Engie SA (ENGI) Earnings Call Transcript & Summary

Good morning, everyone. It's my pleasure to welcome you to ENGIE's H1 conference call. Shortly, Catherine and Pierre-Francois will present our half year results, following which we will open the lines to Q&A with my polite request of limiting your questions to 1 or 2 only, please. And with that, over to Catherine.

All right. Good morning, everyone. ENGIE has achieved an excellent first half of 2026, marked by expansion in upstream and midstream, dynamic downstream results and strong headway on performance. Earnings are broadly stable despite the tailwinds of last year fading away. I am pleased to announce an upgrade in guidance for full year net recurring income group share to a range of EUR 4.9 billion to EUR 5.5 billion from the previous range of EUR 4.6 billion to EUR 5.2 billion. A few highlights. We are at virtually 60 gigawatts in renewables and batteries. That's up by almost 1/3 since the start of 2024. We have transformed our scale in electricity grids with the U.K. Power Networks acquisition plus the award of transmission projects in Latin America. Our commercial businesses are performing well and with improving predictability. We are developing rapidly in delivering power to data centers and our performance measures are gaining momentum across the group. In the Middle East and despite the turbulence there, our operational performance has been good with little financial impact on the group, testifying to the resilience of our business structure there as well as the operational excellence and strong sense of responsibility of our teams in the region. Our discussions to transfer our nuclear activities to the Belgian government are moving forward constructively. Since the signature of the letter of intent in April, project teams have been established. The process is now going full speed. The 2 parties are working in good faith towards the next step of heads of terms on October 1. All in all, despite the complexity of the project, I am reasonably optimistic that the deal can be concluded. Before I move on, a few words on the rapidly evolving energy environment and why it continues to play to ENGIE's strengths and make us the go-to utility. It is clear that the ramifications of the Middle East conflict following on from the war in Ukraine represent a tipping point in forcing countries to prioritize energy security and sovereignty. In many of our countries, this is translating into a renewed push for electrification. The EU just issued a plan targeting a doubling in electricity share in energy consumption to 46% by 2040, with flexibility to implement incentives to encourage investment, improve affordability and widespread boosting of BESS deployment. In France, a country-wide electrification plan bearing early fruit with a 63% jump in electric vehicle sales in H1 2026. And we saw, again, in France, a sharp increase in CRM prices, supporting flexible assets. Germany issued its CRM framework, paving the way for the construction of new H2 ready gas-fired power plants. Spain and the Netherlands are also moving forward with long-awaited CRM schemes. But there is a further reason why 2026 to me is a tipping point and that is climate, which is becoming less predictable, more extreme as seen with a number of heat waves and tragic fires recently observed in several countries. So geopolitics, electrification, more unpredictable weather patterns, changing customers' behaviors, these are all new challenges to the energy system that we have to respond to. And at ENGIE, we are very well positioned to do so as we have, over the last years, built an industrial model that is integrated with a quality asset portfolio, embedding the right flexibility with best-in-class energy management capabilities resilient to varying market conditions. In our Q1 results presentation, I said that I strongly believe that having attractively located high-quality physical assets matters, and we are showing just that as we are creating many opportunities to enhance and extend the value of these assets over the lifetime. We have a number of examples of how we go about this. In Brazil, the Jira Hydro plant raising its reservoir water level to 90 meter above sea level during the dry season, thereby generating up to 236 megawatts of extra electricity. In the U.K., investing GBP 1 billion on our pumped storage plants at First Hydro, thereby ensuring 25 further years of operation. In Europe, repowering suitable units within our 440 strong onshore wind portfolio through anticipation, community support and existing grid access with 0.2 gigawatt repowered at the end of 2025 and over 1 gigawatt targeted by 2030. And also in Europe, investing on the agility of our gas-fired fleet now nimble enough to achieve up to 1,000 start-ups every quarter. And in the Middle East, extending the long-term PPAs of our gas plants, most recently 1.5 gigawatt in Oman with very good NPVs. Boosting the potential of our assets by applying our industrial, commercial and financial expertise is and will remain a fundamental factor at ENGIE. Turning to this next slide, some headline numbers. EBIT, excluding