Compagnie Generale des Etablissements Michelin SCA

PAR:ML

Earnings Call Transcript 2019-Q1

[Operator]

Ladies and gentlemen, welcome to the Michelin conference call. The conference call will be conducted by Mr. Florent Menegaux, Managing General Partner; Mr. Yves Chapot, General Manager; and Mr. Marc Henry, Chief Financial Officer. You are able to download the presentation from Michelin corporate website. I now hand over to Mr. Florent Menegaux, Mr. Yves Chapot and Mr. Marc Henry. Gentlemen, please go ahead.

[Florent Menegaux, General Managing Partner]

Ladies and gentlemen, good evening. Thank you for joining our quarterly conference. We are going to discuss with you our sales performance in the first quarter. And I leave the floor to Marc Henry, who is going to explain to you where we are at, beginning of 2019.

[Marc Henry, Executive VP & CFO]

Thank you, Florent. Good evening, everyone. I'm happy to present to you our first quarter 2019 sales, which have been up 9.3% at constant exchange rate and up 11.3% at current exchange rate to EUR 5.8 billion led by a robust price/mix and a strong contribution from newly acquired business. These results represent a resilient performance by the group in difficult markets, as you know, with the volume contracting by just 0.5%, where passenger car and light truck tires share of market have been maintained in an environment that, as you know, has been impacted by dropping OE demand and slightly declining replacement markets in Europe. As far as truck tire are concerned, we experienced a continuing growth in slightly contracting markets. Specialty tire, we confirm of course our 2019 growth ambition despite first quarter stable, which has been impacted by supply chain issues in mining tire, as we explained it, and also by the focus on margin in OE off-road tires business. This also represent a robust price/mix effect, plus 2%, still led by disciplined price management and a sustained product mix enrichment. Of course, we demonstrate a strong contribution for the recently acquired business, Fenner and Camso, with the integration proceeding according to plan; favorable currency impact of course of 2%. And during this quarter, as you know, we finalized the acquisition of 88% of the Indonesian tire maker, Multistrada. Of course, our 2019 guidance is confirmed.On Slide 4, we described roughly the market with the passenger car and light truck markets dampened by OE segments and replacement demand in Europe. Our truck market are almost stable. And when we look at the OE market, as you know, the OE showed a sustained decline in global demand, roughly minus 8%, where the replacement market, we're up 1%. The positive was coming from North America, 5%, but driven by non pool. The pool was only up 2%. Its impact of course was the import duties that are being put in place. And last point is Europe was negative, impacted of course by Germany and Turkey, mainly. As far as truck tire are concerned, the OE was strong with a 4% growth led by South America and North America; Europe being flat. The replacement being slightly negative at minus 2%; Europe being negative, mainly Turkey and the Great Britain and North America, minus 7%, which is a nonpool effect here also. As far as the specialty business, we maintained our yearly vision of the markets, between 3%, 5%. We're -- of course in mining tire, we will see a sustained growth of demand, 4% to 5%, in line with what we see in actual tire consumption. Off-road tire, infrastructure tire sales might be up -- I mean not sales, but volume of the market will be up 3% while agricultural tire is probably roughly flattish during the year. Two wheels and aircraft are growing as expected. In Slide 5, of course you can see our traditional sales bridge with the sales up 9.3% at constant exchange rates, which are lifted of course by the contribution from acquisition, EUR 409 million or 7.8%. This is of course the acquisition of Fenner and Camso and of course then also the sales of TCi to TBC JV; an organic growth of minus 0.5%, which, I remind you, is a good performance in a declining market, and this is showing the resilience of the Michelin model, I think; the price/mix has been good, showing a 2% growth at EUR 104 million. All this reaching EUR 5.7 billion as far as Q1 2019 sales at constant exchange rate; on top of that, EUR 103 million for currency effect, reaching EUR 5.8 billion.On Slide 6, you have the quarterly vision, which demonstrates really the firm price and sustained mix enrichment you can see in the price/mix table. Of course, volume are mostly impact by the decline in demand. Currency impact is of course positive as we all have experienced it.On Slide 7, let's have a look on the 3 different sectors. Globally, our first sector shows stable sales, thanks to a solid price/mix and currency effect affecting the deconsolidation of TCi, which of course is affecting the first sector. In this sector, the markets are down minus 2%, our sales volume minus 1.6%. So it's again demonstrating our resilience in this market, where OE demand again was down 8%. SR2, stable as -- lifted by volume growth of course, as I said, lifted by volume growth and a robust price/mix. It could be noticed that our service and solution activity participated to the growth