Rexel Sa Unsp/Adr

Yes, good evening everyone and welcome to our full year and fourth quarter 2024 results conference. Thank you first for making the time to join us and for accommodating the change of dates, which we hope, if anything, made it slightly easier for you to be with us today in a busy results season. I'm here with Laurent Delabarre, our CFO, who will be giving you a detailed account of our financials after we've completed a short tour of the main highlights of the last quarter and the full year. And after Laurent's deep dive, I'll come back to discuss our outlook for 2025 and give you a progress update on our strategic roadmap before we open up for questions. So switching to slide three, in 2024, overall, we operated in a market which proved more challenging than anticipated. This is especially true in Europe. where a soft economy, a complex political landscape, and a slowdown of electrification were as many additional headwinds for Rexel. So that's the environment. But in this context, I'm really proud of the way the Rexel strategy has delivered and the way our teams have reacted, not only because it allows us to post what I consider very solid figures, but more importantly, because it allows us to enter 2025 with good momentum. Let us talk about the figures first. We finished the year at minus 2.4% LIFE for LIFE growth, right within our latest guidance update, but obviously below our initial expectations. And to give you a historical perspective, apart from COVID, this is the first negative year since 2016. So in this context, the fact that the EBITDA margin landed at 5.9%, exactly where we had forecasted, is quite impressive. I remember two years ago many questions being asked about whether we would return back to the 4% range in difficult years. I think you have the answer right there, which is a clear no. On the free cash flow side, we strongly outperform the guidance, finishing the year at 76% cash conversion. Now, let me come back to this important message about 2025 momentum. There are many uncertainties in the market for 2025, but there are three areas in which we have good initial speed, which is always a nice situation to be in. Market share gains, first, in many important countries, allowing us to beat the market. Usually when the market is softer, solid players tend to benefit, and we are taking advantage of that. Cost savings gains, second, with many projects having been initiated but not having delivered yet their full year results. We have successfully transformed the difficult year into an opportunity for transformation and the addition of AI tools in the mix has really amplified the potential. This is very exciting for the future and I'll come back to that. North America, third, as we are harvesting the results of the last four years expansion strategy in this continent, which is exposed to more favorable trends. First momentum, I was talking about market share. For those of you who follow us closely, you will know that I'm always quite cautious when it comes to commenting market share. Firstly, because the data is never totally clean. Our intel coming from the combination of customer, supplier, and market intelligence. Secondly, because sustaining a competitive advantage in the long run is difficult in our markets. But we now feel confident enough in a series of important countries to say that our win is not only conjunctural, but probably also structural. due to the continuous investment we have made over the years to offer more value to our customers. We have invested in logistics, but also digital, team expertise, and increasingly added value special services, as we detailed at length during our last capital market day. I'm happy to see that data totally backs what we intuitively knew, which is that having those blocks right ultimately results in gaining share, and in some countries quite impressively, like in France, for example. The next slide zooms on my second momentum, internal optimization, which is pure self-help. On the left, you can see how effective the response has been on headcount. It's only in the first quarter that the volume decline outpaced the FT adjustment, which followed very rapidly and then continued to end the overall year ahead. On the right, we describe a selection of optimization projects we have launched this year to get to these results. Those projects are not detailed for confidentiality reasons, but let me tell you that they are real, closely monitored, and that they are all new projects initiated in 2024. The first important remark is to note that those projects are, for many of them, structural. They correspond to fundamental optimization ideas we had in mind and have accelerated. Take, for example, the Salesforce reorganization in Austria to make it more regional. This is exactly that. which means that those savings will not disappear when volumes come back. And the second remark is that some projects have already started to deliver in 2024, but many will ramp up in 2025 or 2026. So in summary, we have taken the opportunity, quote unquote, of the challenging 2024 to gain a few quarters on our strategic roadmap, and we will progressively see the benefits of that in RPNR. As I mentioned before, thanks to that, we delivered what I consider very solid results. And let's take a step back for