Bureau Veritas Sa

Ladies and gentlemen, hello and welcome to the Bureau Veritas half-year 2025 result presentation. On today's call, we are with Inda Garvey, CEO, and François Chabat, CFO. Please note, this call is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your questions. I will now hand you over to your host, Inder Kalbi, CEO, to bring in today's conference. Thank you.

Thank you, Benoit. Good morning, good afternoon, and good evening to everyone. Welcome to Bureau Veritas' first half 2025 results presentation, and thank you for participating. I'm joined today in Paris by François Chabin, our Group Chief Financial Officer. We have quite a bit to cover today. Let me start with health fund results. There are several key achievements I would like to highlight. Over the past six months, I'm pleased to report that Bureau of Risers has made substantial progress in executing our LEED28 strategy, delivering a robust performance that demonstrates both our operational resilience and our focused execution of the strategy. We have delivered as you planned through a combination of specific construction plans and an acceleration in performance programs in an environment where our customers continue to grapple with uncertainty. Finally, to further accelerate the strategy execution, we have announced changes to our executive committee leadership. Before I move to discuss the numbers, I would like to thank all our colleagues around the world for their contributions to these results. Turning now to our financial highlights. We delivered the revenue of 3.2 billion euros, up 6.7% organically, with a 6.2% increase in the second quarter. On a reported basis, our revenue grew 5.7%. Growth was driven by high volumes when targeted pricing programs throughout the semester. This is a testament to the resilience of our business as we continue to update underlying market trends across the board. The adjusted operating profit increased by 8.8% year-on-year to €491.5 million, generating a margin of 15.4% at 44 basis points year-on-year and at 55 basis points at constant policies. This reflects our operational leverage from ongoing performance programs. Our adjusted earning per share is up 2.4% to 0.65 euros and up 6.4% at constant currency. Combined with our dividend yield and the 200 million share-by-back program completed in Q2, we delivered double-digit returns as per our Week 28 commitment. Our net financial leverage is kept at a level of 1.11, broadly stable compared to December 2024. Based on this robust health year performance and taking into account a number of other factors, we confirm our 2025 outlook. Looking at the mix now, all geographies and activities delivered resilient growth. This growth was supported by solid market trends. We are in the middle of pivoting our portfolio, fully in line with the 28 portfolio priorities. What is important to highlight is that two of our businesses are growing double-digit on an organic basis and three are growing at high single-digit or double-digit, taking into account the organic and the scope effects. This is true in consumer product services, buildings and infrastructure, and certifications. By geography, the Middle East and Africa posted once again a very strong organic growth at 20.8%. primarily fueled by critical energy projects in oil and gas and a buoyant activity in buildings and infrastructure. In Asia Pacific, we delivered 7.6% organic growth with strong activity in South and Southeast Asia. Our performance in China remained steady with mid-single-digit growth. Australia's industry services segment notably accelerated in the second quarter. The Americas region recorded a 5.7% organic growth, This performance was supported by sustained momentum in data centers and energy sector in North America and robust activity levels in Latin America. Finally, our European operations delivered an organic growth of 2.9% with high activity levels in the southern and eastern parts of the continent. We anticipate positive momentum for the coming quarters, supported by stabilizing inflationary conditions and emerging investment trends. Let's now look at our mix and why our portfolio is well positioned to navigate current macroeconomic changes. In fact, I want to come back on our mix with a different perspective, providing an understanding of the regulatory versus non-regulatory services. What we can see here is that we have a balanced approach that spans risk mitigation services and regulatory services. Nearly half of our portfolio comes from regulatory services. These are physical services and safety, health, and risk management mandated by law or regulation with a significant part immune to hasty deregulation. This, therefore, provides us with a stable, predictable revenue foundation. A good example is marine and offshore operations that are regulatory by nature. The other house stems from risk mitigation services. These voluntary services are driven by enterprise risk programs and oftentimes industry standards. We're able to capture growth opportunities as organizations proactively invest in risk management. For example, certification services are largely voluntary. In addition, our portfolio further demonstrates resilience through a healthy mix of OPEX and systems, CAPEX and products. This is a diverse mix and is evolving as we build scale and leadership in our portfolio. These two approaches or these two views of our portfolio give you a complete review of our resilience mix. We are able to navigate today's market challenges while executing our strategy to reach our 2028 ambition.

Let me move to update you on the 28th.

