Bureau Veritas SA (BVI) Earnings Call Transcript & Summary

Hello and welcome to today's Bureau Veritas H1 2021 Results Call. My name is Judy, and I'll be your coordinator for today's event. Please note that today's call will be recorded [Operator Instructions] I will now hand you over to your host, Didier Michaud-Daniel, Chief Executive Officer, to begin today's conference. Thank you.

Thank you. Good morning, good afternoon and good evening to everyone. Thank you for joining Bureau Veritas half year 2021 results on the webcast and on the call. Francois Chabas, our group CFO, is here with me to present our results along with Laurent and Frank. As the pandemic is still present in several parts of the world, we continue to take every possible measure to ensure the health and safety of all our employees. Of course, this is paramount. Our CSR indicators in the first half as regards the number of accidents are showing continuing improvements. In the first half of 2021, we accompanied and helped our clients in managing their risks and in restarting their operations when needed. I would like to take the opportunity to thank again all our teams at Bureau Veritas who remained highly mobilized and proactive. We have delivered an excellent set of results for the first half. The strong growth in revenue, margins and cash illustrate excellent operational and financial performance across the whole of the group's portfolio. They are a credit to our people around the world after what has been an unbelievably challenging time over the past 18 months and continues to be so in several parts of the world. Revenue. Revenue totaled EUR 2.4 billion, up 14.3% organically, including a 22.5% increase in the second quarter helped by the comparables. Adjusted operating profit rebounded by 75% year-on-year to EUR 378 million with a margin of 15.6%. The increase was mainly driven by the strong top line. Cash generation was strong at EUR 229 million, reaching a 9.5% revenue conversion ratio. We enjoyed a big rebound in revenue. And thanks to our highly disciplined management of working capital, it has remained low. As a consequence, the group's leverage ratio is down to 1.3x. It is the lowest level since Bureau Veritas' IPO. We benefit fully from the balanced portfolio we have established over the past 5 years. And in the pie chart, you see, first, how well diversified our business portfolio is and how the individual growth engines are driving each business forward; second, the strong franchise across all continents. In the first half, all our regions grew double digit organically with Asia Pacific leading the pack. The future growth platform is now in place across the whole of the group, and we are uniquely positioned to benefit from both the macro and local trends in all the markets of all our businesses. To illustrate this in greater depth, let's look at the group's largest business, the Building & Infrastructure division. In the first half, B&I reached EUR 700 million of revenue equally balanced between OpEx and CapEx. It represented 40% of the group organic growth in H1. The business has 3 established growth platforms, which all delivered strong performance. First, Europe, which is more than half the portfolio, grew 15% organically. It was driven by regulatory services in France, which was up 13% and Southern Europe, which grew above 30%. Secondly, our Asian platform, which accounts for 21% of divisional revenue, recorded 17% organic growth. China performed very well with 24% growth fueled by large infrastructure projects. Thirdly, our Americas operations delivered 38% growth, thanks to a stellar performance in the United States. Growth was driven by large project management assistance for OpEx-related services and strong dynamics for data center commissioning services. B&I's growth will continue to be driven by sustainability, which is now sponsored by concrete government actions. Now turning to Slide 9. Many countries have announced large-scale investment programs to support the transition towards a greener economy. At the recent G7 Summit, the importance of rebuilding a greener post-pandemic world was one of the key messages. The return of the United States to the challenge of addressing global climate change will be a major driver. The stimulus plans, such as the EU Green Deal, the American Rescue Plan in the U.S. and the Chinese 5-year Investment Plan, target energy renovation, transport infrastructure, industry decarbonation or agricultural transitions. These are areas where Bureau Veritas has key expertise. These and other programs will generate numerous business opportunities for Bureau Veritas in the medium term, supporting not only our Building & Infrastructure business, but also Energy, Business Assurance, Agri-Food or Consumer Products. Bureau Veritas Green Line of services and solutions is focused on capturing these opportunities. During H1, the focus on health, safety, quality and environmental stewardship has continued to gather momentum and importance amongst our clients. As a result, we have seen accelerating demand for our BV Green Line of services and solutions. With our expertise, we serve our clients to meet their challenges all along the chain for all sectors of the economy and across all geographies. To give you a feel for what this means operationally for us, a few examples on Slide 11 of contracts we have been awarded in H1. BV's great strength is being able to deliver a huge diversity of services. In the resources and production sector, H&M is taking major steps to reduce the H&M brands' clothing and footwear hazardous chemical footprint. In the first half, they expanded their environmental chemical management beyond just clothing. Using Bureau Veritas online environmental emissions evaluator, they started measuring accessories and footwear. In the consumption and traceability area, contracts range from helping Sodexo to upgrade their waste management certification in Spain, supporting Lidl with food waste reduction or sustainable forestry certification and biodiversity services in the U.S. Now as regards social, ethics and governance, Bureau Veritas is supporting Walmart with the launch of their automated platform, ECO Records, for managing sustainability compliance. The platform will centralize and accelerate sustainable claim submissions and review processes with BV performing the ECO claim document reviews. BV is providing the social audit services for both document review and field services to boohoo in the U.K. where the company has implemented a complete review of the social accountability status of their entire supply chain. These few examples give you a more tangible idea of why the BV Green Line is becoming such an important growth driver. Francois will now take you through the first half results. Francois?

