Rexel S.A.

Patrick Bérard - CEO Laurent Delabarre - CFO

Andre Kukhnin - Credit Suisse Lucie Carrier - Morgan Stanley Alfred Glaser - Oddo Securities

Good morning, ladies and gentlemen, and welcome to this presentation. I am with Laurent Delabarre, Group CFO.

I will start this presentation with an overview of the key highlights of our performance by geography in Q3 and also in the nine months of this year. Laurent will then detail our financials, and I will make a few concluding remarks, confirming our outlook and commenting on the strength of our value proposition.

Then we will be happy to take all your questions. And let's now start this presentation.

And for that, on slide 3, you will see the key highlights of our performance in the third quarter, which was marked by continued sales growth and an improvement in both gross margin and adjusted EBITA margin. Constant and same-day sales were up again this quarter, rising 5.2% to a little over €3.2 billion.

And I'm glad to say that this is the fourth consecutive quarter of improving sales trends as you can see from the bar chart. Sales also accelerated on a sequential basis in all our geographies, with Europe growing 6.5%; North America, 3.3%; Asia, up 5.1% in Q3.

I will come back later in greater detail on sales by geography shortly. While our gross margin is up 18 bps, our adjusted EBITA stood at about €136 million in the quarter.

We continue the 17 bps improvement in adjusted EBITA margin to 4.2% as you can see. While our adjusted EBITA is up 8.5%, our recurring net income is up 28.8%.

Overall, we are pleased with this performance, which demonstrate that we continue to see the benefits of the strategy that we presented at our Capital Market Day on February 13, focusing on organic sales growth and improving our profitability while investing in our priority areas. On page 4, slide 4.

As you can see, in the nine months, sales stood at slightly below €10 billion, up 2.8% on a constant and same-day basis. Adjusted EBITA margin is up 9 bps at 4.2%.

In absolute terms, our adjusted EBITA grew by plus 5.1%, which is fully in line with our expectations. The performance in the first nine months allows us to confirm that all three 2017 financial targets that we presented at our Capital Market Day, with adjusted EBITDA at the low end of the initial range.

I will return to this in my concluding remarks. Now let's go by geography.

On page 6, take a look at the closer look of our performance by geography, and we can clearly see that we posted accelerating growth in all of them, both in Q3 as well as in the nine months. This confirms that our organic growth engine is functioning on all cylinders.

Our 5.2% growth in Q3 and 2.8% over nine months is the result of a combination of positive factors. One is volume growth and price contribution, including better cable prices, thanks to the copper effect.

This highlights both the more favorable macro environment in which we are operating and the impact of the strategic actions we are implementing in two countries, notably in the U.S. in terms of logistics organization and improvement as well as the branch network expansion.

Now let's look at Europe first. Europe first, which represents 54% of our total revenue, our sales grew 6.5% on a constant and same-day basis and accelerating sequentially in most of our major markets, supported by a broadly favorable environment and some base effect.

Sales in all of our European markets were up except in the U.K. where they dropped 2.4% in an environment that remains challenging.

Our growth in the region was driven by France where our sales rose to 9.1%, driven by all three end markets. Our products were benefiting from the good performance in HVAC and cable management, both growing by strong double digits in this country.

In Germany, sales grew by 5.5% driven by very strong sales in industry as well as cable sales. As you know, we have a new management team in place there since the beginning of the year, working on the turnaround of our business in this country.

In the Nordics, Sweden remains the strong growth engine with more than 15% growth. We gained market share in Sweden and with all end markets contributing to the growth acceleration.

When it comes to North America, North America which represent 6% of group sales. In North America, we continue to see improving sales trend in the region in Q3.

Sales up 3.3% on a constant and same-day basis. We were helped in the quarter by a favorable base effect, which become a little bit more challenging in Q4.

In U.S., our sales were up a strong 4.3% despite a 1.2% negative impact from hurricanes Irma and Harvey. But very fortunately, our teams in installation were naturally preserved from the effect of the hurricanes.

