Mersen Ord

Ladies and gentlemen, welcome to Merson 2026 half-year results. The webcast will be structured in two parts. First, a presentation by the Merson management team, represented by Salvador Lamas, Group CEO, and Thomas Baumgartner, Group CFO. Afterwards, there will be a Q&A session, during which you may ask questions in two ways, by submitting a writing question in the box below the player, or by clicking the green hand button on the player to ask a question orally. I will now hand over to Salvador Lamas. Sir, please go ahead.

Thank you, Nathalie. Good morning, everyone, and thank you for joining us. Before talking about the first half results, let me say how pleased I am to speak to you for the first time as CEO of Mercy. Although I officially took over the role in May, I've been part of the group since 2021 and have been closely involved in defining and implementing our current strategy. Over the past few months, I've also had the opportunity to spend a great deal of time with our teams, our customers across different markets, and of course, you, our investors. Those discussions have reinforced my conviction that Mersenne has unique strengths. Highly differentiated technologies, long-standing customer relationships, a truly global industrial footprint, and strong positions in markets that are benefiting from powerful long-term trends. At the same time, they have confirmed something equally important. The fact that our strategy is the right one. Therefore, my priority today is to continue and accelerate its execution with discipline, agility, remaining close to our customers, and ensuring that we succeed in translating these strengths into profitable growth, cash generation, and value creation. I do see opportunities to further improve our execution, additional simplification, and better capital allocation. These opportunities are already today translated into internal group initiatives aiming to further improve our quality, our processes, productivity, lead times, which are becoming more and more important these days, and efficiency in our manufacturing sites. The first half results we are presenting today are, I believe, a very good illustration of that. The market environment is very dynamic in some end markets, while remaining contrasted across geographies. We deliver very solid organic growth, maintaining healthy profitability, and therefore, today, we are rating our guidance for the full year. So now, turning to our results. Nelson delivered a dynamic first half performance. 611 million euros for the first half, leading to a solid organic growth of 3.9%. EBITDA amounted to 97.4 million euros, which corresponds to 15.9% of sales. An operating income before no recurring items amounted to 56.5 million euros, representing 9.2% of sales.

This represents a solid first half and with that we are raising our guidance.