Thank you, Didier. Hello, everybody. So let's cover the key takeaways from our first half results. Revenue is 4.1% higher than the first semester 2019. To be expected, we have been helped by the catch-up effect of regulatory inspection audits mainly in the first quarter. The catch-up in work is probably largely behind us now, and we are now back on track where we left off, so to speak, before the pandemic. Our margins have also improved to precrisis levels, benefiting from higher volumes in a situation of strong recovery in the first half. That said, as there are still operational inefficiencies due to sanitary constraints, this is currently perhaps too early to say that we would return to prior peak margin in the full year. We delivered a strong free cash flow, thanks to a strict CapEx policy and efficient working capital management, which absorbed the strong top line growth. Moving now to the revenue bridge on Page 14. We delivered EUR 2.42 billion in half year 2021 with an overall increase of 9.9%. Organic growth reached 14.3%, including a stellar 22.5% growth in the second quarter benefiting from improving end markets across most businesses and the return to a more normal operating environment compared to the first semester of 2020. Worth noting that the comparables will be more challenging in the second semester 2021, especially for Certification, Marine & Offshore and Building & Infrastructure who benefited from the catch-up of postponed audits for regulatory inspection in H2 2020. To be noted, ForEx had a negative impact of 4.3% mainly due to the depreciation of some emerging countries' currencies and the USD and pegged currency against the Euro. Turning now to the adjusted operating margin. As you can see on the slide, the increase to 15.6% is largely explained by the increase in organic margin by more than 600 basis points. Scope had a 5 bps positive impact to the group margin and FX cost, 23 basis points. For your information, compared to 2019, our H1 margin improved by 20 basis points. For the full year, however, as mentioned, it's too early to directly extrapolate that improvement in H2 notably due to tougher comparables. The revenue recovery and operating leverage drove organic margins higher in all businesses. This was supported by significant cost-containment measures last year and favorable business mix. The best margin improvements came from Consumer Products, Certification and B&I having suffered the most from the lockdowns and other restrictions last year. The strong operational leverage driven by the top line recovery allowed Consumer Products to deliver a healthy 22.6%; Certification achieved an exceptional 19.4% margin with the additional benefits of digital audits; and B&I margin recovered to a normal level of 14.7% in the first semester. Looking at the bridge between adjusted operating profit and operating profit, there is nothing material to report. We continue, of course, when necessary and if necessary, to adapt our business model, which led to a limited restructuring cost in the first semester. For the full year 2021, we expect restructuring costs to be in the normal run rate of EUR 10 million for the full year. Net financial costs decreased EUR 23 million in the first half of 2021 compared to last year. This is thanks to the proactive debt management program we have initiated back in 2019. It reflects a decrease in the average gross debt and the decrease in costs due to the early repayment of some USPP and Schuldschein loans in 2020 as well as our EUR 500 million bond early in 2021. Looking at tax rate now. The adjusted effective tax rate of the group decreased to 32.2% from 37.9% in the first semester 2020. This 32.2% tax rate reflect the decrease in the corporate tax rate in France and bring us back to a similar level than 2019. For the full year, we still expect our adjusted ETR to be in the range of 33%. Moving to the free cash flow on Slide 20. As to be expected with the level of growth we have seen in the first semester, and particularly in Q2, there is always going to be the flip side impact on working capital. So at this stage, free cash flow is still very strong at close to EUR 230 million. In more detail, we have continued with our well-entrenched approach to cash collection. But with the Q2 top line growth at or slightly above 22%, it is no surprise at all to see a working capital requirement outflow of EUR 68 million. The operational recovery allowed us to restart some CapEx projects that were put on hold last year. CapEx stood at 2.2% of revenue compared to 1.9% in the first half of 2020, and we would expect this to be in the range of 2.5% to 3% for the full year 2021. As you can see on the slide, our working capital to revenue ratio was at 7.6% in the first semester 2021, which is 4 points below the period pre-2020. So this has helped to maintain a strong free cash generation and closed H1 with an even stronger financial structure. The adjusted net debt stood at EUR 1.17 billion, down 12% from December. Our healthy financial profile reflects a strong free cash generation, disciplined M&A strategy with EUR 35 million of spend net of divestment, lease payments related to IFRS 16 implementation of EUR 55 million and limited dividend outflow of EUR 8.4 million at the end of June. So we closed the half year with a leverage ratio of 1.3x and, as Didier mentioned, this is the lowest level since Bureau Veritas IPO back in 2007. So to sum up, this strong financial performance has been delivered, thanks