This growth in the U.S. was mainly driven by our proximity business model, which is in the high single-digit growth at Platt and Rexel C&I, we demonstrate our investment in the segment are already paying off.

On the project side, sales growth is back in positive territory, notably thanks to the oil and gas business which grew by 30%. The business remains affected by the nonrenewal of a wind contract with a large contractor and by disruption in the supply chain of one of our large suppliers.

Canada saw slight drop incurred of 0.4% in Q3 mainly due to a more challenging base effect. Sales were impacted by the absence of a large wind contract that boosted Q2 last -- Q2 '17.

But oil and gas sales were in positive territory in the quarter mainly due to our maintenance activity in the midstream market. USA.

focus now. Let me make a zoom on the USA network expansion strategy that is a key part of our U.S.

plan that we presented at the Capital Market Day already. In the first nine months, we opened 11 branches and 15 Platt-like counters in Gexpro branches, which contributed around 0.7% to Q3 sales growth.

On an annualized base, we expect to open 17 branches of which four Platt branches in California and 20 Platt-like counters in Gexpro branches with a combined annualized sales contribution around $50 million or 1.25% of additional sales. Concerning profitability, we confirm our payback objective for branch opening of breakeven within 15 to 18 months and in line with average regional profitability in 24 to 30 months.

As far as the Platt-like counters are concerned, the payback profile is obviously much quicker. And now to the third region, Asia Pac, Asia Pacific.

Asia Pacific counts for 10% of our total sales. The region posted another quarter of growth, with sales up 5.1% on a constant and same-day basis.

We continue to experience contrasting sales trends in the region and even I should say within subregions. In Asia, China posted solid growth with the sales up 9.6% on a constant and same-day basis, reflecting stronger sales of automation products but also favorable comps, which will become more challenging in Q4.

In Southeast Asia, on the other hand, sales fell sharply, 19% on a constant and same-day basis, largely due to the deep slowdown in Oil & Gas. And the Pacific region posted solid 6.8% growth, with positive trend in Australia offsetting some negative evolution in New Zealand.

Now for the financial review, I would hand over to Laurent Delabarre, who will give you more detail at our Q3 and 9 months performance.

Thank you, Patrick, and hello, everybody. I will start on Slide 12 by commenting our sales growth evolution in Q3.

As you see on the chart, sales in the quarter stood at €3.2 billion. The 1.4% growth on a reported basis is a result of 5.2% same-day growth, minus 3 negative effects: from calendar for minus 1.1%; foreign exchange for minus 2.4%, mainly from the U.S.

and British pound versus euro; and scope for minus 0.1%. Please note that you have the bridge by geography on page 6.

On the same-day basis and at group level, growth accelerated to 5.2% in Q3 compared to 2.8% in Q2 2017. And this growth reflects the solid underlying performance, even excluding the contribution from copper-based cable prices.

Note that the base effect was in just this quarter with 0.3 in Q3 '16 at minus 3.7%. Lastly, we comment on our expectation in terms of foreign exchange impact on the back of the recent evolution.

Assuming that stock price remains unchanged until the end of the year, we anticipate the full year currency effect to be a negative circa 1.3% on sales growth in '17 and negative circa 1.7% in 2018. On Slide 13, we present on our profitability in Q3 by geography.

Overall, adjusted EBITA of about €136 million in Q3, up 8.5%. Our adjusted EBITA margin at group level rose by 17 basis points to 4.2% of sales mainly driven by Europe and Asia Pacific, which offset the deceleration in North America.

In Europe, gross margin stood at 26.2% of sales, down 16 bps year-on-year mainly due to the unfavorable cable margin contribution for minus 27 bps and the negative impact from segment mix especially in Norway with an increasing level of [indiscernible] with zero margins. These effects were partly offset by the benefits stemming from our supplier concentration across Europe.

We've also benefited from a better gross margin in the UK despite cost inflation, thanks to our move to two branches five by now previously. In North America, gross margin stood at 22.8% of sales.

