Dassault Aviation société anonyme (AM) Earnings Call Transcript & Summary

[Interpreted] Good morning. For this new press conference on the results of 2024. As we do traditionally, we're going to begin with a few beautiful pictures summarizing the activity of 2024. On the 8th of January 2024, the last tranche of 18 Rafale for Indonesia came into effect. It follows the first and second tranches of 6 and 18 Rafale, thus completing the number of aircraft on firm order for Indonesia under the contract signed in February 2022 for 42 Rafale. Indonesia is a new military customer for the company. Dassault Aviation was voted best employer in the French Aeronautics, Rail and Naval sector in the Statista 2024 ranking for the magazine Capital. Dassault Aviation is also one of the top three preferred companies in the industry segment among young students and young graduates according to the 2024 Epoca ranking all schools combined. We're also second as the benchmark employer among young graduates of engineering schools in all sectors. According to the Swedish research firm Universum, Dassault Aviation remains the fourth most preferred company among engineering students in 2024 regardless of the sector. Dassault Aviation Dassault Falcon Service and ADP Group joined forces to make Paris-Le Bourget a pioneering airport in sustainable aviation. The 5-year protocol strengthens their efforts to reduce carbon emissions in many areas, including the supply and use of sustainable aviation fuel, electrification of all ground operations, including refueling, taxing and towing and the use of geothermal energy to power the airport's buildings and hangars. The protocol also contains a section aimed at increasing the attractiveness of Paris-Le Bourget for its employment pool. On the 7th of February, the Supervisory Board of the Groupe Industriel Marcel Dassault chaired by Thierry Dassault in the presence of Marie-Alenebert, Helena Meilhan-Dassault and Laurent Dassault unanimously decided to appoint Eric Trappier as Chairman to succeed Charles Edelstenne. This succession took place on January 9, '25. Eric Trappier retains his position as Chairman and CEO of Dassault Aviation. In the presence of senior Egyptian authorities and representatives of Dassault Aviation, a ceremony to celebrate the 10,000 flight hours of the fleet of Rafale fighters was held in early March at the operational air base where the Rafale quadrant of the Egyptian Air Force is stationed after an initial order of -- in 2015, which made Egypt Rafale's first export customer followed by a second in '21, the Rafale has now reached a new milestone, thanks to the Egyptian Air Force. The very first edition of the safety trophies took place on Tuesday, the 9th of April in Saint-Cloud. This ceremony rewarded five people who, through their actions have helped improve the safety of our products. It is by promoting virtuous behavior at all levels in our company that we set the best example in terms of safety culture. Safety is everyone's business. Again, this year, the Dassault team won the Course du coeur, a challenging sporting event dedicated to organ donation. The employees of our various fights proudly upheld the values of our group tenacity performance surpassing one self and team spirit. The first 6 Rafale that Croatia ordered from France in '21 took off on the 25th of April from our Merignac plant and headed for operation Airbase 91 near Zagreb. These aircraft were flown by Croatian pilots. The formation of a full squadron of 12 aircraft is planned for mid-'25. The 24 Reves de Gosse 2, in partnership with Dassault Aviation took off on the 10th of May from Strasbourg and landed on the 18th of May in Perpignan, an aerial tour de France and all for a good cause to make the dream of underprivileged and disabled children come true. The volunteer crews from our Saint-Cloud and East sites contributed to this adventure. Our company participated in the EBACE event, which was held at the end of May in Geneva. On display were Falcon 2000LXS, Falcon 8X and the Falcon 6X, our latest aircraft. This new aircraft is highly appreciated by our customers and pilots for its impressive flight qualities and comparable cabin comfort. On the fan, visitors were able to admire the full-scale model of the Falcon 10X as well as various areas dedicated to the interior fittings of our aircraft. As part of its major recruitment plan, Dassault Aviation notably participated in 2024 edition of the Rêve d'Icare event in May in Royan, presented technological workshops and offered visitors valuable interactions with our employees, a great opportunity for young people interested in a career in aeronautics. [Presentation]