of 0.9%, quite significantly. In the third segment, we experienced stable volume, as we said, linked to this supply and logistic issues in mining and by the OE price repositioning in off-road tires. So this of course -- well, the effect will be offset at the end of the year, mainly of course the one-off mining.Let's have a look a few points that are linked to each of the sectors. On Slide 8, you would see that, once again, Michelin is recognized as a brand -- recognized brand and technical leadership supporting our pricing power. And as a reminder, you know that the Recent Tirelines have already been acclaimed by some of the most demanding German car magazines, and we have some examples here for the tire Pilot Sport 4, Pilot Sport 4 S, CrossClimate +, X-Ice North 4. Of course, this is leading for sales in upcoming months and, once again, so many awards given by the J.D. Power association in the U.S.On Slide 9, we give you some idea of what kind of services are supporting our growth. First of all, our Tire as a Service model grew 6% in the first quarter of 2019. I will remind -- we remind you that our tires are all equipped with RFID, and that today, our global fleet solution offer touches 860,000 trucks under contract, which shows the clear demand from customers from fleets to services. Slide 10, just to remind you that we expect the consumption to -- mining to grow by 4%, and that in this market, we have the most efficient tire offer. And I give you 2 example with the XDR250 57 inch and the XDR3 in 63 inch. Those 2 offers are really very well appreciated, our customers, and we are rushing to deliver those tires to them.Fenner, in Slide 11, grew 3% in the first quarter. The growth was really strong in the conveyor belt area, where it's actually a record backlog that we have and record orders that we have in -- for mining and manufacturing activities. This also shows a highly competitive product portfolio, and I would like to emphasize this one's from Fenner. AEP saw also a good growth on a strong value-creating niche market, as listed there, main activities. As far as Camso is concerned on Slide 11, you can see the sales are up 9%, which is remarkable in the first quarter 2019 with material handling up 8%, construction up 5%, agricultural tracks up 9% and PowerSports up 29%, so linked to a quite strong winter this year in Canada.So let's have a look now on our vision for 2019, and of course the main message is our guidance is confirmed. It will be confirmed, of course, as described in Slide 14, with this market scenario, where passenger car and light truck market will be slightly up and probably a bit less of what we anticipated in February. You can see that we now forecast passenger car and light truck market being between 0% and 1% of growth with of course linked to the low OE demand, especially in China and Europe, even though of course the second half of the year will be better than the first half, definitely so, and replacement market being slightly up in mature economies and gradually improving also in China. We also confirm that the 18-inch demand will be up by around 10% in 2019. As far as truck is concerned, slightly negative market with demand stable in Europe, stable also in North America versus a very high prior year comparative and a slight contraction in China. For mining market, nothing different from what I just said. And this will also be within our raw materials scenario, as described by -- in Slide 15, with the roughly cost increase of raw material prices and custom duties of roughly EUR 100 million, which would be primarily seen in the first half. This [indiscernible] is linked to the butadiene of -- sales pricing in H2 2018. Our currency impact would be slightly positive of course based on March 2019 rates. Our effective tax rate is confirmed to be reduced at 26%. And we of course expect to see net price/mix, raw material positive effect for the year, and our competitive plan versus inflation to be also positive for the year.In Slide 16, we remind you our guidance in line with our 2020 objectives. Our volume growing in line with the markets. Our segment operating income at constant exchange rates before of course the additional contribution from Fenner and Camso will be above 2018 and our structural free cash flow, including the accounting impact of IFRS 16, being above EUR 1.450 billion.So from this, I think we'll be very happy to have all your questions, and thank you for all.

[Operator]

[Operator Instructions] The first question comes from Kai Mueller from Bank of America Merrill Lynch.

[Kai Alexander Mueller, Associate and Analyst]

And the first one is obviously your price/mix on a group level came in better than expected. What I really need is the measures you had taken and in which divisions are you feeling the best impact from that between the 3 divisions that has helped this price/mix? The second one, just a clarification. Can you just clarify why you rejuggled some of the allocations between -- especially SR2 and SR3 again, what exactly you are moving around? And thirdly, you don't seem to be disclosing volumes by division in detail. If you don't do that, can you give us a little bit of color to what were the volume drivers and what were the laggers in the quarter, please?

