Bureau Veritas Sa

Welcome to the Bureau Veritas Q1 2026 revenue presentation. For the first part of the conference, the participants will be on listen-only mode. During the questions and answers session, participants will be able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers. Hinda Garbi, Chief Executive Officer, and Francois Chabot, Chief Financial Officer. Please go ahead.

Thank you. Good morning, good afternoon, and good evening to everyone. Welcome to Bureau Veritas' first quarter 2026 revenue presentation, and thank you for attending this call. I'm joined by François Chabat, our Chief Financial Officer. This quarter, Bureau Veritas delivered a steady performance in a changing macroeconomic environment, reflecting continuous momentum in the execution of our LEAP 28 strategy. I would like to thank our teams worldwide for their commitment and contribution. I would like now to go through our Q1 revenue performance. Revenue reached $1.5 billion. Organic revenue growth stood at 4.5%. While this quarter is slightly below historical organic growth averages, I'm pleased to see that a number of our businesses are delivering on or above expectations of setting the impact of project delays and the Middle East disruptions on others. External growth contributed 1.8% from recent Bolton acquisitions, largely offset by last year's disposals. We expect the recent mid-sized acquisition Lotusworks to take effect in half to 2026. As expected, the appreciation of the euro against most currencies led to a negative currency impact of 5.2% in the quarter. I will elaborate further on our new full-year growth guidance at the end of this presentation. I'd like to say, though, that this year is shaped by complex geopolitics and our decision to exit specific contracts in the sub-segment government services. Moving now to our revenue performance by business and geography. From a business perspective, marine and offshore and buildings and infrastructure deliver the strongest organic growth in the high single digits. through double-digit range. Marina North Shore delivered 11.2% organic growth, supported by strong new build activity as the global fleet modernization continues. Buildings and infrastructure grew 7.3%, demonstrating the value of our recent portfolio expansion, with data centers up more than 30% organically year-on-year. The rest of the portfolio hosted low-to-mid single-digit growth, with the lowest growth in agri-food and commodities and industry, reflecting tougher comparables and disruptions from the Middle East conflict, project delays and disruptions from the Middle East conflict for the last. From a geographical standpoint, Asia Pacific delivered strong growth of 7.9% driven by solid momentum across the region, primarily in China, Korea, and Australia. The Middle East and Africa delivered a resilient 5.5% when navigating disruptions across operations in the Gulf cooperation countries. Europe continued to outperform GDP with organic growth of 3.4%. In the Americas, growth reached 1.7% with a strong growth in North and Central America offset by contract delays and end of contracts in Latin America. I would like now to give you a quick update on the Middle East. We have 10 countries impacted across the region. And I'm pleased to report that our people and their families are safe and our facilities and laboratories did not sustain any damage. These countries account for 6% of group revenue with activities distributed across industries, agricultural and commodities, and buildings and infrastructure for the most part. The security situation varies by country, impacting operations in different ways. We work closely every day with our customers to maintain business continuity in a safe way. I would like now to give you an update on the 28 strategy execution. Few words first on the AI-driven secular trend. The technology race we're witnessing in this age of intelligence will have a profound impact on re-industrialization and urbanization. In addition, the rapid development of AI and the associated needs in computing capacity and data storage are feeding a massive build-up phase for data centers and semiconductor manufacturing. These dynamics translate into significant CapEx commitments from hyperscalers and others, and chips manufacturers, particularly with the rapid build-up in the Americas and Europe. Just on the right there on the slide, you can see that data center capital expenditures projected to rise 17% annually from 2023 to 2030 across the world. Semiconductor manufacturing cap expense in the American and EMEA is expected to grow at a trigger of 8% from 2024 to 2029, highlighting a multi-year investment cycle. Taking that into account and specifically looking at buildings and infrastructure, BNI represents 30% of our portfolio today. It's our biggest market and a leading business in our extended leadership stream of the LEAD28 strategy. The BNI strategy is built around three clear growth areas, building PAPEX, building OPEX, and infrastructure. I would like to focus on building statics, which represents 38% of the divisional revenue. Our strategy is to expand our capabilities in post-compliance and to increase our position in mission-critical assets. These assets, such as data centers, semiconductor fabs, and high-performance facilities are complex, highly regulated, and have high expectations of operational performance and uptime. These factors naturally drive higher testing, inspection, and certification intensity. With the acquisition of LotusWorks, we significantly reinforced our exposure to these mission-critical segments. So, about LotusWorks, if we can go. LotusWorks brings highly complementary technical expertise that significantly enhances our end-to-end service offering across mission-critical assets, from construction phase through to the operations phase. Together, we are building a platform of around $300 million in revenue, fully dedicated to mission-critical assets, such as data centers and semiconductor facilities. This platform when put together, will represent roughly 15% of our B&I revenue and will materially strengthen our positioning in high-growth markets. This acquisition will also support Bureau Veritas Organic Growth, will be accretive to the group's adjusted operating margin, and slightly accretive to earnings as early as 26. I will now pass it on to François to share some financials.