Thomas will come back into more detail later on. The 3.9% organic increase in sales compared to the first half of 2025 was driven first by strong growth in North America. We continue to see in the region a very dynamic electrical distribution business as data centers customers are expanding at a very rapid pace. This is not the only growing market as aeronautics and wind power are also on a strong momentum. Demand for silicon semiconductors also remains very strong in North America, which by the way is even more visible in Asia. Going to Asia and Pacific, also reported significant growth organically, reaching plus 7.6%, even though China remains in negative territory due to weak solar and chemical markets. As a nationwide production, the group is extremely well positioned in a wide range of countries, and in this region, even with a decrease in China, we delivered growth in India and in South Korea. driven by rail, silicon, data centers, and energy storage markets. Europe is lagging a little bit behind, reporting a slight decrease. It is mainly due to weak chemical market sales, which is in line with the difficult situation of this market. Without this market, the region would have reported positive organic growth, This decline in chemicals has finally a good performance in agronautics and RET in this region. During the first half of the year, the group performed well, and I would like to briefly share and comment on some of these few successes we have. We met and were able to meet this strong demand for fuses to protect data centers installations in different regions. I've mentioned before, data centers is a key growth segment for us, and I will come back with more details in a moment. We've also reported significant growth in silicon semiconductors. Mersenne is very well positioned in the manufacturing process, especially in the ion implantation phase. Regarding EV, the group has been selected to supply fuses for Ford and GifMoto. We released a communication on that topic a few days ago. Finally, and this is more for the long term, we are pursuing our partnership with Tehran and Radun for the SMRs that could generate future growth potential. These achievements illustrate very clearly our position in the market with long-term growth trends, particularly electrification, data centers, energy transition and sustainable moving. Let me explain you now why we see data centers as such an attractive opportunity for medicine. Behind the AI story, there is first and foremost an electricity story. Every new data center requires power generation, green infrastructure, power conversion, and electrical protection. We are present across virtually the entire electrical value chain, supporting these critical infrastructures. is a start upstream with power generation where we provide solutions for renewable energy projects. Electricity then needs to be conducted, transported and stored before it reaches the LALA Center. At every step of this electrical chain, MERTEL provides technologies that help manage, conduct and to protect the flow of electricity. Our technologies are also present inside the LALA Center itself. supporting both the electrical infrastructure and the computing equipment. Across this value chain, our electrical power business provides critical electrical protection and power management solutions. At the same time, growing demand for data centers also drives a high demand for semiconductors. This benefits our advanced materials segment, where our RFI solutions are used in critical This role positioning is one of our unique strengths. We are not exposed to a single product or a single application. As investments in data centers continue to accelerate, we benefit from growth across multiple parts of the ecosystem. Looking further ahead, SMRs will complete this ecosystem, and would become an additional growth opportunity for the group. And I will come back to that in a moment. For the full year 2026, we expected to exceed 40 million euro revenue for data centers, probably twice the level of 2025. In the first half of 2026, we already confirmed this trend by reaching about 20 million. Data centers are also one of the key drivers behind the strong momentum we are seeing in silicon semiconductors, alongside artificial intelligence, electrification, and increasing computing requirements across many industries. This is a market where Mersenne enjoys a strong computing position built over many, many years. Our products are used in several critical stages of semiconductor manufacturing. particularly ion implantation, where our graphite solutions are recognized by leading customers. Our competitive advantages are clear, a global industrial footprint close to our customers, long-standing relationships with the leading semiconductor manufacturers, and recognized expertise in high-performance graphite rates. These strengths allow us to benefit from the current acceleration of the silicon semiconductor market. In the first half of 2026, revenue from silicon semiconductors exceeded 30 million, representing strong double-digit growth compared to last year. And for the full year, we currently expect revenue of more than 60 million. Let me now turn to EV, electrical vehicles. Our strategy in this market is very selective. Rather than trying to participate across the entire EV value chain, we focus on critical electrical protection and interconnection functions, where qualification barriers are high and where our technologies create the most value. We have already communicated three years ago on our nomination with ACC to supply postcards for the interconnection and monitoring of battery cells. Recently, we have announced that Mersens have been selected to supply usage for electrical and hybrid vehicles manufactured by Ford and Leap Motor, in addition to the nomination received from CATL at the end of 2025. These recent wins demonstrate both the competitiveness of our technologies and the relevance of our global industrial footprint. Finally, let me briefly touch on the small modular reactors, or SMRs. We see this as a promising long-term opportunity rather than a short-term growth driver. The expected growth is primarily driven by the political commitment in the United States and the growing demand for power from hyperscalers. We are well positioned in this market and we are the only integrated isostatic graphite producer in the United States. We have, therefore, in our portfolio graphite crates available for SMR key applications, such as moderator or reflector blocks. We are also pursuing our collaboration with Terra and Novasu, where Mersenne supplies nuclear-grade graphite for the first of a kind processes currently under development. Their ambition is to move toward industrial requirements before the end of the decade. While commercial recordings remain some years away, this illustrates how Mersenne keeps position in itself on the next generation of energy infrastructure. I will now hand over to Thomas for more details on each one's results.

