Ipsos SA

PAR:IPS

Earnings Call Transcript 2020-Q3

[Operator]

Good day, and welcome to the Ipsos Third quarter Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. Didier Truchot, Chairman and Chief Executive; Laurence Stoclet, Ipsos Deputy CEO, Chief Financial Officer. Please go ahead, ma'am.

[Didier Truchot]

Okay. I will start first just to give to everybody a quick overview of where we are right now. Before I would like to, of course, to say to everybody, good afternoon. And as you may see on the deck, if you have access to it through our website. We have recorded for the first 9 months of 2020 revenue of EUR 1.255 billion. And for the last, which shows an organic growth of minus 9.9% in comparison with 2019. But for the last -- for the third quarter, so from July to September, a decline, which has been much, much lower at minus 3.3%, and which shows that, I would say, month after month, we are recovering from the deep, let's say, crisis in which that we have faced during the lockdown in many countries from March to end of May and even in some cases June.So I would say, the situation, the numbers for the whole period, of course, important, but they don't necessarily reflect the status of our current business. And I will let Laurence Stoclet to illustrate this trend through the evolution of our sales month-by-month since the beginning of the year.

[Laurence Stoclet]

Yes. Good morning or good afternoon to all of you. I am on Slide 3 of the presentation, which is on our website, which is talking about our order book. And to be clear, our order book is a different metrics than our revenues because our order book records all our sales, net of cancellations or any postponements that we might have; sales, that will be recognized in revenue during the course of 2020.But this order book is obviously a different metrics than the revenue because we recognize revenues, not at the time of the sale but throughout the period where we conduct the research programs for our clients from the day the project starts through the day we deliver the results to our clients. So once again, it's a different metric, the order book. It's about all our sales, but all our sales which will be recognized into our revenues this year.And the order book, in fact, give a kind of predictive, if you like, view of what will be the revenue for the whole year, especially when we are at the end of September as a lot of the sales has been recorded. So on that Slide #3, you can see how significant -- how huge was the impact of the strict lockdown measures that we had in many countries around the world, especially starting in March in Western Europe. And you can see that our order book, our sales were down by 40% in March, but knowing that the impact was in the second part of the month of March. Then in April, we had the full month of full lockdown and our sales were down by 60%. May was slightly better at minus 28%.And then starting in June, we went to, I would say, a situation, which was much better with June sales, which were positive. And in Q3, this is the whole Q3, which is positive with July, which had a strong growth, above 20%. Of course, there is a bit of a catch-up from what had happened in the previous months. August, which was slightly down, but August is never a big month for us. And September, which is also slightly up.On a cumulated basis, our order book at the end of September stands at minus 7.5%. And once again, it gives you at this, of course, date, some vision of what could be our revenues for the full year. If we go on Slide 4, we believe that it's interesting to see where this improvement is coming from. The improvement coming from the situation after the first 6 months of the year. So here, we are showing to you our top, I would say, sectors -- industry sectors of our clients, their contribution to our revenues and how this has evolved. In dark blue, you have the evolution in last year, in 2019, then where we were at the end of June this year and where we are after the first 9 months.And you can see that all our top sectors are improving. Some of them are still down, CPG, TMT, but pharma is now up after 9 months. And of course, the public sector, which was already in a stronger growth mode has now reached a very significant growth. So that's, I think, an interesting piece of information, which is showing, I would say, in most of our large sector, which is an important point, an improvement of the situation versus where we were at the end of June. Making a focus on Slide 5 on our public sector activities as they are all together, driving the growth of the group. There are strong needs, of course, of following what's happening with the COVID-19. And we have as well some private sector clients who have also some requests in those areas. This part of our activity is a large part of our business in the following market in the U.S., in the U.K., in France, in Canada and in Sub-Saharan Africa. So in some markets, this COVID-related work that we have been proud to get and to run for a lot of governments. They have, in fact, offset the fact that typically social research implies some data collection methodologies, which conducts us to go to the home of our respondents. And a lot of those face-to-face programs had to stop during the lockdown. So everything is not positive in that public sector practice. Once again, we have a lot of work that we do face-to-face. But the need around the COVID was so big that it has more than compensated the programs, which had to be stopped during the pandemic and some of them still being stopped. So this is an interesting part of our business. And we are once again proud of being able to support a lot of the need for data and insights from our public and private sector client.When looking at precisely at data collection mode on Slide 6, I mentioned a moment ago that a lot of social research programs are conducted