Thank you, and good afternoon, everyone. So we do a bit of a deep dive on the numbers. In the first quarter, as you see on that page, we delivered a revenue of 1.55 billion euros. Our daily growth was robust at 4.5%. Autumn acquisition close in past quarters contributed 1.8% to the growth, mainly in the P&I industry segment where we have reinforced oppositions in Europe in particular. Divestment accounts for minus 1.9%. As you may remember, as part of our active portfolio management, we have divested in 2025 our food testing activity business and part of our technical supervision services in China at the end of 2025. So on a late basis, the scope at margin impact of minus 0.5% in the first quarter. Currency, so still headwind this quarter at minus 5.2%, with many due to the strength of the Euro against the usual suspects, key currency, U.S. dollar, Chinese renminbi, Australian dollar, and Italian dollar. I think the good news is if we assume the transport rates, we expect the traffic drive to ease significantly from Q2 onwards. If you remember, those currencies, moved again zero following the announcement of tariffs about a month ago. So we are now coming out of this comparison phase, so we expect you to in the rest of the year to be much better at transport rates, of course. If we have a look now at our business performance in the first quarter, both on organic and scope aspects, so total big constant currency on the right, marine offshore, So it's another very strong quarter. WGT organic growth hit more than 11%, driven in particular by new construction, as we mentioned. Second element, we're happy and pleased to see bidding infrastructure delivering strong growth of 7.3% organically, 8.2% at constant currency. So the review goals are laid here on three or structured on three main aspects that will be further developed. One, data center and mission-critical commissioning services. Two, an increased demand for infrastructure and three, the contribution from recent acquisitions I mentioned, specifically in Australia and Europe, which are now slowly getting to the organic contribution in terms of . Consumer products, 4.3% for technology business. We bought them out as we told you. during our February cold, so we are now back into the positive here. Certification with an organic growth of 2.3%. Now checking trade was encouraging, reflecting for assurance and compliance services. Agri-food and commodity delivered 2.1%. And finally, industry growth was limited to 0.7% organically. but we reached almost 3% of constant currency. So, it reflects the recent reinforcements of our portfolio offering, in particular, in nuclear-related services and power generation services. Organically, let's face it, we faced tougher control in Q1. If you remember, we delivered, I believe, the most, about 14% growth in Q1 25, as well as some impact from the midday situation. Here we expect a sequential acceleration throughout the year 2026. I will now head over back to Linda for giving you more elements on the business guidelines of the quote.