a moment and look at our EBITDA margin development over time. You can see the structural improvement coming through in the form of increased resilience against the kind of volume and pricing headwinds we've been contending with. 2024 was the first time both of those factors, volume and pricing, have been significantly negative since 2016. And for context, that was a 4.2% margin year. So as you can see, achieving a 5.9% margin against a 2.4% same-day sales decline is a departure from previous patterns. But that's not the end of the story. The structural drivers behind this improvement are still in action. There's plenty more headroom in areas like digital productivity, best practice sharing, and targeted M&A as part of a broader portfolio rebalancing. To put it simply, There is more work to be done and more to be accomplished here. I wanted to comment also on the last momentum component I was talking about, which is our exposure to the North American markets. On this graph, which you will see later commented in more detail by Laurent, you can see the quarterly evolution of ourselves, which shows a nice positive evolution at group level. But you can also see on the right that this momentum comes from North America. where we have seen an acceleration of volume throughout the year, with our backlog remaining at a historical high level, and we have finished the year at plus 3.6% for the last quarter growth in North America. And on the next slide, you can see a longer-term graph of the growth figures we have delivered, highlighting as well the increasingly important share of North America in our mix because of both internal growth and acquisitions. This proves particularly beneficial at a time when we see good momentum in our three markets in North America. Residential, especially in the Northwest where we are more exposed to it, is now solidly anchored in positive territory. Non-residential activity benefits from a good backlog, which is staying at a historical high level quarter after quarter. And we think that we are seeing green shoots in the industrial markets, which were a little bit disappointing in 2024. On slide 9, I wanted to comment on the free cash flow conversion. As you can see on this graph, we posted a very high conversion figure, higher than any of the years since COVID. And in fact, it's a historical high except for 2020, which was obviously very special. This is the result, in particular, of careful inventory management, disciplined credit monitoring, and strong CapEx control with 0.7% in CapEx this year. It's not a total surprise, but it's good to see that we are materially higher than our guidance and even higher than our new mid-term guidance, which is, if you remember, around 65% of cash conversion. I'll finish with just a reminder of the main figures, which are all in line or better for cash conversion than our latest guidance. In the challenging environment we have operated in, those numbers really demonstrate how Rexel has improved over the last few years. And with that said, I'll hand over to Laurent to comment more on the results. Thank you, Guillaume, and good evening to all. Let's start on slide 12 with the different building blocks of our Q4 24 sales performance. Our sales of 4.9 billion euros were up 3.6% on a reported basis, The positive performance achieved driven by the contribution of acquisition for plus 2.1% and the positive actual day sales growth of plus 1% helped by calendar. The scope impact includes a positive contribution of Tally and electrical supply in the US and Itesa in France. And for 2025, we anticipate the scope effect to stand at 0.6% based on the operation already completed, including the disposal of New Zealand signed on February 1st. Guillaume will come back to the portfolio subject later on. The currency affects to that 0.4% in the quarter and is expected to be at plus 1.4% for the full year 25, assuming spot rates remain unchanged. Slide 13 focus on price and volume breakdown of our sales by product and by quarter to give you a better idea of our current trends. First, our core ED business, including cable, representing close to 80% of the mix, is stable in price and progressing in volumes, contributing for plus 1.1% in 2024, a better performance compared to previous quarters. Second, the electrification market remains challenging, with a minus 1.9% contribution to same-day sales evolution in Q4. And nevertheless, we recorded a sequential improvement compared to the minus 2.4% posted in Q3-24, which is driven by better price, down a limited minus 0.4%, and a slight improvement in volume. On slide 14, Guillaume already commented the accelerated trend throughout the year. Let me comment on pricing and on APAC. First on pricing, as presented in the previous slide, selling price were broadly stable, down 0.1 in the quarter, but more specifically, non-cable selling price, including electrification and core, stood at minus 0.7% in Q4-24, similar to previous quarter, and reflecting deflation in solar and piping in North America. The slight improvement in solar pricing was mitigated by the slight deterioration of piping in North America due to lower steel price. Cable pricing stayed in positive territory at plus 0.6%, benefiting from the more favorable copper price. Second, and more specifically for Asia