, when you think about what happened with the Consumer Product division regarding the margin, we were taken by surprise, of course, when China locked down, clearly. So because of the revenue impact, we made decisions. By the way, you need to know that I was already working on the sort of restructuring of the Consumer Product division last year. And we already decided with François that we would probably put some restructuring cash in this operation, so we reacted. We were already working on it. We accelerated the restructuring, and thanks to this good job done on cost, not cost containment. I'm talking of real restructuring, we achieved a margin over 20% in Q2. Clearly, because now we adapted our cost base to the, let's say, what I could consider the worst-case scenario, which is probably what is happening today with the minus 20%, we can imagine a margin at that level for the second part of the year. Regarding your first question about July, sorry, I cannot give you any answer, any trend. I will know more next week. The second question, François?

Yes. Paul, on your second question regarding the differentiation of margin in the 3 scenarios. I mean obviously, you understand we are very cautious as there are plenty of moving pieces obviously. But not to leave you completely in the dark, I think what we are thinking around is a yearly drop-through level ranging between 50% to 60% across the 3 scenarios. So you can put them and look at them the way you wish, but that's basically the ideas we have at the moment. As Didier mentioned, and as you see, we haven't reiterated the guidance for reasons, which are obvious. But I think with this in mind, you can feed up your model and I'm sure that Laurent will be happy to take some further detailed questions on this particular matter now that you have this range in mind.

And the next question will come from Edward Stanley calling from Morgan Stanley.

I think I had 3, but maybe it's -- you mentioned in the consumer outlook that China has recovered in Q2. Can you give us an idea of what the China growth rate is the Q2 to give us some kind of indication of where the rest of the group may be in Q3, given that it's following what generally what the trends in China have been doing 1 quarter later? And to follow-up on something François said. Just so I understand it right, the tax deferrals that helped the working capital, you mentioned that 1/3 of that was related to tax and other benefits you've had. Is that 1/3 of the EUR 130 million benefit or 1/3 of the year-on-year swing in working capital on the cash flow, just so I've understood that right? And I think that is everything for now.

François, I suppose you answer the second question, and I will answer the first one.

So to start on the second one, to be very clear, we are talking roughly EUR 90 million to EUR 100 million. So this is a total swing, and it relates mainly to measures, which have been offered by the French government, Canadian and the U.S. governments. So it's 1/3 of the total swing.

So on your first question regarding -- you asked the question, in fact, when I think about your question, I think about China because you asked question regarding the Consumer division. Clearly, we could see an improvement, in particular in CSR audits, inspection and audit services in China in the second quarter. But more important for me is the fact that we grew our business in industry and facilities, and in particular, in Building & Infrastructure by 8.6% in Q2, showing that the Chinese government has decided clearly to put more cash in the economy and in particular, on the energy infrastructure, and we are extremely well-positioned, as you know, thanks to the business that we developed in the past, and in particular, the joint ventures that we have in China, in Construction and in Building & Infrastructure. Regarding the Certification. It's nearly flat in Q2 in China, which is, of course, quite a good news in nearly flat to last year. So if you think about Commodities, Industry & Facilities business, China is going to do better, clearly, in Q3 and Q4 with positive organic growth. Regarding CPS, the pure Chinese domestic market is going probably to be a flattish, but it is not material at the company level.

Okay. Good. Can I maybe ask one quick follow-up because you mentioned that you've been approached by Boohoo in the wake of what's happened with them. I'm just wondering whether that is a one-off isolated events or whether you're beginning to see more retailers take on this kind of supply chain certification and the assurance and whether it may be something that could move that off you beyond just restart with BV.

Laurent, I'll let you answer this question.

Yes. Hello, Ed. So on Boohoo, it's quite a recent relationship. We are just at the early stage, but we've been selected amongst 2 audit bodies to make a full review of their supply chain, following their well-known issues. So it is showing you that, clearly, there is a clear focus on CSR and audit -- social audit topics. And what we can say also is that we've been working for them as well to manage some products and their licenses on a very well-known U.S. customer. So it's a new relationship, but it will be clearly moving in the right direction.

More broadly, the restart of our business initiative was a great initiative developed by Bureau Veritas. And as you know, we were the first one to launch this program. And I'm very proud to say that thanks to it, we opened doors of some clients, which knew Bureau Veritas in the past, but we are not really clients. So it was a way for us to promote Bureau Veritas' band, and this client will be loyal after I take the example of the hotel. For instance, we developed some protocols -- hygiene protocols with them. And clearly, in the future, we'll continue to work with them, keeping this hygiene type of inspection because it will be more and more requested by the clients. The second good news for us regarding Restart Your Business with BV is that we could touch any type of clients from government to whatever industry, stores, any center even in tourism, in the hotels that I mentioned. So for us, it was and still is because we are seeing the middle of selling this product, a great opportunity. Again, of course, to make some revenue, but more important for me to develop our brand image.

And the next question will come from Rajesh Kumar of HSBC.

Could you give us some color on the type of write-downs and restructuring expenses usual to take in the first half? I mean the provision just to the P&L seems to be a bigger number than the restructuring provision. So what are the various thoughts in that one? Second, if we look at your revenue decline, thanks to Marine, which were quite resilient. It's compared better than a few other companies that have reported recently. But if we look at the drop-through margins, then you've had a higher drop-through margin negative import that is down to consumer, in part because if you look at the headcount, that seems to be quite resilient. It's only personnel expenses are down only 8% to 9%. So just on that piece, can you give us a color on, if you have kept more capacity waiting for a recovery? And second, why do you think your consumer business is trending the way it is compared to some of your peers? I mean or -- is it just a matter of geographic exposure? And last -- and I promise you this is the last one. When you look at your revenues and profits lost in first half, what other revenues and profits that you think won't come back?

So François will touch on the restructuring on the drop through. It's true that when you look at the number of people, the number of employees working for the company, you can see clearly that the organic growth was negative 9% and number of employees, negative, something like 3% or 3.5%. There is a good reason. It's just because we decided, as you suggested, to keep the expertise when the recovery is going to be here. And we hope, of course, that it will start already in H2. So in fact, what we did, we worked on the salaries, on the packages and some. And when we did that, we could save something like probably closer to the 9% impact of the revenue. And François will give you more details about the drop through. But today, I can say that we -- when you look at the number of employees, again, we are ready if there is a rebound in the second part of the year and for next year. In terms of expertise, we do not want to lose the employees that we might need in the near future. I'm going to let you, François, give more details about the drop-through and the question of the restructuring.