normally face-to-face because it enables to have more representative sample. Well, this face-to-face activity has been impacted in many parts of our business. It was representing 30% of our business, and it is down to 25% after the 9 months.On the contrary, our online business has increased by 5% coming from 55% of our business to 60% of our business. The rest being more or less stable our postal activities and our telephone activity. So just one comment. This data is about 70% of the Ipsos business, which is survey based, and of course, Ipsos has another part of its activity, which is nonsurvey activity, which is not impacted in the same months.Precisely, looking at what parts of our business is impacted, and maybe what parts of our business is a bit less impacted. You know that if you are following Ipsos since some time that we are looking at boosting our sales through new services. And we are happy to see that those new services in themselves are more resilient than the rest of the business. For the 9 -- first 9 months of the year, our organic activity is down by 6% with our new services were down by 9.9% organically for the whole of the [ parts ]. So those new services are more resilient, which is, of course, a lot of those services are digital in nature. On Slide 8 of this presentation, you have the contribution of each region to our activity for the first 9 months. EMEA is our largest region. The organic growth over 9 months has been minus 2.5%. So it's the region of the world, which is less impacted. And this is where we have been conducting a lot of work around COVID-19. The Americas are down by 14.5%, knowing that in this part of the world, our activity in the U.S. has been much better than the rest of the region. Obviously, the pandemic has impacted very significantly our business in Latin America. And in Asia Pacific, the business is still down at minus 17.5%, knowing that now our business in China is more resilient in a way and has come back to some growth. What is interesting to see, and this is what we have outlined in the press release that was launched after the closing of the Paris Stock Exchange today at 6:00 p.m., our activities altogether across those 3 main regions. Our activities in the developed market has been better than in the developing market, which are at minus 19% compared to minus 5.8% for the developed market. But of course, once again, this might be also linked to the fact that a lot of our public sector activity is more concentrated in developed markets, developed markets. And you can see on Slide 9, the split of our revenue by audience. So by segment, on which of the population on which we are conducting our share base. And you can see that it is the citizen audience segment which is obviously well -- doing well with the crisis. The doctors and patients segment is also doing better than the rest of the activity and is now up after the 9 months. Our consumer segment is down by 17%, and our client and employee segment is down by 22%. So this is for the analysis of our revenue. If we look now at our operating expenses, we have put in place a saving plan that you have on the following page. And this saving plan is well on track with the announcement that we made at the end of July. We have a saving plan, which is to save approximately more than EUR 100 million compared to last year. And the split is EUR 42 million for the full year on our payroll. This is linked to a different measures that we have taken since the end of February, but that had more effects now in the third quarter of the year, freezing recruitments and replacements, freezing our wages increases, asking some of our top management to take voluntary reduction cuts and other decrease on our payroll such as unpaid leave and other types of measure, furlough, et cetera. Coming to the fact that after the first 9 months, we have saved a total of EUR 30 million compared to our payroll at the end of September last year.We have also benefited, and this is another -- this is on top of governmental subsidy program, chômage technique, we say it in France, but which has a number of similar programs in many countries of the world, not all of them, but more than 20 markets where Ipsos has business. We have been able to benefit from those programs. It's a total of EUR 25 million of subsidies that we have benefited from at the end of September, and we are expecting a total of EUR 29 million for this full year.As far as our overhead and our general operating expense are concerned, we have obviously suspended our international travels and a lot also of our domestic travels. We have undertaken to renegotiate a lot of our leases, and we have also taken some cuts in other discretionary expenses.In total, we have saved EUR 30 million at the end of September compared to where we were last year. And we are expecting a total of EUR 38 million of savings for the full year. So we are well on track once again to meet our full year savings plan.On Slide 11, we are showing our position in terms of financial debt. This is important to say that our debt has decreased compared to where we were at the end of December and also where we were at the end of June, thanks to the projection of free cash flow of a significant amount of EUR 176 million for the 9 months. Thanks to that, our gross debt has decreased to EUR 650 million, and our cash is at EUR 270 -- EUR 215 million after having repaid on the 28th of December, a significant amount of $185 million of a tranche of our private bond USPP bond, which we have been able to do without organizing a refinancing transaction.At the end of September, after this repayment, we still have more than EUR 400 million of undrawn credit facilities with maturity over 1 year. And I let, you, Didier Truchot, comment on the outlook for the full year. We are not giving any specific, I would say, number, but there are good reasons for that.

