Thales S.A.

Yes. Hello.

Good morning. Welcome, and thank you for joining us for the presentation of Thales' 2021 Full Year Results.

I'm Bertrand Delcaire, the Head of Investor Relations at Thales. With me today are Patrice Caine, our Chairman and CEO; Pascal Bouchiat, CFO.

As usual, the presentation will be in English, and followed by a Q&A session. It is webcast live on our website at thalesgroup.com, where the slides, press release and consolidated financial statements are also available for download.

A replay of the call will be available in a few hours. With that, I would like to turn over the call to Patrice Caine.

Good morning, everyone. So let's start with Slide 2, as usual, with the highlights of 2021.

So looking first at the commercial dynamics. We had a pretty exceptional Q4 with more than €9 billion of new orders, which led us to achieve a new record order intake over the full year.

So as expected, both sales and EBIT recovered strongly following the COVID-19-induced challenges we faced in 2020. Organic sales growth was above 5%, with all segments contributing, and EBIT margin returned slightly above 10%.

Last but not least, on the results' side. And of course, Pascal will explain this in details, thanks to the mobilization of the teams we generated an unprecedented level of free operating cash flow, significantly above €2 billion, which is leading us to materially upgrade our medium-term cash flow target.

From a strategic point of view, let me highlight 2 major moves, on which I will come back in the second part of the presentation. First, we announced the disposal of our Transport business to Hitachi, a key move that will allow us to simplify and refocus the group on key businesses.

And second, as part of our dedicated ESG event in October, we announced our decision to accelerate our sustainability strategy, and you will see the concrete impact of this move in today's presentation. So let's move now to Slide 3.

Looking at our financial performance in a few charts. First, as a reminder, following the announcement of the Transport disposal, we are applying the IFRS 5 standard, which means that Transport is now treated as discontinued operations at the bottom of the P&L.

So the 3 charts on the top of this slide exclude transport while the 3 charts at the bottom, naturally, continue to include it until the transaction closes. Also, since both scope and currency impact are negligible, we are only showing reported changes on this slide.

Well, at €19.9 billion, order intake was up by 18%. The book-to-bill ratio reached 1.23, very significantly above the targets we had set for the year.

Sales grew by slightly more than 5%, 5.3% to be precise. EBIT and EBIT margin recovered strongly at more than €1.6 billion and 10.2%, up more than 2 points.

At €1.361 billion, adjusted net income grew even faster, benefiting from the robust performance of Transport. Although the Aerospace business remains strongly impacted by the health crisis.

This adjusted net income was actually only 3% below the previous historical peak €1.405 billion, which we achieved in 2019. Free operating cash flow reached an unprecedented level, €2.5 billion, almost 2.5x higher than in 2020.

Last chart on the slide, the dividend. This new year of strong financial performance is leading our Board to propose to the next AGM a 45% increase in the dividend at €2.56 per share.

So now turning to Slide 4, and looking at our nonfinancial performance. I will come back later on our sustainability priorities going forward.

But I wanted to first report on our progress in 2021. You remember how our sustainability action plan is built around 4 pillars, for which we have set several quantitative targets that drive part of the remuneration of a large share of staff.

First pillar, our strategy for a low-carbon future. With 36% reduction in operational CO2 emissions compared to 2018, our 2021 performance was above our 2023 target.

This was achieved, thanks to the detailed action plan we have put in place with Jean-Loic Galle presented at the October 2021 Investor Day. Our emissions also benefited from the constraints COVID-19 imposed on business travel, which will, of course, represent a headwind in 2022 and 2023 as we will progressively resume business travel.

Turning to the deployment of eco-design. We made significant progress last year, 82% of new developments, integrated eco-design versus 45% in 2020.

Second pillar, diversity and inclusion. Well, we have set 2 quantitative targets related to the gender class ceiling.

On both, we progressed in line with the 2023 target, at 71%, the percentage of management committees with more than 3 women gained 3 points compared to 2020, meaning that we are well on track to achieve 75% next year. The percentage of women in senior management gained 90 basis points between 2020 and 2021.

Even though we are talking of a quite broad-based, slightly more than 10,000 people. We have a good confidence in our ability to achieve the 20% target we have set on this KPI by 2023.

Turning now to ethics and compliance, the target on which we mobilized the teams in 2021 was anticorruption training of all exposed employees. So with more than 6,700 employees trained in 2021, we achieved this target as well.

Finally, on health and safety at work. The frequency of accidents at work was 35% lower than in 2018, which is ahead of our 2023 target.

But here as well, on top of our action plans, the 2021 performance was boosted by the high level of work from home. So it is not yet time to upgrade the 2023 ambition.

Altogether, as you understand from this chart, I'm glad to see that in 2021, we made strong progress on all 4 pillars of our sustainability strategy. So after this rapid introduction, I now hand over to Pascal, who will comment our financial results in greater details.

Thank you, Patrice, and good morning to everyone. I'm now on Slide 5.

So starting with our order intake dynamics. As Patrice mentioned, we achieved again a very strong order intake in 2021 and with €19.909 billion, up 18% organically, and a strong book-to-bill of 1.23, and even 1.28 leading DIS whose book-to-bill is structurally equal to 1.

With 21 large orders over €100 million in 2021 for a total of €6.5 billion, we achieved an even better performance in terms of large orders than in 2020. In particular, we booked 2 jumbo contracts with a value over €500 million.

First, the VASSCO program to provide through-life support for the principal components for the National Air Command and Control System score in France, representing €1.5 billion order for service estimated over 10 years. And secondly, the new Rafale order from Egypt for 30 aircraft.

Q4 was a really strong quarter with 12 large orders, which included 4 contracts related to Space, 1 exploration contract with the European Space Agency related to the developments of the I-HAB Lunar module and swift telecommunication satellites, 8 large contracts in Defence & Security. On top of the 2 jumbo contract I just mentioned before, we booked 3 contracts with the French Armed Forces.

One with the U.K. MoD, and 2 with undisclosed distance customers.

Orders with a unit value of less than €100 million were up 13% compared to 2020, with a clear increase in distant orders between €50 million and €100 million. The dynamics was strong in both mature markets with an organic increase of 14%.

Thanks to 13 large orders in Defence & Security in 6 countries, and an even stronger organic growth of 38% in emerging countries driven by Defence & Security and space. And finally, it's also important to highlight the good performance of small orders below €10 million, up by 4%, and driven by Aerospace at plus 6%.