nuclear was up 3% at EUR 5.3 billion compared to the first half of 2025. Performance improvements amounted to EUR 304 million through multiple initiatives such as digital automatization of curtailment at renewables and BESS, AI-based optimization on forecasting supply volumes and proactively exiting CFDs in favor of PPAs where it makes sense, in fact, embedding a culture of performance throughout the group so that it does become the day-to-day norm. In that respect, U.K. Power Networks' veritable obsession with performance and customer service excellence can provide a valuable new benchmark. Net recurring income group share was little changed at EUR 3 billion. Economic net debt rose due to the inclusion of U.K. Power Networks, up by 1/3 since end of 2025 to EUR 60 billion. And that is this strong first half performance that enables us to look forward with confidence, and we're raising the full year guidance range for net recurring income group share to EUR 4.9 billion to EUR 5.5 billion. In our Renewables and Flex Power GBU, we commissioned 2.4 gigawatts of new capacity in BESS solar and wind over the first 6 months, and we are now close to 60 gigawatts of installed capacity. At the end of June, we had 84 ongoing projects with more than 6 gigawatts under construction. On the U.S. specifically, power market fundamentals remain strong. Demand growth is real. In fact, Texas ERCOT market set an all-time peak above 91 gigawatt on July 22, driven by heat and data center load. We do continue to grapple with timing, especially as federal wind permitting largely tied to FAA reviews remains slow moving industry-wide and part of our near-term pipeline has shifted with it. To protect our U.S. ambition, we have safe harbored 8 to 10 gigawatt of our 26-gigawatt U.S. development pipeline. We will still bring 1.2 gigawatts into commercial operation this year with further 1.4 gigawatts already with FID advancing for construction. And while we expect total renewables and BESS full year 2026 capacity additions to be somewhat below the 5.5-gigawatt organic growth of 2025, we remain confident in reaching our 2030 target with a ramp-up in growth over the final years of the decade based primarily on the strength and the optionality of our global pipeline as well as potential for small- to medium-sized expansion through acquisition. Among the highlights of the first half of this year were a doubling in PPAs signed compared with 2025, the completion of commissioning of the Ile d’Yeu / Noirmoutier offshore wind farm and the award of 325 megawatts of onshore wind projects in France, of which 209 megawatts repowering. Whilst in BESS, we commissioned the Tocopilla unit in Chile and started construction of the Drogenbos unit in Belgium. I would like to pay a tribute to Paulo Almirante, who stepped down from being EVP of Renewables and Flex Power, but will remain as a senior adviser to ENGIE. Paulo has been absolutely instrumental in transforming the business over the last 5.5 years into what it is today, a real industrial machine combining ambitious growth with rigid discipline. Thank you, Paulo, and welcome to Pedro Vasconcelos. Pedro, your wealth of experience and international perspective are ideally suited to continue delivering on our ambitious road map. I am delighted that you have joined us at ENGIE. And what is for sure is that you have certainly hit the ground running. Moving on to our data center activities, which are a strong focus of our growth. We are making good progress towards the 3 targets that I had highlighted in my February presentation. We have already achieved 47% of our 2030 target of supplying 50 terawatt hours of electricity to the technology and data center segment. We now have a total of 7 gigawatts of PPAs ongoing with tech and data centers. And our pipeline of co-siting projects has grown by 1 gigawatt to 7 gigawatts of data center capacity since the start of 2026, and that includes 4 gigawatts of advanced-stage projects, up from 0.8 gigawatts. The opportunity set is exciting as we draw on various value creation levers from enhanced margins on supply deals and risk management revenues, PPAs unlocking new generation capacities and sometimes even the sale of power land in the case of co-siting projects. Now on to Power Networks. A major strategic landmark in Q2 was the full consolidation of U.K. Power Networks from May onwards. The integration process is going well. During these first 2 months, we have been able to learn even more about the culture of U.K. Power Networks that embraces every dimension of performance, safety, reliability of the network, customer satisfaction, cost efficiency. U.K. Power Networks is now actively involved in the ED3 process and is submitting today its business plan draft to Ofgem. Outside the U.K. and Latin America, we were awarded a 400-kilometer power transmission line project in Peru, following almost 300 kilometers of growth via auction and acquisition in Brazil and Peru in Q1. That keeps us on track towards our ambition of 10,000 kilometers of operational power transmission lines by 2030. With that, I will pass it over to Pierre-Francois.