[Didier Truchot]

Thank you. Well, the reasons are, of course, obvious. As we have experienced in the spring our services and how we deliver them are linked to the possibility to just were to -- not necessarily to go to the office, but at least to be in a situation where, let's say, the normal course of businesses can be managed.So we know that what is important for us is not the pandemic itself. But of course, the measure that the authorities are using, are implementing to control this pandemic. If it is what is going on right now in a certain number of areas in the world like in Paris, for instance, where we have a curfew at 9:00 p.m. But some way, the city in the day is working and living as usual.I don't think that it has any specific negative impact on our business. By the way, our activity in France, even this week is pretty healthy and dynamic. So it's more -- and this is where we all have some questions and which does explain also why it's difficult to provide a clear guidance. We don't know if or if not, there will be, again, some, what we call, great lockdown or great -- or full confinement in the next few weeks.If there is -- if we are staying, let's say, in the current situation and even if the number of areas where there are some restrictions is increasing, but if we are more or less in the same situation as we are now, I think that we'll be able to benefit from a pretty robust commercial activity. We are in, I would say, a positive path. Laurence have shown some growth number for the third quarter of the year. And we still believe that, let's say, we can keep this kind of good numbers for the last 3 months, which then means that our , let's say, in total, for the full year, we will reduce the decline that you have seen, which, by the way, have already been reduced. In the third quarter, we are at minus 13%. More or less at the end of June, we are at minus 10% or in fact, 9.9% at the end of September.So we should be better than that for the full year. So this is what we expect. This is what we are working on. With, of course, again, this question that we have, which is about the evolution of the pandemic and the measures that the authorities may use or not to limit the development of the spread of the COVID-19 through the population. So this is where we are. Laurence Stoclet and myself, are, of course, ready to answer to any questions that you would like to ask. Thank you very much.

[Operator]

[Operator Instructions] And our first question is Nicolas Langlet with Exane.

[Nicolas Langlet, Research Analyst]

Yes. I've got 4 questions, please. The first one, if we start looking at 2021, have you seen some increased interest from some clients already, how they remain very attentive and they prefer not to engage already on 2021? First question.Second question, you mentioned the adjusted -- stable adjusted EBIT margin year-on-year at the end of 9 months. In absolute term, by how much adjusted EBIT declined year-on-year? In my estimate, it could be around EUR 10 million. Do you think it's a fair estimate? Three, of the EUR 109 million OpEx reduction this year, how much do you think could be sustained in 2021? So of course, all the state measure, et cetera, will reverse. But for the rest, do you think you can keep some of the savings?And finally, on the share of online data collection, that increased to 60% at the end of 9 months, do you think this is something you will be able to sustain going forward? Or do you think when things go back to normal, you will go back to the previous 55%?

[Laurence Stoclet]

So maybe Didier will take the first question about the trust of our clients, and how they're engaging...