Pacific, accounting for 6% of group revenue, same-day sales were down 2% in Q4 24. In Australia, Sales were broadly stable, supported by industrial markets and notably mining, as well as electrification activities such as solar and HVAC. In China, sales decreased by 6.3% in a context of low industrial demand. Inventories in the value chain have normalized, as reflected in price that improved sequentially. Let's now zoom on Europe and North America. Slide 15 focused on our performance in Europe. Our Q4-24 same-day sales were down 3.8% compared to minus 4.4% in Q3-24, a slight sequential improvement, mainly from electrification. And more specifically, let me highlight the key evolution of the quarter. The business environment remained challenging, specifically in the UK and in the Benelux. The Dow region was down 4%, still negative, but improving compared to previous quarter. Benelux was almost down 8% and remained under pressure despite an easier base effect, notably on solar activity. In the quarter, France and the Nordics were the most resilient. In France, we continued to significantly outperform the market in a declining market. And this market share gain is particularly significant through the non-residential segments. Nordics stood at minus 1.4%, a better performance compared to H1-24, notably from an easier base effect on electrification and the first effect of the lower interest rate on residential spending. On slide 16, we turn to our performance in North America, where same-day sales were up 3.6%, accelerating versus Q3 and confirming the return in positive territories. While electrification was negative due to the initial automation, the core ED, including cable, accelerated significantly, contributing to plus 5.5% in the quarter versus a 2.9% contribution in Q3 24. As in the first nine months of 24, activity continued to be boosted by good backlogs execution, with project activity up in double digits. And let's summarize the key highlights of our two countries. In the US, same-day sales evolutions stood at plus 3.4%, with growth in all three markets. The acceleration was driven by non-residential and industrial markets, and more specifically, data centers, oil and gas, and logistics advance. Canada, so same day sales growth of 4.4%, thanks to the initial demand and notably in mining and manufacturing. On the next slide, as in previous quarter, we continue to enjoy a strong level of backlogs compared to pre-pandemic situation, despite a very high level of execution. One more time, high backlogs results from the combination of a strong backlog execution driving the growth in our project business and a strong order intake during the quarter. Moving to slide 18 to show you the sales bridge for the full year 24 before going to profitability. Our full year 24 sales of 19.3 billion euros were up 0.7% thanks to positive portfolio management impact of 2.7% net of disposal. an actual day evolution of minus 1.9% and a positive 0.5% from calendar. Zooming on the organic part, the minus 2.4% same-day evolution can be broken down between minus 1.5% volume contribution mostly due to Europe, minus 0.7% non-cable price contribution due to a few pockets of deflation in solar and in piping in North America, a minus 0.2% On slide 19, we show you now the building blocks that led us to the adjusted EBITDA margin of 5.9% in 2024 versus 6.8% in 2023. First, operating the leveraging impacting our profitability by 32 basis points, reflecting the drop in actual day sales of close to 2% in the year. Second, the impact of 68 basis points at gross margin level explained by the negative sales price evolution and mix in North America with sales growth driven by project activity for minus 25 basis points combined with the commercial environment pressure for 43 basis points. OPEX inflation had a negative impact largely from salary inflation for 32 basis points and other costs for 13 basis points. Overall inflation stood at plus 2.4% in the year. This OPEX inflation was offset by the 47 basis points positive impact resulting from our action plans and more specifically cost savings, productivity gains, and better credit management. As an illustration, we have reduced the number of people by almost 750 at the end of December 24 compared to December 23. And by geography and similar to the first half, Europe perceived adjusted EBITDA of 5.8% than 151 basis points, explained mostly by sales decline combined with higher exposure to the deflationary solar activity mitigated by active OPEX management. North America was more resilient, with adjusted EBITDA margin at 7%, down a limited 42 basis points thanks to better top line. On slide 20, we look now at the bottom line part of our P&L. We assume on other income and expense, financial expense, tax rate, and recurring net income. Other income and expense to that minus 258 million euros, notably including 124 million euros fine from French competition authority against which Rexel has logged an appeal, and that will be paid in 25. 