Engie SA

PAR:ENGI

Earnings Call Transcript 2018-Q1

[Operator]

Good morning, ladies and gentlemen, and welcome to the conference call on ENGIE financial information as of March 31, 2018, organized by ENGIE, along with Mrs. Isabelle Kocher, Chief Executive Officer of ENGIE; and Mrs. Judith Hartmann, Executive Vice President and Chief Financial Officer. For your information, this conference is being recorded. Thank you for holding, Mrs. Kocher, I now hand over to you.

[Isabelle Kocher, CEO & Director]

Good morning, and thank you for being with us today. I am very pleased to welcome you with Judith Hartmann, our CFO, to present our results for the first 3 months of '18. These results are found in line with what we announced earlier this year.I will start with an overview of the salient numbers and an update on our main operational development, and then Judith will comment our financial performance.This has been another strong quarter. Q1 results are in line with our expectations. We are rapidly growing organically. Our net debt continues to drop, and we, therefore, confirm our '18 guidance.Our first quarter numbers are in line with what we shared with you last March. EBITDA is up 3% despite a significant negative ForEx impact. This is due to the strong organic performance of our activities that are up 6%. CFFO is in line with our expectations, with a less favorable working capital requirement evolution, but a strong operating cash flow generation.Net debt continues to be reduced here again by more than EUR 3 billion in Q1, mainly as a result of disposals. This solid financial structure enables us to further invest for profitable growth, with development CapEx increasing by EUR 800 million compared to last year.A quick zoom now on the business trends of our activities. Three out of 4 activities are now growing, with the fourth one only temporarily decreasing. The repositioning of our portfolio continues to translate positively. Our financial performance is now also helped by our merchant gas midstream business.Networks show a year-on-year decrease, but only due to a timing effect, as Judith will later explain. For the year, we expect this business to be up. On client solutions, this activity will grow faster over the next 3 quarters than the reported 2% at the end of Q1 on the back, in particular, of an improved performance for B2C and continued growth from B2B and B2C activities that are extremely dynamic.As regards operational developments, our activities have shown a strong momentum, and we have further reinforced our leadership positions over the first quarter. In renewables, we target to install 1.3 gigawatt of capacity this year. We are in good shape on this, thanks to a healthy pipeline, following recent successful actions and the acquisition of a wind developer in the U.S.And I'd like to highlight the fact that we have not [ adapted ] our investment criteria for renewable project, regardless of the strong competition that we observe in some geographies. In other words, where we win project, it means that the conditions and rates offered allow us to meet our investment criteria and, therefore, return on investment above [ work ], plus 2%.This requires, of course, an optimization of each of the levers of the value chain of the technologies. In this regard, the particularity of ENGIE compared to certain competitors is to have, for solar, an internalized EPC capacity since the acquisition of Solairedirect; and for wind, a certain know-how as to managing project in an EPCM format. On top of that, our diversified geographical footprint is clearly a key competitive advantage.In networks, we have reached a new milestone with the regulation of our storage business. We now have more than EUR 27 billion of regulated asset base in France, becoming one of the biggest regulated networks operator in Europe.In client solutions, we are keeping a brisk tempo. In B2C, we have now 24 million customer contracts around the world, driven by both new services and energy sales contracts signed. On the latter, we are #1 in France in market offers with 7 million contracts. In Q1, we have continued gaining market share in power strongly, while defending our strong position in gas.In B2B, we seized a lot of opportunities materializing into increased order intakes. Indeed, installation on engineering backlog is up 8% at the end of Q1.And finally, in B2T, we continue to further develop our worldwide infrastructure and decentralize energy solutions platform with key wins and acquisitions in Q1.And I will now let Judith comment in details our Q1 financial performance.

[Judith Hartmann, CFO & Executive VP]