[Didier Truchot]

No. They are, I think, right now, more discussions, proposals, projects than ever. And for part, it's just because, of course, there is a catch-up story, which means that some of our clients have been very cautious in the previous period.And now while they need to work on what they want to do, what they can do, what are the new products or services that they may launch. And which, by the way, may be compatible with the pandemic situation or even with the situation that everybody is trying to understand and which will follow the end of the, let's say, pandemic. So overall, there are a lot of work, which shall be done by our clients and by us to some way to decide or to design what kind of information they need, and how they can get it. So there is, I think, a great -- we from this perspective, we are in a great period then. Of course, I believe that many of our clients are just like us. They don't know exactly what will happen in 1 week, 1 month, 3 months from now because if you look at where we are in France right now, maybe some specialist knew in August that we would be in a situation in October where there are more new cases of contamination than ever. But I believe that most of us believe that, of course, the pandemic would not be over but that it would be under some control. So overall, I would say there are many discussions, many projects. There are some, let's say, orders, which are going through our books. And as we have said, as we have shown, it has been the case in June, July and September, obviously being a bit weaker. So yes, we think that we are facing or that we are acting and working right now in a dynamic market. But of course, decisions are taking maybe longer to be a -- it's longer to take decisions. There are more volatility, more in and out in some ways. But we are used to that right now. I'm reasonably confident, once again, that it should be okay for the end of this year but also for next year if, of course, the pandemic remains under control, and if there is no new full lockdown in many markets. The truth, by the way, is that the situation in which -- that we have faced in April, May, we hopefully not be seen again because there was some weeks where the whole world were under lockdown. So -- and our business was very bad. Not just in Europe or in North America, but also in Asia and even in China.If you look at the evolution of our activity in China, and now it's doing much better. And we hope that the Chinese will show in the next few weeks, the same efficiencies than the one that they are showing right now, which means that hopefully, for instance, Asia will do better than previously. And that overall, the situation will not be even if there is some restrictions, new restrictions will not be in the same situation as we -- that we have experienced during the last spring.

[Laurence Stoclet]

About your second question, about our level of operating margin and net income ratio which are, as we have indicated, more or less stable compared to last year. It means, of course, in absolute terms that our operating profit is down as our total revenue is down by 10.6% compared to last year after 9 months. So -- but it's -- and your calculation of around EUR 10 million less of operating profit is, let's say, is an order of magnitude, which is correct. Your third question is about the phasings that we had and how sustainable they are growing into next year. Well, I will say, it all depends. But there are some aspects to that, where, hopefully, we would not have the same savings because it would mean that for the whole year of 2021, we would not start traveling again, for example. So it's the case where we believe that there will still be some reduction in travel compared to where we were in 2019. But we hope that the phasing will not be of this order of magnitude. We will continue to benefit from some of the rental negotiations that we have had going into next year. As far as the government subsidies are concerned, well, it all depends about what the government will do. If our activity are going better, anyway, it is quite possible that we will not continue to benefit from those measures.For example, in France, we have decided to stop asking for governmental subsidies starting in July because our activity was better. And we had to use our full growth flash in order to work on our clients' projects. So it's not specifically an aim that we have to continue those savings. Hopefully, we will increase the salary of our people next year. They have worked a lot. Their -- all the salaries were frozen this year. And we want also to reward our people for what we believe is a very correct performance, at least up to now in 2020 despite the pandemic.And for the fourth question about our data collection mix. For now, several years, almost 20 years, the share of online have -- which was almost 0 in year 2000 then 1%, et cetera, it has increased to the level where we are now at 60%. And we expect that some of that -- so what has moved to online will probably stay to online. But what we hope is that certain programs which had to stop, which were face-to-face will resume. And therefore, the weight of face-to-face hopefully would be slightly higher going into next year. But once again, this is totally new to the way the pandemic is developing and whether there are strict lockdown measures or not. But the increase of digital and of online is a trend for the last 20 years in a market like the U.S., which is, I would say, almost fully digital, 90% of our surveys are run through online and only 10% are still run either through telephone or postal services.So of course, this gives you what can be the objective that in emerging markets, to reach -- still reach out a certain population and as well to conduct certain social research program, face-to-face is the most adequate and relevant methodologies. So it will not disappear in at least the next 5 to 10 years according to us.

[Operator]

And our next question is Conor O'Shea with Kepler Cheuvreux.