So overall, another very solid performance in 2021 in regards to order intake. So moving now to Slide 6.

Looking at sales. The currency effect was slightly positive during Q4 at plus 1.2% of sales, and almost neutral of the year at 0.1% of sales.

There was no significant scope effect worth mentioning in 2021. Turning to organic growth.

The breakdown shows a rebound per quarter versus a strongly disrupted 2020. Of course, a strong recovery in Q2 after the 20% decline we faced in Q2 2020, a slowdown in Q3 versus a catch-up we achieved in Q3 2020 and a further rebound in Q4 2021 versus Q4 2020, which was already strong.

For the full year, sales achieved a good recovery at plus 5.3% with various dynamics. First, our Aerospace sales were back at a positive 6.1% growth driven by a strong double-digit growth in our Space business, and despite a slightly negative growth at the Avionics business due to the ongoing impact on demand in civil aeronautics.

Same scenario occurred with this, DIS, sales back at a positive 2% organic growth overall and driven by a double-digit increase in cybersecurity but still affected by the health crisis in biometrics. And then Defence & Security sales were back at a solid growth of 5.7% organic after a small decline in 2020, minus 1.8%.

Moving on now to Slide 7, looking at the adjusted P&L from sales to EBIT. As mentioned already, EBIT was up by 32% year-on-year, with a margin progressing from 8.1% in 2020 to 10.2% in 2021.

We'll have a look at the drivers of this performance in a minute, but looking at the key items of the P&L, let me point out that, first, we can see a positive impact on gross margin by 110 basis points, up from 26.1% to 27.2%, with all our businesses outside civil, aero and biometrics back at a fully normalized productivity. We can also see that our indirect costs have increased less than our sales by 80 basis points, plus 4.5% versus 5.3%, and despite a significant increase by 8.9% of our R&D and expenses, which show how disciplined we have been with marketing and sales and G&A expenses.

As expected, our restructuring costs were down from €160 million to €91 million, with most of the structural cost actions related to the health crisis now fully achieved. Finally, Naval Group, delivered a contribution to our EBIT back to a normalized level of €69 million, slightly above the level it achieved back €65 million.

Moving on now to Slide 8. Looking as usual into greater details, are the drivers of the change in our EBIT between 2020 and 2021.

Starting with 2020. Our EBIT amounted to €1.248 billion.

The mechanical impact, scope, currency and pension were very limited this year, adding €6 million. At €385 million improvement in gross margin reflects the sales we've had as well as the impacts of the cost adaptations program in our Avionics business.

In parallel, you can see that we decided to invest part of this operational improvement into R&D, organically up €84 million in order to support future growth across our different businesses. Finally, both restructuring and equity affiliates contributed to the recovery of EBIT, as you can see on the right of the chart.

Now looking briefly at each segment one by one. I'm now on Slide 9, starting with Aerospace.

Orders were strongly up at 48% organically, thanks to the ongoing momentum in the Space business. As mentioned earlier, 4 large contracts were booked during Q4.

2 telco satellites with SES and 1 with Telkom Indonesia, plus a new exploration contract related to the Lunar module with the European Space Agency. We also noted a pickup by 33% of Avionics orders during Q4.

Sales were up by 6.1% organically driven by the strong double-digit rebound in Space over the full year. As expected, the overall Avionics business was slightly down at around minus 3% versus the full year 2020, impacted during only 3 quarters by the health crisis.

However, it's important to note the beginning of rebounds in Flight Avionics aftermarket sales, up by 13% in 2021, and also the positive trend in Q4 with growth between mid-single digits and up to double digits across the various subsegments. EBIT was back at a positive €202 million after full year 2020, deeply affected by the health crisis.

This recovery is, of course, driven by the improvement in sales, and by the effects of both the global adaptations plan and the civil aero structural cost adaptations plan. Let me remind you, as I said during the H1 presentation that it also includes a negative one-off of €10 million related to the higher income tax rate in the U.K., which affects one of our JV based there AirTanker.

Now moving to Slide 10, Defence & Security. Order intake amounted to €11.2 billion, up by 12% organically, setting for the third year in a row, a new record.

This segment recorded 13 orders above €100 million with 8 new ones in Q4, including the 2 jumbo contracts I mentioned earlier. Let me point out here that this performance naturally drives a new record high backlog at €26.1 billion, which represents 3 years of sales.

It materially extends our visibility on revenue. But since several of these contracts cover several years, it will not provide a strong boost to sales growth in the near term.

Sales amounted to €8.6 billion up by 5.7% organically versus 2020, and also up by 3.5% versus 2019. Many business units contributed to this solid recovery, including underwater systems, cybersecurity solution, and networks and infrastructure systems.

EBIT margin remained strong, once again, in the upper range of the medium-term guidance at 12.9%, and this despite our decision to further increase our R&D efforts by 50 basis points to support future goals. Last segment on Slide 11, with DIS, Digital Identity and Security.

As usual, I don't comment on orders as they are structurally aligned with sales. Sales amounted to €3 billion, up 2% organically.

The growth resulted from different moving parts. The ongoing impact of the crisis on biometrics, down around 6% in 2021, but with some encouraging signs of recovery in Q4 with a mid-single-digit growth.

Also positive growth by 2.5% in smart cards, in spite of the supply chain tension on chips which the team managed very well. These 2 factors partly offsetting the double-digit growth of our cybersecurity activities.

At €358 million, EBIT was up by 6.2% organically, with an EBIT margin progressing further from 10.8% to 11.9% despite the ongoing disruptions I've just mentioned in biometrics. The segment benefited from additional cost synergies slightly ahead of our plan.

The ongoing tight control on costs and the leverage of the cyber sales goal. This new achievement in terms of EBIT confirms that the segment is fully on track to reach its medium-term target of an EBIT margin between 12.5% and 13.5%, and Patrice will come back on that later.

Turning now to Slide 12, looking at items below the EBIT. First, taxes.

As you can see, the effective tax rate decreased from 22% in 2020 to 17.3% in 2021. It mostly resulted from the tax rate decrease in France in 2021, moving down from 32% to 28.4%.

But it also resulted from 2 one-off items I already mentioned during the H1 results' presentations related to the tax law changes in the U.K. and Italy.

Excluding this one-off, our tax rate would have been 20.6% in 2021, and we expect the tax rate to remain in this range, 20% or 21% in 2022. Second, adjusted net income from discontinued operations.