This represents a 76 bps improvement year-on-year coming from both the U.S. and Canada.

In the U.S., we benefited from stronger margins in our proximity business as well as from supplier concentration and pricing strategy. While in Canada, we had a positive mix effect with lower direct sales which carried lower margin.

This improvement was more than offset by OpEx in U.S., which increased by USD $50 million compared to Q3 2016 reflecting the full impact of investments made in future growth including branch openings, counter resets, commercial actions and logistic initiatives. In Asia Pac, gross margin stood at 17.7% of sales.

This represented a deterioration of 18 bps year-on-year, impacted by the poor performance in Southeast Asia. However, adjusted EBITA margin improved by 24 bps mainly thanks to strict credit management.

At corporate holding, OpEx amounted to €5.4 million compared to €7.6 million a year ago, thanks to strict control on cost. And we confirm as we said in our Q2 call, the normative level of spending at corporate level will remain unchanged at around 30 million per annum.

Over nine months, our adjusted EBITA stood at €420.8 million, up 5.1%, which is in line with our adjusted full year target of [indiscernible] growth. Let's now move to Slide 14 with our P&L statement for the first nine months.

Let's start from our reported EBITA of €431.8 million, up 11.9% year-on-year, which benefited from the positive copper contribution. Other income and expense amounted to €56.4 million in nine months versus €44.9 million in the same period last year.

While goodwill impairment and other one-off expense were unchanged in the quarter, restructuring costs stood at €20.5 million, down from 32.4 million one year ago. Please note that we anticipate performance per analysis in our goodwill in Q4 and we'll come back to you on our full year presentation.

Net financial expense restated for one-off charges related to refinancing operations in both years decreased by €12.5 million largely reflecting lower average debt year-on-year and lower interest rates. The average effective interest rate on gross debt decreased by 45 basis points year-on-year in nine months 2017 to 3.2% versus 3.6% in nine months 2016.

The rise in income tax mainly reflected the rise in profit before tax and non-tax debit reverse charges from goodwill impairment and asset disposal recorded in H1 since '17. The effective tax rate stood at 39.5% above the normalized tax rate of about 36%.

As a result, net income stood at €163.6 million versus €133.4 million in nine months 2016, an increase of 22.6%. Recurring net income is up 11% to €208.2 million.

Slide 15 presents our free cash flow before interest and tax for nine months and the bridge of our net debt, which as you know currently marked by true seasonality. Free cash flow before interest and tax in the nine months was an inflow of €19.6 million compared to an inflow of €24.4 million in nine months 2016, mainly impacted by the trade working capital evolution which stands at 14.3% of sales in 2017 compared to 13.8% in nine months 2016.

This increase reflects the rise in inventories entering the US, entire inventories offer support for a deeper or larger offer and the opening of branches/counters as presented at the Capital Markets Day. Net CapEx stood at €77.6 million with an increase in the share of computer digitalization.

On a full year basis, we target CapEx dedicated to IT and digital to increase by close to 28% in 2017 compared to 2016 and to represent around 57% of 2017 total CapEx. We confirm our immediate term CapEx range target of €100 million to €150 million as well as our level of circa €120 million for the full year 2017.

Despite the negative evaluation of free cash flow after interest and tax, our net debt, a little over €2.3 billion improved by €168 million notably helped by a favorable currency effect mainly coming from US dollar. The pie chart on the bottom right shows the breakdown of our gross debt.

As you can see, about half is bonds and one-thirds is securitization and the remainder is commercial paper and others. On the next page, let's have the total look of the breakdown in maturities of our debt.

The chart shows that we have no short-term maturities on our bonds with no significant repayment before June 2022 and an average maturity of about 4.2 years. Our active financing management is reflected in the average effective interest rate on gross debt, down 45 basis points year-on-year to 3.2% as we already mentioned.

We remain attentive to market opportunities to further enhance our financial structure. We also maintain strong financial flexibility with liquidity of around €1.1 billion at end September securitization of undrawn senior credit facilities.

Let me now hand back to Patrick Berard for his concluding remarks.