On the execution front and looking at the portfolio pillar of our strategy, our active portfolio management is starting to bear fruit. Looking at the directional trends, our revenue growth by stream is moving exactly where we want it to go. First, looking at our new strongholds, it is leading the pack with 13.4% revenue growth at constant currency, driven by both organic developments and contributions from M&A. We're building capabilities in the high-growth areas of renewables and cybersecurity. Second, our expanded leadership stream covering certification, buildings and infrastructure, and industry product certification, delivered solid performance with a 9.1% growth of constant currency with active M&A, specifically in BMI. The third one, our optimized value and impact stream, is growing at 8.1% organically and at 6% of constant currency, as we expected. These businesses in these particular streams are fundamental to our cash generation and baseline growth. Moving to the M&A front. So far this year, we have acquired six companies, adding annualized cumulative revenue of 60 million euros. We have signed four of them in July. Since the start of the plan, we have focused our efforts on growing our new strongholds, completing or signing SENA acquisitions for a combined annualized revenue of 71 million, This is fully aligned with our strategy of pursuing both arms in nascent high-growth markets. For our existing strongholds, where we are expanding our leadership, we're developing our BNI activity towards the most attractive geographical markets and highest-performing business segments. Since the start of this strategy, we have acquired three companies, adding 147 million euros of annualized cumulative revenues. For our mature businesses within our optimized value and impact fleet, we remained the most opportunistic and completed three acquisitions in metals and minerals and consumer product services and divested no more operations in food testing.

Now I would like to update you on the organizational aspects of LEED 20X.

Our Leap 28 ambition of making a step change in growth and profitability rests on our capacity to execute our portfolio, our performance, and our people programs comprehensively and fast. Our active portfolio management, as I explained, is ongoing, and our organic growth programs are progressing in line with our expectations. Our performance programs are also progressing, and they require modernization of our digital operations systems and of our delivery practices. We are at a junction today. We want to accelerate our performance and portfolio programs implementation so we can gain margin improvements faster, and that will allow us to invest earlier in our modernization program. What is clear to us now is that this acceleration requires higher levels of connectedness and integration between different parts of the organization. This is critical to ensure agile decision making and effective implementation. We have reviewed our organisational operating model and understood that we needed to strengthen our geographical platforms to accelerate regional growth and to increase cross-sending. This would be possible by including product lines representation within the region, bringing higher expertise to customers, developing local capabilities and talents, and capturing new growth opportunities. These changes are designed to remove barriers to execution, to maximise regional growth potential, and to industrialize company-wide innovation and expertise. And we believe that through these changes, we will deliver differentiated values to our customers, our business, and our people. We are, therefore, evolving the structure of our Executive Committee. The current six operating geographical regions will be reorganized into four larger regions, the Americas, Europe, Asia Pacific, and the Middle East, Caspian, and Africa. The product line will be managed by three senior executives who will lead industrials and commodities, organization and assurance, and consumer collapse services. We're also distinguishing between support functions and business functions, and we'll be dedicating one senior executive to perform a major business function. Ultimately, this new organization operating model intends to facilitate three fundamental objectives. One is to leverage the scale of our company Two, to strengthen the structure for execution. And three, to accelerate decision making. I will hand over now to Francois for the financial review for our HealthONE results.

