Alten S.A.

Hello, everyone, and welcome to the Alton Conference. We're going to talk about the sales of the fourth quarter 23. Choose the language that you want to follow the conference. To do that, click on the interpretation button. We remind you that to follow the webinar under optimal conditions, you'd better start at Zoom and then from a web navigator, a web browser. ask you directly in the Q&A module or raise your hand at the end of the conference to ask your question. Please write your name and give a name so that we can identify you. For people that are joining the conference by audio, by dialing the phone number internationally, we inform you that this option doesn't make it possible to choose your channel that you're listening to. You'll automatically have the floor without the possibility of following the slides. We cannot identify you either. That's why we ask you always to announce your name before asking your question. If you wish to participate in the Q&A, you can raise your hand by dialing a nine and and activating your microphone by dialing six. Thank you very much. We're going to hand over to Mr. Abidine. Good evening. I'd like to thank you for participating in our phone conference concerning the activity of 2023. As you may have read in the press release, the sales of the year 2023 for Alten stood at €4.68 billion, up 7.6% compared to the previous year. In France, the activity progressed by 10.2%, by 6.4% outside of France. In the fourth quarter, the rhythm of growth slowed down compared to the previous quarter, compliant with what we anticipated. but the sales was on line with the high estimation that we communicated in October last, bringing annual growth like for like to 9%. In France, the organic growth was 10.2%, and outside of France, it stood at 8.4%. In the fourth quarter, the growth stood at 3.2%, 11.3% in France, and minus 0.3% outside of France. since we sold an activity last year in the US and in the UK, like for like figures, the growth was higher necessarily, which stood in the last quarter at 5.8%. And organic growth was 11.3% in France and 3.3% internationally. In the fourth quarter, we were penalized by by a defavorable basis effect of 0.9 days left and 22 internationally. The working days had an incidence on the activity of 23, since in total, in 23, we counted 1.5 working days less than in 22. So that penalized our organic growth by 0.7% roughly. the rate of activity in the fourth quarter was 91.8%. It stood at 92.2 in the last quarter of 22. In 23, the activity rate of the group stands at 91.8% compared to 92.6% last year, or slightly down by 0.8%, which is normal since the rate of activity came back to its standard rate this year, which, as you know, was 92%. The group staffing levels are consistent with a slowdown in growth. In the second quarter, they're almost stable compared to the end of the first half year. We had sold off C Prime, which is our company in the US and the UK at the end of 22. And the group had 53,000 staff at the end of last December in 22, I'm sorry. out of the 53, 650 staff, we had 47,240 engineers. At the end of June 23, the group had 57,400 staff, including 5,550 engineers, or a group of 3,300 engineers in the first quarter, so 26 organic. By the end of December, we stood at 57,000, including 57,000 engineers in the first quarter. Our group integrated 744 engineers coming from acquisitions, but also deconsolidated, as I could put it that way, 1,380 consultants in India subsequent to a transfer of activity linked to the alliance group. To summarize for 23, The staffing levels of engineers was up by 2,700 engineers to 2,740 organic, 700 in France and 2,043 outside of France. And acquisitions net of exits represented 17 engineers. Position is important because this is quite individual that someone... that as many consultants would be leaving subsequent to an operation, and I will probably get back to this in the Q&A. As I was explaining, at the end of June, the group had progressed by 2,626 engineers organically, and they progressed at the end of December by 2,743 engineers organically. And you can see the organic growth in the group has strongly slowed down in compliance with the stabilization of the activities that we've been seeking out for a few months in the second half year. And most of the growth in engineers happened in the first half year. About of the 53,000 engineers at the end of 23, 11,800 are in France and 38,200 are outside of France. Concerning the activity of the group, whether it be in geographical area or vertically, comments and analyses have not changed from the last publication. France realized a good performance. It even went slightly over its growth rate in the fourth quarter. Southern Europe and Benelux have not slowed down or only slightly. However, the other geographies are strongly down in the second half here. In France... Despite two working days less than last year, which represents an impact of 20% in organic growth, hopefully, the activity was up by more than 10%, essentially drawn forward by the two AeroCivil and France's security. In Iberia, it