[Conor O'Shea, Head of Media Sector]

I'll take 4 questions as well, if I can. First question on the public sector, obviously, an amazing performance this year. Do you have visibility into the pipeline in the fourth quarter? Do you think it can remain as strong as we've seen? That's first. Second related to that, obviously, there's a big, let's say, dependency on the public sector and health care in terms of the improvement in the third quarter. In particular, in the public sector work you do, does that tend to be very different margin from the group average, higher or lower?Then the next question, just in terms of consumer goods, the biggest sector. I think we've seen some evidence that they are more active in generally marketing services in the third quarter, that not really coming through in your numbers. Any thoughts why that's not the case.And then the last question, yes, on real estate property savings long-term from working from home and so on. What is your thinking at this stage? Could you move to a hybrid working from home office model, which could generate some significant savings as leases expire in the medium term?

[Didier Truchot]

I will answer to that question because it's a pretty important topic. Right now, the -- I would say, the willingness to work-from-home is very different from one country to another. If you look, for instance, at China, everybody is working from the office, and it's not because we ask them to do that. It's because this is how the Chinese work. In U.S., nobody work from the office. And if you look at our largest and most prominent clients, like the media and tech company in U.S., they have made some statements, for instance, Microsoft has said that starting now any Microsoft employee could work from home if he wants to do so. This is a right. It's not, let's say, something that which need any approval from the management of the company.And this is not just for the next 6 months. It's for either -- more than they may change their mind in 2 years from now, but this is at least what Microsoft have said. And Google offices in Mountain View, as everybody knows, are closed. So this is -- so it's very different, of course, as you can imagine, France is somewhere in the middle, as usual. So we are -- some of our, let's say, there are some companies and professionals who are willing to organize a lot of work from home and some other, which are more recent. So on my side, and this is, I would say, the position of Ipsos, I'm still not convinced that working from home is the right solution. Of course, we can have some kind of hybrid story, which once again is very French, right? So a couple of days in home, 3 days in their feet, et cetera, it's not necessarily what we want to implement or at least what we want to do is to see how we can organize efficiently, any kind of change between the previous situation where everybody or, let's say, a vast majority of our staff had to work from an office. Because we have seen during the lockdown some, let's say, important differences between, for instance, and people who have worked a lot and some other who didn't work so much, not necessarily because they were lazy, but also because there, we are not in conditions to work well from their office. We have seen some, I would say, different -- everything has not worked perfectly well, I would say.So we need to learn, and we need to do things in an organized way, and there are some teams within Ipsos who are working on that, and we see what will happen. What is -- the true feedback right now, there is, let's say, will from a certain number of professional mostly in, I would say, the Anglo-Saxon world to work from home. It's not necessarily where at least at this intensity, we will want to be in the near future.So does that mean that we can save some money in our, let's say, rent? As we have not, let's say, a clear multi-year plan on exactly what we want to do. We have not made any specific forecast about how much money we could save if we position differently this -- if we position differently Ipsos from what it is now. Now our, I would say, way of working is to in some ways to align with the country's culture, which means that in U.K., in U.S. most of our staff are working from home. In Asia, but also in some European markets, most of our staff are working from the office.

[Laurence Stoclet]

To take your first question about the public sector clients, we hope that what we have seen now for the first 9 months will obviously continue in Q4 as I would say, unfortunately, the pandemic is continuing. So it's around -- so that's what it is, is the margins -- are the margins different for our public sector work? Yes, they are in terms of gross margin. So our revenues less the direct external or out-of-pocket costs of collecting the data. Why? Because in many cases, we are using face-to-face methodologies to do that.And it's precisely because it has face-to-face capabilities that we have been able or, let's say, telephone capabilities, for example, that Ipsos has been able to work with the public sector clients. So usually, the gross margin of our off-line business is lower than the gross margin of our online business. We have already talked a lot about that. But it doesn't mean that the operating margin is different because in a number of cases, we are conducting those large programs with, I would say, small teams of experts. So it's a huge field work to manage, but it's a small team of social research experts, which are then working on the analysis of the data. And usually, it is compensating for larger direct costs by lower, I would say, payroll costs of our permanent staff. So let's say, it doesn't really impact at the end of the day the operating margin of it. As far as our CPG clients are concerned, it's going a bit better in Q3, true that it's not back to growth. You need to know that for a lot of CPG clients, we do product testing, which is a type of research, which is using fact-based methodology and where a lot of the work, in fact, had been stopped because it was not fully, I would say, compliant with some health and strategy protocol. So that's 1 of the reason why we have not seen yet, I would say, some catch up. We are hopeful or we were hopeful for Q4 but it will already depend once again on those measures that might be taken by the health authorities.