Thank you, Anita. Thank you for these few words. Good afternoon to everyone. Before we deep dive into the numbers, a few words on the key financial H1 achievements. The step change in growth and return we committed to within the DIP 28 program continues in the first half, as you can see on the page. We've delivered robust organic growth throughout the year at 6.7% by the end of June. Profitability-wise, we increased our adjusted operating margin by 55 basis points at constant currency, showing a good start to our performance programs. It enables us to invest earlier into additional ones, As you remember, we have indicated directionally a consistent margin improvement of 20 to 30 basis points per year. On the bottom line, our JT earnings per share increased by 6.4% of constant currency. As you recall, our E28 commitment in terms of returns is to deliver double-debit returns to shareholders defined as a combination of the EPS Kega as constant currency plus dividend yields plus share buyback. So doing the numbers at the end of June, we're on the right track. As of now, with a 6.4% EPS growth, a dividend yield of 6.3%, and the 200 million share buyback program completed in Q2, which weighed for roughly 1.5% additional. Lastly, when it comes to the net leverage, we maintain a financial flexibility and balance sheet strength with a net debt over APCA ratio at 1.2%. 11 times, broadly stable, compared to December 24th. Starting now with the revenue reach, so we delivered close to 3.2 billion euro revenue in the half year, organic growth at 6.7, acquisition added 1.3% on a net co-basis, so it reflects both the impact of The bottom acquisition in Darin Manidos realized in the past year quarter, which accounts for 3.2% over the semester, being partially offset by the disposal of full-testing business and economic activity back in China in June last year. Forex impact represents a drive of minus 2.3%, mainly due to the strength of the euro, where it sees most currencies in the second quarter. This weakening of the U.S. dollar and PEC currencies observed in issue 2 and the current exit rates and exposure rates we could figure out may lead to a negative potential impact of 4% on the full year. I'm sure we'll get questions on those, so I'm waiting for more. Overall, we posted a total growth of 5.7% on a net reported basis. Having now a closer look at the revenue generation across those different businesses, a couple of highlights here. All of our businesses, all of them, deliver the broad-based organic growth across most activities, including the scope effect, three achieve actually double-digit growth, while two averaged recorded high single-digit performance, showcasing the benefits of our Bolton M&A strategies. So, three businesses are growing double-digit at constant currency, Marine Offshore and Industry. Both deliver double-digit organic, driven by the continuous trends around decarbonization and global need for energy solutions. Our certification business achieved double-digit growth at constant currency, reaping the benefits of last year's acquisitions in the five main sectors of sustainability as well as cybersecurity compliance. Moving to our other strong performers, BNI and Consumer both delivered high single-digit growth at concerned currencies, supported by scope extensions that Linda indicated too, of respectively 5.8% and 3.8% respectively. Finally, our agro-food community division posted solid mid-single-digit organic growth, though it was upset by the harassment of our food-letting activities, a process that is now almost fully completed. would be by the end of August. I would say 90% of it is behind us now. On the margin bridge, organically, we improve our margin by a significant 104. It is going year on year. This is driven first by the operating leverage, second by the benefit from restructuring made in H2 last year, and cost containment measure we took earlier this year. So note that the restructuring benefit would be somewhat analyzed over H2, and part of organic margin gain would be reinvested. So overall, we remain committed to margin improvement in H2, but at a slightly lower level. Cope had a negative impact of 49 basis points. It's attributive to the recent acquisition in server security and sustainability that requires some short-term investment to scale up as we want them to go outside the domestic market. That's a news as well about the chain of organization that has just been presented or reminded to you a few minutes ago. And this negative scope is expected to reach from H2 onwards. At Comcom Currency, we delivered 55 basis points of improvement shown here. At C4X, it was a drag of 11 basis points to the margin to the strength of the euro as mentioned before. So, in summary, on a reported basis, we will deliver the strong margin increase of 44 business points, reaching 15.4% at the end of June. Having a rapid look at the divisional margin performance for the first year, first, marine offshore maintained a healthy 23.6% digestive protein margin, slight decline from last year, 24.5%, mainly due to foreign exchange and a slight organic contraction that is purely seasonal. The agri-free and community business delivered a strong margin expansion, 200 basis points, to reach 14.3%. It beats our historical trend by roughly 100 basis points. This improvement reflects the successful recovery of our metal and mineral and GSIT government services activities, along with positive scope contribution. The industry division margin rose by 40 basis points to 13.1%, with organic growth of 55 basis points. driven by operating leverage. We are working on structural improvements of the way we deliver the business, and I think it's the third year we're improving year-on-year or margin-level in this business round. Building infrastructure shows improvements, margin-raising 41 basis points to 12%. Constant current series represents a 45 basis point improvement with scope and organic effects needing to be viewed together due to some IFRS treatment of last year's partial divestment or BNI activity in China. So the economical way to look at it is really to combine scope and ability. And we had good developments, especially in the U.S. in the first semester, contributing to good operational leverage. And our certification business maintained an 18% adjusted operating margins. somewhat of a reduction compared to the prior year. This is mainly attributable to investment in the recently acquired system and cyber security companies, as I've mentioned, and we are working on scaling them up from the domestic and initial markets. However, this time on an organic basis, margin increased by 20 basis points, driven by our effective social management program across the business units. And finally, Consumer product services margin slightly improved, above 21.4%, with organic improvement of 34 basis points from operational leverage. Turning now to the other financial performance indicators. On the bottom line, our net financial expense increased by roughly 13 million to 56 million euros due to lower financial income from reduced cash and cash equivalent and somewhat lower interest rate. On the tax front, our GCC tax rate increased by 20 basis points last year, lengthening at 29.2%. This includes, in particular, for the species on the call, the impact of the exceptional contribution on large companies' profit in France. So, overall, I'm pretty happy we maintain the ETR at that very, let's say, control level. And we still expect the full year to be in the range of 36.1% as mentioned. So it leads to an increase of the EPS of 6.4% of consumption. Coming now to cash generation. So we have maintained a strong focus. As you can see on the chart on the right, our working capital refinement decreased by another 220 basis points to a low 6.8% compared to 9% at the end of H124 and even above in the prior years. So we did note the consumer discipline of the entire organization on cash metrics, if you're already used to it. On April 20, 2025 operating cash flow was broadly stable at $262 million, despite higher income tax pay, as I mentioned, and higher movements in working tax than last year. This reminds us that we are coming from a historically low December, which was set at 4.5%. Net capex amounted to $65 million, broadly stable at 2% of the revenue. And finally, interest paid are somewhat higher due to a lower level of excess cash placement. So overall, we delivered a free cash of $168 million. Perhaps if you stay with me for a second, a couple of attention here. On the face of it, the free cash is down 11.5% year-on-year. However, the picture is somewhat blurred by one of coming from a food testing activity divestments. These one-offs are detailed on the side and consist of roughly 22 million of cash outflow related to capex and tax, which are compensated on the line sale of subsidiary, which is not in the cash flow. So we receive the money optimally, which is good, even though that's on the line below the free cash. So that's why we have these breaks on the right where you assess properly the performance. So we are talking about an organic change positive of 6, 7 million from the historical high in 2024. Moving finally to the last word on capitalization, our capitalization strategy remains disciplined and focused. So in the first half, we paid 37 million in closed deals. Those are the two that Inda initially mentioned, and the other four that have been mentioned to you have been signed in July, which will be not here, but we are committed to an additional 50 million euros for the remaining four. And this, of course, excludes any further acquisition that may be completed after July 25. Our contracts remain tier-free managed. We target 2.5% of the percentage of earnings this year. While leverage remains the 1.2% range we committed to. Dividend policy unchanged, 65%. And finally, our €200 million share buyback program, completed by the end of June, in Q2, illustrates the confidence in the resilient business model of the group. So, to conclude, this result demonstrates our ability to drive sustainable growth and its profitability and creates a pretty long-term value for the shareholders. Let me now hand over to Inga for the portfolio business highlights.

