Bureau Veritas Sa

Good morning, good afternoon and good evening to everyone. I'm pleased to welcome you to the full year 2023 results on the webcast and on the call. I'm joined by François Chabat, our group CFO. We delivered excellent results in 2023, reflecting our robust business fundamentals, our consistent execution and our customer centricity around the globe. I would like to warmly thank all our colleagues around the world for their dedication and hard work to deliver this outstanding performance. Looking at our financial highlights of the year, revenue totalled €5.9 billion, up 9.1% at constant currency and up 8.5% organically, of which 9.4% in the last quarter. This is a combination of strong volumes with the conversion of our healthy backlog and a pricing impact as expected. This included more than a third of our portfolio producing strong double-digit growth, with all business lines delivering positive organic growth in Q4. Adjusted operating profit increased to €930 million, up 10.5% year-on-year at constant currency, with a margin at 15.9%. Organically, our margin increased by 20 basis points to 16.2%. Our adjusted earnings per share rose 7.4% to 1.27 euros, a record high. At constant exchange rates, the growth was 17.4%. Free cash flow rose 5.5% at constant currency to 659 million euros. This reflects a strong operating performance and good working capital management. Consequently, a dividend of 83 cents per share will be proposed up 7.8% year on year and corresponding to a payout ratio of 65%. In 2023, we have continued our efforts to be exemplary in terms of sustainability around all environmental, social and governance practices. Our greenhouse gas emissions targets has been approved by the Science-Based Targets Initiative, SBTI. As a consequence, Bureau Veritas joined the CAC 40 SBT 1.5 degree index. We are very proud of the external recognition received. In fact, Bureau Veritas ranked first in the S&P Global Corporate Sustainability Assessment for the professional services industry category. I would also like to share with you the progress in our CSR performance. In health and safety, our ongoing prevention programs further reduced our accident rate in the year. On gender diversity, we continued to improve the proportion of women in leadership positions, which increased to above 29%. Multiple programs have been rolled out last year to make sure we reach our long-term ambition. Last year, we implemented a number of important organizational and governance changes. First, we have strengthened our management structure to support our future growth ambitions. Three new executive committees position were created to sharpen our focus to improve execution and drive strategic priorities around innovation and growth. Second, a number of changes were made to our Board of Directors. Laurent Mignon, Chair of the Vendel Managing Board, was appointed Chair of Bureau Veritas. Pascal Lobard has been appointed Lead Independent Director and Vice Chair of the Board, in addition to his role as Chair of the Nomination and Compensation Committee. Third, the Board created a CSR Committee to support the execution of the Group CSR Strategy. Three out of four leading committees are now shared by independent women directors. I am pleased to report that we have exceeded all the objectives we set for 2023, showing predictability in our execution and resilience of our business model within a complex macro and geopolitical environment. 8.5% organic revenue growth in 2023 at the top end of our revised guidance range from July of mid to high single digit. This is the second year where we have delivered high single digit organic revenue growth. a record revenue. A margin up 20 basis points year-on-year organically versus stable adjusted operating margin target set in July. A strong cash flow with cash conversion above 90%. Looking now at our revenue mix, these results have been driven by all business lines and regions and included high growth from sustainability, decarbonisation and energy transition solutions. Over 80% of the portfolio delivered at least mid to high single digit or double digit organic revenue growth derived from a growing sales pipeline. Looking at the mix, marine and offshore industry and certification delivered consistent strong double digit growth across all quarters. Robust mid single digit organic revenue performance was also achieved in BNI and agri-food and commodities. Following the challenging first half in consumer products, our activity improved as expected in the second half and closed the year up 4% organically in Q4. From a