Bureau Veritas SA (BVI) Earnings Call Transcript & Summary

Welcome to the Bureau Veritas Q3 2024 Revenue Conference Call. My name is Allan, and I will be your coordinator for today's event. Today, we will be hosted by Hinda Gharbi, CEO; and Francois Chabas, Group CFO. [Operator Instructions] And for the duration, I will now hand you over to your host, Hinda Gharbi, to begin today's conference. Thank you.

Thank you, Allan. Good morning, good afternoon and good evening to everyone. Thank you for joining us today on the webcast and on the call. I'm here with Francois Chabas, our Group CFO. We'll be presenting our Q3 2024 revenue update, and we will then take some questions. In the third quarter, we continued our growth momentum, delivering strong top line growth while actively managing our portfolio in line with our LEAP | 28. I'm grateful to our colleagues around the world for their work, efforts and dedication in delivering these results. First, starting with our revenue performance. Revenue for the quarter was EUR 1.55 billion, up 8.8% year-on-year. The organic increase was 13%, exceeding expectations for some businesses and confirming the associated underlying market trend. This resulted in a 10.5% organic growth on a year-to-date basis. It is key to mention that the growth was driven by the entire portfolio. The scope effect was a positive 0.5%, reflecting a higher contribution of 1.1% from recent bolt-on acquisitions, partly offset by the impact of small targeted divestments. ForEx had a negative impact of 4.7% in Q3 due to the appreciation of the euro against most currencies. Excluding foreign exchange, our growth was up 13.5%. In light of our resilient 9 months performance, our robust backlog and our focused operational execution, we are upgrading our 2024 revenue outlook for the second time this year. Looking at the mix this quarter by business and by geography. Our diversified portfolio delivered across the board with all business lines and regions posting high growth, continuing our growth momentum from previous quarters. Our third quarter performance also confirms customers' high demand for sustainability and energy transition services. This underpins, to a large extent, the double-digit organic increase in Marine & Offshore industry and Certification. Additionally, Consumer Products, Buildings & Infrastructure and Agri-Food & Commodities all achieved solid high single-digit organic growth. From a geographical standpoint, all regions performed well, with the fastest growth recorded in the Middle East and Africa, as well as in the Americas. This broad-based growth underscores the strength of our business model and the successful execution of our strategic priorities. Turning now to our CSR commitment. Our organization is executing CSR programs across our operations in line with our 2028 commitment. In these first 9 months, our CSR performance indicators progressed as planned through well-defined actions across our different businesses. Our governance programs are notable for the high impact they have as they ensure we have well-trained, independent and impartial workforce. I'm proud to report that our sustainability efforts have been recognized by leading nonfinancial rating agencies like the S&P, MSCI and EcoVadis. These ratings are a testament to the dedication of our global teams as they embed sustainability practices within our operations and in our daily tasks. In this quarterly call, I would like to share an update on our focused portfolio progress. I'll specifically comment on our M&A program actions for this year. Year-to-date, we have completed or entered into agreements for the acquisition of 7 companies, expected to add around EUR 80 million in annualized revenue. These acquisitions fall into two key strengths. First, companies that will help us expand our leadership in sectors where Bureau Veritas is already a leader. Second, companies that will allow us to build new strongholds in fast-growing markets. In parallel, we have divested or entered into agreements to sell 2 businesses, representing around EUR 165 million in annualized revenue. Both divestments will help strengthen our balance sheet and will support our M&A plan. The first divestment announced in half 1 results was the B&I technical construction supervision business in China, and the second concerns our [ subscale ] food testing operations, which I will detail in a sequent slide. Now let me share details about some of our recent Q3 transactions. Starting with our expand leadership in existing strongholds stream. As a reminder, this stream involves businesses where we want to strengthen our existing