Orange SA

PAR:ORA

Earnings Call Transcript 2023-Q1

[Operator]

Good morning, ladies and gentlemen, and welcome to Orange's First Quarter 2023 Results Conference Call. The call will be hosted by Ms. Christel Heydemann, CEO; and Mr. Jean-Michel Thibaud, Interim Executive Vice President, Finance, Performance and Development, with other members of Orange's Executive Committee for the Q&A session that will start after the presentation. Today's conference is being recorded.

Thank you, and let me hand over to Ms. Christel Heydemann.

[Christel Heydemann, executive]

Thank you. Good morning, everyone, and welcome to our Q1 '23 results presentation that I will comment this morning, together with Jean-Michel Thibaud, our interim CFO.

Let's start with Slide 4, which presents the key highlights of the quarter. First of all, I would like to highlight that our value strategy is well on track with 2022 price increases bearing fruit and new price moves in Q1, which will fuel retail growth in the coming quarters.

Regarding Spain, convergent ARPO growth continued to drive retail services, which are back to growth this quarter at plus 1.2%, contributing to Europe's solid growth momentum at plus 3.8%.

Let me also stress that execution is in action. Orange business transformation is ongoing with, among others, a new organization and discussions started with unions on a voluntary departure plan. On top of that, the Voo transaction was approved by the European Commission in March, enabling us to expect a closing at end of Q2 2023.

Last but not least, in the Middle East and Africa, Orange Money is back in double-digit growth territory, demonstrating our agility and efficiency in responding to a tougher competitive environment. All in all, Q1 results are consistent with our full year guidance with EBITDAaL up 0.5% and eCapex down almost minus 5%.

Now let's have a closer look at our main financial KPIs on Slide 5. In the first quarter, the group delivered revenues of EUR 10.6 billion, up by plus 1.3% year-on-year, driven by growth in retail services, plus 2.8% and equipment sales plus 9.5%. That's much more than offset the decline in wholesale, minus 7.7%.

From a segment perspective, revenue growth was driven by the Middle East and Africa performance of plus 9.1% and by Europe plus 3.8%, with the return to growth in Spain confirmed plus 2.8%. TOTEM also grew by 8.1%, with a 7% increase in external hosting revenues.

In France, revenues were down by minus 1.8% due to the decline in wholesale, which was in line with our expectations, partially offset by retail revenues at a foreseen low point for the year.

Orange Business revenues slight decrease, minus 0.7%, was still due to the strong decline in fixed voice, minus 11.6%, partially offset by the growth of our digital activities. Group EBITDAaL at EUR 2.6 billion was up by 0.5%, giving us full confidence in reaching our full year '23 guidance. As usual, our EBITDAaL margin is lower in the first quarter due to the seasonality of operating taxes. This phasing was accentuated this year by the timing of our latest price increases, whose positive effects will be fully seen later in the year. Finally, eCapex was reduced by minus 4.9%, in line with our full year guidance.

I will now hand over to Jean-Michel for the detailed results review.

[Jean-Michel Thibaud, executive]

Thank you, Christel. Good morning, everyone. So let's start our segment review with France on Slide 7.

The overall decrease in Q1 revenues is linked to the decline in wholesale, in line with the expected medium-term trend. This decline was partially offset by retail growth, which will accelerate over the rest of the year. Indeed, market pricing has continued its positive year-on-year trend following our lead of broad-based repricing of both the front book and back book as announced since last December and which will be fully effective from Q2.

All customers impacted by the price increases have now been notified. The limited churn impact weighing on our net adds this quarter is fully in line with our forecast, thanks to our network quality as confirmed by ARCEP and our very strong NPS. The positive impact of this value strategy will be reflected in our financials later this year.

These price hikes will indeed further drive up the convergent ARPO, which increased in Q1 by plus 2%, passing EUR 72 and fueling the plus 2.1% growth in retail services, excluding PSTN. This value strategy, which will bear fruit mostly in H2 on Orange France EBITDAaL along with our continued cost efforts will mitigate but not offset inflation pressure that will peak this year. Nevertheless, France will contribute from 2023 to group's organic cash flow growth, thanks to strong eCapex discipline.

Let's now turn to Europe on Slide 8. Europe consolidated the good momentum of recent quarters with an acceleration in overall growth and particularly in retail revenues. This solid performance was driven by Convergence and Mobile, thanks to the price increases implemented all across geographies. Equipment sales also grew strongly in the quarter, while the decline in wholesale was due to the regulatory cuts in termination rates with no effect on EBITDAaL. Looking per country, this performance was mainly driven by Poland at plus 7% and Spain that we are now going to dig into on Page 9.