Thank you, Catherine. Good morning, everyone. Thank you for joining us for this ENGIE's H1 2026 results presentation. With the first half of the year, as expected, we are back to organic EBIT growth, excluding nuke. And on top of that, we, of course, benefit from the first contribution of the acquisition of U.K. Power Networks. EBIT, excluding nuke, stood at EUR 5.3 billion, also up year-on-year despite the first 6 months of '25 were still supported by the prices locked in the aftermath of the 2022 crisis. Net recurring income group share reached EUR 3 billion, broadly stable compared to last year and despite again, the phaseout of our nuclear activities. Cash generation remained healthy with CFFO at EUR 6.9 billion. The year-on-year decrease mainly reflects the nuclear phaseout and some working capital movements, but the level remains strong and supportive of our investment plan. CapEx reached EUR 22.9 billion, primarily due to the acquisition of U.K. Power Networks for EUR 19 billion. And as expected, both net debt and economic net debt increased following the transaction. Consistent with the strong H1 performance, we are upgrading our 2026 guidance with a new midpoint at the top end of the former one. And I will, of course, come back on it. Let's now turn to the EBIT evolution, excluding nuke. Starting from EUR 5.1 billion in H1 '25, it does reach EUR 5.3 billion in H1 2026. On an organic basis, the increase is plus EUR 66 million. Scope and foreign exchange had a negative effect, excluding U.K. Power Networks, mainly from the U.S. dollar and the portfolio rationalization in gas generation. The acquisition of U.K. Power Networks then added around EUR 180 million from its consolidation since May. Price and volatility were negative as expected. This mainly reflects trends which were observed in Q1, such as lower capture spreads in Flex Power as the high levels hedged during the crisis are now all gone, but also continued normalization in B2B and soft power market conditions for energy management activities. Volumes were also negative, mainly due to milder temperatures in Q1 and lower hydro volumes. Against this, commissioning contributed EUR 262 million, driven by new renewable and flex capacity for about EUR 200 million, additional regulated assets in France and power projects in Brazil for about EUR 50 million and performance contributed EUR 304 million, showing that the plan continues to be a meaningful lever across the organization. Other items are not significant and include settlements and timing effects. It is the incontestable confirmation that our reported performance is flowing straight into the bottom line. Nuclear EBIT decreased by EUR 382 million, essentially reflecting the Belgian nuclear phaseout and also lower achieved prices in France. So overall, the message is pretty clear. Our growth platforms and performance engine are outpacing the fade of market tailwinds and nuclear phaseout. Moving now to Renewable and Flex Power. EBIT stands at EUR 1.8 billion, down 5% organically. But behind this headline number, the drivers are quite different between renewables and batteries on one side and gas generation on the other. Renewables and BESS delivered a positive contribution. In H1, installed renewable and storage capacity continued to increase with new wind, solar and battery assets coming on stream. This confirms the quality of our development model and the value of disciplined investment execution. It was supported further by another strong contribution of performance. At the same time, the business faced headwinds from lower capture prices in Europe, although this impact was partially offset by the reduction in the French hydro tax. Cash generation decreased mainly due to lower capture spreads in Europe as strong hedges in Q1 '25 are not there anymore and also due to disposals to the non-repeat of positive one-off recorded last year and also the pipeline failure in Peru in Q1 '26. This was partly offset by positive pricing effect in Chile and the contribution of Flémalle in Belgium. In June, exceptionally hot weather supported generation in Europe, but not enough to offset the Q1 normalization. Overall, Renewable and Flex Power continues to deliver value in an environment lacking the tailwinds of the first half of last year. Let's move now to Infra, which delivered a strong contribution in the first half. EBIT increased by 13%. The key addition of the half year is, of course, U.K. Power Networks, which contributed EUR 180 million in the period. Closing took place in May, 2 months ahead of our initial expectations. And as Catherine said, integration is progressing well. Organic growth stands at plus 4%. Gas Networks delivered a solid operational performance with tariff increases in France and Romania as well as continued efficiency actions. These positives were partly offset by a negative temperature effect in France as the first half was warmer than both last year and average conditions. In France, this reduced distributed volumes weighed on the contribution of GRDF. Power Networks continued to grow strongly, plus 19% organic increase. This was supported by inflation-linked indexation in Brazil and a positive one-off in Chile. The transmission network in Latin America continues to expand with new projects and concessions supporting grid reliability and renewable integration. Local energy infrastructure, LEI, also delivered growth. District heating and cooling networks benefited from development and tariff indexation, while EV charging benefited from the European development of EVs and charging stations. Weather was again a negative factor, but operational performance and new projects more than offset it. In short, H1 illustrates why infrastructure is becoming even more central to ENGIE's profile, regulated, predictable, growing and directly linked to the energy transition. Turning now to SEM. EBIT was broadly stable organically. B2C and energy management were positive, while B2B declined as expected from an unusually high base last year. B2C showed a strong increase. This reflects effective portfolio management, solid operational execution, but also the nonrepeat of a negative timing effect recorded in the second quarter last year. Belgium and the Netherlands performed well, notably in power portfolio management. These positives were partly offset by milder weather and lower gas volumes in France. This quarterly flow of our profit in 2026 is a reasonable proxy of the proper seasonality going