It was coordinated by [indiscernible]. The Serbian 'Ministry of Defence signed a contract on August 2019, BELGRADE, for the purchase of 12 Rafale jets could be air defense in the Serbian Armed Forces. Serbia is the eighth Rafale export countries and the third in Europe. It had never operated vessel fighters just before. This new order once again demonstrates the interest that the Rafale elicits among countries concerned about their sovereignty. Sébastien Lecornu, French Minister of the Armed Forces and Veterans announced the development launch of the unmanned combat aerial vehicle that will complement the future Rafale F5 standard. The F5 standard is a real relation for Air Forces. Although it will be based on the same aircraft, the Rafale, it is a change which is at least as radical as the transition from Mirage 2000 to the first Rafale. This revolution reflects the rapid growth of connectivity to carry out all the operational missions of the French Air and Space Force. The Rafale in its F5 standard will interact with other sensors and remote effectors on the ground, in flight and in space. Build on the achievements of the nEUROn program, this UCAV will be complementary to the real to collaborative combat. It will incorporate still technologies, autonomous control with man in the loop internal payload capacity and more. It will be highly versatile and designed to evolve in line with future threats. This ambition and exciting program confirms Dassault Aviation's leadership in combat aviation in Europe. This announcement was made at a ceremony celebrating the 60th anniversary of the French Strategic Air Forces at the Saint-Dizier air base in the presence of Eric Trappier and General Jerome Bellanger, Chief Officer from the French Air and Space Force. On the same day, Sébastien Lecornu and Eric Trappier inaugurated Mirage 4 installed at the foot of the Charles de Gaulle Memorial in Colombey-les-Deux-Églises. A patronage agreement was also signed by Eric Trappier and Hervé Gaymard, President of the Charles de Gaulle Foundation. Since 1964, Dassault aircraft have contributed to nuclear deterrents in line with general wishes. We have equipped the French strategic Air Forces with the Mirage 4, the Mirage 2000 and the Rafale. In mid-October, a Rafale Marine test campaign took place on the Charles de Gaulle aircraft carrier. This campaign was aimed to validate the deck landing assistance features developed as part of the F4 standard. Dassault Aviation participated in Euronaval exhibition organized in early November in the north of Paris. In addition to the Rafale Marine, the company showcased its expertise in maritime surveillance. On January 13, 2025, General Christian Baptiste National delegate for the French Order of Liberation officially thanked Eric Trappier for the help provided by Dassault Aviation in purchasing a silver slipcase decorated with the liberation cross containing the list of companions of the liberation. This case was purchased during the public sale of Gaulle succession [indiscernible] with the support of the society of the Friends of the Museum of the Order of Liberation. Dassault Aviation is a patron of the Order of liberation. The Dassault Group is also one of the patrons which enabled the French Ministry of Culture to acquire writings by General [indiscernible] the benefit of national collections. Falcon 2000LXS Albatros successfully completed its maiden flight on January 24 in Merignac. It's a key milestone of the [indiscernible] program, which aims at renewing the new French Navy's fleet of maritime surveillance and intervention craft. The seven aircraft ordered by the French Ministry of the Armed Forces will be delivered as from '20 to '26, and they should be followed by five additional aircraft in the optional tranche. Equipped with cutting-edge equipment and systems, the Albatros will be a valuable asset for the French Navy in a broad spectrum of missions, including search and rescue, fisheries enforcement and the fight against pollution and trafficking. On January 30, Eric Trappier received the Strategist of the Year award from French Prime Minister, François Bayrou. Created in 1989, this award recognizes a business leader selected by readers of the newspaper, [indiscernible] and by a jury of French industrial and economic leaders. Dassault Aviation participated in the Aero India Show from February 10 to February 14, 2025. Two 1/5 scale models were presented on the stand, the Rafale Sea Indian Air Force as well as the Rafale Marine. We were also present at the IDEX exhibition in February in Abu Dhabi in the United Arab Emirates. A few days earlier, Eric Trappier had unveiled in East, the first Rafale produced for the United Arab Emirates Air Force in the presence of the French Minister of the Armed Forces and the UAE Minister of State and Defense Affairs. This aircraft will be used by the Dassault Aviation Fight Center for the development of the UAE standard. Deliveries of Rafale aircraft to the UAE are scheduled for the end of 2026. This first Rafale produced in accordance with the contract schedule demonstrate Dassault Aviation's commitment to meeting its customers' expectations. [Presentation]