to a lot of hard work from all the teams across BV in a very positive yet still complex environment, as you can imagine. Moving now to the business review. Let me share with you the highlights of the first half for each of our 6 businesses. First, Marine & Offshore. The business delivered a solid 5.3% organic revenue growth in the semester, mainly led by strong growth in the in-service activity. The shipping industry is under great pressure as we know at the moment. And in this context, we saw a rapid catch-up on inspection from 2020, and some H2 inspection were even moved forward to H1. So we expect a slower rate of activity in H2 as a result. As regards new construction activity, our new orders increased to 4.8 million gross ton in H1, up from 3.2 million last year. The order book at 15.3 million gross tons, end of June, is up 1.7% compared to December, and it remains very well diversified. For Agri-Food & Commodities, the business improved in Q2 and recorded an organic growth of 4.1% in the first semester. Worth noting that Agri-Food business achieved high single-digit organic performance. Growth was mainly fueled by agri upstream in Brazil and food testing in North America rising concerns for more traceability and sustainability all along the food supply chain remains a key growth driver of the business so far. For Metals & Minerals, we recorded double-digit organic growth overall. It benefited from a strong exploration market across all major commodities with gold, copper, iron ore leading the way and the continuing success of the group on-site laboratory strategy. Lastly, the Oil & Petrochemicals segment continued to suffer from the lower demand for oil and oil products. We continue the diversification towards non-trade-related activities and value-added segments such as biofuel, LNG or oil condition monitoring. Moving to Industry now. Revenue increased by 9.5% organically in the first half across the board. The strategy of diversification towards OpEx and power and utility markets continue to bear fruit. The Power & Utilities segment remained a key growth driver of the portfolio with double-digit organic performance achieved in the first semester. Growth came from Latin America and Europe, notably. This illustrates the good execution of our diversification strategy. In the medium term, we will significantly benefit from the growth opportunities related to renewables and alternative energies. Across most geographies, we are currently bidding for several wind and solar power generation projects with a good level of signing in H1, notably in the U.S., in the U.K. and in the Nordics in Europe. Lastly, in Oil & Gas, the performance improved. We benefited from the restart of many projects which we have put on hold and from favorable comparables. As of today, the share of Oil & Gas CapEx, as you know, in the group, has significantly reduced to 2% of the group revenue. Moving to Building & Infrastructure. Growth has been achieved at 19.5% in the first half fueled by all regions, notably the Americas. As said earlier by Didier, the group is well positioned, 3 growth platforms across different geographies, Europe, Asia Pacific and North America. Similar growth was delivered in both building and service and construction-related services. By region, we delivered very strong growth in Asia, led by the recovery of China. Here, the business remains driven by public transportation and energy infrastructure projects. The stellar performance was delivered in the Americas, led by a strong rebound of our U.S. operation. And it's a combination of large project management assistance and strong dynamics for data center commissioning services, as Didier described it. For Consumer Products, the business recovered with an organic growth of 23.4% in the first half benefiting from a large pickup of activity in Asia in all product categories. This reflects the ramp-up of many operations, which were in lockdown for much of the first semester 2020. Overall, the group made further progress in its diversification strategy towards online clients. It is also supported by CapEx and acquisition spend in the first half of 2021. Finally, Certification has been the best performance within the portfolio, up 38.6% in the first half. The strong recovery was driven by a catch-up of 2020 postponed audits in the first quarter and from the activity resulting from a year of recertification as regards several schemes. All geographical areas experienced double-digit organic growth. During H1, Bureau Veritas sustainability services grew above 25%, of which 32% in Q2 only, driven notably by a strong demand for greenhouse gas emission verification schemes. Comps have paid a role in our H1 performance, and will continue to do so in H2. When it comes to Certification, 2021 is a year with a strong quarterly volatility that we wanted to illustrate on Slide 26. A strong H1, first, as discussed, while H2 will be facing more challenging comparables, as you can see on the slide. Q3 2020 and notably Q4 2020 already benefited from a catch-up of postponed audits from H1 2020. The levels of revenue achieved were above their historical revenue average. Therefore, we expect H2 '21 to be negative from an organic point of view, however, remaining slightly above 2019 normative levels. To conclude this business review, it is an excellent set of numbers with some catch-up, as you could see during the presentation. And I hand now back to Didier for the outlook for the second half of 2021.