This is, of course, the contribution of Transport, which doubled compared to 2020. Adjusting for items linked to the IFRS 5 classification, the EBIT margin of these segments would have reached 7.5%, fully in line with the targets we have set.

Finally, minorities improved strongly, and this is mostly driven by the recovery of Thales Alenia Space profitability, Thales Alenia Space being our joint ventures with Leonardo. All in all, this draws an adjusted net income group share of €1.361 billion and adjusted EPS of €6.39, only 3% below the previous peak that we achieved in 2019.

Moving now to Slide #13. Let's have a look at the conversions of EBIT into free operating cash flow.

The usual recurring items were up versus 2020. Financial interest increasing from €49 million to €58 million in 2021.

Income tax paid, €145 million in 2021 versus €97 million in 2020. And equity affiliates, which corresponds to the gap between our share in the net income and the actual dividends we received from them representing a negative €87 million.

We remain very stringent with CapEx projects, resulting in a global positive balance of €48 million between CapEx and D&A. As usual, the big swing factor was a change in working capital requirements, which represented €776 million tailwind in 2021, boosted by several factors that I will discuss in greater details on the next slide.

Other cash items, not including the EBIT, such as cash restructuring, for [Indiscernible] or IFRS 16 lease depreciation amounted to a net positive €177 million. Finally, at €156 million, the contribution of Transport was also quite strong, above its adjusted net income.

So all in all, an exceptionally strong free cash flow performance above €2.5 billion. What is the impact of the strong 2021 free operating cash flow performance on our medium-term guidance?

I'm now on Slide 14. So to answer these questions, we need to look into the drivers of our 2021 outperformance.

There actually are mainly 3 reasons to high earnings. First, the better-than-anticipated Q4 order intake, especially in export markets.

Second, the solid outcome of our cash action plan with positive impact on various items, collection of overdues, reduction of stocks, extension of supply payment terms and so forth and so on. We also benefited off a few positive one-offs in 2020.

And finally, and importantly, we estimate that around €400 million is due to cutoff effects that will unwind in 2022. As a reminder, this cutoff effects correspond to advance or early payments from customers and milestone, which earlier than anticipated and triggering cash payment milestone.

Based on these expectations that only €400 million will unwind in 2022, and taking into account the expected cash in related to the Rafale in the UAE. We expect cash conversions to remain high in 2022 and 2023.

You see the target on the slide, around 100% of adjusted net income. In euro terms, this is roughly equivalent to €5.5 billion of free operating cash flow over the 3-years period from 2021 to 2023.

And this represents around €900 million above current consensus. Combined with the already strong performance in 2019 and 2020, and the exceptional performance in 2021, this drives a 20-point upgrade to our 2019-2023 cash conversion targets.

So in a nutshell, an exceptional 2021 cash conversions, which enable us to materially upgrade our 2019 to 2023 guidance from a previous average of 95% to 115% on a reported basis. Moving on now to Slide 15 with a quick look at the evolution of our net debt position.

Nothing material to comment on the interest drivers apart from the intensity of deleveraging achieved in 2021, from €2.5 billion at the end of 2020 to less than €800 million at the end of 2021, i.e., a reduction of more than €1.7 billion over 12 months and €2.5 billion over 24 months. And to finish, a word on cash returns, on Slide 15.

First, the dividend. This year, the Board has decided to maintain the payout ratio at 40%, which drives a dividend of €2.56 per share up 45% versus 2020.

As you see from the chart, this corresponds to a 10% per year increase in the dividend since 2017, slightly above EPS growth. Second, as you saw in the press release, the Board has also approved the first share buyback program in the history of the group.

It is sized at 3.5% of the share capital, €770 million at yesterday's prices. As you imagine, we're not rushed to implement this program in view of the share price over the past few days.

But this is a major demonstration that the Board is ready to actively manage the excess cash that we generate, and Patrice will come back in details on this topic. So that's the end of this financial review.

I'm now turning over the call to Patrice, who will address our current strategy and guidance.

Thank you, Pascal. So I'm now on Slide 18.

Turning to our strategy and outlook. So as I stressed at the beginning of this call, last year, we have made a significant progress on our strategic road map with the announcement of the disposal of the Transport business and the acceleration of our sustainability strategy.

So going forward, we are focused on the 5 strategic priorities listed on this slide, which I will develop in more details over the next few minutes. First, let me come back on the portfolio change we announced last year, and I'm now on Slide 19.

I won't discuss the rationale behind the disposal of our Transport business. The point I wanted to make here is that this move reinforces our strategic position by allowing us really to focus our resources on 3 leading and highly synergistic businesses.

You remember what makes Thales quite unique: the combination of domain knowledge in demanding vertical markets Aerospace, Defence, Digital Identity and Security with an exceptional breadth of technological capabilities, focused on what we call the critical decision chain. Almost all of our solutions serve 1 or several of the fundamental building blocks that make critical decision change, sensing data gathering, like radars and sonars or observation satellites are good examples of them.

Secondly, data transmission and storage which includes telecom satellites, aircraft connectivity solutions or military networks and radio communications. And third, data processing and decision-making, which relies on software algorithms, man-machine interface, good examples of this being include flight management systems or command control centers like the ones that manage air space surveillance or air traffic control.

And of course, digital security, cybersecurity is absolutely essential to ensure trust all along this critical decision chains. This breadth of technologies is a key differentiating factor in our business model.

It allows us to address civil markets with military technologies and visor sound or to integrate cybersecurity in every solution we sell. Each of our businesses benefit from this unique positioning at its links, and it links with other segments.

So looking briefly at each segment now one by one. So starting with Aerospace on Slide 20.

Both components of this segment have strong growth prospects. Of course, on the Aeronautics side, on top of the development of military business, sales will be driven by the rebound of air transport, which is set to last for several years.

At the same time, the chart from IATA reminds us that near-term visibility on the pace of air transport recovery remains low. Let's also acknowledge that wide-body traffic and production levels will take several years to meaningfully recover.

Internally, we have completed the necessary structural cost adaptation, and are preparing ourselves for the recovery of demand and the ramp-up of OEM production. Since the middle of last year, we have transformed our service organization, setting up a dedicated global service business line.

And going forward, EBIT margin will benefit from the leverage on sales growth and from the expansion of our service business. Turning to Space.

Well, Pascal stressed the commercial successes we recorded last year. Let me add that on the telco side, our sustained R&D strategy really paid off as well.