Thank you, thank you, Salvador. The first ask was indeed very strong with very robust performance of the electrical power segment. This was driven by, I would say, different drivers, strong growth in power electronics where we supply different passive components for EM, EV was also solid, thanks to the ramp-up of busbar deliveries for ACC. And finally, and maybe more importantly, electrical distribution continues to grow significantly, largely due to the increase in demand for data centers. The advanced materials segment also benefited from growth in several markets. Silicon semiconductors As mentioned by Salvador, aeronautics, rail. On the other hand, the activity in chemicals suffered from the difficult situation of this market. Salvador mentioned it. and as far as solar is concerned we've not seen yet any sign of recovery and finally SIC semiconductor cells remain as expected at a low level volumes have increased but were offset by the non-recurrence of one of positive effects linked to the silicon carbide long-term contract renovation Those reneversations occurred in H1 2025. All in all, we released group sales at 611 million euros, including a negative exchange rate of 32 million euros, mainly in Q1. And what you can see as well is that we have a improvement in organic growth in Q2 compared to Q1. If we come to profitability, the group maintains a good level of operating income and EBITDA. At the constant exchange rate, operating income improved by 2% and EBITDA by almost 4%. As expected, the DNA increased as a result of our large capex program and we expect a further increase in H2 as we have planned to commission large equipment. Operating margin reached 9.2% and EBITDA margin 15.9%. So I will now comment in more detail our operating margin for the move operating margin between 2025 and 2026 and we have two positive effects and two negative starting with the positive you can see that our volume was positive and contributed by 90 basis points to the change of margin. Second very positive thing is that the price increases and productivity measures have offset inflation, inflation on raw materials, silver and copper mainly, but as well inflation on energies and wages. On the other end, depreciation and amortization have increased as expected. I mentioned it. And more important, we had to face the positive impact of the renovation of long-term contract with our silicon carbide customer in H1 2025. The letter represents about 100 basis points of margin. If we look now in more details by segments. The profitability of advanced material segments has been impacted by the non-recurring of renodellization of the SIC contract I just mentioned. Besides that, price increases and productivity have offset inflation. The electrical power segment is going very strongly, gaining 280 basis points on the EBITDA, almost the same in operating margin, thanks to the volume effect. What's more, we have been very successful in increasing prices and we expect an even more important impact on H2. If we look at the net income, you can see that it's going by 5% and even 10% at comparable rates, with very low non-retiring expenses of 1 million euros. The net financial expenses are in the same range as last year, with a slighter higher cost of debt of 3.9%. An income tax reached 10.6 million euros, that is an effective tax rate of 25%, which is similar to last year. Coming now to cash flow, I will start with the focus on change in working capital. The change in working capital over the semester was about 45 million euros during the first half. It includes different things. First, an impact of 36 million euros linked to the increased activity. Especially in June, we posted high sales in June, so it had raised significantly and temporarily receivables that will be paid in H2. Second effect, our inventories were revalued due to the important increase in silver and copper price. Third effect, we also reimburse part of the SIC customer advances as expected. And last, as it is every year, we paid net variable compensation in the first half. So all these effects on working capital were partially offset by additional factoring and by some other effects for a net positive impact of 11 million euros. So keep in mind that it's an important increase in working capital, but as always with Merced, we decrease working capital in H2. So if you look now at the operating cash flow after CapEx, you can see that it's quite similar this year compared to last year with two very opposite effects. The first one is the working capital increase I just mentioned. and the second one is a lower capex than last year. We spent not a lot of capex this half year and you remember that at the end of the year we will have lower capex than in 2025. So I would like to take the opportunity to comment on the performance in our inventories. Last year, we benefited from a huge decrease in inventory, and this explains, at that time, a low consumption of working capital. And this year, we see a very good performance in inventory. To give some numbers, our inventory level at comparable sales is lower by 9% compared to the same period last year. So if we look now at the net debt, it reached 400 million euros. The company financial structure remains very solid with a leverage ratio of 2.3. Our liquidity profile is very strong. As you can see, the average maturity of our financing is 5.4 years, we redeem a private placement shoeshine in the first half of the year, mainly using our cash in hand. So in other words, we have strong liquidity to cover median terms repayments. As mentioned by Salvador, all these very positive factors enabled the group to raise its guidance to the full year. We now expect organic growth between 4 and 6% this is the upper range of our initial guidance for the full year EBITDA margin default non-recurring items between 16 and 16.5% also the upper end of our initial range for the full year operating margin default non-recurring items between 9 and 9.5% 0.5% this is above our initial guidance which was between 8 and 9% and eventually our initial capex between 80 and 90 million euros below our initial guidance which was between 90 and 100 million euros I now leave Sadrador concluded

Thank you, Thomas. Looking ahead, I remain confident in our perspectives. I'm convinced that NASA enters the next phase of its development from a position of strength. That strength is built on competitive advantages that are very difficult to replicate. Differentiated technologies, demanding qualification processes, long-standing customer relationships,

and a unique global industrial footprint.