Thank you, Francois. The excellent first half allows us to upgrade our outlook for the full year. Assuming that there are no severe lockdowns in our main countries of operation, we now expect to achieve strong organic revenue growth from solid previously, improve the adjusted operating margin and generate sustained strong cash flow. Obviously, this includes, of course, a strong growth in H2 compared to H1 due to much tougher compares. In this volatile environment, we delivered strong operating and financial performance. Our past pro forma transformation has been a considerable benefit. Moving forward, Bureau Veritas is well positioned to benefit from strong macro drivers such as sustainability. With the 2025 strategic plan, we will capitalize on our strength and continue our successful journey of delivering a value-creating strategy for BV. Thank you very much for your attention. Francois and I are now ready to answer your questions on the call or on the webcast.

[Operator Instructions] The first question is coming from the line of Paul Sullivan from Barclays.

A couple from me. Firstly, can you -- are you giving us the exit rate for June? And in terms of the second half, outside of Certification and Marine, would you expect to see growth accelerate across the rest of the business on a 2-year view? And then on margin, you seem to be sort of reluctant to sanction or return to peak margins this year. Is that just a function of mix? Or are you thinking about some specific investment that we should be aware of?

So regarding your second question, Paul, on margin, I'm not sure the word reluctant is the right one, but probably the word prudent would be the one. It's true that we are prudent regarding the second -- regarding H2 margin evolution for a very simple reason. It is the fact that today, we are still very cautious about what is happening in Asia. We know that there is some local mobility restrictions in some countries in Asia today. So it's more cautiousness than reluctancy in pushing the margin up. By the way, we are very happy with our first semester margin. And we hope that the second semester could be at least at that level, but we will discuss it at the end of the year. Regarding now the second semester and your question on Marine & Offshore and on Certification, on the Marine & Offshore, in fact, we benefited from some catch-up in H1 due to the fact that some services were not given to our clients last year. So we had to do it, and we had a strong result in term of service in H1. So in H2, it will be a different situation knowing that the very good backlog that we had and the order that we recorded will clearly start to impact favorably our results next year, in '22, but we may have in the second part of the year quite a slowdown. On Certification, as you know, we benefited in H1 on catch-up. There is no doubt about it. And as you could see on the chart presented by Francois, we already benefited from some catch-up last year in Q3 and Q4. So the compare is more challenging. Meaning that the margin, for instance, on Certification, which is very good in H1, will be back to a normal level in H2. So it's the reason why we feel that -- and it's normal because of the compare that H2 will be at a lower pace in term of organic growth.

But in terms of everywhere else, would you assume everywhere else should be accelerating versus 2019?

As you could see, if you compare our results with 2019, we are delivering quite good results even if some countries are still suffering from the virus crisis. So again, I would be cautious, of course, it would not be the same level in H1. You asked about June, by the way, it was double-digit exit right now. So we did very, very well in June. So again, the second part of the year, now more and more, we're comparing ourselves to 2019, we should be over 2019, okay? But this leads us to -- let's say, to think that we are going to achieve high single digit for the full year in organic growth.

And sorry, just to clarify, that June exit rate, what was it versus '19?

What's that? Oh, versus '19...

Well, I would say, as Didier mentioned, first, to comment on June itself, so the compare to 2020 is a double-digit growth, kind of a similar trend as the whole of the order month of the second quarter. When it comes to the compare to June 2019, I would say, don't forget there are a couple of days more, 2 if I'm correct, working days. And it's -- you could plug in mid-single-digit growth compared to 2019 for the June exit rate.

The next question in the queue is coming from the line of Julien Fouché from Societe Generale.

Firstly, you mentioned an accelerated momentum for sustainability-related solutions across the entire portfolio. I don't know if you can share more precisely the growth trends you see there and how we should look at this going forward. And secondly, on Certification, the Certification benefited from strong momentum in CSR-related services. Are you able to share with us the proportion of Certification now related to sustainability? And lastly, on M&A, could you give us an update of your M&A pipeline and your strategic priorities?