forward. B2B was down as anticipated. One reason is the progressive normalization of margins on legacy contracts signed during the period of high volatility a few years ago. We also had lower positive seasonality and the nonrepeat of 2025 one-offs. Commercial momentum remains sound and current margin levels, which are underpinning our results of tomorrow are in line with expectations. Energy Management delivered a strong performance in gas and LNG. This includes positive settlements on gas contracts and also favorable market conditions. In power, our PPA activities in the U.S. performed well, but market conditions were more challenging with lower volatility. All in all, we are in good shape to deliver [indiscernible] full year, not far off the EBIT contribution of last year. With the former GEMS, I know you still have this reference in mind, maybe the last time that we discussed GEMS, but still a former GEMS around EUR 1.7 billion, well above the EUR 1.5 billion we were planning to achieve exiting the crisis. Let me now spend a moment on performance, which remains the key contributor to earnings growth. In the first half, performance contributed EUR 304 million to EBIT, demonstrating that our improvement initiatives continue to deliver tangible value. You can see the contribution of each of the 3 pillars of our performance plan on this slide, and let me bring the plan to life with some concrete examples. And first, in B2C France, the use of AI has allowed to reduce significantly the client contacts in our call centers, demonstrating the value of digitalization and automation to generate about EUR 5 million full year impact. Second, in local energy infrastructure, continued simplification efforts led to the reduction of about 75 positions, not only lowering our cost base, but also improving efficiency for a total contribution of about EUR 13 million full year impact. And third, in Renewable and Flex Power, operational excellence initiatives increased the availability of our solar and wind assets in Brazil, translating into higher production and stronger profitability for about EUR 9 million full year impact. These 3 examples show that performance is not just a corporate slogan. It is very concrete, measurable, embedded in our day-to-day operations from digital transformation and organizational simplification to simple industrial excellence. Let's now have a look at the main items between EBIT and net income. Recurring financial result was EUR 1.1 billion negative down EUR 0.2 billion year-on-year, notably reflecting the financing of U.K. Power Networks and also the impact of ForEx in foreign currency-denominated debt, notably Brazilian reals. Recurring income tax amounted to EUR 0.8 billion. The effective tax rate around 22% is in line with expectations. This includes the market standard treatment of U.K. Power Networks deferred tax balances. After minority interest, net recurring income group share reached EUR 3 billion, broadly stable versus last year. Moving from recurring to reported net income. Commodities mark-to-market had a positive effect of EUR 0.6 billion, mainly reflecting the fair value evolution of our hedging portfolio. Other items were negative by EUR 0.2 billion, including costs linked to the U.K. Power Networks transaction and some portfolio cleanup actions. This leads to net income group share of EUR 3.3 billion. Turning now to cash generation. CFFO was EUR 6.9 billion. The year-on-year decrease is primarily explained by lower operating cash flow with the nuclear phaseout. It's about minus EUR 0.4 billion impact on CFFO, also by the change in working cap. Part of this came from inventory, mainly linked to the price effect on gas. Operating working cap also increased, reflecting higher business activity and prices. Margin costs were close to neutral, which reflects the right risk management tools and processes we put in place during the energy crisis to reduce cash volatility of our operations. Still, CFFO remains high in absolute terms and continues to provide substantial funding capacity for investments, dividends and credit discipline. Looking at net debt and credit ratio. The increase of economic net debt is, of course, driven by the acquisition of U.K. Power Networks with CapEx of around EUR 19 billion only linked to this transaction. These effects were partly offset by the capital increase and the hybrid debt issued to finance the acquisition. Disposals contribution in H1 is immaterial. Be mindful that the Jirau sell-down was completed in July. Economic net debt to EBITDA stands at 4.2x, temporarily above the 4x threshold because the debt impact of U.K. Power Networks is fully included while we just had 2 months of EBITDA contribution. We expect this ratio to move back near 4x by the end of the year. In summary, the leverage increase is clearly transaction related and temporary, while our commitment to a strong investment-grade profile remains untouched. Let me conclude now with our updated guidance for '26. Following the strong performance delivered in the first half, we are upgrading our full year guidance with a new midpoint at the top end of the former one. This guidance upgrade reflects confidence, not optimism. Beyond the early closing of U.K. Power Networks, it is grounded in solid fundamentals and several supportive factors. First, of course, the quality of our H1 operating performance, supported by the contribution of our growth investment, including U.K. Power Networks closing 2 months ahead of schedule. But also second, the continued execution of our performance plan, which remains a meaningful driver of earnings growth. Third, we benefit from better-than-expected ForEx environment, especially U.S. dollar and Brazilian reals and power prices, albeit 2026 was significantly hedged at the beginning of the year, as you should expect. In addition, we now expect a lower recurring effective tax rate in the range of 18% to 22%. This range takes into account some uncertainty related to the ongoing discussions in Belgium. Looking ahead, we see limited risk exposure for the remainder of the year. The vast majority of our merchant positions are now already hedged, providing strong visibility on earnings and cash generation for the next few months. Overall, the combination of strong operational execution, disciplined investment deployment and high earnings visibility leaves us well positioned for the remainder of the year. With that, let me hand over to Catherine to conclude today's presentation.