Just a few words before going on to the questions, the Q&A session. First, the environment, the context, as you know, the world is not very stable at this moment. There's still a war in Ukraine, although there might be a cease fire quickly or not. The good news is that inflation has gone down. And what is worrying, and it's good news for our economy, though, although there is a lot of political instability in France, the government has avoided all the sensors, and we have a budget, which is a good thing. But in spite of all this, the instability is still there in France and will continue until the next presidential elections. But the most important point and the most concerning which disrupts this feeling of stability is the arrival of the new Trump administration, which is questioning a certain number of economic points with the customs taxes that are worrying a lot of economic players in France, too. And redetermination of the alliance between the United States and France, a redefinition of our relations with the United States. So you saw it in the film, the first Rafale for the UAE was presented in East with an important delegation from the UAE, we wanted to celebrate this date for the flight tests. The UAE have ordered 80 Rafales that will be delivered from 2026 onwards. The highlights for '24, there is this success of the Rafale, which is an ongoing success. 30 Rafales have been ordered, the 12 for Serbia and those for Indonesia in addition to the ones they had already ordered. So on the whole, they'll have 42. The ramping up of our supply chain. This is being done. We have delivered 21 Rafale, considering our guidance, which was 20 and some -- unlike what some people have said, so it was difficult, but we are keeping our commitments and a delivery of 31 Falcons at the same time with a little more difficulties in the supply chain and the arrival of the Falcon 6X. So the 31 is slightly under our forecast of 35. The net sales was above EUR 6 billion. It landed at EUR 6.2 billion and a record backlog. The one last year was also a record -- above EUR 42 billion. Difficulties in the supply chain. A lot of subcontractors have difficulties, and this is disrupting our supplies. And it's also disrupting our production lines. It is a whole sequence of difficulties. So we have to support them. We are supporting them. It's not just Dassault. It's also Airbus and the whole sector that is going through difficulties. So we have the GFAS that is controlling everything that is trying to track the subcontractors who have difficulties. We have the Aero fund that has been renewed and that can help in case they need additional equity. And we, at Dassault, we have help that we provide to our subcontractors. We send our staff to help our subcontractors carry out their work or we redesign so as to find new suppliers to make up for those who have difficulties. And we try as early as possible to detect those that could have difficulties. It can still last. It isn't over. It can go on in '25. We hope that things will improve in '26, but we'll still have to fight in the sector in '26. And this is true for civilian aircraft and military aircraft. A few words about our program. In France, in 2024, 234 Rafale were orders in France. To this number, we have to remove the 24 Rafale that were ordered, which are pre-owned aircraft ordered by Greece and Croatia. And we'll talk about the exports afterwards. In 2024, we delivered 14 Rafale. So we still need to deliver 56 within the framework of the current orders. We are continuing the development of the F4 standard. You saw that the first Emirates Rafale follows this F4 standard. And the French Minister of the Armed Forces, and this was well described in the film, showed their determination to launch the future Rafale F5 for 2030, and we will use our unmanned combat air vehicles based on the nEUROn. And this was done in cooperation with six countries. Rafale exported, 273 orders plus the 24 preowned aircraft that have gone from the French stock to the export stock. So that is 300 Rafale aircraft for exports with 18 Rafale in our orders in 2024 for Indonesia. It will go up to 42 and Serbia has ordered 12 and Serbia and Indonesia are two new countries for Dassault, two new customers for Dassault. So we have 8 export countries that have ordered Rafale, that is 9, including France. We are prospecting at this moment. I am trying to answer your questions in advance. The Rafale for the Indian Navy should be signed soon, and there are other discussions around the world. We have delivered 7 export Rafale in 2024, and that comes up to 21 if we added to the 14 French aircraft. It's been a long time we haven't delivered so many French aircraft. And I think that will be the same order of magnitude for next year. Support, we have new Rafale countries. So we have greater support for exports, but we have to strengthen our support to France. France has deployed aircraft because of the conflict with Ukraine to secure neighboring countries that are in Europe and that are part of NATO. So we have to support the French forces and deploy new teams in the countries using Rafale. And this increasing support will be pursued because Rafale will reach the UAE, Indonesia and Serbia beyond the countries where it is already operational. Future combat air system. Here in Saint-Cloud, we are pursuing the development of the NGF. It's a demonstrator. The Phase 1b is underway. This is the definition phase and the next step will be to see how we can contractualize the Phase 2 of the NGF with our authorities. The mission aircraft, you've seen in the film, the Archange aircraft with the Falcon 8X, a third aircraft has been ordered in addition of the two other. [indiscernible] is the first flight. There was the first flight completed in Merignac and the rest is carried out in East. And these surveillance aircraft are expected to by our armed