Okay. So I'm going to start with your last question on the M&A side. We have a pipeline. And I could say that we have a strong pipeline, but we are extremely disciplined, and we have decided with Francois that we will continue in that direction. Since 2015, we decided that we would make acquisition exclusively consistent with our strategy, which we did. And I must say that amongst all acquisitions, we did very well. I'm very happy with all of them. And we'll continue in that -- in the same direction. Meaning, we are looking at what we could call bolt-on acquisitions, which will bring more value, but which will bring also expertise that are going to be complementary to the expertise we have. And by this way, we can continue to develop and to accelerate the resiliency of the group. This is absolutely clear. On the sustainability, the only thing I can tell you today is that we grow because the answer should be activity by activity. So we grow, thanks to the sustainability schemes, at a faster pace than the average organic growth of the group. So meaning that it's -- all the sustainability program, again, which are touching all of our activities from Building & Infra to ESG certification are clearly a tailwind for us and providing substantial organic growth on top of the, let's say, average organic growth, okay? On the Certification, we work a lot on the supply chain, as you know. And more and more, we are developing our CSR certification. The Board and the consumers want to be sure that the companies, which are committed on their ESG KPIs, achieve it. And it cannot be self-declaration anymore. It has to be certified, inspected, audited by a company like ours, independent third-party companies. So we are very solicitated on this important certification scheme. We are at the beginning. We are at the beginning. As you can see, in most LTIPs or bonuses of CEO, you can see now clear KPIs on ESG. Of course, now to develop trust, the final consumer and the Board wants to be sure that what is declared is achieved. So this is something which is accelerating clearly.

And the next question is coming from the line of Rajesh Kumar from HSBC.

Thanks for the color on Marine and Certification, that there was a bit of catch-up from last year. If you were to characterize your growth in the first half or the revenues, whichever you prefer, what proportion of it is either increased catch-up from last year or revenues, which will not purchase beyond 2021, like some of the restart activities? And what proportion of the growth is actually coming from the kind of CSR certification, which will be recurring in nature? That's the first question. Second question. On the Certification, you indicated that a company cannot do self-certification anymore. So are you getting involved at the Board level with the companies or at an operating subsidiary or company level where you issue them individual certificates, which then the company can add up to -- with another party or you to arrive at a company-level certification? And also that self-certification rule, which geographies is that valid? That would be the second. And finally, on the margin side. What are the lessons from the pandemic you've learned in terms of operating expenses? I can totally imagine at the moment, your travel costs are lower. There are some one-off tailwinds, but there must be some structural improvements in terms of automation, in terms of things you've figured out during the pandemic. So what sort of medium-term structural margin improvement can one hope to expect out of Bureau Veritas?

Thank you for your question, Rajesh. Francois, you could take the first one and the third one. Maybe if you want, you could start by the third one on the margin, and I will take the one on the Certification and this very pertinent question on Board-level decision on so-and-so. Francois?

Yes. So just on question three and one. I will start with question three on the margin. We've got a couple of lesson learns. And in my view, there are three lesson learns. The first lesson, and it may sound obvious, but it's always important to remind us this one is the best level of decision when it comes to cost management is having a local management fully in charge to take fast, rapid and quick action in the face of the pandemic. If we had to manage all cost-containment plan from Paris, telling you the results would have been completely different and not better. So that's -- I think the empowerment of our local management is a very strong strength of pure guidance. Two, on a broader -- more broader terms, the second lesson is remote audit, remote inspection is getting traction. I think we've mentioned in Q1 communication the share of the audits which are -- which have been conducted in a remote manner. For example, for Certification, in Q1, we saw this trend maintained in Q2. Meaning, above 20% of the Certification audits have been done remotely. We'll see in H2 with some major geographies somehow moving away from COVID restriction, if the clients will still be willing to operate remotely. But it has obviously a very positive impact in terms of improvement of chargeable time from more auditors and as a consequence, reduction of charging times and charging costs. So this is still something which is very present in our H1 numbers. And the third lesson is we are a people business, as you know. And we saw that in summer it has -- especially in the activities, having laboratories, automation, which was well underway, is really getting a strong push for a reason as simple as that some of the workforce we had in summer has -- could not go back to the countries where they have been working. There is a lot of South Asian workforce who choose to travel here and there, which is now limited in its travel capacity and that we have replaced through automated equipment, especially in the metal and mineral laboratories and the oil and P laboratories. So remote or this automation are getting traction throughout -- or that -- these are the lessons learned through this crisis. On the very first question on the catch-up, to make things simple, consider Q2 as a catch-up-free zone, except for Marine & Offshore. Marine & Offshore, we still had quite a bunch of surveyance audits this time moving from H2 to H1. I can further elaborate, if need be. But beyond Marine & Offshore, all the divisions are on the -- would -- I mean they are to create normative rates. But I mean when I say compared to 2019, but I think free of major catch-up.