Thanks. Thanks, Francois. Let's start with the marine and offshore. So the division continued a strong momentum in quarter one, 26, delivering 11.2% organic growth. We're enforcing the excellent momentum we have seen actually over the last few years. Looking at this by subsegment, new construction once again poses strong double-digit growth, supported by accelerating deliveries and the capacity expansion that we have talked about with the new shipyards coming online. The order backlog is solid. We have reached 33.6 million gross tons, up essentially 24% year-on-year. Now, looking at the OPEX activity, or the core in-service activities, as we call them, that grew modestly, considering the top comparables we have. But the fleet continues to expand with some key new wins, as you can see on the slide more recently. The marine sector continues to transform fast, and we are developing solutions to support rapidly digitalizing ships. We have recently partnered with a Hong Kong shipping company to class an augmented ship. If we look at agri-foods and commodities, the business delivered 2.1% organic growth in the first quarter, with contrasting dynamics across sub-7. Oil and petrochemicals faced a challenging environment and delivered a modest organic contraction, driven by trade disruptions in the Middle East. The impact was partly offset by volumes redirected through alternative routes and in other markets. Metals and minerals continued to perform well, delivering high single-digit organic growth. Activity was sustained in gold and copper. And also, we have seen higher exploration spending. The deployment of new laboratory services, on-site laboratory services, also contributed to this performance. The aggregate subsegment contracted in the quarter, reflecting volatile global trade workflows. Moving on to industry. The division delivered 0.7% organic growth in the quarter and aggregate performance with different dynamics across the sub-segments. Additionally, the middle-list conflict and OPEX project delays were two important factors in the performance this quarter. If we look at oil and gas, it achieved mid-single-digit organic growth supported by double-digit growth in the CAPEX activity. with several important inspection and technical support contracts secured both in the Middle East and Latin America. OPEX activities were temporarily impacted by conflict-related delays in the Middle East and by reduced activity in Latin America. I would like to add that some of the OPEX delays actually predated the Middle East conflict itself. Power and utilities delivered low single-digit organic contraction, reflecting the postponements postponements of major inspections in the Middle East. Solid capex momentum is maintained, and we have seen a mid- to high single-digit organic growth there, sustained by spending renewables and nuclear projects. And as an example, Euroveritas was selected to perform quality assurance and regulatory-compliant second-party inspections as a major European nuclear fusion project. In the industrial product certification, we delivered high single-digit organic growth supported by pressure vessels and increased demand for machinery. I would like to finish this update on industry by saying that customer spend remains robust, driven by growing energy needs and increased concerns around security of supply. The Middle East conflict provides a catalyst for increased spend across all energy sources in the rest of the world. These quarters should represent the trough of the industry activity, and we expect growth recovery from Q2 onwards. Moving on to buildings and infrastructure. The division was once again among the strongest performers this quarter, delivering 7.3% organic growth in Q1. This performance is a result of portfolio visits that we have completed over the last 24 months. coupled with a solid backlog and sustained demand for CapEx services. The business CapEx delivered double-digit growth, driven primarily by multi-year data center projects, with a strong momentum in the United States. Building CapEx achieved low single-digit growth with a steady growth in our largest market firm, from increased volume and high demand for energy-efficient services. The U.S. activities were more focused on asset condition assessments. Infrastructure recorded high single-digit growth supported by government-led programs in Europe, strong momentum across North America and Asia Park, and continued large-scale projects in the Middle East. Turning to specification, the division delivered 2.3% organic growth in the first quarter. Again, challenging comparables, with momentum improving in March. Performance was temporarily impacted by some timing effects of schemes and specific contract terminations or scope reduction. Looking at the different subsegments, the QHS&E and specialized schemes posted moderate organic growth, while demand remained robust for customized voluntary and transition-related certification programs. The State