[Florent Menegaux, General Managing Partner]

Okay. Thank you for the questions. So I will take the first one, and Marc Henry will take the second one and third -- the third one. As far as the price/mix is concerned, we have been very clear from the beginning that in the current market environment, there is no point trying to chase marginal additional volume at the expense of price. And mix, of course, we are continuing to enjoy favorable mix due to the quality of our products, the quality of our brand. And so we are monitoring, especially our pricing, to make sure that we get the mix that we expect. And we have no intention to change strategy that are improving, building good results.

[Marc Henry, Executive VP & CFO]

And by the way, price/mix is very evenly referencing inside the 3 divisions, so there is not 1 that is above the other, I would say. As far as SR2 and SR3, the slight change is the fact that we had the construction truck tires that were inside the off-road tire business, and as we merged our off-road business to the off-road business of Camso, we thought it was better just to bring back, I would say, the truck tire construction inside the SR2, because it will be easier for the OHT team to have a portfolio of activities that is more, I would say, limited and to their core knowledge. So that's what has been done. That's the main movement. And then the volume by division, yes, they are inside the -- if you look at the press release, you will find them. So as I said, passenger car is minus 1.6% in volume linked of course by -- I mean this is the impact of OE, as you can understand. Tractor is 0.9%, and the specialty business is flattish.

[Kai Alexander Mueller, Associate and Analyst]

Okay. And then just on this -- on the last point on your specialty business. You mentioned at your CMD that there were -- again, there were timing issues. Do you believe to basically regain all of those volumes in Q2? Is it just a timing issue? Or was there a bit more to it?

[Florent Menegaux, General Managing Partner]

No. We are confirming the fact that the growth we were anticipating will be there on the year.

[Operator]

The next question comes from Raghav Gupta from Citigroup.

[Raghav Gupta-Chaudhary]

Yes. Great. On the 2019 market guidance for pass car and truck, you've obviously taken them down both slightly. But when I look at the Q2 comps, sorry to be so short term-ist here, but it looks like the group volume results will be weaker in Q2 sequentially, so versus the negative 0.5% you've just reported for Q1. Can you confirm this thought process? And also just help us better understand the basis of your confidence that the volume situation improves in the second half of the year. Is it simply just kind of the soft comps? Or kind of what do you have? Is there kind of intel that you have that would kind of gives you that confidence? That's the first one. The second one, the price/mix effect, just coming back to, I guess, Kai's point, basically stronger than expected in the quarter. Is it fair to say the positive impact from pricing specifically will be limited to the first half of the year? Or can we expect that to continue in the second half? And then finally comes to more general kind of question about high-value tires, kind of the greater than 17-inch segment. At the CMD, you talked about an annual mix benefit effect and an additional 100 million per year -- EUR 100 million per year, excuse me. What gives you the assurance that this will indeed come through and not be competed away by kind of lower cost manufacturers?

[Florent Menegaux, General Managing Partner]

Okay. So a lot of prospective questions, and it's -- usually, it is very difficult. If we could predict where the future will be, we will have different conferences. But as far as Q2 volumes are concerned, we are confident that Q2, compared to Q2 last year, will be better. We see growth. And don't forget also, we have the acquisitions that will also provide us with additional growth opportunities. As far as price/mix is concerned, under the current environment, we have no reason to change our strategy I've seen from now with the market conditions still from now for the months remaining. So at this point, we see no points changing in term of price. In term of mix, we are confident in our mix generation capability because we have demonstrated that previously. And in the first quarter, it came through as well so due to the market environment. Of course, the whole passenger car market is down so that has a slight impact on the mix. However, it gives us other opportunities in other sector and part of the world. I think the key message from Marc was the fact that the group is -- has a worldwide coverage, is -- has activities spread across many different businesses. So that's the very strong fundamental for the group, to be able to generate a more stable and more robust growth. Maybe to add one point on the mix benefit. We -- in our annual conference -- I mean in our -- that was in Almeria, you understood that our 18 inch and above, it's a proxy to describe the customer segment that is highly Tier 1 focused. So it's a proxy, and that's true, but it's a good proxy. And so Tier 1-focused customer is not chasing for price that much, and you would be chasing for quality. In that regard, in this respect, Michelin is of course very well placed.