Francois, thank you. When it come on your question regarding certification on the Board-level decision, you're absolutely right. It's clear that today, for instance, I'm a Board member of a company in France and the CEO committed to the Board to have 75% of each product recyclable. So he self declared the fact that he achieved this target. And I said, no, no, no, but we need this to be inspected and audited, which is done now, showing it's not just because I was in the Board and the Board members were asking exactly the same question. Now in fact, the CEOs have to demonstrate and to prove that what is declared to any audit firm, which are more looking at the KPIs than purely going, inspecting, auditing and certifying is proof. And it's all about trust. So this is not going to be a trust because at the end, you have the Board, but you have also the consumers. I'm thinking, for instance, about one of our client, I can name it. It's L'Oréal. They came to us because they are feeling on their shampoo bottle that there is no foliant in their shampoos. But now it's certified by Bureau Veritas because we tested the product in our laboratories in term of chemistry, and there is no foliant. And we are more and more now consulted by our own clients or other clients who will have to prove to their community, their Board, but also the community and the citizens and their final consumers that what they say, declare is true. It's all about trust. And of course, as independent company, we are very well placed to deliver this type of service.

And the next question is coming from the line of Annelies Vermeulen from Morgan Stanley.

I just have two, please. So firstly, on -- you've talked a lot about the operational leverage and cost efficiencies and so on. And given the very strong margin performance in some of your divisions in the first half, I'm just wondering how much of that is still being done on a lower headcount base. I don't know if you're still in the process of rehiring people or whether that is largely then completed. I'm just wondering to what extent some of the work you've done in the first half has been thanks to, I suppose, an overutilization of staff. Any comment on that would be helpful. And then secondly, you've -- thank you for all the detail on the Green Line and the ESG activities and you've obviously talked about growth being ahead of the group for some of those pillars. And I'm just wondering if you can comment on the margin on some of those newer ESG-related activities that you're doing. Are they typically margin accretive to the various divisions that they fall under? Or is it relatively in line with the divisional average?

Okay. So Francois, maybe you could answer the first question?

Yes. So on the first question, staff and headcounts, I think together with the year, we took from the beginning of this year a very careful view when it comes to the signing to re-recruit or restart recruiting or reinitiate salary increases. And I think we've done it in a way that we have been looking geography by geography, business by business along the way. As soon as we saw somewhat of an horizon long enough in term of business, then we took the decision to relaunch our recruitment processes. And lastly, I would say just a couple of months ago, we finalized or finalized increases for the whole company. So it shows that we've taken a step-by-step approach because we are, like you, building our own business view based on the various news from the pandemic. So -- and I'm proud to report that we've re-recruited vastly now in the U.S., in Europe. In China as well, we've rebuilt our workforce there. On the back of the business we've gained in H1, there is no mystery that the level of growth we have delivered is obviously linked to the low comparables. But it's as well and most importantly been possible because we have found the resources and re-recruited the right level of resources. Otherwise, the math would not have been working that fine. So have we gained a lot of efficiency? I would say yes, in Q1. In Q1, especially in Certification where the demand was so strong that for usually low quarter in term of activity, our auditors could deliver more than the usual. And we went back to normative margin in Q2 to make it simple.

Thank you, Francois. Moving to the margin linked to the Green Line. Well, if you look at the Green Line, of course, as you can see, we are going to offer our services. It could be our renewables. I'm thinking about wind farms, solar farms, hydrogen. We could offer our service on decarbonation programs and we could offer our service on traceability, bio food and to the end to what I call ESG certification. In fact, when you look at these various businesses and -- which all along the Green Line, in fact, the margin will be at least similar to the margin that we enjoy in the various activities. When I say at least similar, because it needs a particular expertise if you are, for instance, in the, let's say, industry part, energy. Tomorrow, our margin on -- when we work on the inspection of wind farm or solar farm or hydrogen, which is -- when you think about the type of inspection on the hydrogen side, it's close to what we were doing in the past in Oil & Gas and on the CapEx side. So meaning that we will enjoy the same level of margin, probably quite similar. Now if you go to Certification, the average margin that we enjoy in Certification will be quite the same, probably a little bit better as long as we go to some specifics. So along the Green Line, clearly, the margin should be, again, at the same level. For me, if you think about the Green Line, what is important is the traction and the potential of organic growth. And let's be clear, if Bureau Veritas comes back to the margin that we enjoyed in the past, which I'm sure we will, that I would prefer growing the business at that type of margin compared to being obsessed by getting a better margin and having a lower organic growth because the potential is huge, and it is the right time to take market share. And as we are leading the pack, of course, we push as much as we can because, again, we can cover the whole line and none other can do it.

The next question is coming from the line of Neil Tyler from Redburn.