forces in the coming years. For exports, we have delivered the third and fourth Falcon 2000. These are green aircraft that will be equipped locally in South Korea by the Korean authorities and the Korean industries by electronic war equipment. The Falcon context, 26 orders, slightly better than last year. The deliveries 31, slightly under what we were expecting, but slightly above what we had last year. So we still have difficulties delivering. And there's the arrival of this new aircraft, the 6X that was certified at the end of the summer of '23. It was commissioned in the beginning of 2024. This is the beginning of the life of this new Falcon 6X, and it is being ramped up in terms of manufacturing. And we're continuing the development of the Falcon 6X. For the 10X, we had the demonstrator that flew for more than 1,000 hours for demonstrations. And it's not just flight. We had passengers on board so that they might get the feel of the Falcon success. And we have a very good passenger feedback and orders are arriving and are strengthening our orders. Once we'll have solved all the manufacturing issues, we will be able to accelerate the number of orders. The 10X, you see a picture of the 10X in Merignac. It's being mounted. It's the first aircraft. This is the one that will carry out the flight tests. We have reviewed our schedule at the beginning of '24, and we are online now with the schedule for the first deliveries at the end of 2027. I will not say more today, but I think we will talk about this again in 2025. Falcon support. Well, here again, we have to have support from our customers, 2,200 aircraft flying around the world. The main difficulty is related to the supply chain. We need to have some help from suppliers who are going through difficulties and the support team have to help them. Right now, there aren't many major issues. Here, you have a picture of the jet, and we carry out the repairs on time. Decarbonization, it is ongoing. I'm not going to go back to what I said the previous years. I just like to make a comment. I feel that the more we are virtuous, the less we are recognized. So I'm wondering if we should not be so virtuous to be recognized. So I'm leaving you think about this. We're putting SAF in our aircraft. We are using sustainable aviation fuel in our aircraft. But there is still a lot of aviation bashing when our French aeronautical industry in general, not just Dassault is one of the flagships, but they are still bashing on the French aviation. They are adding standards. They're adding things in spite of all the work carried out. And the European Commission is also doing more and this term taxonomy, I would like to get rid of it from my vocabulary. And I wish we had never had this word. There was the taxonomy that was pointing at us because we were manufacturing French, European weapons. And I think that today, these people will question what they've done and not just put aside this social taxonomy, but they will realize that we have to manufacture weapons in Europe if we want to defend Europe and not just buy. And same for business jets, an American business jet in Europe is not penalized by this taxonomy. And Dassault Aviation is penalized by the European taxonomy. I think this is scandalous. So we have made a request to the European court. We are using SAF. We are manufacturing using aircraft that can use SAF, we should be recognized by the taxonomy. And all these stories on taxonomy, these are political issues driven by some, and this goes against European sovereignty. The carbon footprint, we are trying to bring it down. I'm criticizing the taxonomy, the CSRD, some of the standards that are imposed upon us, but we're working on the environment. We are trying to make our plants, our aircraft greener and be able to emit less CO2, so we are committed. And I think we should not blame the industry. Hiring, we have hired a lot of people in 2024, 2,400 new hirings. This is creating more business because you have to train these newcomers. And since we already have a lot of work, there is good attention among the teams. They have to get used to the Dassault DNA. These are large groups of newly hired people. You saw that there was a slide on safety. We are in aviation, and we have to be very careful about safety. You've seen it in other examples around the world, and this is a major topic for us. For 2025, we are reassessing things. We do not know what's going to happen regarding taxes that are going to be imposed on us by the United States. You know that some of our clients are in the United States and the business aviation, which is in the United States, well, we are wondering what's going to happen about that. So we're going to reassess our hiring capacity for 2025. The impacts, as I was saying, well, it's good. We have a government. We have a temporary stability, a little bit of instability, but we finally have a budget, but this budget is taxing corporations because we have policy, bringing down this tax by 25%. Now it's gone up again by 6%. And theoretically, it's going to be only for a year. So we've taken due note of that. We have put it down in bold letters on our papers, but we will see at the end of the year what's going to happen because of the evolution of the French debt. The value-added tax that was supposed to arrive this year that would have given us a tax break. This has been put off by 3 years. And the social taxes for sickness and family allowances, what the social security is paying will be paid by the corporations. There's a drop in the expenses breaks. There was the [indiscernible] report that was explaining that France's competitiveness was mainly linked to its know-how and to its industry. And so therefore, we had to reduce the social expenses. That is between 2.5% and 3.5% of the minimum wage. And there was a break in these expenses. And now there's a drop and an increase