55 million euros of goodwill impairment, notably Germany and UK. 33 million of restructuring. Financial expense stood at 208 million euros, higher than last year, resulting from the rise in growth debt and interest rates. It includes 66 million euros of interest-only liabilities integrating Tally and pure financial costs of 142 million euros. The effective interest rate increased to 4.3% compared to 3.7% in 2023. For 2025, we anticipate stable financial expenses at circa 210, including 70 million interest on lease liability, taking into account recent acquisition, and 140 million of pure financial expense, excluding one-off, and assuming current interest rate conditions remain unchanged. Our income tax rates were at 46.6% due to the non-delectable expenses, including the fine in France and goodwill impairment, as well as write-off of default tax assets. The normative tax rates stand at 26.2% in 2024, excluding one-off. And going forward, we anticipate the tax rate to be at circa 30% in 2025, taking into consideration the additional tax in France that should be applied for one year only. And from 26 onwards, we anticipate then tax rate to be back to below 27%. As a result, recurring net income was 662 million euros compared to 823 million euros in 23. Moving to slide 21, we generated robust cash flow before interest and tax, reaching a high level of 917 million euros, implying a free cash flow conversion rate of 76%, well above targets. This record level of free cash flow generation resulted from our operational results combined with a significant cash inflow from working capital management, and more specifically, strict receivable and inventory management. Lastly, the capex to sell ratios to that 0.7% in line with last year. As shown on slide 22, net debt increased by €522 million, mainly resulting from three factors. First, the €550 million impact from net financial investments, mainly for the Tally acquisition. It includes an earn-out that has been increased since the end of June, as Tally delivered performance above expectations. Second, the dividend payment related to the 23 results for 357 million euros, corresponding to 1.20 euro per share. And third, share repurchase program for circa 100 million euro. All this leads to net debt close to 2.5 billion, including earn outs for 124 million that will be paid if acquisition deliver on promising expectation. And the indebtedness ratio stands at 1.83 times. Let's turn now on slide 23 to our liquidity picture. Our financing is well balanced between receivable securitization, long-term financing, including three sustainability link bonds for 1.4 billion, and a shoe shine for 200 million issued in June. Our liquidity is now close to 1.5 billion euros, including the undrawn senior credit agreement. and we have no short-term refinancing needs and no risk on the renewal of the securitization as it is an asset-based financing rolled over every two years. On slide 24, we present our proposed dividends for 2024 financial year to be paid in 2025. Rexel will propose to shareholders to maintain the dividend at a record €1.20 per share It implies a 54% payout ratio on recurring net income, demonstrating our confidence in the model and in our midterm ambitions. It remains, of course, subject to approval of the annual shareholder meeting to be held in Paris on April 29. It offers a 4.6% yield based on today's share price. Let me conclude with our carbon reduction achievements and the confirmation of our midterm ambitions. We have further reduced in 2024 the CO2 footprint in both Scope 1-2 and Scope 3. On Scope 1 and 2, corresponding to our emissions in our facilities, mainly our buildings, they have been cut by circa 8% in 2024. And that put us on track to achieve our 60% reduction target between 2016 and 2030. Scope 3, corresponding to the CO2 in the value chain, It has also reduced by 8% in 2024. And our SBTI validated Scope 3 objectives have been redefined to better consider the full environment impact all along the value chain and not only limited to the use of product sold. We target to reduce now Scope 3 emissions by 35% based on this new definition between 2016 and 2030. As you may have seen yesterday, I'm also happy to share that we have been upgraded by CDP and now get a CDP-A rating corresponding to the best-in-class limitations. With this, let me now hand back to Guillaume to discuss our outlook and priorities. Thank you, Laurent. And I will move to slide 27. Now is the time to comment on 2025. which is just like 2024, a year marked by a certain level of uncertainty. I would firstly say that prospects appear a little bit clearer in North America than in Europe. In the US, 2024 was a year of caution when it comes to industrial investment, as many people were waiting for the results of the elections. Now that the environment has stabilized a bit, I expect more willingness to invest, and indeed, it looks like we are seeing early signs of that in our business. Many things about the new economic policy are still unknown, but there seems to be overall more optimism in the economy, which is good. I would also expect that any trend favoring manufacturing in the U.S. would benefit investment short-term, including more protectionism. And finally, remember, there are two trends that I would qualify for Rexel as regional, which are going in the right direction. Data centers, to which we are mostly exposed in the southeast of the U.S. through our major subsidiary. And residential, to which we are mostly exposed in the northwest of the U.S. through Platts, and where we are seeing positive trends in a few quarters after having