I suppose three -- I've got three. First of all, coming back to Annelies' question, but from another perspective on cost phasing. I think at the end of 2020, you talked about the operating costs having declined by about EUR 270 million. And broadly, 2/3 of that might be viewed as more temporary. So assuming that sort of EUR 180 million figure still stands, is the first half run rate on costs already incorporating a return of that EUR 180 million on an annualized basis? That's the first question. Secondly, with regards to the remote work and the lower travel costs in chargeable time, could you perhaps sort of share your views on whether the conversations and contracts you're signing with customers now represent you're translating into any sort of pricing pressure to reflect that lower cost incurred? And thirdly, back to the restart with the offering, could you talk a little bit -- in a little bit more detail about the momentum that you've had so far and you anticipate over the remainder of the year with that?

Okay. I'm going to start with the last question and Francois will take the first and the second one. On the Restart Your Business with BV, of course, because of the actual situation, we still have the opportunity to, let's say, sell this product. But more important than anything, what we are noticing now is that thanks to this service, we started to work with clients we were not used to work before and we are now delivering them new schemes, in particular, in term of health and safety. I'm thinking about, for instance, Accor. We started with return your business with BV. And now we have like an inspection scheme to systematically inspect their hotel regarding hygiene and regarding, of course, even safety. So, in fact, it's bringing Bureau Veritas today some new opportunities with new clients that didn't know us before, for instance, because we have them on the B&I, on the Building & Infrastructure, side on services, which are more like inspection certification type of services. So now the return your -- Restart Your Business with BV or a full scope of services is moving progressively to the full scope of services because during this pandemic crisis, clients started to be more concerned about the hygiene in some places, offices included. So it's a more -- right now, it's probably more challenging to just measure purely Restart Your Business with BV, but it's bringing clearly revenue to Bureau Veritas. First and second question, Francois?

Yes. So on the cost side, just to be specific, I think your numbers were broadly right. But just to be sure we're talking the same language, in 2020, the main cost adjustment was staff related, 2/3 people and 1/3 was more cost-driven, including travel. So -- and it represents altogether a saving of EUR 260 million in the year 2020 compared to 2019. So a reduction of roughly 9% and for subcontractor, 19%. So what have we done in H1? If you read the numbers, we'll see that H1, our personnel costs are up EUR 78 million. So part of these savings in 2020 have been expensed in a sense already back in 2021 in order to provide the workforce to deliver. On the external subcontractor part, which is a second leg of our production capacity, the costs are up only EUR 10 million. So we've clearly ensured that, first, our own staff was fairly busy before moving to the usual flexible resources. Again, it's -- it complement what I've said before. Meaning, we have restarted our recruitment program in the areas where we had visibility strong enough to make sure that the people we're recruiting were busy day 1 delivering services. Now the tough part of the question is not so much what we have done in H1, it's more how much we can keep moving forward. So it would obviously depend on the level of recovery. In H1, we have reinvested in a very selective, disciplined manner. We have recruited in important geographies for Bureau Veritas, France, China, U.S. And believe me, you can't deliver 30% growth in BUI -- B&I U.S. when you know about the U.S. labor market today without getting smart on recruitment. So we are looking with Didier and all the excom members on our backlogs. And we will continue this disciplined manner. So from a modeling point of view, we will be back to the number of staff we used to enjoy in 2019 somewhere in the second half of the year, hopefully, when our level of activity will be back to that part in the large part of our organization. The other question, I think I forgot about the first -- the other question you have.

It's about the remote work.

The remote work. The current status...

And the risk of...

Frankly, it's -- I would say it's a bit -- it's early to -- it's a bit too early to ask the question because we -- we've developed this remote audits lots in the U.S., in Europe, say, in mature economies, which are just getting out of the -- hopefully, the restriction related to the pandemic. So most probably, we'll be able to tell more after summer because those discussion are happening as we speak. The audits being introduced for summer are currently being organized and -- which mean I don't have or we don't have a consolidated view of the percentage of our clients willing to continue with remote solutions. So if you were me, I'll keep this question for the Q3 publication. And you have my commitment, I will give you a more detailed answer at that time.

And the next question is coming from the line of Kate Somerville from UBS.

Three questions from me, if I can. The first question is on Building & Infrastructure. Obviously, this has been above -- significantly above the 2019 level and mostly driven by the U.S. I was wondering if you could give a bit more detail around the sort of main drivers in the U.S. and how much of that growth do you expect to continue into H2. And secondly, sorry if I missed this, I just want to get an idea about what your new guidance means. Does that strong organic growth means high single digit? And then finally, obviously, you've delivered strong cash flow. And I was just wondering if there's any change in your -- sort of your use of cash, especially if you don't find significant M&A opportunities.