[Conor O'Shea, Head of Media Sector]

Okay. That's very helpful. So just on the margins. So just to repeat that you were flat more or less year-on-year for the 9 months. So unless we go to a particularly negative scenario in Q4 with the curfews and so on, it's a reasonable expectation to be flat for the full year or something around that?

[Laurence Stoclet]

You mean the ratio, I was talking about...

[Conor O'Shea, Head of Media Sector]

Yes, yes, yes, for the percentage. Just for the percentage group margin.

[Laurence Stoclet]

What we have said, and this is what we are confirming is that H2 and for the [indiscernible] part of the year we will be better, and we can confirm that, of course, then the start of the year. We are not making in this release any, I would say, commitment. We hope it will stay where we are at the end of September, but we are not ready. We have not put that in our press release.

[Operator]

And our next question is from Matot Emmanuel with ODDO.

[Emmanuel Matot, Analyst]

First, is there a risk according to you to seize a high level of cancellations and postponements of orders in the coming weeks in Europe due to the very negative evolution of the pandemic, even if governments are not taking, let's say, decisions of strict lockdown. I wanted to know also if you start maybe to have some difficulties to operate currently for face-to-face surveys in some large countries in Europe due to some government restrictions?And my last question is about your savings for 2020. So the full package of EUR 109 million, if I am right, you do expect much less savings in Q4 than in Q3. Is that correct? And why?

[Didier Truchot]

I don't know why you said that by the way. I'm not sure that this is our plan. What is true is that there will be less governmental subsidy because most of our -- there is no more part time work except in a couple of countries where we -- it was discussed to keep it till the end of the year. But we are still -- we have implemented these measures and important to understand that. In March, April, which means that the full effect of these savings have been seen in May, June and whatsoever. So maybe we will have a bit less savings in the last quarter, but not -- it will not be extremely different because on one side, we will probably have, once again, most of our staff working in full time. We will have less governmental subsidies given if on that line things are moving from one month to another. So for instance, some governments are announcing some new measures right now, which they did not plan 1 month ago just because of situation of different businesses have not recovered as much as they expected. So it's a pretty -- how can I say, it's a pretty volatile situation. Now when we are talking about will we have a lot of postponement, cancellations in the last weeks of the year. I don't know. But I can tell you that this is not what we have seen in the last couple of weeks because we are tracking, of course, that on a weekly base. And I always start my week Monday morning by looking at our sales of the week and -- which includes, of course, some views about cancellations and so on. And for the last week, so a few days ago, the volume of postponed cancellation was absolutely aligned with what we have in a normal time. So once again, how the situation will move, I don't know. Right now, it's still normal. But in a few weeks, in 2 weeks, 3 weeks from now, maybe there will be another movement of -- like that, but I don't think.so. By the way, not all of what we are doing online have resumed. Some of this contract will not resume before the beginning of the year at the earliest because the clients, of course, are cautious. So some clients even in the public sector are pretty cautious, they have not restarted these contracts.So we should be even -- on behalf wave of cancellations, hopefully, it will be less impactful than what it has been in the spring.

[Emmanuel Matot, Analyst]

Okay. And regarding your operations for face-to-face surveys, you don't have any difficulties at this time?