experienced a downturn. So overall, North America is a place where we would expect clearly positive figures, even though the extent of this positive will depend on many things. We are more cautious about Europe for reasons that you know well. Slow economic growth, lack of overall confidence, and political uncertainty is made for a very slow market in 2024. And at this stage, we don't see a positive trend taking shape. In addition, electrification trends, which constituted a big help in 2022 and 2023, have not recovered. And here again, I cannot honestly call for a rebound at this stage. Now, there are some good news in Europe. One of them is the market share gains I was talking about in the first part of the presentation, which should allow us to beat the market once again. And the other one is interest rates, which have gone down and should continue to decrease, which in my book translates automatically after some time in a rebound of construction markets to which we have high exposure in Europe. How long it takes depends on many things, but I would expect to begin to see positive signs in H2. And in fact, we are already seeing slight positive trends in some markets, namely the Nordics. You know finally that pricing is an important parameter in our equation and here I expect at this stage the environment to be slightly more supportive than last year. The early indications from manufacturers are more ambitious than what we have seen last year. the impact of the commodities categories like solar panels will probably be less important than in 2024. And last but not least, there is the uncertainty about U.S. tariffs, which could go only one way, which is additional inflation, which you know is usually a tailwind to our P&L. But to be clear, no tariff is included in our guidance at this stage before we see a little bit clearer. That leads us on the next slide to our top light guidance for 2025, stable to slightly positive, which we have intentionally made cautious because of the uncertainties. And to give you an early information about how the year is starting, we are right there in January, slightly positive on a like-for-like basis, both in North America and in Europe. On the bottom line side, we will see the effect of all the self-help actions we have done in 2024 and also of those that we will start in 2025. But we will also face headwinds once again with inflation of our costs north of 2%. And overall, we expect our profitability to be around the 6% mark. There are upsides to this scenario if we were to see, for example, material positive sales figure or if product inflation was to be higher than what we anticipate. But at this stage, we don't bet on that. And finally, we have set our free cash flow conversion target to circa 65%, knowing, obviously, that the exceptional payment to the French antitrust authority is taken out of the equation. Beyond those short-term guidance elements, I would like to speak in a few slides about the mid-term targets that we have given last June at our capital market debt. We have faced, since then, market challenges, and a legitimate question would be to ask us where we stand and how we feel about those targets, so I'll anticipate the question. The answer is that we still think we are totally on track to reach them, and let me give you a few details about that. As a reminder, the main targets are the following. Same-day sales growth ranging from 5% to 8%, current adjusted EBITDA margin above 7%, and free cash flow conversion around 65%. I won't talk about the last one as we exceeded it in 2024 and have set our guidance for 2025 right at the same level. But let me say a few words on top line and on bottom line. Top line first is made of four main components. What we could call legacy market growth, Rexels growth over the market, M&A, and electrification. We know that Legacy market growth is cyclical, and 2024 was clearly a down cycle year. We will see what 2025 holds, but it's pretty sure that at some point the cycle will come back. Growth over the market is something we feel more and more confident about. We talked about market share in the initial part of the presentation, and it looks more and more obvious that the complexity of the value proposition that is necessary to match today and tomorrow's customer demands will progressively challenge smaller players. Moving to the next slide, the third top-line component was M&A, is M&A, and it's an important level of our strategy. And this year, it contributed to 2.9% of additional growth, the acquisitions, through two important acquisitions. The largest one, Tally, in the datacom space in the US, is proving very successful, as Laurent mentioned. both in terms of short-term results and in terms also of synergies with the rest of our business. The same way, ETSA in France is a game changer in a specialized adjacent category, which is access control and security, in which we were already present, but here we are acquiring a very strong leadership position. Those two acquisitions, along with the third small one in Florida, are good illustrations of where we like to put our money. in consolidation in the U.S., and in fast-growing adjacent markets throughout the world. Perimeter adjustments go both ways, and we announced today the divestment of our New Zealand operations, where we