geographical standpoint, the Americas, Middle East and Africa are leading the pack, alongside a strong performance in Europe and robust growth in Asia-Pacific. I'm encouraged by the momentum of growth in Q4 across all our businesses. Turning to CPS, revenue growth for 2023 was positive at constant currency with organic back to 4% growth in Q4. We also continue to execute our diversification strategy, which is built around three pillars, and I would like to share our progress. First, from a sector expansion perspective, we have completed the two acquisitions in North America in 2022 to be able to build new revenue streams. As announced previously, these acquisitions in health, beauty and household sector have delivered strong growth in 2023. Second, we are further diversifying our services in sustainability and other upstream solutions. The recent acquisition of Impactiva is a good example. And third, we are expanding our geographical footprint beyond our traditional strongholds in Asia. The ANSI acquisition announced this morning establishes our leadership position in Mexico. These two acquisitions reflect our continued focus on strengthening our CPS business. The Impactiva acquisition completes our portfolio and positions us as an upstream leader in the leather footwear value chain. Today, we announced the acquisition of ANSI, a leader in testing and certification services for electrical and electronic products in Mexico. This allows us to enter a new market and could serve as a springboard for expansion into North America. Mexico is clearly one of the fastest growing exporters to the USA. We are planning to leverage BV client relationship with retailers and brands to expand our business. Together, this adds circa 30 million of annualized revenue, and we expect the Bureau Veritas CPS platform to accelerate growth. In line with our focus strategy to diversify CPS and regain our growth momentum, there are a number of other targets currently under discussion. Earlier today, we signed a small new deal allowing us to enter the Indian consumer tech market, which is a new geographical diversification. I will pass it now to Francois.

Thank you, Linda. Before we deep dive into the numbers, a few words on the key financial achievements of 2023. We have continued to prove our ability to navigate through a volatile environment with a strong organic growth throughout the year. This is the second year in a row where we closed with an organic revenue growth of plus 8%. We improved our margins organically by 20 basis points. And in particular, this shows a 47 basis point organic improvement over the second semester of 2023. We reported an adjusted GDPS growth at high single digits at constant currency. The growth achieved was 15.7%. This was led by strong operating and financial performance. And it contributed to a further decrease in our leverage ratio, which is now down to 0.92 times. In terms of dividends, as Inda previously said, Bureau Veritas Board of Directors is recommending a dividend of 83 cents per share for 2023, up 7.6% compared to the previous year. This corresponds to a payout of 65% of the adjusted net profit. Looking now at the revenue bridge, we delivered 5.9 billion euros in the full year with a significant organic growth of 8.5%. It shows a strong execution capacity combined to the good momentum of our secular growth trends. Acquisitions added 0.6% on a net scope basis, reflecting the impact of the Bolton acquisition realized in the past few quarters. As always, we continue to actively manage our portfolio, and in July, we sold our non-core automotive inspection business in the US, which represents less than €20 million of annualized revenue. On the acquisition side, as Inda mentioned, we added two new deals in the last few weeks of 2023, and even a smaller one today, and our pipeline is promising. Forex impact represents a drag of 5.3%, leading to a total growth of 3.8% on a net reported basis. And I would like to give you some more color on this situation. As you may know, we operate in more than 90 9-0 currencies. The vast majority of our businesses is not exposed to transactional ethics as we invoice in the same currency as our cost base. We recorded a negative translational ethics in 23, mainly attributed to the strength of the euro against most currencies. Half of the 300 million euro impact come from the US dollar, the Chinese yuan and LATAM currencies. When it comes to foreign exchange, Buraita's strategy is twofold. First, on the tiny part that is transactional, we hedge. Second, capital allocation remains in countries where