Thank you, Isabelle. We are indeed happy with the first quarter results.Let's look at the year-on-year evolution of EBITDA. The important message here, organic growth of EBITDA is at 6%, thus, fully in line with the full year trajectory indicated in March. On FX, the negative impact of EUR 100 million is mainly coming from the depreciation of the U.S. dollar and the Brazilian real.On scope, the impact from scope out is limited, EUR 30 million, mainly coming from the disposals of U.K. and Australia thermal assets. Over the next quarters, you should expect a higher impact from disposals, which is mainly driven by the seasonality, notably from Loy Yang B. The scope in impact is mainly coming from the contribution of last year's transactions, mainly the 2 hydro concessions, one in Brazil and, to a smaller extent, from Tabreed and Keepmoat in client solutions.Let me remind you that Q1 2017 EBITDA reported here excludes EPI and LNG upstream and midstream activity, as per IFRS treatment for discontinued operations.On the next page, let me give you more color on the quarterly performance of our main activities. Client solutions contribution increased year-on-year, thanks to very good performance of the B2B, B2T service activities. In B2C, we benefited from a positive temperature effect and the positive volume effect in power as we continue to gain market share. This was offset by positive one-offs recorded in 2017, leading to negative year-on-year comparison. And the margin pressure in gas, we are mainly impacted by the rising cost of Energy Savings Certificates. This will have a temporary effect on margins as these costs will be eventually passed through to final customers, either following the next tariff review for regulated clients or at contract renewal for market offers.In electricity, margins suffer from a similar cost increase in Energy Savings Certificates, but here are offset by the growth in number of customer contracts that are -- that I already mentioned. By year-end, we expect client solutions to grow faster on the back of improved retail performance, the ramp-up of Lean 2018 contributing to margin expansion and continuous positive business dynamics in services.Networks show a slight organic decrease. The new favorable storage regulation will have a positive impact from April 1 onwards. We expect to book the full year contribution, including the 1Q retroactive impact, from this new regulation over the next 3 quarters. The unfavorable 2017 tariff revisions for transport and LNG terminals in France and gas distribution in Romania will only impact the 1Q comparison to last year as both took place on April 1 last year. Adjusted for these timing factors, Q1 performance on networks would have been slightly positive year-on-year. In generation, on renewable and thermal contracted activities, we benefited from a very strong quarter in renewables in France with favorable hydrology conditions, a 39% increase in our hydro production in France and good wind resources.On merchant activities, we benefited from a very good performance of our midstream gas activity resulting from active portfolio management and favorable market conditions in Europe. This positive impact more than compensates the lower gas spreads captured by our European gas-fired fleet. Of course, you remember Q1 2017 was a very strong quarter on the back of EDF nuclear outages and pressure on renewables. This quarter, we were also impacted by lower achieved prices and outages in our nuclear activities.Lean 2018 contributes across the board with a EUR 70 million positive impact in the first quarter.As mentioned by Isabelle, our balance sheet and financial structure shows continued strength. The CFFO was down EUR 900 million year-on-year, mainly due to the negative working capital evolution of EUR 1.1 billion. This negative evolution is mainly coming from 3 drivers, namely the impact of temperature, some timing effects on operational working capital and the impact of margin calls related to the evolution of commodity prices. I remind you that 2017 benefited from a very positive change in working capital requirements of EUR 1.3 billion. Yet, the operating cash generation remained strong at EUR 2.9 billion, up EUR 100 million versus the first quarter of last year.Hence, as you can see on the next page, we have significantly reduced our financial net debt during the quarter, leading to historically low level of EUR 19.4 billion. This is resulting mainly from the sound operating cash generation and from the portfolio rotation program. Indeed, we have booked a EUR 2.6 billion net debt reduction coming mainly from the closing of 3 transactions, namely Loy Yang B, ÉGÁZ-DÉGÁZ in January and E&P mid-February.Just keep in mind that the positive impact of EUR 1 billion coming from the recent hybrid issuance will only be temporary, as this issuance is meant to refinance by anticipation hybrids maturing in the coming months.The cost of debt continues to decrease and stands at 2.53%. Financial net debt-to-EBITDA stands at 2.1 at the end of Q1 2018, improving significantly versus December 2017 and remaining well below the 2.5x target. Economic debt-to-EBITDA stands at 3.6 at the end of Q1 2018, also improving significantly.S&P has recently reaffirmed our A category rating, revising the outlook from negative to stable.With that, I'm handing back to Isabelle.

[Isabelle Kocher, CEO & Director]

Thank you, Judith. Well, our Q1 figures are very good, and we confirm our full year guidance. We changed the course of the company 2 years ago and it's now paying off, and we are now happy to take your questions.

[Operator]

[Operator Instructions] We will now take our first question from Vincent Gilles of Crédit Suisse.

[Vincent Gilles, Head of the Utilities Research]

Two very simple questions, please. The first one is the organic growth you are giving us for the quarter, the group level and at divisional level, could you split the various components? I don't know, maybe the simplest way to do it is price, volumes and temperature, or however you can help us measure effectively. What I'm trying to get to is the pricing power that you may be regaining versus the last few years. And my second question is on client solution. Judith, you just said you expect client solutions' earnings to improve based on an improved performance in the next 3 quarters. Could you develop a bit and help us understand what you call the improved performance?