in the taxes that the companies will have to pay. We're carrying on with the modernization of our industrial tool. Cergy is operational. We're substituting Argenteuil. We have commissioned the building in 2024 and all the transfers have been completed with production starting. Merignac, we're still building new facilities to host the first Falcon 10X when the production will start and also the aero structures and fuselage of Falcon that we're doing in Merignac. We also finalized the expansion of the production buildings in [indiscernible], and we are modernizing Saint-Cloud. It's a bit more difficult because it's an urban area. We started with the company restaurant, which was something that had been demanded by our employees for many years, and we will gradually modernize the Saint-Cloud facilities. Make in India. So there is a ramping up of this program in full harmony in compliance with what we decided in 2016, that is being able one day to have the Falcon 2000 assembled there. We already have some sections being assembled. We also have the transfer of the T12. Now if we achieve this in the forthcoming years for the Falcon 2000, it will also pave the way for the Rafale because this is what has been asked for the future combat fighters orders. So we'll have to be able to perform the final assembly locally. It's not only in the framework of the joint venture with [indiscernible]. We also work with other companies such as Dynamatic. We have also the T5 transfer for the Falcon 64 with Mahindra. And Tata with whom we have ongoing discussions, which will hopefully be successful. So order intake, plus 32% at EUR 10.9 billion. Net sales slightly above EUR 6 billion. That's plus 30% versus 2023 and a backlog, which is now standing at EUR 43.2 billion. Two comments. When you consider the backlog, that is the middle column, and what we're actually selling in terms of sales, it's 1/3 France, 1/3 Falcons and 1/3 export. So that's the picture for 2024. And when you consider the backlog, the Rafale export, which will be spread out over various years and ensure a very good workload for the forthcoming years. We are still funding on our own equity, the R&D. The fact that we had the 10X and the 6X Falcons means that our costs are going down, and we're still working on R&D for the 10X. So there is still a bigger effort in terms of self-funded R&D, EUR 437 million versus EUR 483 million. Thales. We are a shareholder of Thales, and we've been a shareholder since 2009 on an on par equity sharing between the French state and us. That's what holds 26.59% of Thales capital or equity. And Thales is now growing and developing, bringing many solutions in many areas with an EBIT, which has been going up also. You've heard about the result last year, 9% for the net sales. So we are also enjoying a part of this, and this is feeding our company. So EUR 6.2 billion, EUR 6.230 million exactly, EUR 519 million operating income, so an 8.3% operating margin, that's plus 1% versus 2023. Financial income is almost the same as in 2023. Thales and other equity affiliates, EUR 515 million and taxes have slightly increased in 2024. So the net income is standing at EUR 1 billion. That's unprecedented with a net income margin of 17% with a self-financed R&D percentage of 7% and earnings per share of 13.5%. That's a significant increase compared with 2023. Now our cash is also higher with a free cash flow at plus EUR 1.6 billion, meaning that our available cash is standing at EUR 8.4 billion as opposed to EUR 7.3 billion in 2023. There was a share buyback program canceling them. It helps to reinforce the position of the existing shareholders. So we have canceled shares, buyback shares. We bought back shares. So what matters is what you see at the bottom, GIMD, the Dassault family, that's 63.28%; free float, 22.91%; Airbus, 10.56%; and 0.25% held by Dassault Aviation. Voting rights on the right of the slide, the Dassault family holds 79.74% of the voting rights. Dividends, EUR 370 million in 2025, up compared with 2024. We will be offering EUR 4.72 dividend per share. That's a payout of 35%, meaning that 1/3 goes to the shareholders that's also 1/3 for the parent company where we're sharing the value with the employees. So that's the 30-30-30 rule as requested by Marcel Dassault and the Dassault family. So we are in the top three companies sharing the values with their employees in France. Now outlook and strategy. We want to deliver the Rafale and Falcons according to our planning. It's still a challenging effort, mobilizing all our teams in 2025, respect the deadlines, and this involves costs, both for military and for the Falcon developments, prepare the future of the Rafale with its F5 standard. We started to negotiate with the DGA and the French military to start its development. We will carry on with the combat drone and the post Rafale with the NGF. Support and availability of the aircraft, maintain the satisfaction level of our military customers, supporting the Falcons and the arrival of the 6X. We want to continue our prospection effort for Falcon sales and exports of Rafales, accelerate Make in India. The 10X will help us to have a control on the ultra-long range to compete with the G7 of Goldsturm. So accelerate the Make in India program. And we want to continue our recruitment effort with the reservations that I mentioned as a function of what is going to happen in the United States. Our 2025 guidance is for EUR 6.5 billion range for the sales. That includes 40 Falcons and 25 Rafales with a reservation, which is subject to what's going to happen with the tariffs, which might be imposed by the United States and the possible European Union countermeasures, which might have an impact on our capacity to maintain this guidance. Bombardier, one of our competitor has also presented this reservations. I'm now ready to entertain any question you might have.