for Sustainability and Digital Certification continues to perform strongly, well, delivering high single-digit organic growth driven by rising demand for carbon assessments, ESG services, and supply chain-related services, as well as a solid momentum in cybersecurity certification in Europe. Overall, certification continues to benefit from strong structural drivers and assurance sustainability, and risk management, supporting a pick-up from Q2 on. During the quarter, we secured a contract to perform ESG performance and supplier audits for a large European hospitality company. Lastly, turning to consumer product services, the division delivered 4.3% organic growth in the first quarter. Soft lines, toys, and hard lines demonstrated resilience despite very strong comparables from pull-ins ahead of tariffs last year. Technology services performed particularly well, delivering double digital daily growth as the electrical and electronic platforms developed in Eastern Asia from acquisitions we have completed in the last 24 months. Finally, transition services within this division continued to expand in the first quarter, which we were selected to provide social audit support for a major U.S. retailer. Now prior to talking about the outlook, I'd like to come back to the decision linked to certain activities that we have taken this quarter. Pursuant to internal alerts, the company has conducted investigations that uncovered compliance deviations in the Middle East and Africa region, mostly in Africa, and primarily in the government services legacy sub-segment. We have proposed several remedial measures in the short and medium term to our board of directors. And at its meeting on April 21st, the board of directors supported and approved all of these actions. First, the company took the decision to immediately and voluntarily disclose the situation to the French authorities in a spirit of transparency and cooperation. We will provide an update on the financial consequences of these deviations and disclosure as soon as we can do so. Furthermore, the company will terminate the contracting question and will continue the in-depth review of its activities within the government services legacy , which represented 185 million in Revenue 25 to determine the appropriate terms of exit from this . As a result, we have updated I would like to say that our existing compliance framework will be reinforced to ensure that all activities fully adhere to the group's ethics and compliance standards. We have implemented disciplinary measures, and Bureau of Paraclass is committed to implementing all necessary measures to prevent the reoccurrence of such events. Turning now to the outlook. Complete geopolitics and an uncertain macro environment are shaping 2026. In addition to the launch of an in-depth review of the terms of an exit from the group's government services legacy sub-segments as I explained earlier. In particular, after we have decided to terminate certain contracts in the Middle East and Africa region. We have therefore updated the guidance for full year 26 as follows. On the growth side, mid single-digit organic revenue growth. On the margin side, improvement in adjusted operating margin at constant exchange rates. And on the cash side, strong cash flow generation. The group is fully permitted to the LEED28 financial guidance, benefiting from favorable market trends and from the sustained execution of LEED28 portfolio and performance programs. I would like to close now. On this first quarter performance, a number of factors, including project delays in various parts of the world, the conflict in the Middle East, and very challenging comparables in C Division contributed to what we consider a low point in our growth journey. We have a solid backlog, sound and scalable education capabilities, and ongoing performance programs that will all contribute to what we expect to be a recovery throughout the year. Our business model is resilient with a well-balanced mix of activity. Our portfolio composition continues to evolve, and we have a solid financial position. On the T28 strategy front, I'm pleased with the progress achieved so far around our portfolio priorities. The acquisition of LotusWorks is a significant milestone as we accelerate the buildup of new platforms for future growth. We have proactively disclosed a compliance event that is triggering certain government services contract terminations. Based on that, we have accelerated an in-depth review of this legacy sub-segment activities to determine the appropriate terms of exit. Bureau Veritas is committed to the high standards of ethics and integrity in the conduct of its activities anywhere in the world. I would like to finish by saying that our updated full year 2026 revenue growth guidance is only a temporary step out of our lead 28 path. I reiterate our commitment to our 2028 financial condition. Thank you for your attention, and Francois and I are now ready to take your questions.