Thanks, Francois. Let me start with our marine and offshore division. which is a top-performing business in this third house of 25, with an organic growth of 12.7%, including 13.5% in the second quarter. If we look by sub-segments of marine and offshore, new construction delivered a strong organic double-digit expansion, led by high demand for equipment certification services and by the conversion of a solid backlog, as the renewal of the world's aging fleet continues. The Asian market continues to be a significant growth engine, and we have seen also robust activity in Europe. Coring service activity, or our OPEX activity, delivered mid-to-high single-digit organic revenue growth with an acceleration in the second quarter from a combination of increased number of service chips and some price increases. The M&O business delivered solid sales, supported by, again, the maritime sector commitment to lower its emissions to renew its fleet and to enhance energy efficiency. In the first half, we secured 7.9 million gross tons of new orders, bringing the order book to 31.9 million gross tons, up 22.7% versus last year. Extremely pleased with these results, and I want to thank our marine and offshore team. When it comes to innovation, we're particularly proud of the launch in Q2 of Augmental Survey 3D. This is an AI-powered solution to automatically detect and precisely locates anomalies during the remote inspections of maritime vessels and offshore structures. Moving now to the agri-food and commodities activity. We delivered here robust 5% organic growth, including 4.1% in Quartus II. The oil and petrochemical segment achieved low single-digit growth as macro uncertainties and low oil prices impacted the business. Growth remained strong in the Middle East with contract ramp-ups. It's important to say that recovery continued in the quarter between 4 to 1 and 4 to 2. Metals and minerals delivered the double-digit organic growth. In North America, the upstream business benefited from strategic contract wins, some earlier-than-expected service initiation, and successful pricing strategies. On-site laboratory activities remained strong. Looking at agri-food, or agri in this case, we experienced a slow start to the year with a low single-digit organic contraction in the first half, mostly from underperforming activities in Brazil. In the food sub-segment, as Francoise explained, we successfully completed the food-seeking activity divestment across the world, except in one country, in Latin America. Government services grew organically at a high single-digit rate, with solid contractions up, in the Middle East and Northern Africa, and expansion of contract scopes in Southeast Asia. Now, for industry, I'm pleased to report that in this industry division, we continue to deliver very good organic growth, achieving 12.3% in the first half, with 10.4% growth in the second quarter. This performance was driven mostly by strong energy spending in response to, from one side, energy security plans and commitments, and transition-related needs. Our oil and gas activities posted double-digital organic growth. CapEx activities continued to experience positive momentum, leveraging the favorable investment cycle in the Middle East and Asia. OKEx activities posted a more modest growth, tempered, I would say, by strategic contract terminations. This reflects our ongoing commitment to progressively shift our portfolio towards more selective and profitable contracts. In power utilities, we achieved strong double-digit growth as global electricity demand continues to grow. This was led by renewable energy services with buoyant wind and solar demand globally. To augment our capabilities in nuclear beyond inspection as we continue to develop our offerings in this area, We signed in July the acquisition for Dormier Henneberg. This is a specialized firm in technical advisory and radiation protection for nuclear facilities and commissioning. Looking at industry product certification, we recorded high single-digit growth with strong activity in Asia. We continue to strengthen our market leadership in pressure equipment inspections and to expand to new services in some geographies. Let me share some achievements on the green objects. First of all, we're creating new revenue streams by providing methane emission detection solutions. We're also ramping up our capabilities in CapEx for CapEx projects, where we secured a 250 megawatt wind project to provide project management services in North Dakota in the United States. Additionally, we are diversifying our activities into OPEX services. Recently, we won a contract for wind turbine inspection services in Mexico. Turning to building and infrastructure, we recorded a 2.6% organic revenue growth in the first half of 2025, with a 2.7% increase in Q2. It's important to take into account scope with the recent acquisitions, where the growth, including scope, at constant and at constant currency was 8.4%. If we look at it now by sub-segments, our CapEx building segment delivered mid-single-digit organic growth. The U.S. platform contributed to the growth, primarily through strong double-digit growth for the data center commissioning services business. We also have seen robust activity in code compliance, thanks mainly to housing expansion, housing projects expansion in Florida. We also have seen the real estate transaction market picking up where we have improved our growth And, of course, all this is health-stable interest rates. In France, our construction activity outpaced market growth, leveraging public works and safety-related services. If we turn to the OPEX building services, we achieved low single-digit organic growth. France, where we have most of our activity, contributed to growth through an increased volume of services, favorable pricing programs, and sustained energy efficiency audit. OPEX activities in the U.S. centers on asset condition assessment on behalf of public clients, specifically in the western states. In the Middle East region, new large OPEX projects in rail and airport sectors contributed to the growth. Lastly, business and infrastructure