[Didier Truchot]

It depends where. This is a situation where, once again, the world is not harmonized. So the situation that we are facing in U.K. is different, especially I think, they have organized lockdown in waves, for instance, of course, where significantly we are doing in waves right now is stopped because of the measure, which has been taken [indiscernible]. Fortunately, we don't work a lot in waves. So -- but -- all right, especially in [indiscernible]. So I would say there is no difference from what is going on in the other parts of the world. The only thing which is absolutely certain is the fact that in China, the situation is very different from what it has been in February, March and April. Now the Chinese society is back to its normal working. And you know some companies have already released some positive comments and numbers about their business in China. It's more or less the same thing for us. So it's not -- we are not growing by 25%, but we are certainly not moving down.

[Operator]

[Operator Instructions] And our next question is from [ Philip Hawkins ] with 2R Capital Investment Management.

[Unknown Analyst]

My first question is on the CPG sector. I mean you outlined and explained that, of course, due to the face-to-face nature, it's impacted by the lockdown. But I mean, what is your midterm outlook in the sector? Because -- I mean, in 2019, we saw already a bit of an improvement, we saw more spending from the sector. I mean how would you assess, yes, the midterm outlook in terms of spending if there's any recovery there? And secondly, I would like to ask on the net working capital. So I believe that in the last results, you explained that there was a cash inflow of EUR 167 million due to a decrease in receivables. So I just wanted to see if you can tell us as the business activity has recovered, is there also a normalization in terms of net working capital levels?And finally, I just wanted to see if you could give us also some sort of information on the CapEx. So I mean, yes, what is your -- if you can give any guidance on the 2020 outlook for the CapEx plan?

[Laurence Stoclet]

So about the CPG sector, we hope that it will recover even though a lot of those clients are themselves into them, I would say, transformation plans and have a target still to decrease their marketing spending for some of them. But from what we have in our order book, and you've seen that our order book was slightly better than our revenues. This is -- a lot is coming from an improvement of the situation with the CPG clients. You had a question about our working capital. And I can tell you that, yes, our working capital has obviously improved compared to where we were at the end of last year. But having in mind and we had talked about that, that our generation of cash at the end of 2019 was particularly low. And we were expecting cash inflow from good sales that we had in Q4 to be received in Q1. And this is what has happened, and we had a record first quarter of cash coming from our clients. So yes, if -- as our revenues are still decreasing at the first 9 months of the year, so we are at minus 10%. Of course, we still have a positive variance of our working capital, which is a decrease of our accounts receivable because of the decrease of our activity which translate into more cash for us.So it's good, but it's good, except that it's linked to decrease of our activity. So you can see it's a positive in -- but it's not something that we hope will obviously continue.

[Unknown Analyst]

And I think the last one was just on the capital expenditures, whether you see that this will be maintained over 2020. So whether the target of, I believe, it was EUR 45 million will still be maintained?

[Laurence Stoclet]

Yes. At the end of September, we are at around EUR 30 million. So we are slightly down compared to the same period of last year, where we were slightly above EUR 30 million. We were at EUR 31 million. And for the whole year, last year, it was around -- not EUR 45 million, it was more around EUR 40 million -- a bit above EUR 40 million. So we will probably be slightly down compared to that, but not significantly down.So once again, we are a few millions down compared to where we were at the same period last year. But not significantly because there's a lot about IT. We need obviously IT in that -- in those circumstances, it's true that we are not spending money in relation with our offices, and this is where the difference is coming from.

[Operator]

And there are no further questions at this time.

[Didier Truchot]

Okay. So maybe we can end that call. I would like to thank all of you for your interest, but also for your patience because as everybody else, we are, of course, looking at the evolution of the situation and what is going on in Europe, but also in U.S. By the way, we are very involved in the polls for the next presidential action in U.S. So if you go to our website, you may see some information about who will -- who is leading the game. And of course, it will have -- as the pandemic itself, some consequences on the evolution of the world and the evolution of our business, but that's a story for November. So thank you very much, and see you soon. Bye-bye.

[Laurence Stoclet]

Bye-bye.

[Operator]

And this concludes today's call. Thank you for your participation. You may now disconnect.