leading market position through market share gains and services expansion. This ambition will be achieved through a combination of [ rapid ] organic scaling and acquisitions that broaden our business portfolio capabilities or geographical coverage. Our recent acquisitions are for our Buildings & Infrastructure portfolio. Our key priorities for this business involves building a comprehensive CapEx platform for both Buildings & Infrastructure projects and then developing new positions in OpEx services. In October, we announced one transaction aligned with these objectives, and we expect others to be completed in the near future. We acquired the IDP Group. This company is a leading independent provider of Building Information Modeling, Project Management Assistance and Digital Twin Services for the public and private sector in Spain. This acquisition brings key digital enablers that will enhance our services and operational capabilities in B&I. With this acquisition and others in our pipeline, we are reinforcing our leadership in the Building & Infrastructure sector. This will enable us to better serve our clients and to capture growth opportunities across this large and dynamic market. Moving now to our create new stronghold stream. We intend here to develop the small businesses we currently have in markets where customer demand is very high. These markets are mostly driven by sustainability, energy transition, cybersecurity and digitalization and connectivity. In half 1 '24, we completed 4 acquisitions, 3 were for our consumer technology testing business to augment our capabilities in Asia and one was for our cybersecurity business to develop our North America services platform. As we execute our well-defined acquisition road map in this new stronghold stream, we have completed this quarter, 2 new strategic acquisitions. First, we acquired Aligned Incentives, a U.S.-based provider of sustainability solutions. This acquisition augments our capability in the rapidly expanding sustainability transition services market, as I will detail in the following slide. And the second one we acquired, ArcVera Renewables, a leading player in the U.S. new energy space, this transaction enriches our capability to support renewable energy projects and to complete our offering for this fast-growing market. Let me now spend a few minutes on our most recent acquisition Aligned Incentives. This addition is a good example of what we aim to do as part of our LEAP | 28 strategy. This company will help us complete our portfolio of transition services in the fast-growing market of digitally enabled and AI-powered sustainability solution. When it comes to sustainability reporting, the market demand is shifting from a model, relying on high-level estimates at corporate levels today towards more transparency and granularity in footprint assessment. It will rely on more accurate custom life cycle-based data, taking into account not only the emissions footprint, but also the impact on many other sources like water, for example, for every product across a corporate portfolio. Aligned Incentives is an innovative U.S.-based provider of AI-powered enterprise sustainability planning solutions. They bring deep expertise in areas like greenhouse gas accounting, climate risk and ESG data management. By integrating this technology augmented into our portfolio, the group will be able to bring differentiated solutions to help our clients measure, manage and report on their environmental, social and governance impact with unprecedented accuracy and speed. Moving now to the third stream in our focused portfolio strategy pillar, optimize value and impact. In line with our LEAP | 28 strategy, we have been assessing the progress of the businesses classified under the stream to ensure they are performing as planned. Earlier this month, we entered into an agreement to sell our food testing business to Mérieux NutriSciences, a global leader in the food testing business. Our food testing global operation generated EUR 133 million in revenue in 2023 and employs over 1,900 experts across 34 labs worldwide. Post closing, this divestment will be accretive to our margin and will have a neutral impact on our adjusted earnings per share by 2025. To summarize, now the -- this strategy update around our focused portfolio, I'd like to emphasize that we have clear, granular and defined plans for every business in our portfolio, and we are working diligently to execute those plans. In the coming weeks and months, you will see more progress, particularly on the M&A front. I will now hand over to Francois for the financial review. Francois?