was solid, up near single-digit organically. In Europe, growth was driven by Italy's government infrastructure spending, In North America, the activity was supported by several large programs covering new construction, rail upgrades, and bus terminal expansion, or in California. Within the Asia-Pac region, China remains slow with the absence of public spending, specifically in transport infrastructure, while the Australian activities continue to develop as the portfolio expands, with a recent acquisition performed late last year of APP Group, an infrastructure leader. Looking now at transition services and our developments in that area, few contract links to highlight and help fund. We were selected to carry out energy efficiency and decarbonization services for 29 public facilities in the state of Colorado. We were also awarded a contract to perform LEED-compliant services for a Saudi company. For certification, our division here delivered strong results, achieving 8.6% organic growth which supersedes all other players in the market growth, including 6.6% growth in the second quarter. Strong demand for decarbonization services, supply chain resilience, and cybersecurity solution was instrumental to this growth. Our quality, health, safety, and environment and specialized scheme solution recorded high single-digit growth despite tougher comparable following last year's recertification cycles. Growth was sustained by solid demand for food safety certification and by the ramp-up of our large public outsourcing contract for food safety inspection in France. The organic growth in sustainability-related solutions and cyber-certification was in the low teens. More moderate growth was recorded on the sustainability contract. Customers are rearranging their programs to focus on ESG, supply chain audits, product lifecycle, and carbon and decarbonization programs. Cybersecurity certification services reported strong growth driven by increased customer awareness about cyber risks. In July this year, Bureau Veritas announced the launch of Bureau Veritas Cybersecurity, accelerating the integration of recently acquired companies into one single business organization and brand. This business is now well-positioned for accelerated growth and for a geographical extension to new markets. Other solutions in this portfolio generated new single-digit growth propelled by solid performance in tracking. Looking at new services in our transition services and what we have won recently, we completed corporate social responsibility audits for 120 T1 supplier sites in five countries for a major automotive player as part of its ESG standard supply chain compliance. We also delivered carbon content assurance and life cycle assessment services for a Middle East, for a large Middle East oil company. Finally, consumer product services division delivered a robust 4.5% organic growth in the first half of 25, with a 5.3% increase in the second quarter. Taking into account the scope, growth was at 7.8%. Looking at the sub-segments, sub-line, hard-line and toy delivered mid-single-digit growth This performance was attributable to three factors. Early ordering effects of U.S. companies anticipating tariffs from their sourcing regions. Higher growth in Vietnam and Southeast Asia and South Asia as U.S. clients in particular shift from China and diversify their sourcing. And the ramp-up now with our latest acquisitions of Asian domestic markets. Supply chain and sustainability trends. services grew high single digits. Social audits and green claim verification services were the main driver of the growth, especially in Europe and in Asia. Now turning to technology. After a number of quarters contracting, the technology segment experienced a return to growth in the second quarter. Electrical appliances segments continued to grow solidly, driven by domestic markets in both China and Mexico. offsetting to a large extent the reduced demand for wireless products and new mobility improvements in China and Taiwan. Looking now at the rest of the year for Big Division, activity levels are expected to moderate in the second half against a more challenging pace of comparison. However, our diversification strategy that we have shared with you for the consumer product services continues to fail. We anticipate to reconnect with faster growth over the medium to long term as major retailers and brands diversify their sourcing partners across multiple geographies. I'll move now to the outlook. Given our robust first half performance, the solid backlog, and strong underlying market fundamentals, and in line with the LEED28 financial ambition, we confirm our full year 2025 outlook and expect to deliver mid-to-high single-digit organic revenue growth, improvements in adjusted operating margin and constant exchange rates, and strong cash flow with a cash conversion above 90%. In summary, Eurovap continues to deliver reliably on its commitment and in line with its strategy ambitions. The company produced a robust first health of the year while navigating an uncertain macro environment. The sustained execution of FEED28 contributed significantly to this outcome. In many sectors, our customers are navigating short-term uncertainties while they prepare for a more resilient freedom long-term. This dynamic requires higher customer intimacy, discipline in executing a business plan, and a focused leadership team. I'm confident in the capacity of our leaders to manage in this environment and to deliver on our commitment. As we accelerate the 28th execution, we'll step up the implementation of the new organizations. This interconnected new organization will allow the company to respond quickly and effectively to customer demands and to reach the company ambitions faster. Our executive leadership team is fully dedicated to driving this transformation and to achieving our strategic goals. We entered the second half of the year with confidence and with strong momentum, supported by a robust health plan results and by an effective strategy execution track record. Thank you for your attention. Francois and I are now ready to answer your questions.