Ladies and gentlemen, if you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6. The next question comes from Annalise Vermeulen from Morgan Stanley. Please go ahead.

Hi, good afternoon, Mahinda. Good afternoon, Francois. I have two questions, please. So firstly, regarding the downgrade for your organic guidance, could you elaborate just on how much of the downgrade is more macro-driven, i.e. you're seeing slower-than-expected activity in some of your end markets, even beyond the Middle East, and how much is simply the exit of those contracts that you referenced? From memory, you typically start the year with the vast majority of your revenues locked in. So I'm just curious as to what has significantly changed in the last couple of months, as I said, beyond the Middle East. And then secondly, regarding the investigation into the government services sub-segment, you've mentioned in your remarks implementing additional compliance controls. So how confident are you that this is an isolated situation within the group? And to that end, Are you planning any additional compliance checks or business reviews across the rest of your portfolio? Thank you.

Thank you, Annelies. Let me start with the second question, and then I'll get back to the first one. I think we obviously, you know, this is still an ongoing investigation. There are a number of things we cannot share. But I would like to say that our actually compliance programs are effective in finding such deviations. And therefore, we have an organic way of finding this, and we have been very clear in our approach to this issue. We investigated. We voluntarily are disclosing to the authorities, and based on our findings, we're stopping some contracts. There's no, this is a clear case of compliance for us. We did what we would do in these cases. Now, the fact that we are considering the exits from government services in many ways is a natural thing. I have mentioned in my prepared remarks that this is a legacy segment. This is a business we had for a very long time. It's low growth. It is subscale. And it's a segment that sits in our bucket of optimized value and impact. And the fact that we had to stop this contract because of this particular case I've mentioned really, in a way, accelerated the review that we would have talked to at some point. So there is no major drama here. This is us acting on that information. we have found, and I'm quite confident that as we learn from this investigation, we can implement the necessary measures to ensure such events do not reoccur. On the first one, we're obviously, again, because we are in the middle of this and also because the contract terminations will take a certain time that we are not able to tell you right now because The key thing that we're very focused on is business continuity for our customers and finding an orderly and professional way to exit these contracts or terminate them. It's pretty very hard to give you an exact number there. I think at this point, we'll just stay on that, Emily.

Okay, thank you. But the change in the guidance is those exits. It's not that you're seeing slower activity elsewhere in the business.

No, I think that the change in guidance, there is the impact of this contract, absolutely. And there is, of course, the fact that we have a very uncertain situation around the world. And I've mentioned a few times in my prepared remarks that we have project delays. These project delays are important. are a bit everywhere, and we want to make sure that we take that into account as we revisit the plans for the year. Okay, very clear. Thank you. Thank you.

The next question comes from Will Kirkness from Bernstein. Please go ahead.

Hi, thanks. I've got three questions, please. I just wonder if I could follow up on the government services and just ask if you'd give us the revenue number for what you've exited and whether the margin profile is different for government services as a whole versus group. The second thing was just looking at group organic growth, if you could give a split of price versus volume. And then finally, just thinking about M&A and optionality and news flow we've had recently, Just wondering how the board thinks that appeals and whether, you know, potentially discussions from late 24 or early 25 would ever come back on the table. Thanks.

All right. Thank you. Thank you for the questions. I'm going to let the first one. Go ahead.

Yes. Thanks for the question. So if we frame this a little bit, you know, the government is 3% of the corporate . It's a sub-segment, as a matter of fact, we do not disclose margin by sub-segment or for any sub-segment. In particular, in this business where the competition then gave this super perspective, the over-impact is captured in the guidance, and you've seen we haven't changed guidance on margins, so that's what we reassure you. And then when it comes to, I think that varies here when it comes the process review values, exit options. So at that stage, we take a cautious look at it with respect to . So that's why we have a broader guidance, whether it's review or margin, that encapsulates, you know, values options for which then we don't have the certainty, but which are broad enough that we know we'd be able to stick to those guidance. When it comes to the price volume, so we start to see, you know, a bit of discussion about inflation coming back. Not that easy, though, for various reasons to elaborate, if you wish. But at that stage, we haven't changed our plans for the year, meaning one-third inflation, two-third volumes on a full-year basis. I mean, really on a full-year basis. That's where we are. again, if you want to further elaborate on patients, you have to do so.

All right. On the third question on the M&A and optionality, I think we've been clear and it's very important to reiterate that we have two streams in our M&A. We have the bolt-on stream, which we will continue to do very opportunistically based on the gaps we have, be it on capabilities or in terms of geographies on different businesses. That will continue and it's It's a very well-oiled machine. The other thing we had is mid-sized acquisitions, and we tended to essentially put that between the handles and 500 million, mostly to build new platforms. The LotusWorks acquisition fits exactly into that. We have, at this point, no plan to change that approach, but, of course, we're watching very carefully what's happening today in the market. But as to coming back to the case of the 24, that's not the case. Thank you. Okay.

Thanks. The next question comes from James Roland Clark from Barclays. Please go ahead.