Thank you. Thank you, Hinda. Good afternoon to everyone. Taking now a closer look at the revenue bridge. In the third quarter, we delivered EUR 1.55 billion in revenue, representing a strong organic growth of 13%. And this performance demonstrates our continued execution capacity and the benefits of our secular growth trends. This marked the ninth quarter of organic revenue growth at or above 8% over the last 11 quarters, so very close to -- over the 3 years. Accelerated acquisition realized over the last 12 months added 1.1% to the group's revenue and 0.5% on a net [ scope ] basis, as it was partially offset, as Hinda mentioned, by the disposal of our non-core Chinese construction business in July this year and a small automotive divestment the year before. For your information, the deconsolidation of our food testing business will occur early next year most probably. When it comes to ForEx impact, it represents a drag of minus 4.7%, leading to a total growth of 8.8% on a reported basis. This is mainly attributed to the strength of the euro versus several emerging market currencies. In Q4, we expect the FX to remain a headwind, although we expect it to ease sequentially. On a 9-month basis, the Bureau Veritas delivered EUR 4.5 billion of revenue. We achieved 10.7% growth at constant currency, with organic revenue growth increasing by 10.5%, while the acquisition net of disposals contributed [ 0.2% ]. The strong organic performance highlights the strong momentum around the secular growth drivers. And ForEx, in fact, represents a drag of 5.1%. When it comes to the performance of the different businesses in the third quarter of the year and for the first 9 months, you'll see both numbers for third quarter in the middle and year-to-date numbers on the right. I'm pleased to say that both the third quarter and the 9 months are pretty much comparable. All businesses delivered good growth, vis-a-vis 3 activities led the growth, Marine & Offshore, Industry and Certification. They all delivered double-digit organic growth in 9 months, including the third quarter, on the back of continued momentum in sustainability-driven services, including marine decarbonization, renewable energy and certification schemes. Agri-Food & Commodities and Building & Infrastructure, both recorded mid-single-digit organic revenue growth in the first 9 months, with an improvement in the third quarter up high single digit organically, as both benefited from improving trends in the U.S. market. [ To be noted ] as well as B&I benefited from favorable comparables in Q3. Finally, Consumer Product Services continued to recover at a high single-digit pace for both Q3 and 9 months, benefiting from new product launches and stabilization of the technology business in the third quarter. From a scope point of view, which is in light gray, the contribution is mainly concentrated on CPS, where M&A took place earlier this year. The various acquisition that have been described a few minutes ago will start to impact our P&L as the year progress, but they aren't yet to be seen from a P&L point of view. So we expect the next quarter to start materializing those, especially on B&I, on Certification and on Industry. And the divestment of our lab testing business will impact the Agri-Food & Commodities division, as I mentioned, most probably in Q1 or starting Q1 next year. I'll now pass it back to Hinda for the in-depth business review.