[Judith Hartmann, CFO & Executive VP]

Yes, absolutely. Let me start with the second question first. So client solutions, as you saw, had a 2% increase in the first quarter. We expect this to be much higher for the total year. And really, the big driver of this nonlinearity, if I may call it that way, is the pressure in the first quarter on B2C. As you can see on the page, we were at minus 12%. This was mostly driven by the French B2C business, which was at minus 10%, which is going to be positive, will have a positive organic growth for the total year. So really, there were some specific items in that business that are going to level out over the course of the year and, in fact, are going to make this a positive organic increase. I mentioned most of it. There were some unusuals in the first quarter. There were also some unusuals, by the way, in the rest of the quarters in 2017 that are going to make for a good comparison. And then the impact was mainly also due to pressure on gas, like I said, of cost increasing, and that's going to level out through time. And by the way, part of that is, of course, offset in some of our other businesses, B2B when it comes to the CEE, the Energy Savings Certificates and in -- some of it also in generation when it comes to capacity payments that are increasing the cost for our B2C, but are a positive on the generation business. Now on your question on the main drivers splitting EBITDA changes into scope, price, volumes, lean and so on, change and -- FX and scope was laid out. It's about EUR 100 million, that is mostly due to foreign exchange. I mentioned that it's U.S. dollar and real. Scope, almost no impact on the first quarter. It will be higher for the rest of the quarter for the reasons -- for the rest of the year for the reasons I mentioned. Price is about EUR 100 million, and most of it I've just mentioned. It's the B2C effect. There is, of course, some impact on generation. Those will be the main ones I would mention here. And then volumes, a positive EUR 150 million; with temperature being a positive EUR 60 million; renewables, positive; generation, positive. And then the rest is really the lean contribution that I mentioned, which is close to EUR 100 million.

[Operator]

We will now take our next question from Peter Bisztyga of Bank of America.

[Peter Andrew Bisztyga, Head of Pan]

It's Peter Bisztyga here. Two questions, if I may. Firstly, you've been reported to being selected as preferred bidder for the TAG pipeline network being sold by Petrobras. So I was wondering if you could tell us a little bit about that asset, why it might be a good fit for you and what great opportunities it would bring? And then the second question was on the competitive environment in the French energy retail market. I was just wondering what sort of shifts you're seeing there. I mean, we've seen Total recently acquired Direct Energie. I guess, it looks like both the regulated gas and electricity tariffs are going to be sort of phased out over the next -- well, at some point in the future. So I was just interested in your views on the competitive dynamics in the French market.

[Isabelle Kocher, CEO & Director]

Yes. First of all, about Brazil. We already mentioned that we are seeking to diversify our activities in Brazil that are, as you know, mainly hydro. We started, in fact, already developing a transmission line in particular, we spoke about over the last quarters. We also are starting developing energy services activity. The gas network in Brazil will play an important role in the energy strategy of that country. You know that we have very strong know-how in that domain. We are one of the most experienced gas transmission player in the world, though that's effectively the reason why we said our interest for TAG. Apparently, we presented the best offer at the bidding phase, and then we are currently negotiating the terms and conditions of a potential transaction. It's not yet on an exclusivity phase. It is a long process, that's not end. And we have the opportunity to update you over the months to come. Regarding B2C, so you mentioned the move from Total on these markets. Not easy to say if it will reinforce the competition. Direct Energie, the company Total, both was in fact already very aggressive. Well, anyway, we will continue to develop into -- to develop our competitive advantage in that market, that is to say, first of all, quality of services. And we continuously increase the level of client satisfaction on this domain. Quality of energy, as you know probably, we are now proposing only 100% renewable power on this market. And finally, and that's maybe the most differentiating point, the ability to accompany our services -- or our clients with services. We have, for example, 1.5 million contracts now to maintain boilers at home. And we recently extended the range of services, developing, for example, rooftop installation offers and maintenance offers. That's only one example. So I really believe that in that domain, we have an ability to make a difference. The very strong dynamic we have on this B2C power market in France because, in particular, we gained 16%, number of contract in this field over the Q1 shows that effectively, we can play a very significant role.

[Operator]

We will now take our next question from Michel Debs of Citi.