Thank you, Laurent, for all these explanations. I will conclude this presentation with our outlook.

And I will give you a fewer on the strengths of our value proposition. We are clearly seeing the benefits of our first strategic actions implemented in Europe in terms of both logistics organization as well as branch network expansion.

Taking into consideration the performance of the first nine months and expectation for the last quarter, we confirm our 2017 full year financial targets with adjusted EBIDTA increase at the low end of the February guidance. As a reminder, we said in February that Rexel targeted: a, resuming organic growth with sales up in the low-single digits on a constant and same-day basis after two years of decline; B, a mid- to high single digit increase in adjusted EBITA; C, an indebtedness ratio, net debt to EBITDA as calculated under the senior credit agreement of below 3x at December 31, 2017.

Looking ahead, we remain focused on our three priorities: our investment in the U.S.; our investment in IT and digitalization; turnaround in Germany and execution of the divestment program as we said it at the time. Now I would like to conclude this presentation with Page 19 by focusing on the topic that comes out often during all the meetings with investors.

It has become almost cliché, if I may say so, to say that the business environment is rapidly changing with the rise of digital. Now we get a deep look into it, and our experience shows that Rexel multichannel approach contains differentiating factors that underscore its relevance versus pure web players even if we do not underestimate their capabilities and the fact that they will be part of our future environment.

On Slide 19, we summarize five key elements of Rexel differentiating value proposition. First, with increasing demand for connected solutions and home automation, the expertise and customer knowledge of the sales force to offer the right solution and advice becomes a competitive advantage.

As an illustration, our newly launched Energeasy Connect solution helps our clients with a fully automated solution connecting product functionalities from different protocols and different vendors. Secondly, we have a differentiating offer.

Our long-standing relationship with suppliers and the intimate knowledge we have gained makes us their partner in the value chain, notably to put their innovation in the market. We also have software solutions like Al-Hobayb but also multiple configurator, which helps electricians in designing their installation and making sure they have a complete list of our portfolio of product.

Thirdly, we can capitalize on our long-standing client relationship to offer customized pricing based on segmentation and price value sensitivity analytics, helping us. Fourth, our dense network of DCs and branches have turned our logistics into a proximity innovative business.

Our daily order job [indiscernible] for contractors, project management, et cetera, which has been reinforced with the ability to supply our customers 24/7 through lockers sometimes online branches depending where it is. And last but not least, our multichannel approach is critical as you can see on the next slide.

What do we mean by that? Our customer relationship knowledge and evolution is done at the sales rep level, every single 1, every customer has a sales rep attached to his name.

Quotations are worked out at branch or center levels. Thousands are done every single hour.

Orders are placed at counter, on telephone center, or through the web/EDI depending on the tool. Product searches and availability are immediate on the web EDI at the counter.

Competencies and solutions are built at each interface through software capability and market specialist and market observation knowledge. Therefore, through this multichannel approach, Rexel has become unique partner for the electrical supply industry with 2 million customer contacts every day, even in a rapidly changing environment, even with a new competition coming.

This is what makes Rexel confident in the strength of its value proposition for the future And I would like to thank you for this attention. Laurent and myself are now ready to answer your questions.

It's Andre from Crédit Suisse. Can I just start with the U.S., please, and on the kind of end market outlook there?

How you see it in the near term with -- you've quantified the hurricane's impact. Do you have any idea on how much sort of the rebuild demand we can expect?

And then more broadly, the some of the lead indicators have now turned negative on non-res. And obviously, the res recovery's quite mature, so just would like to hear what you think about that.

On the hurricane dimension, let me tell you that first of all, lucky enough, and I apologize for the people who couldn't say the same thing, all our assets are safe, and we are operationally ready to go for any, let's say, favorable side effect. Even the assortment that we modify, they're ready to help, ready to be a part of let's say what comes after the city [indiscernible].

On the other hand, around Houston, in the region, 120,000 houses must be partially or completely rebuilt. And so far, more of the industry and the urgency has been done and we cannot assess how much of this will be effectively rebuild or not.