In the past 3 months, Space Inspire, our new flexible satellite product line, was selected by 2 of the largest satellite operators, namely SES and Intelsat. This backlog and our future order prospects allow us to confirm the €2.5 billion sales target by 2024, which will drive a 5% per year growth between now and then.

Turning to our second business segment, Defence & Security. And I'm now on Slide 21.

You all have in mind how since 2015, defense budgets in Europe have returned to growth driven by the geopolitical context and terrorism. The chart on the right shows defense forecast over the coming 3 years, 80% of our geographical portfolio benefits from at least 4% annual growth: France, Australia, the U.K., Asia and the Middle East.

This forecast dates from last month. And of course, it is too early to draw definitive conclusions on how much faster different budgets will grow in the coming years following the invasion of Ukraine by Russia.

Still, here in the German chancellor, talking of a €100 billion additional defence package, and declaring an ambition to spend sustainably above 2% of GDP on defence. This gives a sense of the paradigm shift.

This crisis is triggering in Europe. In addition, our product portfolio is very well aligned with what armed forces want to buy solutions to help them better sense their environment with, for example, radars and sonars, infrastructures to exchange more information and better coordinate themselves, et cetera.

In particular, we see high demand for new generation air surveillance, including the protection against UAVs and for the integration of cloud capabilities in a military environment. While these 2 factors explain why our growth guidance over the coming 3 years is significantly above the consensus growth forecast for other large defence companies in Europe, U.K.

and the U.S. as shown on the chart on the bottom right.

Let me finish by remembering you that this business sustainably delivers industry-leading margins close to 13% last year. So really quite a remarkable asset.

I am now on Slide 22, looking at our third segment, DIS. As Pascal showed earlier, this business delivered a strong EBITDA performance last year in spite of the COVID-19 impact on biometrics product line, and of the supply chain challenges it faced.

On top of a solid delivery on cost synergies above the planned €110 million, it leveraged its strict cost focus, especially in the smart card business to achieve an 11.9% margin. This is more than 4 points above 2018, the last year it operated as a stand-alone business.

Last year, it also generated of €400 million of free operating cash flow, more than double what it had achieved in 2018. So undoubtedly, a strong financial performance in spite of COVID-19, in line with the medium-term EBIT margin target set at the October 2019 Capital Markets Day.

In addition, DIS gives us, of course, strong positions in several very attractive growth markets such as data protection, which is expected to double by 2025 or eSIM and the 5G SIM whose shipments are expected to triple over the same time period. Finally, integrating Gemalto's key digital security capabilities in our products uniquely strengthens our competitive positioning.

Last year, we won 141 such revenue synergy projects, and recent successes include airport self-service solutions, drone management projects and our partnership with Google to offer a sovereign cloud solution in France. Second priority, R&D investments, and I'm now on Slide 23.

Technology leadership remains a major driver of competitiveness in our markets. As you can see on the chart, we intend to continue growing R&D investments faster than sales, spending more than 6.5% of sales on self-funded R&D in the medium term.

Over the past few years, this budget increase has allowed us to systematically integrate digital technologies in products among the new focus areas. Let me mention far edge computing, quantum sensors typically.

Both technologies offer not just opportunities for higher processing and sensing performance. They can also be very energy efficient.

So moving now to Slide 24 with the third strategic priority, sustainability. As I announced at the ESG Investor Day last October, accelerating our initiatives in this domain is a strategic priority for the coming years, in line with our purpose and the expectations of our customers, our employees and future recruits and our shareholders.

First and foremost, sustainability is at the core of our product portfolio. And as shown on the chart, our solutions have key roles to play in making the world safer, the world greener and the world more inclusive.

Contributing to a safer world, protecting democracies, safeguarding liberties. This world have a different flavor now that we all see war at the edge of Europe.

This can never be taken for granted. In this context, I'm glad to see that the new report on the so-called social taxonomy has clearly acknowledged this reality, narrowing harmful defence activities to the weapons that are prohibited by international treaties.

On the previous slides, I've already showed our -- how our customers are increasing their investments to protect against both physical and digital threats. And in particular, our cybersecurity business recorded a double-digit growth last year.

Environmental monitoring, navigation, the reduction of the digital divide are also driving strong growth at Thales Alenia Space. And on a longer time horizon, we continue to see increased interest for our green aircraft operations concepts, which received new research funding.

And as Yannick Assouad described, the combination of new generation of flight management systems and air traffic control offer a major portal to reduce CO2 emissions from aviation, up to 10% of total emissions. In parallel, we have made solid progress on our internal initiatives.

I commented earlier on the 2021 performance on our 4 priority areas. We expect to submit our climate targets to the Science Based Target initiative, SBTi, sometime during H1.

On the governance side, we recently created the position of Chief Sustainability Officer, reporting to our Group Secretary, Isabelle Simon, who will lead a new corporate department in charge of all CSR expertise and competencies. In addition, 2 Board Directors have joined the Strategy and CSR Committee of the Board to contribute to the Board discussions on ESG matters.

And finally, we will continue to develop best-in-class ethics and compliance practices from anticorruption to export control or the use of AI in autonomous systems. This year, in particular, we will expand our ISO 30001 certification to additional countries in the organization.

I am now on Slide 25, operational performance. Operational performance constitutes the 4 strategic priority.

So beyond the 4 group-wide initiatives that are listed on the left, this year, we intend to focus on a few initiatives. First, the transformation of our engineering function.

This initiative includes the deployment of new generation engine -- of engineering digital tools as well as the ramp-up of our engineering competency centers in India and in Romania. Second, we will implement several actions related to manufactured competitiveness, such as further automation, design for manufacturing or the reduction of non-quality.

Third, having run last year several pilot projects on what is called S&OP, Sales and Operations Planning, we plan to broadly roll out these best practices in 2022, which will help us better address ongoing supply chain challenges and reduce inventories. Fourth, and finally, we will work hard to adapt our fixed cost structure to the new shape of the group after the disposal of the transport business.

So as you understand, the development of a performance culture remains at the heart of our strategic plan Ambition 10, and we continue to find many operational performance improvement opportunities. Fifth strategic topic, last but not least, capital allocation.

I am now on Slide 26. As we demonstrated over the past years, our businesses are very cash generative.

Of course, defence businesses sometimes benefit from large down payments, while many of our civil businesses are flow businesses and hence face less working capital volatility. During the COVID crisis, this diversity helps us as well when we saw institutional customers being very supportive in cash terms.