[Raghav Gupta-Chaudhary]

If I can just follow up very quickly in -- Florent, on your point about price. I mean does the 1.3% impact that you've seen in the first quarter obviously kind of Europe offsetting kind of the raw material headwind in the first half. Is your suggestion that you might continue to see that in the second half of the year? Because, I guess, when I look at what consensus have been for that particular component, it's somewhat lower than that. I just wanted to try and understand that dynamic.

[Florent Menegaux, General Managing Partner]

Yes. Those -- we are always comparing a quarter versus another quarter. So last year, we had the beneficial impact. So this year in comparison, the Q2 and to Q3, we'll be slightly lower than the Q1 versus Q1 last year, okay? So -- but our strategy will not change. So that's why in the -- for the year, we don't change our guidance. We have no reason to do that. However, from quarter-to-quarter, you will see differences due to the seasonality of our price/mix last year.

[Operator]

The next question comes from Henning Cosman from HSBC.

[Henning Cosman, Analyst]

Please, can I clarify on the guidance? I mean we've talked about it already. You've slightly adapted, of course, the market volume growth. Can we just understand if that, everything else equal, means that you're also looking for a slightly lower absolute number? Or are you, in your minds, more compensating for that elsewhere because something else is a little bit better? That's my first question. Then secondly, I would've thought when Raghav asked about volumes just now or growth rather, he was probably referring to volume alone rather than revenue growth or that's my question anyway, because your volume comp in Q2 is obviously a lot tougher. It's a swing of 5 percentage points. So if you could talk about the cadence of volume growth, how you see that developing through 2019, if that's okay. That would be my second question. And then finally, maybe again just to clarify on the SR3 growth. The volume came how you see that, was it a timing issue? And if you could remind us, what exactly the logistic issue was so we can understand a little bit better when it comes back. Is it spread out equally through the remaining 3 quarters? Or does it all come back in Q2 and then we're back to the 3% to 5% range?

[Florent Menegaux, General Managing Partner]

Okay. Okay. Yes, yes. So Marc will take care of question 1 and 2 and then will answer on questions 3, on logistic issue.

[Marc Henry, Executive VP & CFO]

Okay. As far as the market volume, of course, you know that market volume is key for us to generate the volume impact in our bottom line. So I would say the slight adjustment that we foresee for the market that are not as supportive, so we'll have to battle more. So they are -- in a way, there's a risk of a slight volume impact. That's very clear. As far as the volume in Q2, Q3, Q4, what you could expect or we are expecting, I would say, is that the Q2 and Q3, probably positive, and the Q4, which was quite strong last year, probably flattish or something like that. So that in term of signs. I would not say more in term of value, but I would say in signs. Q2-Q3, we expect some growth and probably a flattish Q4. That's where we are right now. And for the SR3...

[Florent Menegaux, General Managing Partner]

Yes. So the SR3, in term of logistics issues, we have 2 events in the first quarter. One was in the off-road activity, where, there, we raised prices towards the OEM, which had a negative impact on our volume seen quarter-to-quarter. But now that the price increase has been placed, we have every reason to think we are back to normal business condition. So that's one. It's not only the logistic issue in the mining activities that was there. It was also the effect on the OHT. And in term of logistics, I think we have fixed the issues we have in a conference in the first quarter. So we touched wood. But normally, our team have fixed the processes, so normally, Q2 and Q3. As the demand is there, we should see the volume. Now whether all the volume are to come back in Q2, I don't know. But I know during the year, we have Q2, Q3 and Q4. We have no reason to change our volume expectation in mining.

[Marc Henry, Executive VP & CFO]

Yes. Maybe to give you confidence about that is the fact that actually we have experienced and [ include ] the logistic issues led us to experience an increase in inventory in our mining tires, but this increase in inventory has not led to a lack of demand. It's just a logistic issue. So that means that those tires will be sold before the end of the year. So this increase of inventory, that mean that the production of tires are running at the speed that we expect for the full year. So the production of first quarter was at the expected level. And we see of course with production at the expecting level for the other quarters, meaning that the delivery will be speed up in Q2, Q3 and Q4. And today, until that -- already, in March, we expected -- we had our record ever sales in mining. It was linked to January-February. And now this is back to, I would say, normal. We -- of course, during the following months, sales those inventory that we have today and of course continue to produce at a high speed, so being able to reach our growth in mining as we expect it to be above market growth.