were generating a little bit less than 100 million euros in sales. Our strategic review there led us to conclude that we were underweight, and we decided as a result to divest this dilutive business to an American private equity. Moving to the next slide, Electrification, finally, is the last component of our future growth. And here, from an electrification trend perspective, we experienced a challenging 2024, as I was commenting earlier, especially compared to the most bullish scenarios. But the fundamental drivers, as we see them, are basically intact. And there are good reasons to believe that much of the slowdown in 2024 was temporary. First of all, the wait-and-see posture adopted by economic actors in a multi-election year was transient by definition. Same is true for the construction slowdown brought on by higher interest rates, which was another drag to electrification. To support this idea that the electrification underlying trends remain very strong, we selected on this slide two graphs from the latest forecast done by the International Energy Agency. The good news is that this document was issued in the second part of 2024, which means it's up to date from the latest world evolutions. And the global conclusion is that fast electrification is confirmed simply because there is no solution around it. The first graph on the bottom left shows the growth rate forecasted over the next decade of global electricity demand compared to the last decade. And you can see that even though energy demand should slow down, This is not the case for electricity to the opposite. And the second graph on the right is even more interesting as it shows where the electricity demand will come from. You can see that it will come mostly from new uses like mobility or heating or data centers. And then because of that, it will also come mostly from so-called developed countries. All of that is quite interesting because those areas are places and segments where Rexel is strong and can be helpful. So overall, yes, electrification is confirmed because it's not the result of one trend, but the combination of several trends converging. Artificial intelligence, sustainability, reshoring are all pushing in the direction of more electricity and more electrical material. Switching gears to the profitability topic on slide 32, what does the soft 2024 change to our mid-term vision. The good news is that the answer is basically nothing. Why is that? It comes down to the element of the profitability bridge we had in mind in June. There are blocks which are linked to market evolutions in the yellow box, like volume or inflation, and there are self-help elements which are in the green box. On the first one, 2024 proved soft, and 2025, although it should be better, will still be far from what I would consider a mid-cycle situation. But our vision about the mid-term landing point for the market has not changed fundamentally. It's just that the timing has become a bigger uncertainty. To the opposite, on all factors which are self-help related, we have clearly accelerated in 2024 and reduced the uncertainty. This is true for operational efficiency. on which we are now targeting a 2% to 3% productivity goal mid-term, which is an increase compared to what we have achieved in the past, which was basically 0% in the 2010 to 2020 decade, and then 1% since then. This is also true for the perimeter contribution on the acquisition side and also on the divestment side. We just talked about New Zealand, and what we are saying here is that we plan to continue optimizing our portfolio of underperforming assets mid-term. Finally, on growth margin also, we are accelerating our action plans. For example, pricing algorithm or supplier mapping rationalization and concentration. And also on this particular component of growth margin, we are starting the bridge from a year, 2024, where growth margin was under a little bit of conjunctural pressure, which is typically the case in a low volume situation. So it's very likely that beyond the structural projects that we have on growth margin, we will also benefit from a cyclical recovery of growth margin when the market picks up. So overall, 2024 led us to be maybe slightly more uncertain about the timing of the yellow block, but it also led us to be much more bullish about the potential of each one of the blocks in the green box. And to illustrate that, let me focus on one important acceleration factor, which is technology. On digital, We continue our march forward, and this year, for the first time, we passed the 30% penetration rate. And you know from the Capital Market Day that our profitability is broadly correlated with digital, so this is very good news. As a reminder, the correlation is linked to the direct efficiency associated with digital, but it's also due to the fact that digital penetration is a good overall maturity indicator of our country on many topics, like pricing, assortment, logistics, which are necessary to get to digital. And I will come back later to talk a little bit more about this concept of maturity of the countries. But the really interesting thing when we talk about technology this year is the rise of Gen-AI. You remember that Rexel got interested in data and artificial intelligence very soon, and we have already many use cases already