[Michel K. Debs, Vice President]

I have a few questions. The first one is that you are the main shareholder of SUEZ, which raises 2 questions. Who will represent ENGIE on the SUEZ Board? Will Mr. Mestrallet remain your representative or will you appoint someone new? And what is the strategy that you want to employ to deal with this troubled asset? Will you let SUEZ work through its own problems or do you want to take a more active role? The second question has to do with your comment on the midstream business. Your press release and your comments talked about an improvement in margins. Are we talking about something structural or something seasonal? And my last question has to do with Belgium. The Belgium state has recently confirmed that it is planning to shut down all nuclear assets by 2025. But if you look at the energy mix in Belgium, it's very hard to see how it will work without nuclear. So what is the replacement plan? Are you in talks with the Belgian government to build replacement gas plants or renewable assets or giant batteries? What is the game plan in Belgium? Is there a reinvestment opportunity?

[Isabelle Kocher, CEO & Director]

So on SUEZ first, and then I will let Judith answer the midstream question. So on SUEZ, no change expected in the governance. And of course, we have an active role. We are, as you state, we are the main shareholder. Our main objective is that SUEZ is back to a growth and value-creative situation. You've seen that the SUEZ management announced a strong action plan. So we fully support this action plan and we closely follow the results. Judith, on midstream?

[Judith Hartmann, CFO & Executive VP]

On midstream, it's indeed, a very good quarter. I would mention a few topics here. One is we had pressure last year in 2017. You mentioned that -- you might remember that the south zone in France was missing gas and that we had to deliver gas at some cost. That was actually a EUR 40 million impact of a positive comparison to 2017. And then very positively, I would like to mention really the teams have been able to take advantage this year of some of the cold spikes in the first quarter, with about a EUR 50 million impact of really optimization around flexibility of contracts when it comes to gas. That's the 2 things I would mention.

[Isabelle Kocher, CEO & Director]

Well, and as far as Belgium is concerned, nothing really new, in fact. Just the fact that every day, it is even more challenging to replace in due time the nuclear fleet that is expected to be shut down between 2022 and 2025. You have maybe seen that a monitoring committee has been set in place by the Belgian government. And the role of this monitoring committee is to check and report yearly on the fact that this nuclear shutdown to come is compatible with the objective of the so-called Pacte Energétique. You have maybe seen the objectives of this Pacte Energétique, which are based on 4 pillars: security of supply, safety, affordability and, of course, you will know that a nuclear fleet is extremely competitive, and CO2 emissions. I would say, anyway, Electrabel has a big role to play in that country. Electrabel is the main supplier of power in Belgium, is the main player in the energy sector. So what we are very simply doing is to prepare Electrabel to be even more competitive month-after-month in order to play that role, either by the pronouncement of part of the nuclear fleet or by the construction -- through the construction of a new portfolio of capacities. And I believe that we really made progresses in the quality of services we have in this country in the development of B2B services, B2B solutions, EV solutions now and the fact that we stabilized our B2C activity, B2C portfolio, plus renewable development. So in Belgium, what we are doing is that we extended relatively significantly our scope of offers in order to be the key player, whatever the scenario, the Energétique scenario is for the future.

[Operator]

We will now take our next question from Vincent Ayral of JPMorgan.

[Vincent Jean Michel Ayral, Analyst]

First, very quickly, on the gas storage, there were low volume, and there should be a retractive flowback in the transition tariffs as per the new regulation. How much would this be according to your estimate based on Q1? So that would be one. On the working capital, you've been saying that the Energy Savings Certificates should be clawed back at some stage. So would it be by the year-end under your estimates? And how much would this represent? And I would also ask a question regarding Brazil. We saw the recent auctions on the renewables, and some of your competitors have been extremely aggressive regarding wind, among other things, with prices bid of around $20 per megawatt hour. That does not seem anywhere economic. We were pleased to see that you did not bid on these prices. But could you give us a bit of color on your investment criteria? And how do you play in this environment?