Ladies and gentlemen, as a reminder, if you would like to ask a question or make a contribution on today's call, please press star 1 now on your telephone keypad. And to redraw your question, hit star 2. Also ensure your line remains unmuted locally. You will be advised when to ask your question. The first question comes from the line of Anne-Lise Vermeulen calling from Morgan Stanley. Please go ahead.

Hi, good afternoon. I have two questions, please. So, firstly, on the accelerating the execution of Leap 28, just so I understand it correctly, is there any change to the timeframe or the quantum of your Leap 28 targets as part of your plan to get there? And similarly, on the structural reorganisation, could you comment on the timeframe of that and are there any additional costs involved with the restructuring of the organisation? And then just a quick one on consumer. You mentioned again pre-ordering from U.S. clients ahead of tariffs. I think you spoke about that in Q1 as well. So could you comment on how that developed in Q2 versus Q1 and what your expectations are for the second half based on what you can see so far for consumer? Thank you.

Thank you, Emily, for the questions. Look, I think this reorganization is a good question to explain how we thought about this. We've been working on this since the inception of the strategy, so we've been thinking about that for a while, and we think that it's fundamental to our capacity to execute as we want our strategy. Of course, there are certain market trends we find extremely favorable that we want to make sure we are earlier in investing to capture these, and that's really what we're trying to do. So it's a matter of making the organization work more effectively. It's a matter of making decisions faster. It's something that we timed to come at a stage where we have established a very good cadence in the execution of the strategy. So no change of timeframe at this point. I think the quantums will have to look over time, but definitely this is fundamental for us to continue to deliver at pace. I'm going to let Francois, you want to comment on the restructuring linked to this?

Yes. So, in a nutshell, as I've mentioned, the executive committee has been reshaped, and we are in a phase of, you know, further cascading down this reshaping of the broader organization. There'd be some restructuring in H2 with a very key view to have incrementals in margin as early as this one next year. So, I think it is not, you know, a one-off or this type of thing. It's done structurally. That's why we started with XCOM. And, of course, with a view to be faster, more agile, and getting some time-related structure. So, I've mentioned the very short payback, but I'm not talking about long-term extension.

Yeah. Thank you, responsible. On the consumer side, the early ordering is similar between Q2 and Q1. I think the bigger thing here for us, for the consumer products business, is a very robust performance in this House 1 with a nice performance in Q2. But we are, as I explained a few times, in the midst of a large diversification program, both geographically on the services and on the sectors. And as I mentioned earlier, this is a business that grew north of 7.5% in terms of between scope and organic. So we are really pivoting this portfolio specifically on the technology side. And as I mentioned, the technology side in Q2, it's the third quarter and a number of quarters where the technology grew positively. So quite happy actually with that. And I expect after overtime moves, we'll see consumer reconnect with more normative growth.

Okay, thank you both.

Thank you.

The next question comes from the line of Suhasini Baranasi calling from Goldman Sachs. Please go ahead.

Hi, good afternoon. Thank you for taking my question. Just two for me, please. There's been a large deal done in this space, eight years. Did you take a look at the deal and can you maybe share your thoughts on criteria for doing larger transactions? And the second one is on Marine, please. It's shown very nice growth in the first half, but margins are down organically despite this growth. Is there a pricing problem or is there more due to mix and how should we think about margins in second half? Thank you.