Hello. Thanks for taking my question. So just looking back at the first course, you slowed down by two percentage points in terms of organic growth from Q4. Can you try to spit out the drag of that slowdown between the Iran conflict and anything else you think is important to flag? Or perhaps could you give us the trend up until the conflicts and then the organic trend for March? Secondly, on certification, there's a bit of a slowdown here. Can you provide us with a current trend there maybe and what is actually sustainable? Because obviously there's a timing impact in certification. And then finally, you mentioned in your presentation that industry should recover in the second quarter. The situation in Iran is still not resolved, so I just wanted to give you the confidence in that commentary. Thank you.

Yeah, the line was really very bad, so I will attempt my understanding is what is the, I guess, the sequential dynamic there between Q4 and Q1, if I heard you well. So a couple of things. As I mentioned earlier, I think it's very important to mention that it is true the conflict in the Middle East, which impacted some of the industry and some of our oil and petrochemical activity. But that is, some of it is linked to the conflict, delays linked to that. But there are a number of projects that predated the conflict. that were actually in play as well, particularly for industry. And you can see industry in Q4 grew 4.9%, and then it grew 0.7% in Q1. It's very important to mention that last year, industry in Q1-25 grew 14.3%. So we are against very, very tough comparable. The same for certification. Certification in Q1 last year grew 10.9%. So you're dealing here with tough comparables, project delays in general, because some of them are not only in the Middle East, plus the conflicts in the Middle East. Now, why am I confident that industry in quarter two should recover a number of things? We have projects that will start in different parts. I talked about some of the wins we have had. We can't, of course, predict too much what will happen in the Middle East, considering the fluidity of the situation there. But we have a backlog that we work with. A number of the OPEX projects should recover and should restart. So we have, I would say, reasonable and good reasons to think that we can industry will recover. Certification actually is a clearer story there. That's comparable, that's true, but we exited the quarter with 5% growth in certification in March. So, we are starting to recover, and we are, and we expect to, again, there were some timing effects we talked about in some of the schemes. We expect those to go away. So, again, certification should recover. So, there are very, very tangible things there that we have taken into account in our views of Q2.

Thank you.

The next question comes from Geoffrey Michaelet from AutoBHF. Please go ahead.

Hi. Thank you for taking my question. I have three quick ones. First one, we see 5.5 organic growth in Middle East, which is quite impressive. Do you have an idea of how much growth you left on the table because of Middle East disruption in your view, or let's say versus your previous budget? before Middle East destruction. Second question, when you did the full year 25 call, you mentioned your willingness to double the portfolio rotation versus what was done the last two years. At this stage, had you already the government services in mind in your portfolio rotation? And did you already know or had the alert of potential wrongdoing in this division? And can you also reassure us on the financial impact, meaning that you will asset only the potential exit and not any accounting fraud that might trigger, let's say, treasury impact? And the third point and last question, on your new guidance on sales, this new mid-single-digit target, is it still including government service that will be probably exited or run off, or will it be straight out? Thank you very much.

Sorry, Geoffrey, could you repeat the last question? I didn't hear that properly.

Yes, on the mid-single-digit new target that you have, Is it including the government service business within your portfolio, or will it be stripped out of your portfolio? Thank you.

All right.

Oswald, do you want to take up this one? So on the green list impact, so we see what we hear about the impact in March. I think a big scheme of things, we have a bit of an impact on the industry segment and to a lesser extent on the B&I segment, as well as on the oil and petroleum testing within area food communities. I think the bulk of the impact in March has been led to disruption in industry and area food communities. What we see today is the activity is getting back, I would not say to normal, in every with less disruptions in the industry field where we can go and visit raffineries and such locations, the fuel-tasting business remains subdued. So how much we've left, you know, I think we know by the end of June a little bit, but not the past amount. And I think what we indicate when it comes to immediate disruption is more for the year to come, is more, you know, broader disruptions in the global economy, because most of what we have technically left on the table in Q1 are petro-retain services that will have to have . And that thing of petro-retain which we moved is not from the , then somewhere else. So this we would recoup anyhow to Q2, Q3, or Q4. But the broader disruption is something which is, you know, more difficult to assess with the global economy here. But that's the first point. The second was on, so just precision on the financial impact and accounting code just for everyone to be very clear on this. The financial impact and the financial consequences of miscompact events, as soon as we can do so. to answer bluntly to your question, There is no accounting problems.