[Judith Hartmann, CFO & Executive VP]

So let me first start with your question on gas storage. The total year catch-up to be booked over the next 3 quarters is around EUR 120 million, so quite significant and, of course, in line with our expectation for when we gave the guidance. It was -- it goes into effect on the first quarter -- on the 1st April, sorry, of 2018, but it is effective of the 1st January. So that's why you're going to have the retroactive catch-up for the total year that you will see coming through in line with what we had assumed in the guidance. On your question on the certificates, there's 2 things that I would mention. One is, like I said, there is a partial offset in the B2B business that is relatively immediate, let's put it that way. But the bigger part is going to be translating into gas cost -- gas prices over a period of time and, like I said, partially through the regulated tariffs that are going to be updated and partially through the market offers that will align over time. So some of this, you can assume it's going to actually take 12 to 18 months. And then on your third question, on renewable auctions in Brazil, like Isabelle mentioned, we are looking at renewables like we look at any other project, which means that we only accept them if there is the right value creation. And indeed, we had some wins in Brazil when it comes to wind over the last 12, 18 months. And those are good projects for us. Campo Largo, if you remember, is one of them. But there's a number of projects that are very positive, and we're going to -- we are quite positive about the Brazilian market from our viewpoint.

[Operator]

[Operator Instructions] We will now take our next question from Carolina Dores of Morgan Stanley.

[Carolina Botacini das Dores, Equity Analyst]

I have 3. One, going back to Brazil, the gas transmission pipeline is quite a sizable investment. So my question is when, if you have in your mind an idea or a target of maximum exposure to the Brazilian real? My second question is also looking into long term. You're very close to complete your transformation plan. When should we expect for you to tell us what is the plan B on 2018? So when should we get longer-term guidance? And finally, when you announced the sale of your LNG business to Total, there was a EUR 550 million potential increase in price in case all your markets recover. My question is if we are already at that point to consider that this EUR 550 million are very likely to be cashed in.

[Isabelle Kocher, CEO & Director]

Thank you for your question. So on Brazil first, and then Judith will take the 2 other questions you have. So on Brazil, again, what we are trying to do is to diversify our portfolio. In order to balance the type of exposure we have in this country, we intend to go, I suppose this is what you expect, we intend to go for this TAG acquisition if we gained that competition with partners, as we do in a very high number of cases. So you have to take that into account in your -- in the way you see our future exposure in Brazil. But on transformation plan and what we expect for beyond '18, so as I already said, we will organize before the end of the year, it will be during Q4, an Investor Day, and it will be the opportunity for us to give you more guidance and more details on the way we see our company. And we will disclose the date for that Investor Relation meeting over the months to come, a little bit too early today. Judith, on LNG.

[Judith Hartmann, CFO & Executive VP]

So on LNG, indeed, there is, of course, positive news to come on the earn-outs that we're hoping to get. We have -- all I can say at this stage is we are -- we started to monetize this option, and there will be a partial impact already in 2018.

[Operator]

We will now take our next question from Emmanuel Turpin, Societé Generale.

[Emmanuel Philippe Turpin, Equity Analyst]

I would start by a clarification on your press release on bottom of Page 2, please, to make sure I'm not confused. You mentioned on note #1 about the accounting of your LNG midstream activity, saying that it is classified as discontinued as from March 2019. I wanted to know, therefore, if there was anything for the LNG business for at least part of Q1 '18. If so, how much? My second question, I would like to come back to your full year '17 slides, especially Slide 36 wherein you give us a very informative bridge for the guidance of the EBITDA level for 2019. And in particular, you were expecting for the middle of your range an improvement in EBITDA for the next -- networks business of about EUR 150 million. In the context of your slight decline in Q1, are you still comfortable with that budget for the full year? On a similar question for client solutions, which is supposed to bring the biggest increase in EBITDA at around EUR 300 million for the full year, you reported only a slight increase in Q1. Again, are you comfortable with that kind of EUR 300 million increase for the full year? To finish on this topic, on the contrary, you were only hoping for about EUR 50 million increase for merchant and other. The market condition seems to be helping you as you've already achieved much more than that in Q1. Is that a factor that could help you aim towards the top of your guidance for the full year? And finally, coming back to Belgium, we've had news about some outages at some of your plants. All in all, could you give us your best budget for nuclear production for Belgium for this year? And if you're not able to give us a hard number, are you still comfortable with your assumptions as projected in your budget for nuclear in Belgium?