We are very well positioned on markets supported by powerful long-term trends, such as low-carbon power generation, electrification, the transition towards direct current, the rapid development of data centers and artificial intelligence, clean mobility, and the broader industrial transition. Of course, these markets will not evolve in a straight line. Each one follows its own cycle, as we experienced in the previous years. But the long-term direction remains unchanged, and we believe Mersenne is well positioned to benefit from this structural trend. Over the past few years, we have invested significantly to prepare for these opportunities, particularly in the AM segment, in the material segment. Today, our industrial platform is largely in place, and our focus increasingly shifts from building capacity to generating returns from those investments and its development. We also benefit from a truly global industrial footprint, allowing us to remain close to our customers while limiting our exposure to geopolitical and trade disruptions. Finally, our financial position gives us the flexibility to pursue All together, I believe Mersenne has the right markets, the right capabilities, and the right teams to continue delivering profitable growth and creating value over the long term. As a result, I can confirm our 2029 medium-term roadmap, space around 1.7 billion euros, EBITDA margin of 90% plus or minus 50 BTC operating margin of 12% plus or minus 50 BTC and ROCE at 30% plus or minus 50 BTC I remind you that these objectives have been defined in February 2023 with different exchange rates With that, thank you and let's move to your questions

Ladies and gentlemen, if you wish to ask a question, you may do so in one of the two ways. By clicking the green hand button on the player to ask a question orally. Once we activate your line, you will see a message to unmute your microphone. Please make sure to do so before you speak. Or by submitting a writing question in the box below the player. The next question is from Giovanni Salvati from Berenberg. Please unmute your mic and go ahead.

Hello, can you hear me? Yes. Hello, hi, and congratulations for the results, and thanks for taking my questions. I have a few questions. One is, like, about a few numbers, just to kind of understand if I got them right. You said that revenues from data centers were around $40 million, and each one was... from standing for the semiconductor business was around 60 million is that correct the the the pool your I'll yes if the media for the full year and 30 million each one the correct he and yeah okay for the data and the it's what you mean you're all for the clear okay and and maybe at you also mention that there's the increase in the organic growth for the electrical power division is also linked to the ramp up of deliveries of ACC for ACC. If you can please quantify that in Q2 and in H1. And my last question is really on the profitability of the electrical power distribution because you clearly mentioned that with volumes margins are improving and I was wondering how close you are to full capacity in that division. So how much room you have more to improve margins going forward.

Maybe I will start with the last question, in fact, in terms of capacity for electrical distribution. In fact, it's not very capital intensive, so you can follow quite easily the increasing capacity without waiting on your margins. and what we can say is that as always electrical distribution for us is more profitable than in the US especially than in other regions or when we do business in the US we have a positive mix so it's profitable for electrical power business but can you just give us a rough quantification of the difference in the profitability like

Two points more, three points more No, I'm sorry, we don't need that Okay, okay And then on ACC Yeah We don't disclose exactly the number of ACC deliveries What I can tell you is H1 deliveries The ramp-up continues in ACC We have delivered more or less close to three times the volume compared to last year in terms of parts, in terms of volume. Still, it's behind the schedule of ATC, as you know, ramp-ups have been a little bit more difficult than scheduled, but we are following this road, and it keeps growing in H2.

Okay, thank you.

The next question comes from Thomas Renaud from Quai Tachereau. Please unmute your mic and go ahead.

Can you hear me? Yes. I have several questions, please. The first one on pricing, what was the price effect in Q2? And are you, let's say, satisfied with the pricing freeze implemented so far? I have a second question on guidance. As you expect, a stronger growth in H2 compared to H1. Is the low end of the guidance simply cautious, or does specific factor that could bring growth closer to that level. And I have two more questions on data center and working cap. On data center, US peers are reporting orders and sales growth well above 100% alongside, let's say, a two to three times increase in content for new architectures. Are you seeing similar trends? and on working cap. You mentioned the advance payment in H1. Could you please quantify the amount to be repaid over the coming years and how it could impact the working cap profile over the next few years? Thank you.

So the price increases in the second quarter was around 3% so it's an increase compared to the Q1 and it will be a further increase in H2 With regard to the stronger growth in H2 you said that the the day don't you school that the the the low end of the day don't he's a maybe conservative I would say that you know what the the on the element the political macroeconomic environment he's a well not all news changing so we'll see at the end of the year for for it's a good level of the day don't what we gave today I'm

Yes, I confirm, and the numbers are the same. We see this trend of times two, potentially more, on this trend on volume.