[Henning Cosman, Analyst]

Okay. And Marc, just on your point regarding volumes throughout the year, right? If I look at your Slide 6, I just want to make sure we talk about the same thing, because it looks like Q2 and Q3 were actually the tougher comparables in 2018, and Q4 should be a relatively easier comparable. So I just want to make sure I fully understand?

[Marc Henry, Executive VP & CFO]

Be careful because you forget that this is a comparable versus 2017. And in 2017, Q1 was extremely high and then Q2, Q3 were pretty low in absolute value, if you look at the absolute value. So actually it's -- it will be -- it's about the reverse, and Q4 was -- seems small, but actually it was quite good in October-November, mainly. December was so-so. But -- so at the end, be careful. Because in absolute value, our Q2, Q3 were not that great because of the first quarter of 2017, which was huge. We were at, if I recall correctly, 8.7. So yes, it was mixed up, and there were plenty of further inventory of dealers. Those were sold, and that's why we finished like this.

[Operator]

The next question comes from José Asumendi from JPMorgan.

[José Maria Asumendi, Head of the European Automotive Team]

Just 3 items. Can you just clarify again what is -- please, were the supply issues on SR3 and what you're doing effective to fix them, all these logistic issues? And are they already fixed, just to confirm, as of April?

[Florent Menegaux, General Managing Partner]

They are.

[José Maria Asumendi, Head of the European Automotive Team]

They are? Great. Second, Camso, Fenner or basically the acquisitions you've been doing over the past sort of 12 months, are there any restructuring actions you're planning to do? So for first half 2019, any restructuring items we should be aware of there? And third, is it -- please remind us on your acquisitions policy or targets that you have for 2019. I think the last years have been pretty heavy in terms of acquisitions. Should we think about 2019 as a year of more sort of a stabilization and accumulation of cash within the group?

[Marc Henry, Executive VP & CFO]

So supply issue, it can just come -- the supply issue is that tires are on boats right now. So they were a bit late on boats, and they're on boats. The other thing -- I mean it's just sum of little things. Another one that I can give you is the fact that we -- our mix of sales have been dragged more towards Australia. So it takes longer time. So we have more tire on boats. I think the -- yes. And depending on boats, it's a bit longer. So it's just little things like this, nothing more

[Florent Menegaux, General Managing Partner]

Okay. As far as the acquisitions and the restructuring you're mentioning, I think we have to say that Camso, it is a perfect complement to offer. So we have 0 reason to make massive restructuring. And actually, Camso, the integration of Camso is doing very well. And as we told you during the Investor Day, we are at the point where we are investigating all the synergies possible, and it's too early to come back to you to confirm those synergies. As far as Fenner is concerned, we have confirmed the synergies. Everything is going according to plan. And we are now working on managerially look at how we fit the Fenner organization into Michelin organization, and the process is going very nicely. And the -- as far as the acquisition targets are concerned, for -- I could say that, yes, 2018 has been pretty active. Yes, we have a lot of work to do to make the integration with Michelin. As the teams are really running very smoothly, we may see opportunities in 2019 at -- if we see it's a good opportunity. We may see that we have enough to do right now to make integration with Camso and Fenner on the other one.

[Marc Henry, Executive VP & CFO]

I can probably add that in both cases, Fenner and Camso, the synergies were more on the top line in the first step. Of course, there might be some rationalization in the future. But most of the synergies, as Florent mentioned, is coming to have a complete -- more complete portfolio for offer for our OHT business, and we're expecting more top line growth and, let's say, savings into production of the truck.

[Operator]

The next question comes from Deeya D'Souza from Morgan Stanley.

[Deeya D'souza, Associate]

Deeya D'Souza from Morgan Stanley. I just have one question really on replacement demand in Europe. What do you think there? And what are the reasons to the decreasing demand really? And what -- how do you see that recovering throughout the rest of the year?

[Marc Henry, Executive VP & CFO]

The European market is pretty contracted. There is some countries where we have observed, I mean, material contraction of the demand in Germany, in Turkey of course with the economic situation. On the other hand, on the Southern Europe, the market seems to be more resilient. And of course, as far as the original equipment market is concerned, we are seeing -- we have seen, let's say, the consequence and the follow-up of what happened in the Q4 of 2018. And let's say, more we grew within the year, the more we base on -- the comparison base on the, let's say, last favorable figure in 2018.

[Deeya D'souza, Associate]

Okay. And so you think that the replacement demand in Europe will come back, but it's more of a short-term thing.