currencies are stable. This is what we have done in the last four years. And to put this a bit in perspective, since 2022, the foreign exchange impact is limited to 1% overall on the group numbers. Taking a further look at the fourth quarter, Strong revenue growth, 9.4% organically. External growth contributed to minus 0.4% on a scope basis. This is the impact of the recent disposal as part of our portfolio management strategy. NFX had a 0.6% negative impact. Overall, it is a total growth of 2.6% in the quarter on a reported basis. When it comes now to the performance of different businesses in the year, including the last quarter. You see on the left, the full year, on the right, the last quarter. Three activities led the growth, namely marine offshore, industry and certification. They all delivered double-digit organic growth in the year and in Q4, on the back of continued momentum in sustainability services, including marine decarbonisation and renewable energy projects. Agri-food and commodities and building infrastructure both delivered mid-single digit organic revenue growth in the year. BNI was led by both in-service and new-built activity and recovered as expected in Q4, up 4.4% in the quarter. Agri-food and commodities growth was driven in particular by the strong demand for agri-food and government services and grew 7.5% in the last quarter. Finally, consumer product services delivered as planned. After a negative H1, their recovery in the second half led to a stable performance overall in the year. Now, looking more specifically at the last quarter, I'd like to remind you this is the sixth quarter of organic revenue growth above 8% in the last two years. And all businesses that we've just seen delivered good growth. Now, on the margin bridge on this slide, so despite cost inflation, we delivered a healthy 15.9% margin in the year. Organically, our margin increased by 20 basis points to 16.2%, as I mentioned. After a broadly stable first half, we delivered a 47 basis point improvement over H2. This illustrates good progress in operational excellence and execution of our pricing programs. Scope added a modest 1 BP and Forex added 32 BPs negative impact to the group margin, explained by the currency mix. Within the portfolio, the revenue growth and the operating leverage drove organic margins higher in four out of our six businesses. Industry is up 250 basis points organically to 14%, which is somewhat of a more normative level, benefiting from more contract selectivity, as we said earlier in the year, and some operational leverage. Marine offshore was up 94 basis points to 23.8%. Agri-food and communities up 70 basis points to 14.9%. And this was led by the operational leverage and a positive business mix. Certification up 26 basis points to a very healthy 18.9% margin. On the other hand, two businesses recorded margin decline, namely consumer products and building infrastructure, as they were impacted by lower consumer demand for the first one and mixed FX. As a conclusion, we managed to offset the FX impact on the margin by the solid execution of operational leverage. Moving now to the other financial metrics in the full year, EPS and cash in particular. Starting with EPS, we delivered a record adjusted EPS of 1.27 euros, up 7.4% year-on-year and up 17% at constant currency. This reflects strong operating performance, but also lower financial charges and effective tax rate. Putting that a bit in perspective, our earnings are now 25% ahead of the 2019 levels, up over 9% each and every year, as a result of a constant execution, regular and focused attention to EPS growth. Growing the earnings is a key objective for the company, and we are confident to maintain a positive EPS momentum moving forward, as we did over the last four years. Moving to the cash flow statement, free cash is up 5.5% year on year at constant currency to a strong 659 million euros, representing more than 11% of our revenue in terms of cash conversion. Despite the strong revenue performance in the fourth quarter, our working capital requirement outflow was contained at 53 million euros. Our working cap ratio over revenue is kept at a low level of 6.5%. We remain obviously very disciplined when it comes to investment. Cap exude at 2.4% of revenue, up 20 bps, to finance the development of our lab activities. And we expect this to be in the range of 2.5% to 3% for the full year 24. So to sum up, a very strong financial performance delivered by the group in 23, thanks to a lot of hard work from all the teams across BV. I now hand back to Linda for the business review.