All in all, as explained by Pascal, we expect that cash generation will be significantly above cumulative adjusted net result over 2019-2023, driving a major deleveraging of our balance sheet. On top of that, we will receive the cash in from the disposal of Transport at the end of this year or at the beginning of 2023, which will further add to our cash optionality.

This sustainably high cash generation will enable us to comfortably implement a balanced capital allocation, combining both investments in the business and cash returns to the shareholders. And I will reaffirm our M&A strategy in a minute.

Regarding cash returns, the Board is proposing, as I already said, to the upcoming AGM, a 45% increase in the dividend, and the long-term EPS growth prospects to drive many years of further dividend progression. In addition, the Board has approved the first share buyback program in the history of Thales.

This represents an important signal to the market that we are actively managing our excess cash to support sustainable value creation. So zooming in on our M&A strategy, Slide 27.

Let me reaffirm what we explained in response to the rumors regarding our interest for Atos cybersecurity assets. First, our strategic focus is on bolt-on acquisitions defined as assets with an enterprise value of less than €5 million -- €500 million, sorry.

These acquisitions must help us reinforce our technology portfolio and/or expand our geographical footprint. Second, we have no intention to diversify into markets other than those we are -- we already serve.

On the right side -- on the right of the slide, you can find some details on 2 recent acquisitions that fit exactly in this criteria. While acquisitions form an integral part in our capital allocation strategy, let me stress that we intend to remain very disciplined, saying no to any project if we are not fully convinced of its contribution to growth, its synergy potential or if we think its valuation is excessive.

Moving now to Slide 28, discussing our 2022 outlook. Starting with the business assumptions on the left of the slide.

The health situation is clearly improving, which should support a gradual recovery of air transport. Still uncertainties remain particularly high at the beginning of this year.

Global supply chains remain under tensions. And even if our logistics and energy exposures are low, we are seeing inflation picking up, in particular, on wages.

In addition, of course, the geopolitical context has profoundly changed since the middle of last week. On the one hand, in the near term, the economic tensions taken against Russia, and the associated disruptions, we will have a temporary negative impact on our business.

On the other hand, in the longer term, this context will drive higher defence spending for many of our customers. And the German decision, I mentioned earlier, is quite meaningful in this regard.

For 2022, I've listed here 4 key short-term priorities. First, operational issues will stay on top of the agenda, staffing, supply chain challenges, dealing with the consequences of economic sanctions on Russia.

Second, we will continue to focus on our growth initiatives, in particular, the capture of revenue synergies with DIS and on reinforcing our technology leadership. Third, we will execute the disposal of the Transport business, carving out the entities that will be sold to Hitachi, adapting our fixed cost base, and updating all the required authorizations.

And finally, we will further implement, of course, our ESG strategy. All this brings me to our financial objectives for 2022, considering the business environment and priorities that I just described.

So now I'm on Slide 29. With respect to order intake, we expect another year of strong commercial performance, driving again a book-to-bill ratio above 1.

Based on the February 2020 scope and foreign exchange rate, we expect sales to amount to between €16.6 billion and €17.2 billion, which corresponds to an organic growth between 2% and 6%. The wide range is, of course, due to the high uncertainties at the start of the year.

And thanks to all the initiatives I presented earlier, I expect a further significant improvement in EBIT margin, reaching between 10.8% and 11.1%. Let me finish with a quick summary, and I'm on Slide 30.

Thales is now refocused on 3 leading businesses: all 3 offer long-term growth prospects, are able to sustainably deliver double-digit margins, and are aligned with major ESG trends. We continue to execute full speed on our strategic levers, investing in R&D, reinvesting our performance culture.

And we will leverage the strength of our cash generation to maximize long-term value creation, implementing both disciplined M&A and cash returns to shareholders. The decision in spite of the volatile context to launch the first share buyback in the history of the group is, of course, a great demonstration of this balanced approach.

So this concludes our presentation. Many thanks for your attention.

And now together with Pascal, we are pleased to take all your questions.

I guess I want to ask about when you say you have no interest to diversify into a market other than what you already serve. I guess, first part, can you just confirm, does that mean that cyber is still under table for the area that you could look at?

And two, how do you think about the other side of that? Meaning, even after the Transport sale, do you see room to further simplify the portfolio and focus more on your primary market of defence, electronics, especially as we may see a period of more supportive global defence budget.

Well, thank you, George, for all your questions. So the message is clear about no diversification, but it was worth, I would say, reiterating this strong message.

Of course, cyber is totally core at Thales. It represents already a business of around €1 billion.

So clearly, it's a significant business, where we have leading -- world-leading positions, and typically in data management, data protection, where we are the world leader in this domain. So why not on [Indiscernible], of course, acquisitions in the cyber domain, if it makes sense and if the valuations are clearly correct.

Now on the portfolio, it's true that we are now refocused. We are at least comfortable with the 3 pillars, I've mentioned, namely Defence & Security, Aerospace and Space and Digital Identity and Security.

So I do not see, I would say, any, I would say, large disposal looking forward as we think that now the group is really positioned on 3 world-leading, world-class businesses, the 3 businesses I've just mentioned.

Okay. And then maybe just on the defence side, I mean, you mentioned it's too early to maybe draw indications.

But I mean, what type of opportunities do you foresee from even the German announcement with their budget increase? And what we'll may hear from our friends next week when they speak about defence?

But probably 2 remarks on this point. For sure, the announcement of the German chancellor, and probably others that will -- that may come in the near future, give a global positive tone on this budget investments looking forward.

Now it's a bit too soon to say what will be the exact, I would say, consequences for defence companies and in particular, for Thales. But overall, this is positive.

But for us, Germany is 4% of our Defence & Security pillar. This is the third largest customer for us in Europe.

Now probably that in the short term, the only consequence I see is probably, I would say, a more active support and service, I would say, activities to make sure that the armed forces we serve are fully operational in particular, in the context we know.

I've got a couple if I may. So the first one is regarding the defence businesses, the Defence & Security, and cyber.

If you could maybe articulate how many are -- how much is what you would call short-cycle businesses? And if I look at the order book, things that are under the €100 million value a quite significant share of the order book.

And with that, I would say, how many could converge -- if the defence budget are raised, how many could convert quite quickly and not just in 2025 outlook? And my second question is regarding the gross margin, which was nearly closed at peak level of 27.5%.

So excellent delivery there. And if you still think Pascal that there is further potential for that to expand.

Okay. Okay.