Indeed, in Spain, for the third consecutive quarter, we confirmed top line growth, thanks to retail services back to growth and strong equipment sales. In a still highly competitive market, we continue to support value through a better mix associated with a disciplined promotional policy and B2B growth. These measures were reflected this quarter in the continued growth of convergent ARPO at plus 3.5%, while churn levels keep on improving. This growth momentum in addition to our cost control management makes us confident in our ability to return to EBITDAaL growth this year.

Finally, regarding the joint venture with MásMóvil, the antitrust process is ongoing with the European Commission, which opened on April 3, as expected, its in-depth investigation into the transaction. We expect the closing during the second half of the year.

Let me now turn to Africa and the Middle East on Slide 10, which again delivered a remarkable performance this quarter with a revenue growth of over 9%. This is proof of our agility and resilience despite being confronted to geopolitical tensions and currency devaluation in certain markets. Indeed, all our countries grew this quarter with nearly half recording double-digit growth. This performance continues to be based on very solid retail services growing by plus 9.4% and fueled by the double-digit growth of our 4 growth drivers: data, fixed broadband, Orange Money and B2B. As a result, our mobile customer base reached 143.9 million, representing a plus 5% increase, delivering an average mobile ARPO increase of 3%.

Finally, let's highlight in particular the strong plus 21% growth of Orange Money revenues. This demonstrates the effectiveness of our response to new competition, which has put us back to a double-digit trajectory.

Turning to Orange Business on Slide 11, we are seeing the continuation of the business trend of previous quarters with total revenues close to flat in the quarter. This is the result of the growth in IT&IS, which depending on the quarter, more or less offsets the continued decline in the legacy business, in particular, Voice.

I would particularly like to highlight this quarter, the strong double-digit performance of Digital & Data and Orange Cyberdefense, which you see on the slide. As explained during our Capital Markets Day in February, Orange Business' deep reorganization is ongoing, and we plan to drastically reduce costs which led us to open negotiations with trade unions on a collective redundancy agreement for approximately 670 positions on an exclusively voluntary basis in the main historical activities in Orange business in France.

At the same time, we have initiated the upskilling and re-skilling of 5,000 employees from traditional telecom areas to the world of virtualization, cloud, data, AI and cyber. We also plan to accelerate the development of our digital business by launching an ambitious recruitment program to hire 800 additional cybersecurity experts and about the same number of people in digital services. The action plan is therefore ongoing, as announced in February, and EBITDAaL recovery will take time with a turnaround in 2025.

I will now hand over to Christel, who will conclude today's presentation.

[Christel Heydemann, executive]

Thank you, Jean-Michel. So I would like to conclude this presentation simply by reaffirming that this first quarter's results underpin our confidence in achieving our full year guidance, which remains unchanged.

Thank you for your attention. Jean-Michel [indiscernible] and I are now ready for your questions.

[Operator]

[Operator Instructions] Our first question today comes from Nicolas Cote-Colisson from HSBC.

[Nicolas Cote-Colisson, analyst]

Two short questions, please. The first one is on the commercial performance in France. If you could give us more color about what the weakness in net ads was, either driven by the lower gross adds or higher churn? So I guess I wonder at which level the price rise announcements are impacting? Is it on recruitment or on the existing base? And whether we should consider further customer attrition into 2 and forward?

And my second question is on fiber in France and the requirement by the regulator to complete the coverage in the medium dense area. Is it fair to say that we're talking about 1 million lines. So if you could help us with the timing to deliver these lines and the possibly incremental CapEx budget that this could represent possibly in 2023, that would be great.

[Christel Heydemann, executive]

Thank you for your question. I will hand over the question to Jean-François Fallacher, who, as you know, to cover the responsibility for France as of April. But just to tell you that the commercial performance in France in Q1 is fully aligned with our plans. So there is no surprise, but I'll let Jean-François comment with more color.

[Jean-François Fallacher, executive]

Thank you very much, Christel. Thanks for the question. Well, you stated that the commercial performance is lower than you eventually expected, which -- I mean it's not, as Christel was saying, our assessment here. As you've seen, we have positive net adds across the line in Mobile and in Fixed Broadband. When you look at the level of net adds in fiber, I find it pretty impressive. Looking at the overall context. I mean Fabienne and the team, which are here, have been obviously doing a great job this quarter to increase prices very significantly, as you know. You will remember all of you that we have increased prices of EUR 2 on Broadband and EUR 1 in Mobile, meaning that if you are having the convergent offer, this is obviously a mix of all of this. So price raises could go up to even EUR 5 or something like that when you have a convergent package. So you can imagine that, obviously, this move, which is going to be absolutely key for our performance in the second quarter and in the second semester of the year was not completely for free. I mean when you do such price moves on the market as competitive as France, there are some impacts.