was up by 14%. All sectors are strongly up, with the exception of the bank finance sector, which slowed down in the last quarter. In Germany, the activity continually went down since the end of the first quarter, down from 18% from the beginning to minus four at the end of the last, which was penalized by less working days than last year, and the annual growth of 5%. As I explained to you during the conference in October, this was the automotive sector which was dominant in Germany, which was strongly down, particularly in equipment producers, where the budgets are down and have been since the back to school in September. The deceleration was accentuated in aeronautics, was down 26% with a few percentage, which did not happen in France. And the two sectors represent 70% of sales, which is explained by the degradation of activity in Germany. the downswing in Germany. In the UK, the integration of methods that we acquired last year and that were consolidated starting from July 22 has been taken into account for calculating the growth starting from the second half year 23. This company that we acquired a bit over a year ago represents 40% of the activities of that country. And there was a very slow growth in the first quarter, has a slight decrease in the second half year. So the integration of methods diluted the organic progression of the UK starting in the second half year, which also included one working day less than last year. In the historical scope, Of the group in the UK, growth is maintained at more than 10%, even if the main sectors, auto and aeronautics, have been slowed down, although they were still dynamic. In Italy, the growth is still 24%. All of the sectors are progressing without any exceptions. In Benelux, the growth is 15%. It stays at 15%. thanks to automotive and rail, and slightly down in electronics and semiconductors in the Netherlands. We also saw one working day left in 2024. In Scandinavia, the situation is extremely close to the one we observe in Germany. The activity has slowed down throughout the year, going from 12% in the first quarter to minus 4% in the last quarter. or an average growth of 4% over the year because of the auto and trucking industries and other industries for Sweden and in Finland, various equipment areas. So, This is identical for all points of view with what we've observed about Germany and Eastern Europe. We also have had to face a decrease in activity, even if the global growth is satisfactory, standing at 17% in 2023. In Poland, which represents 65% of the zone, grew by 20%, and Romania, also increased by 15% thanks to auto and energy, despite two working days less in the second half year. In North America, the growth in activity has continuously slowed down until it was flat in the last half year. In the U.S., these are automotive sectors, which are essentially oil and gas and tertiary that have slowed down. In Canada, it's mainly the bank and finance that slowed down. Lastly, in Asia Pacific, the published growth of 3% roughly is null in the second half year. I'd like to remind you that you have to reprocess data about Asia Pacific of the strong decrease in activity in Singapore because of the end of the project in oil and gas. Singapore represented 12% of the APAC area in 22, and it only represents 3% now in 23, so we're down 75% due to that. Recalculating Singapore, the impact is down 10% in cumulative data at the end of the year. The growth is still satisfactory, sorry, it's plus 10%, which reflects the reality of the activity in this zone for the Alton group. In China, which represents 35% of the zone, was penalized by a strong slowdown in telecom, which is significantly down, down to 5% only. On the contrary, auto, the automotive industry, which represents 35% in China, still is up by 30%. In India, 30% of sales in the APEC area are also up by 12%. Two countries are significantly growing, which are worth noting. Japan, up 11% of the zone, a slowdown in the last quarter with a peak of 17%. So the global growth was 29% in electronics and tertiary. And South Korea, continuing to grow, represents 10% of the zone, growing by more than 25%, thanks to auto. If we analyze our activity now vertically, nothing new compared to the publication in October, but a summary here reveals that automobile is up by 15%, with a strong increase in automakers globally up 25%, with a rhythm of increase which is not weakening with the exception of General Motors and Ford in the US and one in Sweden. The slowdown in activity with equipment producers, notably in Germany, which did not grow over the year. In Germany, where some are even actually down, there's a downswing for many of these. In rail industry, the activities are up throughout the year. The average growth is 7%. But Q4 was more than 10%. Aerospace remains very dynamic, especially in civil aviation. The spatial activity is growing, but much more weakly, whereas civil aviation is more than 25%, with a slight slowdown in Q4 in Germany, which hit the equipment producers. Defense and naval security activities progressed over the year. Rhythm of