Thank you. Thank you, Sr. Sweeney. Look, we are very actively scanning the market for targets as we execute our M&A strategy. We did look at NPS, and we do look at, just for a reminder, our strategy is to look at bolt-ons, of course, but also to look at more, a bit larger deals between 100 and 500 million. So that was at the middle of it. That was the process. We, of course, looked at it. Now, as a reminder as well, our strategy of M&A is all about pivoting the portfolio and preparing our company to be aligned with segments of growth in the market. ATX simply didn't respond to this strategic objective. If you look at this, of course, it's an inspection company. Now, as the leader in inspection in this sector, the activities in this company are not activities that we consider favorable to our portfolio. And based on that assessment, we decided that we weren't going to pursue it. Now, the second question on marine and offshore. You're absolutely right. Great, great growth in this business. The fundamentals of marine remain extremely, I would say, positive over time. So, on the broad side, but your question is on the marginal canal that François specifically understood.

So, very specific question to me. In a nutshell, you may remember that Marine Offshore is combining two very important aspects. First, it's been one of the fastest-growing segments of the company now for two years. You see the backlog, which are at record highs during another semester of very strong order intake. That's the credit number one, so strong push on the top lines. Credit number two, this is the first division which started with its performance program now, let's say, even a bit ahead of the official announcement of the B28. So by delivering especially a very focused pricing for us. And we took this opportunity that we knew top line was still very strong and still needs to invest a bit more in H1. The whole thing will be completely captured by the end of the year. So don't worry, a bit of a timing here, but I think it's a very strong division within a portfolio and the margin will be up immediately.

And I think, you know, perhaps I will address, just to add to that, I'll address in general, there's a lot of talk about the shipping sector in general around the macro of that shipping sector. I think the trends for marine and offshore are very, very positive because, as I mentioned multiple times I think in the past, is that we have a very old fleet around the world. So beyond the emissions concern, there is a need to renew this fleet. And today, as I mentioned also more recently, the shipyards are fully, fully booked for a number of years, probably until 2028 at the earliest. So everyone needs to operate their fleet. We have a very nice backlog, as you have seen, 31 million gross tons thereabouts, 22% increase year on year. So very well positioned with a good backlog, and we are simply executing it. We don't control the pace of how the shipyards work. but we definitely are investing, as François mentioned, to have capabilities to support new technologies in this sector, to support customers as they, you know, pursue energy efficiency, as they renew their fleets, as they really make technology sources, and that's helping us. So, as I said, extremely pleased with the performance of this business.

you for the traditional color actually because um if you don't mind this strong growth um is that sustainable for the next six months or do you think we should be worried about a slowdown happening in 2026?

Look I so you know it's of course we we don't provide guidance short term like that but I think what's important though to keep in mind is the backlog we have it the conversion of the backlog depends on the availability of slots and shipyards whether they're ready to if our orders would be treated or not. So as that continues, we continue to grow. And we have seen, as I showed you before, we have very healthy growth on the new construction side. On the ship and service side, we are definitely moderating the growth simply because a lot of the growth in the past was also carried by catch-up from backlogs in terms of navigating or opaque services. That is... that has moderated somewhat. But overall, I think we expect to be, I would say, stable in performance for the short term. Thank you.

The next question comes from the line of Arthur Forslov, calling from City. Please, go ahead.

Good afternoon, everyone, and thanks so much for taking my question. Two, if I may. So the first one, in both certification and building an infrastructure, you suggest that the scope knock margins down by in excess of 100 basis points. I guess my question there is, do you think that over time, the things that you have bought in these divisions can get close to those divisional margins once you've optimised the assets? And if not, how close do you think that those currently under divisional margin of performing assets can get. And then second question, I think if I understood you correctly, you talked about how you have invested to grow the revenues of some of the recent bolt-ons that you've done and that that had also dampened margins. Firstly, within that, is that included in the sort of scope impact on margins as you see it? And secondly, can you just give us an idea of how much you've invested in that way? Thank you.

All right. I'm going to take the second question and Francois will address the margin question. Look, these companies we have got and we specifically singled out our sustainability and cybersecurity. These are organizations that have very specific skills that we consider are scalable across the enterprise and will require investments in commercial services but also in digital development that will help us grow. So I'm not going to share the exact value but what's important to understand is these are small, have potential to grow and will need support in the first few years and we expect over time that the the growth around the world will allow us to basically absorb these investments and deliver value. So we're actually quite pleased with these capabilities. And just as a reminder, I talked about lifecycle assessment before for products. That's one of the areas we're investing in. High demand from customers, digitally enabled solutions. Cyber, high demand from customers, double-digit growth markets. Both are double-digit growth markets. So The investments are fully, fully defined importance and fully justifiable. I'm sorry, you want to comment on?