All right. Thanks, Francois. On the third question, the question is whether government services is included in the numbers. It's removed from the numbers.

I couldn't hear the question. To be clear on the question, I think, You asked if the new guidance was including the, as I mentioned, the existing of the contract, and the answer is yes. It does include the existing of the contract.

So it needs to be moved.

So that means we're going to remove. We don't sign a number. There would be no such numbers, but it's part of the guidance.

Okay. All right. Thank you.

In case of doubts, you can channel your further questions to Laurent. We'd be happy to answer them with all level of detail. So it's within but being removed.

The next question comes from Virginia Montourcy from Bank of America. Please go ahead.

Good afternoon, and thank you for taking my questions. Just a quick one on industry. If I think about the sequential dynamics for Q2 and onwards, obviously comps get easier, but I would assume that Q1 only had the effect of Middle East trade eruptions in March. If the comp is being ongoing, Q2 will likely book an impact from April onwards. Are you still confident that the impact from the easier comp kind of affects the middle-east disruption, or how should we think about industry essentially with these key two moving pieces into Q2 and then the remainder of the year? Thank you.

Yes, thank you, Virginia, for the question. Look, Q2, first of all, the pumps are a little easier, but last year industry grew 10%. So we are confident that we will have a pickup in Q2 versus what we have seen in Q1 in terms of growth. The impact, as we said, was significant. one month in Q1, and it's not only the conflict itself, but project delays in the region. So, we tend to talk about the Middle East, but there are two dynamics. There are project delays, and then there is some of the impacts of the conflict specifically to it, but two different dynamics here, and we've seen this project delay mostly in OPEC, both in oil and gas, and in power and utilities, meaning non-oil and gas energy sources. The CAPEX is growing nicely. So, again, we're also seeing project delays in Q1 in other parts of the world that will recover in Q2. So, when we take back, we take the backlog we have, we are confident that in Q2 we'll see recovery of our industry division.

Perfect. Thank you very much. Very helpful.

Thank you.

The next question comes from Victoria Chong from J.P. Morgan. Please go ahead.

Hi. Thanks for taking my question. I have three questions, please. Firstly, on growth by region, in the Americas, you posted 1.7% organic growth, despite a 6.8% organic increase in North and Central America. So can you talk about what the offset to that was, please? Was it driven by weakness in the Latin region, perhaps? Secondly, if I remember correctly, at the full year results, you saw product delays in industry and had a negative effect on your margins. Would you expect a similar impact on first half margins this year, given that the product delays have continued, or was that more of a one-off timing effect in 2025? And then my last question is on certification. At four-year results last year, you talked about rolling out a new production system. How has it been progressing, and did the rollout of that new production system impact growth at all in certification? Thank you.

Thank you. Thanks for the questions, Victoria. So on the Americas, Latin America has a combination of project delays and some novel renewal of contracts. And that's really impacted the growth this quarter. We continue to work very hard on the sales front, on the pipeline, on the sales front, and we secured some new contracts there in industry. That was really some of the industry, some of the B&I. So that's really what was driving that lower performance in Latin America. So we expect to see that starting to move. The project delays in industry, The second question you mentioned is whether there was a – can you please clarify the – it's mostly on runoffs. We have – yeah, that was last year. We have done some – we stopped some contracts because we were managing – we were looking for more of the commercial and profitability of these contracts. That was last year. We don't have that this year. This year we have continued project delays at this length. and some non-renewal of contracts that occurred. But there is no voluntary positive contract. And then on certification, we have a SmartSearch platform that we have been deploying, and that's ongoing. We have deployed it in a number of countries, so we have been able to see some really good feedback from our teams around the world. and we should be completing probably the deployment by mid-next year because we have some very big regions that need a bit more adaptation during the implementation of that. But all in all, it's going according to plan.