Thank you, Francois. I'll now share with you the highlights of the third quarter for the 6 businesses. Our Marine & Offshore division delivered another strong performance, posting a 13.2% organic increase. This continued momentum underscores -- this continued growth momentum underscores our differentiated positioning as the maritime industry accelerates the decarbonization, its fleet renewal and its digitalization efforts. If we drill down into the different activities, we grew double digit across both new construction and our core in-service. In new construction, the dynamic global shipbuilding markets led by Asia and China fueled this expansion. Our core in-service business grew at a rapid pace, driven by our increased number of class vessels, disciplined pricing and rising demand for retrofits and upgrades to meet new environmental regulations. In the first 9 months of this year, we have secured 10.8 million gross tonnes in sales, bringing our backlog to 27 million gross tonnes, up 24% year-on-year. This work was secured by winning contracts for new LNG-fueled ships, container ships and other specialized vessels. This record backlog gives us higher visibility on future ship construction activity and pace. While we remain confident about our ability to navigate this dynamic market environment, we believe that in 2025, shipyard capacity would be fully utilized, which will slow the conversion of our backlog versus this year. When it comes to innovation, the business contributed to the development of low carbon emission technologies and issued an approval in principle to French luxury cruises operator, Ponant, for its new wind-assisted propulsion passenger vessels. In the third quarter of 2024, the Agri-Food & Commodities business recorded a high 8.5% organic revenue growth, delivering a 5.9% performance on a 9-month basis. By segment in Q3, Oil & Petrochemicals achieved once again a high single-digit organic growth, performance was mainly fueled by market share gains in Europe and the ramp-up of contracts in the Middle East. For Metals & Minerals, we recorded a sequential recovery, posting double-digit organic growth in both upstream and trade activity during the quarter. Our on-site laboratory strategy and the ramp-up of a significant contract in the Middle East contributed to this good performance. The Agri-Food segment delivered mid-single-digit organic growth. The Agri side leveraged new development with key players in Latin America and Europe, while the Food business benefited from pricing and services diversification initiatives. Finally, strong performance in some African and Middle Eastern countries contributed to the Government Services segment, low single-digit organic growth. In terms of sustainability accomplishment this quarter, we secured an R&D contract with a Finnish oil refining company to provide services for product and feedstock quality optimization. We were also awarded a laboratory testing services contract for a European leader in sustainable aviation fuel. Moving on now to our Industry business. In Q3 '24, we recorded 23.8% organic revenue growth, with double-digit growth across the main segments. Year-to-date, the division has achieved 19.7% organic growth, primarily led by the buoyant energy sector. We are increasingly working on green objects alongside our traditional services in the Oil & Gas. The Power & Utilities business recorded a high double-digit drive, led by strong OpEx activities in the Middle East and Latin America. We also maintained good momentum in CapEx services for nuclear and renewable power. The Oil & Gas segment remained robust in both CapEx and OpEx activities, benefiting from the ramp-up of major capital projects, especially in the Middle East and in the Far East. This quarter, we secured a key contract to perform quality assurance and quality control inspections for an offshore gas project in Vietnam. Industry Products Certification services performed well from high levels of activity in North America, China and France, driven by high demand for pressure vessel testing, welding inspection and raw materials testing. On the sustainability front, we are benefiting from an accelerated pace around energy transition projects. In Q3 in China, we conducted a hydrogen storage tank project review. And in France, we secured the water analysis and data monitoring services contract for a new nuclear European pressured reactor project. For B&I now, we achieved an organic growth of 9.3% in the third quarter of 2024, representing sequential improvement and recovery from 4.3% organic performance in the first half. During the period, the CapEx business grew at the same pace as the OpEx one. In the Americas, we delivered double-digit organic performance in Q3, driven by a very strong performance in the U.S. Our data center and mission-critical infrastructure business maintained strong double-digit expansion, while regulatory services and infrastructure CapEx project also showed a strong traction. In Europe, we achieved high single-digit organic growth, led by Italy, benefiting from the country's infrastructure multiyear investment plan. France also contributed to the strong growth, where our OpEx-focused activities grew the volumes -- in volumes and leveraged productivity gains. The Asia Pacific region grew at a mid-single-digit pace, boosted by strong performances in South and Southeast Asia as well as in Australia. China, China's public spending constraints continue to weigh on transport