in operation, like churn algorithm, for example. So obviously, we looked at the potential of Gen AI early and with a lot of curiosity. And what we found is that the potential for improving our efficiency, especially the inside sales efficiency, is material. Not a game changer, but a clear step forward. Let me take two examples. Expertise requests and RFQs. Our people spend a lot of time answering simple technical questions, mostly product definition questions. What if? we could help them accelerate the answer through an internal expert chatbot, concentrating the knowledge of our best experts. It would allow us to be much faster, to have better customer service, and to dedicate more expert time to really tricky questions. On RFQs, our team spends a very large amount of time matching very long lists of part references with our own references, sometimes by Excel, sometimes by hand. if we could smartly automate all of that. In both cases, we have developed AI-boosted tools, and those tools are being tested right now with quite interesting results. And overall, we think that we may be able to improve our overall efficiency productivity by up to 10% if we go at it in an organized way, which is what we are doing. And if you remember what I told you about our productivity figures, this is a potential jump of 5 to 10 years in just a few years, so that's a great opportunity. And in a world where workforce is scarce, especially in our sector, gaining time to be able to dedicate it to more value-added tasks can really become a competitive advantage. So yes, we are still very confident we will reach 7%. And let me finish by taking the same question under a different angle, which is the country angle. The graph you are seeing here shows on the y-axis the profitability of our 17 countries, and you know if you listened to us in previous calls that the top countries are almost double-digit in profitability. And on the x-axis, a more qualitative concept which is the maturity of the countries. We have evaluated indeed each one of our countries on several maturity criteria through batteries of questions touching on each important area of B2B distribution. logistics, purchasing, digital, pricing, services, you name it. Not surprisingly, you can see that the most advanced countries are also the most profitable. You can also see that the correlation is not perfect. For example, the US, although being at the beginning of the better category in terms of maturity, is already quite profitable. But the interesting conclusion of this graph is the potential that it highlights. We think we can progress the profitability of the goods and of the better countries by intensifying the best practices sharing with the best countries. And this is what we have started to do in the last three years through specialized working groups and through a management organization by cluster. This standardization effort doesn't require us to invent new ways of doing businesses. It just requires us to apply what we already know. taking the necessary time to adapt it to the local environment, but basically copying it, and you can see that the potential, especially in what I would call the turnaround countries, is quite important. When we do simple maths on this graph, we can easily convince ourselves that the potential right there is big, high double digits in BIPs, or even triple digits in My Best Dreams. It will take some time to unlock without breaking engagement of our people, but it is very feasible And it is another way to give ourselves confidence that our midterm goals are indeed very reasonable. So to conclude our presentation with a few final thoughts before we open it up for discussion, on many counts, 2024 was a stiffer test for Rexa than initially expected, against which the company proved its significantly improved resilience, thanks to a transformation strategy that still has plenty more to give. Despite the North America rebound and signs of improvement in Europe, the economic environment remains uncertain for 2025. We are responding with accelerated actions on costs and other levels to stay on course and be optimally fit for the recovery when it comes. And finally, all the building blocks are in place to achieve our mid-term goals, and the progress achieved so far has only increased our confidence, which is by the way also the reason, as Laurent mentioned, why we maintain the dividend at the same level. And with that, I'd like to thank you for your time and attention, and Laurent and I are ready for questions.

This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touch-tone telephone. To remove yourself from the question queue, please press star and 2. Please pick up the receiver when asking questions. Anyone who has a question, may press star and 1 at this time. The first question is from Martin Weekie from Citi. Please go ahead.

Good evening. Yes, it's Martin from Citi. Just a couple of questions. The first one, you mentioned that you haven't included the tariff impact. Would you just to read between the lines on what you're saying? When we think about what happened back in 2018 and other times of tariff, should we think of this as a net benefit should you get that? So you're not worried about gross margin squeeze, but more the inflationary benefit of tariff should they be added?