Celine, thank you for your question. So probably a bit difficult, I mean, to express the proportion of all of our backlog in defence that can be converted right away.

I mean defence is a combination of both, I mean, project executions. And in project execution, it can vary from projects that we can execute in a 6, 12, 18 months' time frame, which is very short.

But also, as we mentioned, for instance, in our VASSCO project that we booked in Q4 2021 projects that will be executed over the next 10 years because it's a support as a contractor. I mean this is the beauty of this business.

It's really a combination of the 2. So both short terms, but also, I mean, long term.

When it is, by the way, just I mean build as opposed to support when it is about execution of build projects here again. I mean you can deliver quite simple short-term project on 6, 9 months' time frame, but you can also execute, I mean projects on the longer run.

I mean a good example of that is our [Indiscernible] project that we booked in 2020, which is a very large size project that will be executed in the next few years, it will take time. Now maybe behind your questions, you can imagine being also, I mean, can we speed up?

Will we see customers willing us to execute even more quickly? That might be the case.

That might be the case. I mean we will see.

What we can see is probably a need for additional support because we know that this crisis is probably triggering some of our key customers we -- I mean to test themselves in terms of operational capabilities, which means that, I mean, primarily they will ask for more support to help them, just really, I mean, test their own capabilities. Now what can this lead in terms of internal growth at this point is probably really -- it's probably we need to earn.

Now in terms of gross margin, I mean, first, we are quite happy with what we delivered in 2021, and you have seen this jump as compared to 2020, which was, I mean, disrupted, is there [Indiscernible] to do even better there. I mean I can assure you that this is constant fight overall at Thales.

And the key indicators that we track is the gross margin in our order intake. It's internal indicator, but -- which is a very important indicator as this is a leading indicator than for our gross margin in our P&L.

And without disclosing any precise figures, I can share with you the fact that we have been quite happy with the overall gross margin on our order intake. Or in other words, this very large level of order intake that we managed to book in 2021 has not been done at the expense of lower gross margin on order intake in terms of percentage.

So all of that is positive. And this is also important for us as we keep saying this is our policy to keep investing more in terms of R&D as a proportion of revenue, and a clear message within Thales that we keep conveying to our teams is that a condition for us to keep increasing our level of R&D is, of course, to keep increasing the level of gross margin and order intake.

Yes. So one of the questions I had was on allocation policy.

I was positively surprised by the buyback announcement and the comments around you guys will actively -- and the Board will be actively managing excess cash looking at the guidance that you've given, it implies a net debt number, just north of €1 billion, I think, in '22. .

Should we take this then that you guys think that you can run this business with a net debt position in the medium term? So that would be the first question there.

And then the second question would also be on M&A, obviously, the environment has changed quite dramatically in the last 7 days. Is this impacting how you think about M&A, and you assess M&A?

Is this a chance to be more aggressive from an M&A perspective, given the budget support environment has clearly changed. Does it change how you think about geographies that you want to be exposed to?

And does it change how you think about technology within defence that you want to be exposed to? Should we be thinking more land, more naval, more air opposed to cyber?

Just interested to see how you guys think about that.

Okay. Thank you very much for your 2 questions.

So I said yes, I will take the first one, and leave Patrice to take the second one. So overall, I mean, the level of net debt, we're happy with, I mean, to one, I mean, the company I mean the figures that you mentioned is in my view, makes sense.

So I don't want to be more precise. And we see that this should leave us to combine both increasing the level of return to our shareholders.

And hence, the decision of our Board and to launch this share buyback program. And also, I mean keeping investing in the company, both from an organic standpoint, but also in terms of bolt-on acquisitions.

So it's a combination of the 2. It's going to be a balance, I mean capital allocations was -- of course, as I always said, I mean, a key point for us is to remain a very strong investment-grade company.

And we can combine all of those dimensions.

On the M&A, if I may continue, Pascal?

Yes.

Ben. No reason to be more aggressive or just aggressive.

We always have to keep a cool head at Thales. You know us very well.

So no reason to change what I said, by the way, what I've reiterated in our -- in terms of M&A philosophy and M&A policy. In terms of geographies and technologies, in fact, we are looking at both where we can expand our geographical footprint.

As you know, we are present in more than 50 countries, at least. So clearly, it's difficult to mention 1 country in particular.

In fact, we are looking in these different countries. And then it's a question of opportunity.

So difficult to predict, and probably use less to mention names of countries where we would like to expand. In terms of technologies, most of the time technologies are agnostic of applications later on.

So if you take -- I don't know, I've mentioned during my presentation, Edge, edge computing. We mention 5G.

I mentioned Quantum, and I can mention many other technologies. These technologies are clearly agnostic to use cases or applications.

That's why I -- here, again, is difficult to say, we want to increase technologies in the naval domain or in the land domain. We would like to increase our technological leadership on top, and these technical leadership, then is applied in our vertical markets namely Defence & Security, Aerospace and Space and Digital Identity and Security.

Hope it helps.

The first one will probably be a detailed question for Pascal, if I may, on the dilution of the EBIT schedule for 2022 from €10.2 billion margin to the range of €10.8 billion to €11.1 billion. So roughly, it's an increase by €250 million to €350 million.

Can you expect -- can you explain a bit what are the drivers between restructuring organic growth as our usual, the bidding costs, this kind of stuff? And you expect a pickup in fixed cost.

You mentioned wages inflation potentially pressure from supply chain. If you can explain a bit how it impacts your performance, and how you mitigated by efficiencies.

That would be very helpful. And the second question would probably be a question on cash allocation and the share buyback.

I understand that Dassault has decided to change a bit its holding to make sure it doesn't go over 30% of shares. Can you tell us whether there's any change in the governance or the shareholder part is still holding?

And is this a limit to the cash you can return through buybacks that persistent of that shareholding agreement between Dassault and the French state? And if I may squeeze in a quick follow-up.

I wanted to make sure that the underlying free cash flow guidance at maybe €1.5 billion, €1.6 billion was including the UAE contract from -- on Rafale, the first range of Indonesia, but no other Rafale exports and no large constellation contracts. That would be helpful.

Okay. on.

So starting with the -- I mean the first question about I mean the key drivers supporting our progression in terms of EBIT margin. So it's going to be first, I mean, top line growth, I mean, organic growth with an expectation of a slight further increase in terms of gross margin as a proportion of sales.

So even though, as I mentioned, I was quite happy with the level of gross margin in 2021. We are expecting this level of gross margin to go even further.