Thank you, Pierre-Francois. So in conclusion, a successful first half for ENGIE with upgraded full year expectations. The strength of our industrial model is showing results in the context of geopolitical market and weather unpredictability. It is compounded by our commitment to enhance the value from our existing asset base to invest in our growth priorities with strict discipline and to remain laser-focused on execution and performance, all dedicated to supporting our customers with affordable and reliable, sustainable energy whenever they need it. I can't end without paying tribute to our incredible ENGIE teams who are, without a doubt, among the best professionals in the industry and the real reasons behind our continued success. Thank you. Back to you, Delphine.

Thank you, Catherine. Operator, can you please open the line to Q&A? [Operator Instructions]

The first question comes from Harry Wyburd of BNP Paribas.

I'll take my full 2 questions. So firstly, it's a fairly predictable one but on Energy Management or the former GEMS perimeter. So in Q2, you did pretty well in Energy Management. Is that just pure good performance in gas and LNG trading? Or was there something new on gas contract renegotiations in there? I think you mentioned them both in the 1H and the 1Q updates. And I think you said you did EUR 100 million of gas contract renegotiations in 1Q. I wondered whether that -- there have been any more in 2Q. And then maybe you could just clarify what your expectations are for the full year now. I think you mentioned EUR 1.7 billion of EBIT, if I picked that up correctly, for GEMS -- for the former GEMS perimeter, but would that include the gas contract renegotiations? Or is that an ex gas contract renegotiations figure. So that's the first one. And then the second one, just a topic we haven't covered that much recently. regulatory reviews in French gas networks, I guess, for GRDF, if I remembered correctly, the regulatory reviews or the end of the period is less than 2 years away now. And I think in this regulatory period, the current regulatory periods, you benefited from timing effects quite significantly. So I just wondered if you could remind us where things stand on the next regulatory period and how confident you are that you'll be able to maintain a smooth earnings profile if there's a different volume catch-up figure in the next regulatory review?

Maybe just a quick word on the second question. Just on the -- just to remind everybody on the timing, right? So 2027 is going to be the year of engagement with the CRE to prepare the next regulatory period. So right now, what is maybe meaningful on the topic of gas networks is the fact that there has been a report issued by the CRE that laid out the different scenarios that they're looking at and reinforcing, obviously, the importance of gas in the system to 2050 and looking at even beyond 2050. So there are different scenarios, pretty much mostly in line with our own view of the decrease of gas, but also the importance of gas in the system. So that's one point. There are also some important features in that report that reaffirm the need to look at things like potentially starting to dismantle some part of the network, but that would need to be covered by the tariff. So that's very important to us, obviously, as a shareholder. So there's some really good and important positive points in that report that laid out the foundations of the work that we will do with the CRE next year to prepare the next regulation period. And that, of course, will include all the clawback mechanism that are very typical of the French regulations and that often is the result of the volumes that decreased particularly as a result of the climate, which we have seen this year, climate being, again, a factor behind volumes decrease, and that will necessarily lead to a clawback mechanism kicking in for which we don't expect any deterioration in terms of scheme for the next regulatory period. Pierre-Francois?