And on working capital, you said that yes, we still have some advance payments to be repaid, something between, I won't give day-to-day, I would give rough figures between 20 and 30 million euros to be repaid, but in several years.

Okay, thank you very much. Many thanks.

The next question comes from Julian O'Neill from Marex. Please unmute your mic and go ahead.

Yes, can you hear me? Yes. Thanks. So, a few questions, four questions I'd like to start with. The first, could you say, tell us what your sales are in EV in the first half to EVs? And I got in mind for the full years around last year about 30 million euros. What you could expect for this year in terms of EV sales, considering all the growth you have. Similar question about silicon carbide. You didn't speak so much. I had in mind about 55 million euros last year. Is it something where you see however a bit of growth you mentioned is still weak but could you see some small improvements anyway this year and two specific markets I just wanted to talk first you had a contract with the DLA for the defense in the U.S. potentially is going to effectively some missile in the U.S. for using some profiles knowing that the U.S. is consuming right now a lot of I'm sorry, in Iran. I knew I have some members to give us on what sort of sales you are doing right now, what could happen for this year. And four questions coming to the Soltech contract. I remember you have done an implement on that. But you mentioned that you were working on a solution to a new market. Could you tell us where you're going right now on this specific market, specific projects here, and have you effectively in mind something which you could shield the investments you have got?

Thank you for your question. I will answer to the specific numbers you asked. EV is around 15 million euros in H1. and we give no guidance at the end of the year. And SIC business, silicon carbide business, silicon exchange, around 5 million units and H1.

DLA is a contract with a logistic agency in North America. We are supplying this contract. We communicated the envelope of this contract, which is close to $10 million. We are delivering to that contract. So we don't know at this stage additional contracts to come. They might be just discussions, but at this stage it's a little safe. And regarding StreetTech, yes, we are today focusing on working the diversification program on our processes that we have developed to supply this community. This is not short-term action, this is medium-long-term impact.

The next questions come from Jean-Francois Grandjean from Odo VHF. Please unmute your mic and go ahead.

Four questions on my side. The first one, I would just come back on the, I don't quite understand the amount of the sales for the SIC business during the first half, so just put your remember the sales for this business for the first half the second question regarding the depreciations we see a relative stabilization in H1 compared to last year do you expect the similar level for the full year and the question is so in fact your guidance you expect you improve the guidance for the EBDA but you expect you increase more the expectation for the EBIT margin versus the EBDA margin so can we explain that by probably less depreciation compared to what we expect previously The third question is, you have reached a historical level EBIT margin of 14.9% for the electrical power. Is it sustainable for the coming years? at, I would say, an average 15% or more than that percent. And the last question, I will come back on the working capital. So if I understand, you expect a higher or better level for the working capital during the second half. And could you give us some more color of what you expect for the free cash flow for the full year after the 6 million mentioned last year? Thank you.

Maybe I will start with something else. Sales in SIC is around 25 million euros in the first half. So regarding depreciation, in fact, Yeah, it's because of the exchange rate. At the same exchange rate, the impact depreciation increased by 2 million euros compared to the first half last year. And it's less than what was expected because we commissioned for technical reasons the CATEX a little bit later this year compared to what we thought at the beginning of the year. so that's why at the end of it there will be more more depreciation in the second half the skid lower that was expected that they when we make the guidance at the beginning of the year I would say the third one regarding the

The answer is yes. At this stage, we don't expect any reduction on this performance. The opposite, when we compare this performance to peers, we can say We still can see a slight amount of improvement in the next month, I should say. I see it is sustainable, to answer the question.

Regarding working capital, I will not give number for Francois. Why? Because it will depend on their growth in Q1 2027 for working capital. that's why I would not comment today on the cash that would be you know but I can tell you that even with whatever the scenario the second half would be far better before capex so you can confirm that normally you should have a higher free cash flow compared to last year This is a fair assumption. Okay. Okay. Thank you.

There are no further oral questions at this time. So I will now return the conference to the speakers for the writing questions.