We know one thing from Katrina at that time that nothing below six months give us a good vision what the side effect will be, positive side effect would be. For the time being, we know how much would be incurred because we have to start -- we were out and everybody was out of operation and we know that it is 1.2%, as I said before, difficult to judge.

But in any case, whether the two hurricanes, Florida and Houston regions or same story for the fires in the North West, all our assets are safe and we are ready to be totally operational for the rebound effect, okay? The nonresidential outlook, in full colors, I do not see in our numbers and in everything we sell every day, negative trend impacting us now.

Our U.S. non-residential business is at 3%, which is totally in line with the trend in Q1, which was plus 2.9%.

And Q2 was plus 1.9% and we see positive trend in the region where we are active in. Now that does not mean it could be it could be all of the U.S.

like this but where we're active in, I do not think. In addition our U.S.

story is mostly specific at our future growth and mostly dependent on the logistics organization, branch expansion strategy. And it has also to do with an improving supply chain and efficiency in the capability of GEIS, which has been to sold to ABB to improve their offering to us.

And to me, these are the two pillars by which we will have a positive trends in the future and nothing of what some indicators are telling us, which is slightly slow down will do a difference.

And my second question is on your disposals program. We've kind of nearing a year since the announcement.

Could you update us on what has been done there? And what we can expect in next six, 12 months?

Yes, thank you for your question. As we said so far the group you may remember what we said in the February 13 Capital Markets Day a global reduction circa €800 million, a positive impact on the EBITA of the group compacted 2016 of circa 25 basis points and a slight improvement in [indiscernible].

So these figures, we cannot comment more but the process are ongoing and we are still on track to finish that program by the end of 2018.

And it will be fair to say that you have moved closer to concluding some of these disposals in last three, four months?

Look every process has its own speed, but there are also some options that could make it longer or shorter. I would not commit on anything at that stage.

This is actually Lucie Carrier from Morgan Stanley. Just I would want to start with the U.S.

if I may. And I have to say we are seeing all of the distributors in the U.S.

posting negative pricing, negative gross margin and commenting on the struggle you're facing. When we look at your data, we've seen gross margin improving now I believe for four, five quarters in a row in the US seems to have a pricing momentum share gain.

Can you just maybe explain, Patrick, how you are doing this even considering that you are still in investment phase and how you have differentiated so strongly from other industrial distributors that you are able to post that type of performance? That's question number one.

Thank you, Lucie. It's -- we are not magicians.

And but we know where we start from and we know what some of our banners have been able to do. There are certain good practices that we tried to extend and everybody knows that Platt in the residential and proximity business is having superior margins than the rest.

And we try to apply this to the residential and proximity business, which is right now in the expansion in Rexel C&I as an example or at the Gexpro counter refresh that we are doing. It's one element.

The second thing is that on head credit for our previous EBITA probably we started from a lower than -- some of my other colleague, from a lower end, meaning when some of our comparables are being attacked by much lower pricing strategy and when I see the net price that customized pricing in our computer system for every single customer, the same will not apply to us because we are not of the high hand as others have been doing in the past. Thirdly, cable sales have an impact.

And I have difficulty to judge what their mix is if you compare it to others. But maybe there is a little bit of an effect here and which is more favorable to us.

But it's more difficult to judge because I don't have all the evidence between lighting, cable and the rest. But in any case, we work our mix also in order to try to see where the margin can come from.

Therefore, yes, we are better improving than others and we will continue to do our best to continue that trend.

Thank you. Just maybe two small follow-up questions on US before I go to Europe.

One of them is, you are mentioning some disruption at a large supplier and you also mentioned some delay or some weakness in the project business. So I am guessing here we’re talking about Gexpro.

With -- how long do you think this disruption is going to continue or is it in the favor of stabilizing?

First of all, this year we have rebuilt our let’s say pipeline of projects within the Gexpro. We said that we could and we’re determining on our pipeline both in term of quality and volume for the future.