[Interpreted] Good morning, Mr. Trappier. I'd like to know what you think about Mr. Faury's statements with his intention to the future fighter that is putting together the Tempest and the NGF.

[Interpreted] Since the beginning of the program, Airbus has come up with these statements. I have done what I was asked to do, that is an NGF demonstrator. We're doing that with the German and the Spanish. I haven't had any discussion with Guillaume or any other member of the Tempest team.

[Interpreted] Times Aerospace. I have a question about the Rafale. Dassault Aviation has recorded a historical order from the United Arab Emirates. And you've talked about future prospects. Everybody is quoting Saudi Arabia. And what do you think considering the geopolitical situation, what's going to happen in the Middle East?

[Interpreted] Well, I think that the outlook for Dassault are in the long history of the French Republic, the Fifth Republic, it was the intention of Generale de Gaulle to develop a nuclear deterrence program and having a technology that is independent to support this nuclear deterrence. With these weapons and these fighter jets, we are able with Mirage and now the Rafale. It was also in the 1960s, the intention to export to the "unaligned, nonaligned" countries, that is non-European countries. European countries are mainly geared towards the United States. We're pleased that we have some European customers that is Balkans, with Greece, Croatia and Serbia, but most of our export market is with the nonaligned countries. No surprise that we're selling to Indonesia, Egypt and India and the Middle East traditionally with Qatar and the United Arab Emirates. If we could sell to Saudi Arabia, fair enough. In this kind of business deals, there is a highly political side to it and the evaluation or assessment of the aircraft, Saudi Arabia is going to decide what they want to do, just like in any other country, who would call for some independence. France is offering them this independence because of the heritage of the Fifth Republic of that of -- and the legacy of what Charles de Gaulle through all the French Presidents we've had. So that's the 1960 strategy that helps Dassault Aviation and its partners, Thales, Safran and the whole industrial network because Rafale is 100% French made. There is a bit of Make in India in the future, but it's 100% French made and its technology and capacity is consistent with the French policy of nuclear deterrence programs. We are in line with this policy. Is this policy going to change? I don't think it's going to change in France. Quite the opposite. It's going to be reinforced. And for the other European countries, well, I'm expecting what's going to happen with what the Europeans are going to do. We'll see. I'm neither optimistic nor pessimistic. I'm just observing the situation, and I'm hoping that the European countries will call for an autonomous defense program for Europe.

[Interpreted] Mr. Chairman, with regard to Europe, do you think that Dassault Aviation will have its place in this defense in Europe, if it ever exists? Because according to the information we have, there are a lot of contradictions. Yesterday, Ms. von der Leyen talked about EUR 800 billion for defense. This morning, I was listening to the radio. And it is mainly -- all this money will go to Germany. And there are some countries buying the American F-35. And we were talking about [indiscernible]. I thought that Europe had a complex, but no, not at all. It is a coup against our industry. You talked about the taxonomy, which is a strange word, but I think it's going against everything else. So will Dassault Aviation have its place in the European defense?

[Interpreted] Well, Dassault Aviation has its place in France. It will keep it for a very long time still, and it has its place in the world. And the users of Dassault aircraft are old users like India, since the '50s, they count on France. They count on Dassault to equip their armed forces today and tomorrow. So we have a duty vis-a-vis those countries, vis-a-vis this partnership, all those who've trusted France and Dassault Aviation. And that will be maintained. And then the defense in Europe, you're going to do this, you're going to do that. I'm observing very carefully. Dassault Aviation will have its place in European defense. It won't be something that will be totally integrated and the commission does not have the competence in the field of defense. That's the European constitution and the states have to mobilize themselves. We have to go fast and react with this change in the alliance. And we will have our place because in Europe, we are the only ones who have the skills. We have the competencies for the aircraft from A to Z, but also for the electronics with Thales and for the engines. So I don't see how we can do without us in the future. So if they want to drown us in something that is difficult to understand with an incredible number of countries, I don't think it will be so. So we have to go beyond all the statements made. The European defense, we've been hearing about this for the past 30 years. I've pleaded for the European preference right from the years 2000. And they said that word cannot be pronounced in Brussels. I was banned from Brussels. And in 2024, you talked about [ EDP ]. And if the commission wants to help the defense industries because they have no competence in defense, but they can help the industries. We said, well, why not? And with European money, it would be good if that money went to the European industry at 100%. Even that was banned. We couldn't think like that. We had to have a share for non-European countries with European money. So we aren't profits but we're following our convictions.

[Interpreted] Nicolas Abreu from Germany. There's a new coalition in Berlin, that is being formed in defense, will that create opportunities for Dassault? And what will be the consequences?

[Interpreted] I'm delighted that Germany has realized that they have to invest in defense. We've already heard this a few years ago, there was a EUR 100 billion plan in Germany. And one of the first decisions was to buy the F-35 in Germany. That is to carry the American nuclear arm. So the money that was spent to buy the F-35 and carry the American nuclear arm, I'm wondering what is its efficiency today. I'm happy to see that Germany is going to maybe change things. I'm waiting for that. And if there are opportunities, we will definitely seize them.

[Interpreted] The United States are suspending their funds for Ukraine for the military deliveries. What do you think about that?