Thank you for your question. So strong -- let's start with strong. So strong means high single digit. On the infrastructure and building side in the U.S., we are doing extremely well with the company that we bought 3 years ago, which is named Primary Integration, it's about data center with double-digit organic growth, and we have a backlog which is very big. This company, as you know, is doing technical inspection in data centers. And of course, with the expansion of the data centers worldwide, we bought this company which was U.S.-based. But now we can give the service worldwide. But we decided to keep this company verticalized. And it's a vertical for Bureau Veritas because it's a pure expertise. So we deliver the service worldwide. But it's -- again, the revenue is in the U.S. To give you an idea, there were 120 people working for PI 1 year ago, 2 years ago, and there are 200 people now. And these guys are extremely expert as you can imagine. The second is the OpEx. We bought this company named EMG. And we won some very large projects across many sectors, many sectors. In this case, in fact, we are defining some protocols with retailers, could be schools. And after, we go, audit and inspect again these protocols. And this company is growing very fast, in particular, because of what happened with COVID. But not just that. For instance, if you take some -- I'm not going to give the brand name, but let's say, fast food shops -- chains, they decide to digitalize the way they are delivering their food. Our job here is to go and visit all of these fast food stores to check, inspect to be sure that they are compliant with the decision which is made centrally by the chain. And this is now something which is clearly moving fast in the U.S. The second point is the transaction. There are a lot of transactions. And we are, in this case, inspected buildings before they are sold to new owners. And this is something which has accelerated a lot. So it's the reason why we have such a good performance in Building & Infrastructure in the U.S. And I must say that we are very pleased with these companies and some other. We bought some good compliance companies. In this case, we are auditing the -- at the design phase, we are auditing all the [ Doors ] -- the [ Dorwin ], sorry. And we do it for the government or for the local authorities. And this again is expanding. And last but not least, infrastructure. As you may know, we got a very big contract with an airport in -- which is LaGuardia in the U.S., and we are getting more. And you can imagine the opportunities we have in front of us after what happened in Florida with this building which collapsed because some building owners now want their buildings to be inspected. So it's the reason why we are doing so well in the U.S. on the Building & Infrastructure side. And the -- sorry, Francois, on the cash flow question. Okay.

On the -- no, no that's fine. I did not forget. So yes, your question on cash, which is 2 sides in what's happening and what are we doing with this. I think on both sides of the equation, the answer is discipline. We are very disciplined when it comes to cash collection. And the old Veritas executive committee is clearly very much aligned on maintaining a high discipline in terms of cash collection and working capital management. I am personally extremely happy that despite the strong growth, we've maintained a working capital ratio to revenue way below precrisis levels. We used to be at 10%, 12%, 13% in H1. And we maintained below 8% at the end of June, 7.6%, which for -- it's a sign that we may have learned something as well through this crisis on this front, and we remain very disciplined. So that's one. We are as well very disciplined when it comes to capital allocation. What are we doing with this cash? It would be very tempting with a leverage at 1.30 to think we should spend it all rapidly. I think Didier has been very clear as well. We've been successful through a well-organized bolt-on acquisition program for the last 6 years now. We will continue with this. You know the multiples are good as new. So far, we've managed to buy bolt-on companies at affordable rates and a rate that brings a decent return to the shareholders. And our intention is continue that route, continue that way. The inflection we will be making in H2 compared to H1 is more on the front of capital expenditure, CapEx. We've remained very cautious in H1. And we are guiding for total CapEx in the full year closer to 2.53%, which means somewhat of an acceleration. And a good chunk of this acceleration will be on our Consumer Products division that we accompany to diversify geographically and diversify in term of services, investing -- continuing our investment in the technology front. So discipline on cash collection and discipline on investment for the second half of the year.

And the final question is coming from the line of Nicolas Tabor from Stifel.

The first one would be just a clarification on the O&P trends. I mean are you expecting a rebound in Q3? And how is it evolving? And do you expect the price pressure to continue going forward? And then on Consumer Products, can you give us more color on the expected evolution of the profitability? As you just said, you intend to expand and invest in that segment over the -- at least the short term.

Yes. On your first question, Nicolas, on oil and petroleum, I do not see any rebound. The good news that we touched the floor, meaning that we do not see any more deterioration both in term of revenue and in term of margin. So -- but I do not see any rebound yet and probably before a while. On the Consumer Product, Francois, would you answer this question, please?

Yes. On Consumer Products, you've seen that at the end of the first semester, we are not quite yet back to pre-'19 level in terms of revenue. But margin-wise, this division is usually delivering around 23% in H1 and around 25% in H2 mainly due to the seasonality of Chinese New Year. And I think we can say that we are back on track with this type of margins. So we expect H2 to reflect historical profitability levels for Consumer Products.

I think that was the last question, if I'm right. So I wish you all a good morning, good afternoon and good evening and thank you for your attention. And for those who are going to be on vacation, good vacations.

Thank you, everyone, for joining us on today's call. You may now disconnect your handsets. Hosts, please stay connected.