infrastructure, moderating, as a result, overall growth for the region. Finally, in the Middle East and Africa, we grew double digits organically, driven primarily by large-scale project wins in Saudi Arabia. We continue to develop sustainability solutions for buildings. In the third quarter, we were selected by several California school districts to conduct facility assessments, including energy audit and the development of net zero energy reduction plan. We were also awarded inspections around electrical equipment for electrical vehicle charging stations in Italy. Moving now to the Certification business. The division recorded strong organic growth of 17.7% in Q3, a similar growth trend to the last 2 quarters. This was led by strong volume increases and price escalation. It also reflects high market growth where comprehensive brand protection and sustainability commitments are fueling strong customer demand. Our Quality Health, Safety and Environment & Specialized Scheme solutions, particularly in automotive, posted double-digit growth, benefiting from recertification cycles. This activity is also supported by the development of innovative solutions in response to client demand for customized and voluntary scheme. Additionally, we continue to develop public outsourcing services to address government and local authorities needs. In line with the recent outsourced government contract secured in France, the group was awarded a food 2nd party audit and training services in Madrid nursing homes in Spain. Sustainability-related services and digital certification activities also recorded double-digit organic growth. This performance is benefiting from tightening regulations and is driven by high demand for carbon and emissions verification, forestry audits, ESG-related supply chain audits and cybersecurity assurance. To grow faster this business, a key focus of our LEAP | 28 8 strategy, we continue to leverage our footprint in critical services and to create scale through targeted acquisitions. During the third quarter, we continued to grow services around assurance of sustainability reporting. As an example, in France, we helped the medium-sized enterprise to evaluate its CSR maturity, it's double materiality analysis and to complete the GAAP assessment ahead of CSRD reporting. We also completed the audit of suppliers traceability and compliance with European deforestation regulation for a leading producer of natural rubber in Africa. Lastly, for Consumer Products Services, we delivered a 7.5% organic revenue performance in Q3, confirming the improving trends of the last few quarters. Geographically, Asia is leading with good organic growth, led by China, Vietnam and Bangladesh. Looking through the segments now. In the Softlines, Hardlines and Toys segment, we delivered high single-digit organic growth, primarily driven by volumes recovery in China and Southeast Asia, with strong activity in Hardlines. The Healthcare subsegments, including Beauty and Household products, posted solid double-digit growth as we successfully scaled the service of the acquisitions completed in the last 2 years in the United States. Supply Chain & Sustainability Services recorded very strong double digit growth, benefiting from increased demand for CSR audits and green claim verification services. Finally, the Technology segment recorded low single-digit growth, an improvement from the negative trend in half 1. This market remains challenging with low product launches in wireless and slowdown in new mobility equipment, particularly in China. Electrical appliances performed well, though and benefited from improved consumer spending. In terms of sustainability services development in the third quarter, we were awarded a contract with an Austrian furniture chain to support their suppliers with sustainable claims certification. We also performed environmental emission management services for one of the largest clothing companies in China. Moving now to the upgraded outlook. We now expect to deliver for the full year '24 an organic revenue growth in the range of 9% to 10%. This is compared to a high single-digit guidance at half 1 '24. This reflects our strong 9-month track record and our confidence in our business execution for the rest of the year, an improvement in adjusted operating margin at constant currency and strong cash flow with cash conversions above 90%. Before opening for questions, let me leave you with a few takeaways. First and foremost, our customer focus and operational excellence, combined with a robust backlog, have enabled us to outperform through our first 9 months of the year, including a strong performance in Q3. Second, as we execute our LEAP | 28 strategy, we have made tangible progress, accelerating our M&A activity and actively managing our portfolio, as shown by the food testing business divestment we announced this quarter. Finally, we remain confident that the key secular market trends underpinning our strategy, remains strong. This gives us confidence in the future growth trajectory of our LEAP | 28 plan. I am proud of the progress we have made in the first year of our strategic plan, and I am confident in the opportunities that lie ahead for Bureau Veritas. I'd like to reiterate my thanks to our teams across the world for the excellence in execution they have shown and the commitment to our strategy execution as we ramp it up. Thank you all for your attention. Francois and I and are now ready to take your questions on the call or on the webcast.