[Judith Hartmann, CFO & Executive VP]

Yes, so a lot of great questions. Let me start with the -- let me start with your questions on the EBITDA, the different drivers of businesses and how it's going to look like for the end of the year. So you can see from the pages that Isabelle and I presented client solutions, indeed, an increase of 2% in the first quarter. We expect a much higher increase for the total year number. And yes, we do feel confident around that. It is -- you can assume a double-digit increase for the total year number. And most of it, I explained earlier when Vincent was asking the question, it's a B2C timing. You're going to see continued positive dynamics in B2B and B2T. And some of the cost I mentioned in the B2C, like you said, is going to wash out over time. So that's our client solutions. When it comes to networks, a negative 3% in the first quarter, which assumes a big increase if we want to be at an increase that's projected over the end of the year -- for the end of the year, and that is mainly driven by -- and yes, same thing, confident, mainly driven by what I mentioned earlier, it is the catch-up on the total year number of the storage, which doesn't show in the first quarter. Adjusted for that, the first quarter would have been flat on networks. And so you can assume a single-digit growth in networks for total year. When it comes to generation and renewable thermal contracted was 12% in the first quarter. Now this is more positive than what we were expecting from the total year. The total year is in line of what we thought was going to happen. We had in the -- in 2017, in the latter part of the year, some positives around LDs, around BD costs, around some litigation. And so it is going to be a positive increase at the end of the year, but nothing like the 12%. It's single digit, in the low single digit. And then generation merchant, we obviously had a very good first quarter, I mentioned the main reasons, 37% up. This is going to reduce over the course of the year, mostly driven by nuclear volumes and nuclear price, both of them already in our guidance. And so you can expect a lower growth rate for the total year, but high single digit, I guess, is would be what I would say to that. So I want to -- obviously, one of the underlying question behind this is, how do you feel about the total year? We feel good, and we are confirming our guidance here. There is some changes in between the lines, but fundamentally, the dynamics are like we expected them. So that's good news. Your question on Belgium is, of course, part of the answer of what I just said. We do have -- the biggest thing that is impacting us this year, but like I said, was already in the guidance is Doel 3, which was an outage that is supposed to go until August. You will remember that we had some outages last year also on a number of things, Doel 3, Tihange 1. And so quite frankly, the way it's expected right now, there isn't that much difference between the 2 years, maybe pressure of EUR 15 million, EUR 20 million on the year-on-year comparison. But like you said, that this already baked in into our guidance, and we feel relatively confident for the rest of the year on the dates that we have assumed. So now when it comes to your first question on LNG, yes, because it's a major business line, it is now treated in IFRS 5. And so we have restated the numbers. Those numbers are public also for 2017. It is now shown as discontinued activities for both quarters, 2017 and '18, which means that LNG does not contribute to our operational KPIs and EBITDA and COI. And there was a pro forma that was put out there that you should be able to access. The year-on-year comparison of this, which was part of your question, is similar. It was a slightly -- it would have been slightly more negative, I guess, last year. But like you said, it is now excluded because of the IFRS 5 treatment, in line with obviously IFRS accounting.

[Operator]

We will now take a follow-up question from Vincent Ayral of JPMorgan.

[Vincent Jean Michel Ayral, Analyst]

Just a quick follow-up on this one because I received a couple of questions from clients on that. Regarding the guidance, my understanding there is that IFRS 5, you do consolidate, it's all good. You feed into the net income, but your guidance is on a net income excluding these activities, so you [ show the ] retreatment for your full year guidance. So that would be one additional clarification. And second question, regarding Nord Stream 2, there have been a fair amount of noise there. Could you give us a bit of color on what is at stake, financially speaking, for you if Nord Stream 2 were to enter into difficulties and, let's say, be stopped and then if it's remotely realistic, it would be of interest.

[Judith Hartmann, CFO & Executive VP]

No, a very good clarification. Yes, of course, what I've just described on IFRS 5 on LNG is in line with how we gave the guidance, and so there is no difference there. And on Nord Stream, Isabelle, probably, yes?

[Isabelle Kocher, CEO & Director]

Nord Stream 2, you follow closely the situation as we do. That's true that this project is facing strong opposition despite the fact that this would be a key infrastructure for Europe, but a key, strong opposition from the U.S., from the EU Commission, for some Eastern and Central European parties from Ukraine. So we are active in order to discuss with the relevant players on the elements that will ease that project. You have to be confident on the fact that we are well-protected, legally speaking, so it's not a project in which we have financial risks. And it's probably too early to say what will really happen.

[Operator]

Ladies and gentlemen, there are no more questions. I will now hand back over to Mrs. Kocher.

[Isabelle Kocher, CEO & Director]

Well, thank you very much. This is then the end of our conference call. Thank you for attending, and we wish you a good day.

[Operator]

Ladies and gentlemen, this concludes the conference call. Thank you for participating. You may now disconnect.