And then we have several questions from Paul Manigault of Amiral Gestion. I will list them and then you can answer. So Regarding data center, a little few mentioned that the new architecture, so the 840C, will be very positive for the product by two or by four compared to the current architecture. Is this the same order of magnitude for you? Second question, new data center might use more SAC semiconductor. When do you see a reverse for the SAC market? You mentioned said he didn't you all say for he'd been so I I didn't even get the the the the about just mentioned he's twenty-five or a 50 said the and that question on that is also going to be to choose the issues expected to get a chance to use we and do you see any action for you elected he didn't use

that also accelerated in Q2 so maybe we'll start with that yes thank you for the question so yeah I think we've been exactly the same type of market not the same type of portfolio so I can say yes regarding our portfolio today and the new portfolio that will come Once this architecture of a contract for DC will be let's say finalized these first versions. Yes, we see a positive impact on some of our product branches times two times four. It's not it's not it's not a surprise. At the same time, moving to 800V DC, yes, will trigger some additional opportunities for us in the group, meaning that mass material segments where the SIC normally will take over part of this architecture as well. In line with what you already mentioned, the question about H2, definitely H2 will expect to be higher than H1.

Thank you. So now one question on the LTA with SIC customer. Will we have a negative impact in the second half or is it gone, I would say, in the first half?

The very last important impact was done in the first half, in fact. clearly we have some residual impact in H2, but it's residual.

So now one question maybe on the breakdown of data synthesis. So the question is, so we mentioned 20 million for the first half, 40 for the full year. Is it speak of Asia, U.S., Any comment on that? Is one region growing faster than another?

Definitely, North America is faster than anybody else. We do see recently, and I think this is the sensible question, as capacities are being saturated in North America for data centers, providers, I should say, infrastructure, supplies, components, as we are, we see an increase in Asia to deliver customers that will position their systems, their solutions in North America. So, this is why the number between 50% is difficult to calculate depending how you look to the situation. So, yes, North America is much faster than anybody else.

One clarification also, it was mentioned 50 million euros for the full year was for silicon semiconductor and the first half is 30 million for silicon semiconductor. And we mentioned also the second part, which is the SIC being 25 million for the first half. So there are no other questions on the chart.

Any questions?

The next questions come from from . Please unmute your mic and go ahead.

Yes, sorry, I just got back with three more quick questions. The first is this tomorrow. You mentioned that you will be starting some prototype tests during 2028. All customers will start. Any small sales or it will be really marginal? And as you, maybe some idea that you do, you know, in 2030, some revenue on this part. Second question, you mentioned about the decline in the sales in chemicals. Could you remind us basically the revenue you have done maybe in H1 what was the decline compared to last year in percentage to have in mind how big was the decline in chemicals and third question very technical question maybe but I've seen on the cash flow statement there is a 4.6 million scope effect negative scope effect what it's about because I don't have in mind any acquisition or disposal at this time so What is this co-effect?

Thank you. I will start with an SMR question. The language is not so good, probably the question is right. Yes, this SMR, as I explained, definitely needs a long time. We already received some orders for the prototypes, for example, with terrain battle. Both are other customers as well that we are working today as a prototype stage. These will generate very low number of stages. mostly in 2027, not the same thing in 2026, but it is still small. We expect really the run-up of this technology once these reactors start to be qualified by the nuclear authorities in North America, and this is expected between 2028-29,000, depending on the question.

For chemicals, in fact, to give you a sense of the decline, it goes between minus 15 and minus 20%. This is linked, as we said, to the industrial, but as well to the fact that the H1 was very, very strong last year. and the chemical the chemical cells is around 45 million euro I would say the first half and they are you know what they are high sometimes big orders so it's it's you can have you know some very good years and some because of you know this project effect I would say then the scope effect in fact I think you mentioned the fact that there was an activity that was previously in electrical power, which now is in advanced material. In fact, it is for rail industry, and in fact, electrical power was doing something, advanced material was doing another thing. and we wanted to combine both in the same segment in order to make a synergy.

Okay. Thank you.

As a reminder, if you wish to ask a question, you may do so in one of the two ways. By submitting a writing question in the box below the player, or by clicking the green hand button on the player to ask a question orally. The next question comes from Jean-Francois Grandjean from OdoBHF. Please unmute your mic and go ahead.