Thank you, François. Let me share with you now highlights of the full year 23 for each of our six businesses. Starting with marine and offshore, 2023 was another strong year for our business with a 14.4% organic progression. It ranks among the best performing divisions within our portfolio. It was driven by growth across all sub-segments. We are in a multi-year growth dynamic as the maritime industry decarbonizes and becomes more energy efficient. We grew double-digit in the new construction part, reflecting the solid backlog and acceleration of new orders conversion over the year. We grew double-digit in the core in-service activity. This came from solid pricing and an exceptional number of occasional surveys. We have a healthy backlog, growing 11.4% year-on-year, driven by LNG fuel chips and specialised vessels. This provides us good visibility on future revenue. Bureau Veritas continues to differentiate itself in the market and is now the first class company to be recognized and approved to class ships under the Chinese flag authority. In recognition of our innovation capability, we have also been selected to class the world's largest ammonia carriers in China. It will support the adoption of carbon neutral fuels by the shipping industry and the development of supply chains for green hydrogen. Now, moving to agri-food and commodity. Our diverse agri-food and commodities division recorded a robust 5.7% organic revenue growth with different dynamics among the sub-segments. Oil and petrochemicals recorded mid-single-digit growth. O&P benefited from market share gains in Europe and from the global sustained demand for biofuels and oil condition monitoring. Metals and minerals, on the other hand, saw a low single-digit organic growth. On-site laboratory strategy remains a strong growth driver for us, with important wins in Asia and Australia. Trade activities recorded a high single-digit organic revenue growth, led by sustained strong volumes from Asia. Agri-food delivered high single-digit organic progression. Agri-activities reaped the benefits of exceptionally good harvests for different food commodities in South America and for corn overall. Lastly, government services achieved high single-digit organic growth, led by the solid ramp-up of new verification of conformity contracts in the Middle East and customs outsourcing contracts in Africa and the Caspian area. In terms of sustainability achievements, in the last quarter, we were selected to deliver carbon-related services for a large crop science company in Germany in order to improve its agricultural practices. On the industry front, our highest growing business in 2023, up 16.5% organically. Our growth was broad-based across sub-segments and most geographies, with the Americas, Middle East and Africa outperforming other regions. Government energy security and transition needs and customers' decarbonisation agendas are driving investments across the energy sector. Specifically, we continue to see an increase in clean energy investments that are driving our growth momentum. By market, we deliver double-digit organic performance for CapEx activities and power and utilities. For renewables specifically, the momentum remains strong during the year in solar, onshore wind, and high-voltage transmission projects in the U.S. In OPEC, growth was moderated by our decision to be more selective on contracts. In Europe, the nuclear power generation segment is seeing a revival with new projects in the UK and the EDF power plant renovation programs in France. In oil and gas, new global projects, including startups' gas projects, drove double-digit organic revenue growth. The non-energy activities performed also well in both OPEX and CAPEX services. These activities benefited from a number of drivers, including aging assets, tightening regulations, and the adoption of more sustainable and decarbonized asset management practices in different industries. In terms of sustainability achievements here, in addition to launching two certification schemes dedicated to renewable hydrogen and ammonia in 2023, we were selected for the engineering and quality assessment support on Woodside Energy's H2OK in Oklahoma, a hydrogen plant. For BNI, we achieved an organic growth of 6.3% in 2023, Against challenging comparables, this brought the Q4 organic revenue growth to 4.4%. Overall, we continue to benefit from secular drivers around green buildings, energy efficiency, and an increase in infrastructure spend to support population and expansion and urbanization, especially in emerging markets. During the period, the building in-service activity outperformed the construction-related activities. If we look at our three key platforms, in the Americas, we grew low single digit, led by Latin America. In the US, in addition to stronger 2022 comparables, we made the decision to improve revenue mix through contract selection. A number of businesses within our North America diversified portfolio continue to deliver high growth, such as data center commissioning and code compliance services. In Europe, we recorded broad growth. In France specifically, we grew mid-single digit, led by OPEX, thanks to continued price increases and productivity gains. In Asia Pacific, Middle East and Africa, we grew organically double digit in 2023, led by India, Australia and Saudi Arabia. Despite the difficult financing backdrop in China, growth recovered, driven mostly by the civil works on energy projects. In the last quarter of the year, the group was awarded several contracts in the field of energy audit and sustainability solutions. This includes energy audits for schools in Michigan states and the US, and green building audit campaigns for a leading retail real estate owner in Europe. I'm extremely pleased with the