Okay, I understand. Thank you. I mean, just to follow up on my second question, actually, on the margins. So just to clarify, will your first half margins be – unaffected by the product delays in that case?

I think the simple answer is not necessarily if it is. I mean, we do not guide the margin by semester, by segment, but we do not expect any material drop in margin for industry. Okay.

Thank you. The next question comes from Francois Daigard from Kepler Shoebrew. Please go ahead.

Good afternoon. Thank you for taking my question. Sorry to come back to this, but I still feel I do not understand the nature of the misconduct. This is not an accounting fraud. So what exactly is it? Corruption? If so, why notify the French authorities rather than the local authorities? And to your best knowledge, when this deviation has started? Thank you.

Thank you for the question, François. As you can understand, this is an ongoing investigation, and we are disclosing to the authorities. So there are limited things that I can share on a public call. So at this point, all that I can say is the compliance event, that we have investigated and continue to investigate. We are talking to the authorities, and the investigation will take its course in the hands of these competent authorities. I really cannot say more than that. It impacts the Middle East and Africa region, mostly in Africa, and it does impact government services, as we have explained. That's all I can tell you at this point.

As you understand, the answers sound lawyer-driven. They are clearly not sufficient for investors with a share price down 13% today, mainly because of that. So when do you plan to hear more details?

I think as soon as we can disclose more, we will, of course, disclose more to investors, absolutely. Okay.

Thank you.

Thank you.

The next question comes from Rory Mackenzie from UBS. Please go ahead.

Good afternoon. It's Rory here. Just one follow-up on the margin, please. As discussed, you haven't changed the wording of the margin guidance despite the lowering of growth guidance and the slower Q1. Can you just talk about your cost actions you've taken as a result of any of these project delays and your attitude towards cost management, what's proving a year in general? And also related to that, if you can't talk about sub-segment profitability, could you please commit to disclosing the margin impact of any contract exits as that happens over time? Thank you.

Hi, Rory. Just on the margin guidance, I think we have, you know, enough means within our viable cost structure to be able to adapt in a very giant way as soon as there is, you know, a little bit of slowdown. as well to put that in the wider context. You know, moving from mid to high to mid, you know, remains something that is pretty much manageable in a service-based company. So as you know, we have a good chunk of our business that is run through contractors that enables us to adapt to the ups and downs, and the company is used to manage its cost structure in a very, I would say, rapid and efficient manner. No big drama here, you know, for us. Two, you know, it's interesting. We're at about 3% of the business. So if you want me to disclose each and every contract within a stock in terms of margins, we can trade it for a long night, my friends, because that would be a long list. So I think the company is managing portfolio. We have, if you remember last year, end of 2020, Ford, which I invested in the world. food testing business in trenches, not in one go. And I think it's been well managed from a guidance point of view, well managed in terms of making sure everyone is involved and knows what's happening. We're doing the same thing here. And I think that should make everyone comfortable that our guidance is well-proposed and that we know how to navigate this. Again, let's put that into consideration. We're talking about 3% of the revenue of the company. And by the way, just as we say in French, but we end up having a Lotus Cross coming with, you know, probably almost the same size. So we are in the transformation of a portfolio with, and it is true, this is quite unique in this sector. Not many companies in the sector are shaping the portfolio the way Inda is doing it. And I think we have some potential in being successful in this.

Yeah, and I think, look, I mean, obviously, we haven't discussed government services. We consider it's a mature legacy business that at some point we will deal with it in terms of portfolio pivoting. But it just so happened that we had to do it now. I think it's very important for us to execute that with an eye to business continuity for the customers, which we have done with our food business and will continue to do so. We are, of course, managing the whole, the announcement and its impact on our employees, and we will make sure that as this investigation progresses, we, when we can, we give you more information on that. There is full transparency on this matter, but I hope you understand that there are some limitations to what we can disclose at this point. And with that, I think we don't have a discussion. Yes, thank you. Thank you very much. And again, with that, I think we are coming to the end of the call. Thank you all very much for joining our call, and have a good day.

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