Second, there is one issue with the supplied by GIS which is the processor being sold that is not very stable and very active and we suffer from mixing logistic on their part. And therefore, we expect that ADB once have been done the closing, can read it through these pricings again, both in term of assortment and in term of manufacturing capabilities and logistic capabilities so that we will at least have competitive with this supply as the rest of the U.S.

market which has not been the case in the last 12 months, so let's put clearly what it is. And then we have a high trust in this change probably the worst is beyond.

That's a one we would be the closing and not part of the focus, and it would be announced than only than we will start the work and now only then where we would efficiency as always.

Thanks and just maybe a last question on [frocks] which is a off course a very important market for you. I mean we've seen a very strong acceleration in the quarter the data has been quite supportive now for about 18 months.

From your perspectives do you think that we are kind of on track for further momentum in France to continue into the fourth quarter and into next year based on what's you seen off course year-to-date and kind of you are getting contract with the customers?

The good news is France is that we start from the lower level of activity and sharecount segments distributor which is un-short. And so far we see the one which is pushing very hardly.

Later catch back effect because it has been slow down for long and the pipeline from what I know from customers that I see is pretty good so far it's not in the high end of the market it's what we call vertical and housing, which is higher wise building for housing. We still which is not the highest margin portion of the market and we expect let's say the what we call always until housing following the vertical one.

It’s always like this in these market. The common stock segment is about flat that would be our project on the horizon edge and you think that in the foster region, region will until the other pageants will be modified heavily.

I would bet that at least the portion of the France will experience couple of years of improvements. In any case given our footprint, given our strengths, given our presence, given our teams and everything we should get as much as we can and continue to head our modern per share of this upswings.

Thank you very much.

Firstly, on the U.S. again with your significant investments so OpEx rising by 90 beps and when do you think that those margins drags for investments will peak and so when can U.S.

margin start to expand?

As I said total we are decline are returning branches and this branches are the [Indiscernible] cleared as I mean we cleared it which obviously makes you understand why you don’t see this today as an operated leverage favorable. Because it takes a period of time and we are within this time arise on yet.

And improve time of given the situation we are in the U.S. where I keep going growing by the magnitude of what we've said in the past when we say 17 branches to be made worldwide '17 branches.

In region where they will get the [Indiscernible]. The same the only one which I could accelerate which is obviously because the payback is shorter this is the counter refresh because it look like that, so the first way that we exactly get in time what we expected from.

Therefore as this close 17 branches are coming which four telephone now, 20 Platt-like counters in Gexpro forecasted that I would not commit on faster than 15, 18 months breakeven for the branch, somewhat fast 10 to 12 months for counter refresh as the beginning of the operating leverage improvement within [Io].

Great, that was very helpful and on the U.S. and on the pricing gross and that gross margin, you clearly referencing loss of mix shift as you change your store basin and the next for.

Could you also comment on the like for like gross margin within your different banners in the U.S. and may be talk about how the customize pricing you bring in how early days is that or are you already seeing benefits from differentiated pricing across the U.S..

We’re seeing, we have different means to describe, [guide] opportunity business growing the first half then the rest, but [origin] side approximately the next we see some improvement in the gross margin, we know that know we have a flat, selling CNI business, so you bring all the knowledge and know how the margin management and we see the cross result of that on the [GNI].

Okay and then just last one quickly, in UK other in so the price increases and when should they come through.

Could you repeat it again, so I need to.

So in the UK are there any further price increase stand and when will they come through.

Oh my dear, what a question, it really depend on the town. Because 80% of the electrical supply to the market is produced outside of the UK, each time the current, split of current step, we have to put a price increase, and because suppliers do.

And because and on top of that above, our suppliers today around the world, the extent raw material price increases, meaning I continue to expect certain prices increase that have to be pack next year. And obviously there is market resistance to it, obviously it have to be really a [knowledge] for the UK to absorb all of it and at the same it in a market, which has less project, less volume and for the project because no body knows some of the projects, how it will be financed and at the same time no body want to commit on any firm prices, that project that relate too long, because in the mean time further price increases should have been pass through.