[Interpreted] I have no answer to make. It's a state business. I'm not helping Ukraine financially. So the answer must come from the European countries. And in France, it all depends on the French government. But substituting ourselves to the Americans, this is going to be a toll order, and this will have to be made by all the European countries.

[Interpreted] Véronique Guillermard for the Figaro newspaper. In terms of Rafale production capacity, have you reached the pace of 3 per month? That was your prior objective. And would it be possible to produce more if requested by the state, if they placed orders through export orders? And my second question is on customs duties. The Dassault company sells a lot of Rafale to the United States.

[Interpreted] No, not Rafale, Falcon. I would like to sell Rafale to the United States. Sorry, sorry. That's asking too much from us.

[Interpreted] Well, sorry, sorry about that. Yes, that's a slip of the tongue. And so Falcon, therefore, can you tell us what would be the impact if the United States increase taxes by 25% on all European products and particularly on Falcon?

[Interpreted] So the manufacturing chain, I'm repeating what I've already said, we have the primary parts. We have our subcontractors, 500 subcontractors. They will be in Merignac to assemble the aircraft before delivering to our users. We have reached Phase 3 for the upstream in Saint-Cloud, in our plant, we are at Phase 3 and some of our subcontractors, too. In Merignac, which is the end of the cycle, we need some time to ramp up our production. And that too because we have some issues in our supply chain. We have delivered 21 Rafale in '24, and we said that we're going to deliver 26 Rafale -- sorry, 25 Rafale in '25. So there is a ramping up 0.5 point between '24 and '25. So gradually we're increasing our pace. We have gone to Pace 3. This is done. It's underway. And we are anticipating going to Pace 4. And if we had to, we would try to reach Pace 5. But that is if we receive the orders. We are not anticipating going on to the cadence 5. But if we had to, because there's -- this will to reinforce the French armed forces with 30 additional aircraft after 2030, of course, we would say yes to that. We will be glad to say so. And secondly, since we have a certain number of prospections underway, we would do that. And then there is India. They are preparing some major orders for combat aircraft, and we would open a new assembly line in India so that we can absorb this load, therefore, this major Indian order. And so we can increase our pace. I know that for the past 2 years, everybody is saying they won't manage to do so. I'm not saying it's going to be easy, but we like challenges at Dassault, and we like to succeed against these challenges. And we've demonstrated that we could go faster. We will build additional hangars. We will hire additional people, and we will balance things out between Falcon and Rafale. And we have to make sure that the supply chain follows. But if we increase our pace with all our suppliers, that's good news. Now the problem, as you said, is that this can't be done by just clicking your fingers. It's work. You have to anticipate things. You cannot increase the pace in 5 minutes. You need some time to ramp up. You need at least 2 years. 2 years to gain one point. It is difficult, but we are working on this very seriously, and we're trying to anticipate things. If we felt the need to increase our pace to supply our armed forces, we would do it. As for the Falcon, the difficulty is the reverse. We have a market. It is half-half between Europe and the United States, 1/3 Europe, 1/3 America, 1/3 the rest of the world. So if all of a sudden, there are customs duties, 25% for the aircraft to be sent to the U.S.A. on the price of the aircraft, and we will have to deduct the amount of work carried out on the aircraft in Little Rock in the U.S., this would create difficulties. And if Europe has countermeasures, this would create more issues. We would also be taxed, and we would have to increase the prices so as to absorb these taxes. So here again, we're looking carefully at what is happening, but it will be a difficulty. And this is why I put this reservation in our guidance for this year, 2025.

[Interpreted] Thank you. As Make in India is being discussed, I'd like to get more information. The Make in India, is this done to compensate the 36 Rafale contracts that have already been bought? Or are you following a strategy that is favorable for Dassault Aviation? And I think that there will be the 26 Rafale. I hope the contract will be signed very soon for you for the Indian Navy. And the Indian Chief Marshal was complaining about the local production capacity of HAL. Would it be possible for the future productions that will be done with the private sector? Could that be done with the help of companies, partnerships that you have set up in India itself.