[Florent Menegaux, General Managing Partner]

They're probably flattish in Europe as far as we can see. You understand that Germany is quite a big market for passenger car. Turkey was our biggest market for truck tires, and those 2 are quite strongly affected of course Turkey by very adverse economical situation. In Germany, it's probably more. People being hit by the car -- I would say OE car issues that have been rising and so people being a bit in an attentive mode. But probably, we'll stop at some point. But it's very unusual to see such a drop in the passenger car market in Germany, and it's showing. I would think it's going, so we could say on the car market right now in Germany linked to all these issues that we have heard on these markets.

[Marc Henry, Executive VP & CFO]

And maybe to add in Turkey, what has happened, as the currency fluctuates, it's extremely volatile, we have taken the pricing discipline to make sure that we have every -- all the volatility in the currency, we raise the prices, when necessary, to make sure that we have compatible European price in Europe, which creates a lot of volatility in our forecast in volume in Turkey.

[Operator]

We have a new question from Martino de Ambroggi from Equita.

[Martino De Ambroggi, Analyst]

One is just confirmation regarding the agricultural business. You mentioned at the beginning that you expect to be flat for the full year, just a confirmation, and if you can elaborate between original equipment and replacement. The second is on Fenner and Camso because they grew quite significantly in Q1. What is your expectation for the full year? And in terms if mix, maybe I didn't find it, but I don't see the usual indication of the growth in the passenger car for 18 inches and above market.[Technical Difficulty]

[Florent Menegaux, General Managing Partner]

Sorry, for this interruption, we don't know where it's coming from. But okay. So maybe Marc, you want to...

[Marc Henry, Executive VP & CFO]

For the ag business, what is clear is we experienced some strong position in North -- some growth in North America for the super high segment. That's why you can see the tracks for Camso growing in that speed. So in the super high -- but in the medium and newer segments, in a way, it's going more down. And when you look at the balance -- for example, the OE market in Europe has been negative. So I think we have unbalanced situation between the U.S., where you have more highly powered engines, and the rest of the world. So at the end, in total volume, it's probably negative in numbers. And for the replacement we look at, it's flattish. It's quite hesitating market [indiscernible]. That's what we see.

[Florent Menegaux, General Managing Partner]

So as far as Fenner and Camso are concerned, once again, we are very happy with the integration process, and we have no reason to believe that what we have seen out of past months will not reproduce itself in the coming months. As far as the 18-inch plus, Marc?

[Marc Henry, Executive VP & CFO]

Maybe one thing to remember that -- a way to look at it is that in Q1 2017, we had -- the ratio of 18 inch and above tires at Michelin was 33% for the first quarter. It has been 37% for the first quarter of 2018, 37%, and it's 40% in the first quarter of 2019. So you can see there's a progression of roughly 4 points per year.

[Martino De Ambroggi, Analyst]

This is in terms of volumes.

[Marc Henry, Executive VP & CFO]

Yes. It's a ratio of volumes in the -- within the passenger car tire sales.

[Martino De Ambroggi, Analyst]

So you are basically gaining market share.

[Marc Henry, Executive VP & CFO]

I think it's a good performance because -- sorry?

[Martino De Ambroggi, Analyst]

You're gaining market share.

[Marc Henry, Executive VP & CFO]

Yes. It's a good performance because it's showing that we are able to grow at the speed of the market. And before, it's also showing that this is even more difficult in an environment where OE is down, because remember, the mix in OE is very strong. So you know, the mix in OE is very strong in 18 inch and above, much stronger than replacement and even though we are able to about -- grow about the same speed.

[Operator]

We don't have any further question for the moment. [Operator Instructions]

[Florent Menegaux, General Managing Partner]

Okay. So thank you very much for participating. As you've seen, we had -- we have delivered in Q1 the sales that are on the trajectory of what we were expecting. No more, no less, I think, is the message. We are right where we wanted to be, and we have confirmed our guidance. At this stage that we -- short and rapid conclusion about the activity in the first quarter despite many activities.

[Marc Henry, Executive VP & CFO]

And despite a market that was fully supportive and despite a market that has been extremely challenging.

[Florent Menegaux, General Managing Partner]

Thank you very much.

[Marc Henry, Executive VP & CFO]

Bye.

[Florent Menegaux, General Managing Partner]

Thank you.

[Operator]

Ladies and gentlemen, this conclude today's conference call. Thank you all for your participation, you may now disconnect.