Therefore on the project, there is a lot of reducing volume and nobody wants to commit any more and most of it is more on the opportunity that we pledge many main comments, saying for which we have to put further price increases, yes there are more to come probably. And it came it down [this] is always 100% tax food, that kept in it because there are certain margin increase temporary but if we continue to expand.

I would say globally speaking its clearly when it comes to Rexel, we're lower than it order, in the Great London area, which talk for the most fund the project delay on one hand and on the other hand we have done a nice restructuring of all our banners, so that the -- we have the impact of what's happening there is quite limited, thanks to the model chain the banner consolidation, the logistic consolidation, the OpEx reduction we have done and we have inefficient model which can make us having different results throughout the difficult plant.

Just I wanted to ask you could you give us a bit more detailed overview on pricing by region excluding the cable impact. And second could you update us on the inventory in working capital outlook for the end of the year as you planned to achieve?

I think on the pricing side excluding cable we are slightly below 1% in Q3 in Europe excluding cable, in North America in effect to each is also the same for pricing below 1%. And on debit side we have this improvement of cable price [indiscernible] price that is actually slightly above this 1%.

With respect to the inventory, we have more inventory compared to last year, mainly due to the branch opening and we performed in the U.S. plus the strategy Markus can you and more customers while we put a bit more inventory on all of our branches while necessary.

So all together we have two days more again of September, we see the revenue improvement compared to the situation again of June. But we will manage this and what we need to manage in different [Asia] of the year on each we have confirmed this guidance.

So you planned to reduce these two additional days of inventories that you have now at the end of September by the end of December?

We slightly reduced the deadline of that we will have more inventory than a year ago.

Just two questions if I may ask. First early dedicated to the nine months sales, could you give us the numbers you gave us i.e plus 2.8% same day figure, what is the impact of nine months of the copper in that figure please.

Second question if I may regarding Germany could you elaborate a little bit more on what's going on there, you mentioned it's in the Rome, if I'm correct when you [indiscernible] Europe you look at Germanys repositioning, some competitors I don’t remember that you will give me memory back if I may say. In Germany I think that the market as compared [indiscernible], could you just come back on the what's going on in that country more specifically, on what's your positioning there?

Last question with regards to US. Could you just give us also a view on the trend into the industrial business into the US, a specific question on that?

And if I may add just one, what’s your view about M&A currently, are you preparing some opportunities there bearing in mind some may be restricted in some countries from some distributors, what is your view with regard to this? Thanks a lot.

May be I will start with the top-line on the corporate tax you’re seeing the effects of 1.5 impact in Q3 out of 5.3 that goes on a year-to-date basis, the impact of corporate 1.2%. On Germany, we suffered during too long period of time, not having had the top service capabilities out let’s say fixed -- which being fixed to the point that we can say we are equally as good as needed competition -- as needed to face competition.

At the same time, we have changed the management which is a person from the service industry and exactly that has to be done to serve properly to German customers. And we can need this tech to fix let’s say created difficulty in gaining customer or customer retention.

Therefore we are enabled in the industry outside I think the proper offer and the proper delivery and wide customer base from which to expand to both now [indiscernible] and growth in the industry. This being said, even it’s still more than 50% we are much stronger and we are now gearing for the future on developing more than what we are in the residential and small commercial business because we will continue and we will focus even more on the industrial side.

Industry require knowledge, people, know how, connected solutions which we decided is our main avenue for growth in Germany and which we are let’s say pushing very hard with the management. And therefore, I feel confident where we are going to be in Germany.

Your next question, which is the industrial in the US. We had too big September.

Could you refer to exactly what you are expecting me to come on numbers?

Yes, just coming back to the US industry segment, just -- could -- if I remember when you were affected by oil and gas pressure on difficulties into the US, I think that now these [indiscernible] may I say is more or less although is not rating further. Than could you give us some color on how is the business….

[Calls end abruptly]