So I mean the 27.2% that we delivered in 2021. We think that in 2022, we should be above this level.

Now when it comes to indirect costs -- so probably a bit too early, but I mean, R&D expenses should be in terms of percentage probably at the level that we had in 2021, which was significantly above 2020 and [6.3%]. So my view is, I mean, this 6.3% probably a good rule of sum, I mean, to consider what should be 2022?

A point which is quite important is marketing and sales, where we are seeing quite a strong drop in 2021. With, I mean, both cost containment, but also the positive effect of quite a limited level of travel expenses in commercial populations which, of course, I mean, has to travel.

So here, I'm expecting probably a bit of additional cost in terms of marketing and sales expenses. Of course, I mean, G&A will continue to be very much under scrutiny.

And we don't want any relaxation on this matter. My view is that the overall level of restructuring should be probably in line with what we have seen in 2021.

So in a nutshell, we think that there's still way for us to keep increasing, I mean, the level of gross margin. This, I mean, reflecting, I mean, the continuous implementation of our cost optimization program.

In engineering, in industry, for instance. And this also, I mean, overall leveraging effect from a higher level of revenue.

Yes, I mean -- of course, I mean, we are operating in the context where we need to handle a pressure in terms of both supply chain and wages. I mean this is a matter of fact, and this in many countries.

And also on some important supply chain aspect, I mean, we have still not commented the crisis in component, but in electronic components, I mean, shortage goes along with also inflation. Now I guess that we have demonstrated in 2021 that we can manage also, I mean, and absorb this level of additional costs and pricing for instant at our DIS business, went extremely well in 2021.

And I'm expecting, in particular in DIS, I mean, are related to keep pushing prices for -- through the -- I mean through our customer base. I mean, reflecting -- and I mean the fact that we cannot keep this additional cut for ourselves.

So yes, and of course, this is requiring attention I mean, to operate in this more inflationary world. But I mean, I'm not -- I don't have any specific strong concern on that.

I mean this is our duty, and we'll manage that. And this very much consistent with, I mean, the level of operating margins that we are targeting for throughout 2022.

And second matter...

Very simple answer, both Dassault, Dassault Aviation or Dassault Group and the French state are happy, not very happy shareholders. And by the way, the single support Thales management in our strategic journey.

So there is absolutely no change in governance and no change in typically the shareholders' agreement. Probably what you are referring to comes from the fact that Dassault by law has to monitor the -- its voting rights not to cross the 30% threshold.

Otherwise, they would have to launch a public offer on Thales, which is not their intention. So they have to monitor the mix of the shares, having, I would say, double voting rights.

And the other ones, having single voting rights. So they monitor this mix.

That's why probably you have read something about that number. But clearly, it's just a technical aspect of -- or technical consequence of the reduction coming from -- or resulting from the share buyback.

Your last point, Tristan, was about cash flow in 2022 guidance. So yes, I mean, this €1.5 billion is the inclusive guidance that we are communicating today, and it takes into account, I mean, our best view on what is going to happen in 2022.

With -- of course, in particular, this is, of course, quite a significant amount, I mean the impact of the booking of the UAE contract. And also, as I mentioned in my presentation, significant reversal of advanced cash that we got in the last part of 2021, in particular, on some specific milestones that we achieved in December ahead of the expected schedule.

The first one is, again, around capital allocation and the decision to start a share buyback, especially the arbitrage between the shareholder return and M&A. What would you be your firepower for a large M&A deal?

And would that share buyback indicate that you would not be ready to issue new shares for a financing of a large deal, or doesn't it prevent any of that type of option? And the second, on cybersecurity, you talked about a doubling of that business on an organic basis.

And I was curious about the potential operational leverage and margin impact of that type of growth.

Thank you, Aymeric. On the capital allocation part of your question, again and again, let me reiterate the fact that our strategy is to focus on the bolt-on acquisitions.

So this is clear, and this is written. This is said.

And no diversification is clearly is envisaged. Cyber, yes, we said a while ago that we could double our cyber business, I said by 2025, if I remember, let's say, midterm.

And this is clearly doable, looking at the growth rate of the market and the growth rate of our own cyber business. Now in terms of operational leverage, but clearly, it will play in favor of margin improvement for sure as part -- not all, but part of this business either software-driven business, more than a hardware-driven business.

The second part of your question was -- sorry, I think there was another part of your question. Okay.

But is it okay for you, Aymeric?

I think that we lost Aymeric.

No. No, no.

Sorry, I was on mute. Yes, I'm outside.

So I'll try to background noise. But the -- if there was a larger deal opportunity, let's say, let's address speculations around BDS that were referred by the press earlier in the year.

We're talking several billions. So it's outside the bolt-on bracket.

I mean would you -- what kind of leverage the group would be ready to take today?

But I mean -- really, Aymeric, I mean it's just speculation, as we mentioned that we're not ready to consider any transformational acquisitions. I don't think it's worth mentioning what would be a capital structure, I mean, to fund transformational acquisitions.

So no, I mean, I cannot answer any questions, which, in my view, at this point, is really, I mean, just a few speculation.

Yes. First, congratulations on your results.

I have 3 questions. The first one on the share buyback.

I know it's a board decision. I don't know if you can comment, but what has driven the decision of share buyback or higher payout?

It could have been 50% payout, and it could come actually. But I was wondering what was the kind of motivation behind this, if you can comment?

And the second question is, in the current environment, with that increase in, I mean, potential demand, what bottleneck are you seeing in terms of production and labor if you were to increase production of OE product and services as well? And I will follow up with the last question afterwards.

Okay. So Christophe, I suggest to take the first one and to leave Patrice taking the second one.

So share buyback versus increasing the -- I mean the payout ratio. Probably the first thing that we have done is to listen to investors, and we have been in contact with many investors over the last few months.

And there was a clear overall feeling about the fact that Thales generating a sizable amount of cash flow and getting in a few quarters, the proceeds from the disposal of our Transport business. In the end question was very much about, I mean, not piling up cash on the balance sheet, but increasing this return.

And I have to say that in most cases, not to say more. I mean the share buyback was really the right tool for investors in order to address these specific situations.

And I have to say that in most of those discussions, we have not been challenged about, I mean, the level of our payout ratio, which is pretty much in line with most of our peers. So it was really about addressing, I mean, this level of excess of cash generated by our performance in terms of free cash flow generation, plus the disposal of our Transport business.