Yeah, so I asked her. So on the first part, I would say two different situations here, and I will take a bit of a broader step to get started. Scope, minus 41, 49. We have a couple of elements here. Ultimately, this negative gap will reduce by year end for two particular points. First of all, the largest acquisition we've made last year, the APP group is, as you may know, based in Australia, which is a fantastic place, being located way down south. And by definition, January and February in Australia are always the low months. So the seasonality of this hemisphere is totally different. upside down compared to Northern Australia. So we expect, and that's exactly the aspect of our business plan, that this activity will actually ramp up its margin from a pure, you know, business point of view at a higher level in H2 for the reasons I have mentioned. So that's one. Second, when we look at BNI, I think I've mentioned it in one of my remarks, but In the scope, there is an impact coming from the divestment of an activity well in China last year, in June. And, you know, due to an IFRS treatment, we have the scope that is a bit inflated and the organin that is a bit inflated as well. So probably the more, let's say, economical view to look at it for BNI is the combination of both, the 40 basis points, is actually the economic improvement. Now, if you are... let's say, passionate about IFRS. The investor team is at your disposal through all months of August at any time. Laurent sitting in front of me is raising his hand. But that's dedicated. And lastly, when it comes to ramp up and then completing what Linda mentioned, the performance of the activities we've acquired so far are very much in line with the business plan we've set up. So, to your first, very first point, usually when it comes to synergies and bringing the assets to the, I would say, at least the divisional level, we set ourselves usually a limit of 10 to 15 months. So, this would be, for those who are below the level, this would be covered by, within this period. So we're not talking about assets which are likely waiting on the average margin of the division. Thank you very much. And Laurent is waiting for your call around the 10th of August or any time around that date.

Thank you very much.

Welcome. Ladies and gentlemen, as a second reminder, if you would like to ask a question, please press star 1 at any time. The next question comes from the line of James from Barclays. Please go ahead.

Hi. Afternoon. Two questions, please. My first is just on pricing. I think you flagged in the release twice pricing initiatives that have delivered a sort of improvement in the growth in marine and in service and also metals and mining. So more broadly across the group in the first half, could you help us with what price was worse in organic growth? And then those pricing strategies that you alluded to, are they the latter work of catch-up on pricing in the last few years, or are they new initiatives that can be rolled out across the group? And then my second question is on certification, where sustainability slowed down as customers, as you said, rearranged programs to focus on. supply chain orders and so on. What are they moving away from? Are they moving away from reporting? And do you think you can capture this new activity that they're moving towards?

Thank you. Thank you. Thank you for the question. Look, yeah, we did mention pricing a few times for a few reasons. First of all, as we've said in the last couple of years, I think we established a nice practice of reviewing pricing and being very, very vigilant to inflation in general, and there are still some markets where inflation is something you can still work with. That's one, but that's why we say it's a baseline and it doesn't apply everywhere. The other one is we launched within our performance programs specific programs around contract management, management of out-of-orders, basically to stop any contract leakages, which basically improves your pricing. And that sounds basic, but it's very important because you need to make sure that your front line is actually very vigilant to the scope they're working with, that they are very disciplined and rigorous when it comes to out-of-scope tasks or things they get asked to do, that they apply the terms of the contract and receive excellent, excellent impacts but some of our businesses, Marion, I'm sure, mentioned. Certification now is looking at that. And it's really something that is starting to expand across the company. So pricing, therefore, at this point, we are around slightly below a third of our growth. So that's on your first question. On the certification, the sustainability, I want to be very, very clear. We do not see – a slowdown in the market. This market will remain robust. What we see is customers initially taking a bit stock of what is happening in C-Market. The U.S. has a very negative rhetoric around ESG. Europe went through all the dynamic around simplification. So people paused a little bit to understand or company to understand how they will pursue their ESG programs. And we are seeing them just moving things around. It's, first of all, a risk-based approach. It's really about capacity to impact, to basically put programs that address the most pressing risks. And that's why we're saying you will see decarbonization continues to be an important element. Supply chain resilience, very critical, regardless of what regulations say. This is a matter of reputation and competitiveness. and the life cycle assessment is becoming an important element for any manufacturer out there, be it consumer goods or industrial goods. So it's really a rearranging. Reporting, actually, people are still working on reporting. Of course, if you look in Europe, there are some delays. It doesn't impact all the categories of companies that it was supposed to impact, if you look at the CSRD, for example. So it's not a slowdown of the market. It's rather a rearranging of programs. We continue to be extremely committed to this market, and we continue to invest in it because we think that it is going to be a carrier of growth in the future.

Thank you very much. Thank you.

There are no further questions, so I will hand you back to your host to conclude today's conference. Thank you.

All right. Thank you very much, everyone, and happy holidays for those of you going off.

Thank you for joining today's call. You may now disconnect.