performance of our certification division, as it recorded high organic growth of 12.4% in the full year of 2023, including 15.1% in the fourth quarter. This performance is the result of both volume increase and price escalations. The growth was broad-based for accredited and voluntary schemes across the geographies, showing strong business development and continuous innovation. During the year, increased client demand for more brand protection, traceability and social responsibility services along the supply chain also drove growth. QHSE schemes, supply chain and food safety recorded double-digit growth. As an example in France, we're seeing the outsourcing of public services where we secured a large contract providing food safety audits. Our sustainability solution increased double-digit fuel by high demand for verification of greenhouse gas emissions and ESG-related supply chain audits. Cybersecurity is another key growth driver. We posted stellar performance in the year, led by rising demand for improved cybersecurity frameworks and regulation compliance. During the year, we won numerous contracts in the sustainability field. We have been selected by Mondelez International for sustainability data assurance and social audits. We were also awarded a contract by a European power company for the measurement of its enterprise level carbon footprint and verification of SBTI commitments. And lastly, for consumer product services, we delivered a broadly stable performance in the year with a positive second half. During the year 2023, Asia growth was limited by weak consumer spending in developed economies and fewer technology product launches. The Americas and the Middle East and Africa continue to benefit from our diversification strategy implemented over the last two years. For soft line, hard lines and toys, we grew low single digit organically. Soft lines showed good resilience throughout the year and benefited in the fourth quarter from a restart of goods production as stocks depleted. China improved every quarter. Southern Asia maintained strong momentum led by the structural sourcing shifts. Health, beauty, and household recorded solid double-digit organic growth in 23, led by the US and Asia. For technology, as expected, our revenue continued to contract, as it is still affected by the global decrease in demand for electrical and wireless equipment, as well as fewer new product launches. By contrast, in the new mobility subsegment, driven by connected and electrical vehicles production, we delivered double-digit growth. Finally, we maintained a strong momentum for sustainability services over the course of 2023 with 17% organic growth. This includes organic products, testing, recycling, social audits and green claim verification solutions. In the last quarter of the year, we executed a contract with one of the world's leading sportswear and footwear brands to help them measure science-based targets and help reduce supply chain greenhouse gas emissions from the strategic Tier 1 and Tier 2 suppliers. As we have reported throughout the year, we continue to develop new solutions to address our customers' needs as they transition their supply chains to a more sustainable state. The BV Green line of solutions and services is a good proxy for us for our development and sustainability and energy transition. It represents today 56% of the last 12 months' sales. Two examples to highlight for Q4. We signed a cooperation with Advanced Labs on hydrogen certification. This strategic partnership is a collaborative effort to set industry benchmarks in international hydrogen trade. We also partnered with Kairos, a leading environmental digital intelligence services company, and Optel, one of the world's leading suppliers of digital traceability systems to provide food companies with non-deforestation compliance solutions. Moving on to the outlook for 2024, we're making two changes today. First, we now expect mid to high single digit organic revenue growth. This reflects our confidence in the healthy sales pipeline, high customer demands for new economy services and a strong underlying market growth, which allows us to navigate the current economic and geopolitical environment. Second, we're guiding to an improvement in adjusted operating margins at constant currency. As for cash conversion, our expectation remains unchanged at above 90%. Reflecting our comparable base, we also expect half to 24% organic revenue growth to be above that of H1-24%. Before taking your questions with François, I would like to close by saying that our performance for the full year 2023 was excellent. These results reflect a robust business model underpinned by our agility, consistent execution, customer centricity and innovation around customers' existing and new needs. I am convinced that we can take Bureau Veritas to higher levels of performance and achievement. Our portfolio of leading global business lines, strong execution track record and exposure to positive secular trends are key contributors to our current performance and a great foundation for our future outperformance. Looking ahead, we see robust demand for services supporting transition to sustainable development models, evolving building integrity needs, growing infrastructure investment and increased spending and low carbon energy development. Our existing pipeline of opportunities in these business areas is a testament to this durable growth dynamic. Specifically for 2024, we expect Bureau Veritas to deliver another strong year of growth. A capital market day will be held on the 20th of March 2024 in person in Paris, where we will provide you with an update on our strategy and plans. Thank you all for your attention. Francois and I are now ready to take your questions on the call or on the webcast.