Yes. And thank you, Harry, for indeed, not a completely unexpected question. So you're right to point out that Q2 in EM was strong and probably stronger than what you had in mind. It's actually on the back of 2 things. One, indeed, very decent trading condition on gas, but also indeed some supplement complement into our gas settlement. Now the EUR 1.7 billion that I mentioned as the landing point for the former GEMS and again, with some of the usual caveat, it's basically for B2B, again, a strong business, which is getting closer to the EUR 1 billion delivery. And so that's definitely a strong asset. And on top of that, of course, by difference, EM, which is around EUR 0.7 billion, that's where we would see that. And in that amount, there would be indeed the positive contribution of this gas settlement, but we are actually baking in H2 with some cautious derisking given the current environment and which is also, as you know, part of our strategy, and you've seen that pattern over the years that H2, we tend to be a bit conservative in terms of risk management, and that's also in our numbers. So I think the EUR 1.7 billion that you see is quite a robust EUR 1.7 billion, which is not overly inflated by one-off, and I think that's what you were after.

Got it. And the supplement to the gas contract renegotiation in Q2, would you be able to quantify that? How much extra you got?

Yes. I mean now we are done with the settlement. So the big chunk was in Q1 and the smaller one in Q2.

The next question is from Wanda Serwinowska of UBS.

Wanda Serwinowska, UBS. Two questions from me, if I may. The first one is on the performance plan. I think you mentioned in Bloomberg that you are like EUR 100 million ahead of the plan. Should we expect an upside to your current plan? Or did you deliver H1 quicker than you expect? I'm thinking how should we -- what should we model beyond 2026 on your performance plan? And the second question is on the German new CCGT auction scheme, I think you mentioned it, and I think you have one project. So what is your appetite for the German CCGT auctions? And would you be ready to have a project for the first auction or for the second one?

Yes. So we are obviously in the process of studying all the features and the details of the framework. We do have indeed potential projects that we are considering for an auction. And I don't know if it's the first or second one that you're referring to. So it's one of them, and it should come fairly quickly. But obviously, we will only participate if we feel that the conditions are adequate for us. But yes, we are interested in participating very, I would say, selectively in reinforcing the flexibility need in Europe. We have done that with Flémalle. So the Germany framework might be interesting. We're looking at it. Again, if satisfactory, we will...

Okay. And then maybe on performance, clearly, very pleased with our H1 numbers. We are EUR 300 million, including contribution of loss-making of about EUR 90 million. So it means that the rest of the plan is delivering north of EUR 200 million for 6 months, it's a pretty good number. Clearly, trading above the EUR 300 million, which is more or less EUR 300 million full year contribution that we give. So it's going to be another good year of performance for 2026. So very pleased with that. Now please do not extrapolate too early, but it's clear that the momentum that we had last year is still around in '26 in terms of delivering strong performance numbers, but we should be careful about -- before extrapolating to future years. But very pleased with the pace that we have today.

Yes. And I'm told it's the second auction in December that we're talking about.

I got some IT issues. So Catherine, I missed 90% of your answer. I will read the transcript. Can I just quickly check, I don't know really what you said. Do you have -- have you secured turbines and do you have all the permitting in place? I'm trying to understand how ready you are for the auctions in December [indiscernible] for the follow-up.

Yes. I mean, obviously, we have a project that is under development, and I'm not going to go through too many specifics, but we are looking to participate in that second auction. Obviously, we have land secured. And for us to participate in December auction does tell you that we are well engaged with the supplier on securing the equipment. Otherwise, it would be foolish of us to position ourselves for December. As you know, turbines supply is a scarcity these days. So yes, we are looking to -- we have secured land and we are in good shape in terms of equipment. Again, should we go ahead as we are finalizing, looking at all the terms of the CRM auction.

The next question is from Arthur Sitbon of Morgan Stanley.

The first one is on the lower tax rate assumption that you've made for 2026. I was wondering if we should consider that as a -- well, if you could give a bit of color on what's driving it, if we should consider that as a one-off effect or if it will impact future years as well, so post 2026. And I was wondering also if it's linked in any way to the U.K. capital allowance scheme now that you have U.K. Power Networks. The second question is on AI. You made an interesting point on the fact that it's allowing you to save EUR 5 million in France in B2C, thanks to new initiatives. I was wondering if you could develop a little bit more on the potential of AI for your cost saving plan. I assume that's still a very small share of your current EUR 300 million per year, but it would be interesting to know a little bit more about the initiatives you're working on there.