[Interpreted] So the answer is yes. From a strategic point of view, in 2016, we set up a multiple strategy. Of course, yes, there are compensations. If we Make in India, we -- it contributes to our offset. We have a strategy in India to bring down our costs on Falcon. So we're doing this gradually because I'd like to remind you that to sell Falcon, we are in competition with the United States. And the American competitiveness is better than the French competitiveness. And I used to say that even when corporations were taxed at 25% instead of 35% now. So we need to bring down the cost to be in this highly competitive market versus American, Canadian and Brazilian companies with Embraer. So that's the second strategy. And the third is to prepare ourselves one day for larger Rafale orders for India. We have to prepare ourselves and maybe transfer an assembly line in India. So we are following three objectives in our Make in India strategy. And so therefore, yes, for the second part of your question, we're going to continue because when we began this, the Indian authorities were liberalizing the economy. 30 years ago we had to use the public industry that is HAL. And now we have recommendations so that we can move into the private industry. And the private industry, we have the companies I mentioned on the slide. And Dassault has its plant in Nagpur with its partner, Reliance, and we have the industrial control to manufacture in India. So we are in India with a partner who knows India well. But of course, in the future, we will work with Tata, et cetera. And we won't have the 26 Rafale, I mean, we will have other things to do.

[Interpreted] Future warfare magazine. Regarding The Atlantique 2 of the French Navy, do you consider having a specialized version of Falcon 10x because DGA has commissioned a study to Airbus. And I know that you also have a proposal.

[Interpreted] We have presented Falcon 10x new versions for the maritime patrol. We believe this because we have some experience in this area and some have an experience that has started in 1958 with TAL1, ATL2. We have maritime surveillance aircraft. So we have a know-how that have for the French Navy or for the Japan Coast Guards. We even worked for Coast Guard Falcon delivered in the United States at one point. So we do have this capacity. And today, so it seems because there haven't been any official statement so far, the State would go for a feasibility study starting from an Airbus aircraft model while having as a backup an American aircraft. We're still able to manufacture the 10x, but if we do not receive any orders to -- and commission a study on that, we won't start any study. And good luck to Airbus.

[Interpreted] So you have business aircraft and warfare aircraft. You were talking about the competitors from the U.S., Canada and Brazil. What is the percentage of parts from the United States on the Falcon aircraft? I'm thinking it should be a high percentage in terms of electronics, for instance. Now for the military part, what do you think about the future of the combat fighters?

[Interpreted] We have the FCAS that is going to come through. No Dassault Aviation seems to be prepared for the future. But what was about the future warfare jets in the high-intensity wars, where we said 50-50 between the French part and the U.S. part. No, we have to also see that the engine is Canadian, is not U.S. made. So we will have the plus 25% tariffs imposed by the United States on Canada. So it's slightly less than 50%. So the completion part is done in the U.S. in Little Rock and part of the electronic equipment is also purchased in the United States, but that will be less than 50% for the Falcon. Now for the jet fighter, I don't believe in 100% fully automated warfare. Based on the discussions we've had with the military, the French military and other military representatives from around the world, the future jet fighters with a pilot on board within the next 30 years will still remain true and will be pivotal for having the capacity to attack a country or to defend the country. Now it doesn't mean that there is no automation. There is the automation of the aircraft lease all the data from the sensors from a collaborative combat means that all this data will be automated and processed automatically to help the pilot. The pilot is more a mission commander in chief who is closer to the front line, who will be able to make decisions as per what is required by hierarchy and what is observed in the field. Now it's true that combat drones will help enhance the functionalities of an aircraft during a mission. So we will be witnessing the inception of drones, pilots -- with the pilot on board or remotely controlling. The Americans are often ahead because they have huge financial means and resources for that. We don't see small drones. You've seen in Ukraine, it's as if they had a small explosive that is remotely controlled. The fact that we have something that is fully integrated with the combat fighters were not -- jet fighters were not at this stage yet. We do enjoy some know-how that will help us move forward in this area. And if the ambitions of France are confirmed to have combat drones by 2030 in addition to the Rafale, it's a challenge that will be interesting and that we will be ready to take up before we have a future jet fighter that will come after the year 2040.

[Interpreted] Now in the sales of Dassault Aviation, what is the share between MCO, MRO and new aircraft? And another small question, what about Mr. Charlie Denson, has he retired truly? Is he leaving down the French Riviera? We don't see him anymore.

[Interpreted] I will answer your second question first. Well, Charles Denon has indeed retired. He is a pensioner. That's why I'm replacing him. Otherwise, he would be here with us. He's still a member of the Board of Directors of Dassault Aviation. He's somebody who is really reliable. We want to have him on board. And he's still a member of the Board of Directors of Dassault Systèmes and also a shareholder of Dassault Systèmes. Now for your first question, the support activity is an important share of our sales, not as much as the sales from the selling of aircraft. Of course, in France, for instance, you have all the MCOs for Atlantique 2, Mirage 2000 and Rafale. So the support part is a significant part of the total sales revenue. But these figures in the distribution is not disclosed. If we've exhausted all the questions, well, thank you, and we will meet in July again. I don't remember the date -- July 21. Okay. I'll keep this date in mind, and we'll meet again soon for some of you. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]