[Operator Instructions] We will take our first question from Suhasini Varanasi, Goldman Sachs.

Just a couple from me, please. Given you've delivered 10.5% organic growth already in the 9 months to date, it looks like you probably need maybe 8% to 9% growth in fourth quarter to get to the 10% number, which is the upper end of your range. Can you maybe discuss the moving parts that will get you to either the lower end or the upper end of the range? What is your key concern at this point in time? The second one is on B&I. I think in Europe, the CapEx activities did benefit from Paris Olympics. What was the extent of the benefit, which we should expect should reverse in the coming quarters, please?

Thank you, Suhasini, for the question. So look, the guidance here we updated, just to give you a range of what we expect for the rest of the year, I think our assumptions overall on execution having changed dramatically, we take into account that Q4 tends to have different -- some cyclicality for some businesses. We want to make sure we are actually prudent about that. So overall, I think it's a reasonable prediction for the rest of the year with the visibility we have today. We don't expect major dynamic change overall, and that's why we decided to provide this guidance at this point. Now on the B&I question, the Olympic Games in France were a good opportunity to -- they created quite a bit of volume here in France for a limited period. It had some impact on our business to the tune of roughly 2 million. So it's not massive, but it was reasonable to participate in this.

We will take our next question from Karl Green, RBC.

I've got three questions. The first question, just in terms of the reported revenue growth in the first 9 months of 5.6%, is that materially different from what you'd expected at the start of the year? And then kind of linked to that, is there any chance you could estimate your real rather than nominal pricing power this year, just allowing for those emerging market inflationary dynamics? The second question, very simply, just on the Americas organic growth of 18%. Can you just split that between North and South America, if possible? And the final question, just about if you could remind what the group's luxury goods exposure is? So thinking about Consumer Product, Softlines, perhaps Certification overall. Just kind of any kind of quantification of the group's exposure to the luxury industry.

Excuse me, we're really having difficulties hearing you. Could you please come back to the second and third question?

Sorry, yes. The second question just very straightforwardly, whether you can split the Americas organic growth of 18% between North and South America? And then the third question was just a reminder of the group's exposure to the luxury industry, perhaps across Consumer Products and Certification, please.

Thank you. So look, the revenue, if I heard you well on the first question, the 5.6% on a reported basis for the 9 months, that is built on a 10.5% organic growth. I'm not sure I heard very well the question, the first one.

Yes. It was just -- the first question was whether the reported growth was materially different from what you'd budgeted for at the start of the year? So whether -- forget the organic for a minute, but whether that...

Maybe I'll let Francois comment on in terms of foreign exchange. Yes, go ahead...

The question 1 and 2, and apologies, the line is not great here. I hope you can hear as well. So on the reported growth, I think basically, we're not counting on having an FX drag as strong as we've seen. I think we thought -- we knew Q1 would be -- was negative, but I think it's been dragging along. You've seen what happened at U.S. dollar over summer. As you know, we report in euro, so that has been a bit stronger than what we thought. And if you remember well, I think I was even saying around our July call that we would expect Q3 to be materially lower in terms of FX, close to 2.5%, 3%, We're still above 4. So sequentially, it's easing, but not at the pace we would hope for, I mean, not much more we can do about it. And second question, so we don't really report on those 2 geographies. But to give you kind of an idea, I would say the northern part of the Americas is closer to 15%. The Southern part is closer to 20%, in terms of growth by big blocks. So double digit on both cases.

Okay. Thanks, Francois. On the luxury exposure, it remains a small percentage of our divisional revenue for Consumer Products. It's an interesting space. It's a space we actually invested in -- I think, was perhaps in 2015, 2016. We have some presence in the luxury space across traditional services, but also -- we have invested in some activities in Italy in the past. It remains, again, a market of interest that we continue to monitor to see if there are opportunities there.

We will take our next question from Sylvia Barker, JPMorgan.

Perfect. Firstly, on B&I, just going back to the FX impact, apologies, but can you just clarify which are the main currencies that have led to that negative 14.5% in B&I specifically? Then the second question on Marine & Offshore, could you maybe elaborate a little bit around that comment that the limited capacity at shipyard is finally starting to have an impact? Kind of what would you expect for that new construction part of the portfolio for Q4 and into next year? And then finally, around margins, no change to the view there, but anything to say around the mix on the margin relative to where we were at the half year?

All right. I think, Sylvia, the currency impact on B&I in Q3 is only negative 1%. So I think you weren't referring -- you were referring to Industry perhaps, Sylvia?

I was indeed, sorry. That's my bad.

Yes, you are referring to Industry. Okay. You want to comment on the FX, and then I'll continue?

Yes, sorry. Yes, I was -- sorry, that was my bad.

It's alright. I just want to make sure you're...