Yes, two more questions from my side. The fourth one concerns the advanced material business. Without solar on chemicals, could US be the train of the stage for the post-alf? Engrossed or not without solar on the chemicals? On the second question, due to the fact that, as mentioned by Salvador, the EBIT margin is sustainable for the elder power, so more or less 15%. If we expect positive leverage for the Adam's material in the communes, and previously the margin for this division was quite high, you expect 12% evident margin in 2029. It seems quite cautious. if we take into account 15% for the EP and probably a similar level for the advanced materials. So do you confirm that 12% or plus 50 base point is probably cautious or too cautious for 2099? Thank you.

I will answer to that question this question Jean-François in fact you see that we are not cautious on EBITDA margin 19% compared to 16% today and it's reasonable but it's an increase don't forget that we have the depreciation will increase a lot that's why ok And that's why that that's make the difference. So the 3% is not understated. Okay, and then for sure, don't forget that. I forgot that to mention the don't forget that there is a advanced material EP and central cost as well as electrical power and central cost as well. You have to deduct that. Coming back to your first question, yes, if you add back solar and chemicals clearly and this material is in nice positive territory in terms of growth.

The next question comes from Thomas Renaud from Kepler Chevaux. Please unmute your mic and go ahead.

Yeah, thank you. I don't know if I well understood, so just a clarification on what Salvatore said. So you are expecting a growth acceleration in electrical power in H2, right?

We are seeing an increase, especially in high season, in H2, in fact.

you mean prices because the question was about little fuel little fuel Q3 growth acceleration and you mentioned that you could expect something yeah but little fuel Q3 growth should be higher than what they publish in H1

5 points above if I remember well I cannot comment the little fuse assumptions, I don't know them clearly we see an acceleration H2 compared to H1 it is convenient for both price and volumes related to the activity on the little power it's true, it's both of them it's more pricing than volume power ok, so you expect an acceleration in H2 yes

ok and so when we look at the basis effect in advanced materials which was down 9% I think like last year we could expect something very strong in H2 at the group level I think we see as we said we see that the chemical will be lower than what we expected in chemical with advanced materials

We see no acceleration, no kick-up in solar and not at all. And we see not a big deal, not a change on FIC semiconductors. So at the end of it, it will be... I will come back to what... In fact, we were in electrical power. We were talking about... We are two business units. It's electrical distribution and power conversion. We were speaking now when we were commenting on a little fuse. It's electrical distribution, in fact. Electrical protection is not the power conversion effect. So please don't keep in mind that necessarily there will be a huge pickup in electrical power globally. So what we say, we gave the guidance. We don't give guidance there. you know segment but at the end of it you compare to if you do the H2 it will be slightly to much more growth than H1 globally ok many thanks the next questions come from Giovanni Savotti from Berenberg please unmute your mic and go ahead

Hello I have a last one maybe on M&A we haven't touched on that I was wondering if there is any update there if you're scouting for any deals at the moment then if so in which area would you concentrate your targets

I would say that one, of course, the answer is yes. We mentioned it a few months ago as well. We restarted our activities on NNA. So it's difficult or tricky to say something about it, but I can tell you what we said before, and I mentioned it in both our acquisitions. We are looking specifically at some territories, Europe, North America.

Okay, but is this mainly for the electrical power division or for the advanced materials, if you can say so?

Okay.

Thank you.

I have one more question on the chat. Could you quantify the opportunity of sales for Mersenne per SMR? For instance, TOYO and SGL Communicator respectively of 10 million euros and 25 million euros per SMR with X energy.

Yes, at this time I would not even figure. No, SMR is a new technology. Depending the customer you have in front, you have different constraints in terms of fuel, in terms of qualification time requirement, in terms of graphite, inside each one of the solutions, depending what the technology they are looking for. The only thing I can mention is these numbers are not at all surprising to me, compared to what we could do in the potential future. The question there is not, again, short-term. It's long-term. And we are today working with, as you say, the good projects or the fastest projects with the highest chances of being qualified as soon as possible, specifically talking about fuel. We know Terrenovatum, which is a consumer. We do know and work with this energy as well. But at this stage, we have decided not to communicate to any number regarding this story.

No more questions on the chat.

So thank you. Many, many questions today. So we look forward to updating you on our progress on October 28th for two free sales figures. So enjoy your holidays and see you soon. Thank you.

Thank you. Bye.