So it has not been I mean a long discussion with our Board about what should be the right tool, very naturally. I mean the share buyback once has -- I mean the right tool, I mean, to address this specific situation.

Christophe, on the second part of your question, bottlenecks, has I would prefer to speak about challenges. Really, challenges would be to continue to hire new talents or more talent.

You know that our plan as of -- for this year is to hire around 11,000 people across the world. .

This is a challenge, but this is doable. Clearly, we have taken, I would say, appropriate measures to meet this first challenge.

The other one would be, of course, to probably look at our -- if not production facilities, I would say, integration facilities, it's more integration than production per se. And probably, again, it would require perhaps a bit more CapEx.

But clearly, it has nothing to do with other industries. If you compare figures like the ones we can hear of or read around component or chip factories.

It has nothing to do with that. We are, I would say, more, as I said, integrating electronics and not producing electronics and not producing components or chips.

So probably, this is not a headache. It would be a nice challenge we would love to face, to have even more, I would say, work to do.

And at this time, I said nothing to be worried about.

Okay. And the last question was actually a bit linked to the bottleneck, and the labor.

It's related to the wage increases. There is obviously some pressure at the moment.

And it's part of your cost quite obviously, I was wondering what -- can you -- in your fixed price contracts in defence, can you pass some of those increases to clients? Or is it all for you, basically?

I mean are there some closes in the contracts and hence you revise the pricing?

I mean it's quite clear. I mean, Christoph, if it is fixed price.

I mean, there's no way to change price. Now most of our contracts are not based on fixed price, but are based on revised price where we have escalation mechanism to reflect this type of inflation.

So price escalation mechanism is in our Defence & Security, more than norm than fixed price. And when we have fixed price, I mean, we organized ourselves to make sure that we anticipate increase in supply chain cost.

I think we need to close the Q&A session. We can take probably still a few questions very quickly, and we'll provide quite quick answers.

Just one question from me, please. When I think about this new spending in Europe and the time frame.

I think as you said, support will come very quick, and then perhaps retrofit comes next and then perhaps new equipment platforms. I just wonder, given electronics is a great way to retrofit and upgrade the installed fleet.

As a high-level question, when you look across Europe's in-stored fleet aircraft, helicopters shipped tanks, et cetera, what you see the market opportunity for you to do upgrades and retrofit with your electronic offering?

It's a good question. I'm not sure the answer.

That's a good question. David, as you do, of course.

If you try to estimate, I would say, at which pace the turnover would be positively impacted. I think this is, I would say, the underlying earnings of the question.

I would say support and services may be short term, but even retrofit takes a bit of time. Because integrating, let's take a new generation radar on a old retrofit integrating a new radar.

It's not, I would say, plug and play, it's not like your USB being inserted in a computer. You need to integrate this radar with the combat management system.

And clearly, it's a question, at least, of months, when I say months, if not more than 1 year. So clearly, it's not for 2022 and probably not before mid-2023 if it starts now.

So clearly, the expected -- so-called expected effects of retrofit, not to speak of new platform is clearly for me midterm and not short term.

Yes. But just high level, and then I'll shut up.

Is that a big opportunity for you? Do you think that is a way that you can upgrade your capabilities quite quicker than buying brand new platforms?

Yes. Clearly, but potentially on the long term, yes.

Clearly, yes. It represents an even higher potential than some weeks ago, clearly.

So Bertrand is asking me to tell you that we take one last question. So I will follow Bertrand instructions.

So we take the last one.

Hopefully, just a couple of quick final ones. I guess, firstly, on the supply chain, I wanted to clarify there.

Can you give us an indication in basis points of how supply chain constraints have affected -- what supply chains constraints and inflation have affected 2022 guidance compared to what you may have been thinking a month or 2 ago? Also, I wanted to ask on Gemalto.

You've given a figure -- or DIS, I should say. You've given a figure of what the margin would have been, including synergies elsewhere in the group.

I wonder if you could give us a bit more clarity on what exactly that is, the benefits that Gemalto brings to the remainder of the group? And then if I can just squeeze one final one, and can you confirm that the 2022, 2023 cash guidance includes no contribution from Indonesia down payments.

You mentioned UAE, but I wanted to ask about Indonesia.

Okay. Okay, Andrew.

So I mean, starting with the first question. I mean it's quite difficult to provide you with the basis points relating to the supply chain constraint on our 2022 guidance.

I have to say that I'm not able to answer your questions. I have to say that in 2021, we managed at the end of the day not to have been impacted.

And so that's the reason why, I mean, we show a bit of caution for 2022 is that, I mean, we don't see the situation on component shortage to improve since the end of 2021. So we know that it's going to be a challenge for all 2022, and probably also in the first month of 2023.

And because of that, I mean, we need to take a bit of caution. On the second question.

Yes, I mean cost synergies are not accounted for at DIS but in other businesses. So overall, something like €50 million, which goes in other businesses.

And I will just take an example, I mean, for you to understand what it means. When you bring Thales legacy and Gemalto signs we choose to have, I mean, 2 different sites in the specific country, for instance, and you can bring them to a single site.

And then you can save, I mean, the previous signs costs of the Thales legacy business, then you allow, I mean, this Thales legacy business to get savings that have been driven by the fact that we've put together the 2 sites. And these savings on the previous cost of the Thales legacy business in this specific country is accounted for in the P&L of this specific Thales legacy business.

On cash flow 2020 to 2023. Yes, of course, as I mentioned, it does include, I mean, UAE, but it also include, I mean, our visions today with regard to Indonesia and in particular, I mean, what we expect in terms of down payments relating to the first batch of 6 aircraft in Indonesia as well.

The rest of the contract, I mean, at this point, of course, we need to be a bit cautious in terms of schedule. I mean for booking this new contract.

So you need to consider that we have today in our 2022 guidance only the first batch of 6 airports for Indonesia.

Okay. Thank you very much.

Okay. Thank you, and I think I need to unfortunately close this Q&A session now.

So just a few words in terms of conclusion -- of conclusion. So as you understood, our 2021 financial performance was really strong as we made good progress.

And we made very good progress on our nonfinancial targets as well. I would like to take this occasion to reiterate my thanks to the teams for their mobilization throughout the year.

Nothing would have been possible without their full mobilization, of course. We remain focused on the execution of our profitable growth strategy going forward.

And of course, as usual, with Pascal, I look forward to speaking with you all in the upcoming investor road shows and conferences, of course. Have a good day.

Thank you very much, and bye-bye.

Thank you very much. Bye-bye.