growth was stabilized around 30% in the second half year. Energy is down by 8% due to the oil and gas activities, which represent 2.2% of sales. and now it's down 33% this year in oil and gas. We had to face up to the end of big projects in Africa, in the US, in the Gulf, as well as the withdrawal in the second half year of 22, which weighed heavily on the activity. We don't see any reason that this activity would for the moment pick up again in 24. We'd have no information in that direction. Other energy sectors, nuclear, Equipments and chemicals are up on an average of 10%. Life sciences, whether it be pharmaceuticals or medical equipment, are growth homogeneously to the tune of 5%. And industrial equipments and electronics and semiconductors growing by 8.5%. With a slowdown of significance in electronics and semiconductors, which was strongly growing, Almost stable in the second half year and other industries only slowed down in the last quarter. Telecoms. The share of the group has grown. It is stable. Slightly decreasing in Q4. The operators are continuing to grow, whereas Kipin providers are down significantly. because of the end of many projects, many 5G projects that were ongoing and now it's done because those are over. In the finance and banking sectors and insurance, same thing as for retail services and the media and public sector, these were up only by 3.5% this year, growth which was mainly in the first half year. And in bank finance, the slowdown in activity is quite clear in France. it was a decrease in banking, whereas even if the activity slowed down in North America, it still is positive in the last quarter. The other retail services and media and public sector also slowed down in the last quarter. So that you can see that ultimately the analysis of activities in 23, we can consider for geographical areas and vertical areas is quite contrasted. With the exception of oil and gas, which is down, and telecom, which is a decrease as well in sales, which is stable, and all sectors are continuing to make progress, even if most have slowed down in that second half year. or they may not have grown in the second half here, with the exception of automobile, aeronautics, and other sectors, which represent globally for these three sectors, roughly 40% of sales. With respect to external growth, even if other companies, no deal has been finalized since last year, since the month of October. We should close normally a few deals during the first quarter. Total in 23, we have acquired five international companies for 24. As we had anticipated, the activity slowed down in the second half year. So this will be the prolongation of the second semester 23, even if it's too early to identify a trend. As you know, generally we have a better visibility in what could happen in the first half year at the time of the analyst meeting, which will happen in a month's time. After the first contact with startup of new projects at our customers, we think that the globally, the activity should intervene in the second half here, at least in some sectors, such as automotive and Germany, where have indications on the part of our clients, which plan on a restarting of projects at the beginning of the summer. The macro economic. situation as to whether it's starting up again in the second half year or not, and due to this fact the the onboard growth for 24 is modest because it's 2.5%. And the calendar is waiting for a calendar which we are expecting in France. and a bit less outside of France. As usual, in January, we're not giving any guidance in this period of the year because it's too early. We hope that we will have a satisfactory growth, even if it'll be less necessarily by 23 than 23 and 24. I'd like to hand over to you now. I think that some of you may have questions for us. So I am available to you for this purpose.

Hi, Bruno. Can you hear me?

Great. Thank you. Just a few questions from me. So if you could just repeat your last comment on the growth for 2024, you said it should be modest. Did you say around 2.5%? I didn't catch that. If you could just repeat that or clarify that point. And then at the second, if you could just maybe comment on what you said on the activity improving in the second half. So maybe... what's driving the confidence in that and with the visibility on that and basically which sectors will drive the recovery in the second half. And if that means you think growth during the year should bottom out in 2Q, is that what you mean by that? Thanks, Bruno. Maybe just a quick follow-up on that and then one more as well. I guess that sort of implies that growth will bottom out during into Q. I guess that's what we should imply. And I know you don't disclose the margins on this call, but given the growth you saw in Q4 and your comments on the first half of Q4, How should you think about the margin for next year? I know that you had some costs in 2023, which will not repeat in 2024. And maybe, you know, your utilization level will not be headwind as well. So could you talk about some of the moving parts of the margins as well into 2024?