It's been a long day for sure, we'll get you there. So Industry 14.5% had FX impact indeed over the quarter and kind of the same on a year-to-date basis, as you may have seen as well. Here, the bulk of the impact is coming from weaker currency geographies. A chunk of it is Argentina. We all know that inflation is there and FX as well, both signs. So to put it straight, it does represent slightly less than 5% of our business in Industry. And now if you want to have a more clear view here, should we remove Argentina, all the regions we have under this segment are all growing very solid double digits for the reason that Hinda mentioned in terms of dynamics of the energy market across the board, whether this is Middle East. Middle East itself is [ above ] 30%. So I would say the bulk of it would be this one currency with a very strong momentum. And for those who are really interested, I encourage them to have a look at the inflation decelerating in Argentina, and you see that will not last for very long. So we will rerationalize mostly already in Q4. So that answered the part of your question, as you know, the Argentina devaluation took place in December last year.

And perhaps to build on that, I think it's important to mention is the industry growth is structurally sound in general because we see fundamentals of this industry, both on older energy, the fuel, fossil fuel things and on new energy where we're seeing real planning around capacity increase. We see real investments, a backlog of projects. We're actually actively working on finding acquisition targets to expand our capabilities, both geographically and in terms of specific skills we need to be able to offer customers, particularly in the new energy space, a full portfolio. So investment is there. Capital projects has been kicking -- kicked off in Oil & Gas. And then on the new energy and renewables, there are a number of big projects starting a bit around the world. And we will see that a lot of the investment that was mostly in the North, in the global North, if you like. And there is now questions about how it's going to move into the global South and what does that mean. And many of the issues of supply chain and people availability, that remain big challenges for the new energy space. We're starting to see some solutions. We're starting to see some positive dynamic there. So as I said in my opening remarks, the underlying trends for energy transition are solid, and will continue to grow. So -- and we'll continue to invest on that. To come to your question -- second question on Marine & Offshore. So we have been quite consistent in saying that the marine sector had a major issue of renewal for 2 reasons. One is decarbonization needs with the legislations and regulations started to -- starting to come into effect from this year and going -- next year and going forward? And then the second one is the fleet is very old. So that basically triggered quite a rush to build new ships. And that's why today, our backlog is 27 million gross tons. Lots of good work being done by our teams, and we're focusing on certain type of vessels. We're very focused on LNG propelled vessels. We're focused on certain type of container ships and other specialized vessels, and we're investing in different technologies and knowledge around those technologies to help customers. So very solid in terms of outlook. Now the key thing though that we don't control as a company, as a classification company is how the shipyards manage this influx of orders. What we are seeing today is there is such a massive volume of work going to the shipyard that they are starting to hit full capacity. They are today full from what we understand. They're fully booked until late '26 and probably now until late '27, which means that the ships that will be built are already and the roster to be built are in the planning. Any problems in the shipyards will be a slowdown factor. And any additional wins cannot be converted until that capacity that is being -- that volume that is being executed in the shipyard has been done. So that's why we have been for a while explaining that we expect from '25 to see a bit of moderation in the new construction growth not because there is no work, because there is no additional capacity. And to create new additional capacity is not a simple thing, and I don't expect it to occur in a very short term. So that's really -- that's where that comment is coming from. And then on the third question, Sylvia, we don't comment on margins in Q3, and I think we will stick to that. And we'll be able to discuss fully our margins in the full year update in February. Thank you.

We will take our next question from Arthur Truslove, Citi.

I have 3 from me, if I may. So just following on from Suhasini's question on the organic growth. So I think in Q4, if you're going to hit 10% organically on a full year basis, that probably implies about 8.5% in Q4. And if you're going to hit 9%, sort of nearer 5%, I guess my question, firstly, is kind of what are you expecting to slow? And is that because comps are getting a bit tougher? Or is there some other -- something else we should be thinking about? Second question, while I know you're not going to sort of guide for next year at this point, when I look at Visible Alpha, consensus organic growth for next year is about 6.9%. And I just wondered whether you're happy with that, and in what scenario you'd expect to materially exceed that and what would mean that you would miss it. And then finally, if you just think about the FX headwind that we've seen year-to-date, are you able to give us an idea mechanically what impact that would have on margin or not?