So to very precise and answer your questions, I mean if you compare Q-on-Q, the churn is very much on track, and we are pretty happy with this and confident for the future. It's more on the gross adds that indeed, things have been a bit weaker than usual. But once more, we have decided for a cushion of fairness between our base and our new ads to keep the same level of price and to lower the promotion. So that explains clearly this. And as Christel was saying, absolutely on track with the plans we are having.

[Christel Heydemann, executive]

And regarding your second question on the fiber deployment in France, the current -- first of all, I mean, we keep on deploying fiber as per our plan in France and we don't foresee any change to our guideline for CapEx. The debate that was with the regulator in France on our fiber rollout was based -- or at least the legal debate, the dispute was based on a milestone for 2020, which we have now fully achieved. So there is no impact in our CapEx plan moving forward.

[Operator]

And we're moving on to our next question now, which comes from Roshan Ranjit of Deutsche Bank.

[Roshan Ranjit, analyst]

My first question is in France, please, actually, on the cost side. Now when you gave your group guidance at the CMD in February, sort of slight [ EBITDAaL ] growth that was pre the wage negotiations, which completed last month. And I think you said as part of those discussions, you had reached a collective decision with the unions, which I think is different from what has happened in previous years. So I guess my question is, given that do you see a kind of better outcome on your EBITDAaL trajectory given the 4.8% increase that you managed to achieve?

And secondly, on enterprise, last year, you completed that carve-out of the business. Could you see -- could you give us some signs of the immediate results of that? Any kind of smaller bolt-on acquisitions that you have down the road as you look to turn that unit around over the coming years?

[Christel Heydemann, executive]

Thank you. On the wage impact on our guidance and on the France performance, so we are very, very happy to confirm that, indeed, we reached an agreement with all our unions on the wage increase at 4.8%, which is an average and actually for lower level salaries, this will be more. But that has no impact on our EBITDA trajectory. I would say that what has more impact on the cost structure is the departure plan, early retirement plan that we had signed end of 2021, which was very active as we discussed after the Capital Market Day. And so -- but overall, no impact and we are indeed happy that we reached this agreement with the unions.

On the Cyberdefense -- Orange Cyberdefense performance, as we said, we are very active and the commercial performance in Q1 confirms the strong dynamic in the market and our performance in this market. The carve-out was key for us to get agility. At the same time, as you know, we are transforming Orange business. We've been active with a small acquisition in Switzerland in Q4, and we keep being active monitoring the market, but nothing to report as we discussed.

[Operator]

And we're now moving on to a question from Mathieu Robilliard of Barclays.

[Mathieu Robilliard, analyst]

I had a question about energy headwinds. I think in the past, you had said that for 2023 as a whole, it could represent EUR 300 million headwind to the group EBITDA. My understanding is that probably 2/3 of that would affect France. And I wanted to understand a little bit more the phasing. I suspect it's probably more weighted towards the first half and possibly the first quarter. So maybe if you could give us a sense of how this rolls out throughout the year.

And then the second question on pricing. I hear your positive comments and indeed, you've increased quite a number of prices. I do not -- however, there's a bit of a return of promotional activity at the lower end on some of the second brands. And I don't know if that was triggered by you or by someone else. But maybe if you could give a bit of color on the very short-term moves.

[Christel Heydemann, executive]

Thank you. I will let Jean-Michel confirm on energy and Jean-François will answer for the commercial, I would say, traction in France. We can also discuss about other countries in Europe, but I think your question was more related to France.

[Jean-Michel Thibaud, executive]

Good morning, Mathieu. Yes, indeed, so the numbers you have in mind are correct, about EUR 300 million increase in 2023 compared to 2022, with about 2/3 in France. That's more or less evenly shared or spread across the year. I would add that we have taken benefit of the prices that have gone a bit down, particularly in the beginning of the year, to continue our hedging policy and especially -- well, 2023 was already fully hedged. We have completed our hedging policy for 2024, where we have more than 3 -- well, 75% of the spend, which is now covered.

[Jean-François Fallacher, executive]

On the promotion side, on the second brand, I mean, obviously, I am looking in detail into this, I look in detail about the recent history. So the first good news which you've probably seen it as you follow very closely, the French market is that first of all the level of promotion this quarter, this first quarter, if we compare it to the first quarter of 2022 is really going to our opinion in the right direction because all the players, including those who are actually claiming they are not changing the prices have actually lowered the level of promotion or raised the prices in the promotion. So I think this is very good news for the French market. That's the first thing I would like to state.

And the second thing that we have to state on Sosh more precisely, yes, there's been a lot of movement in the first quarter about the different players' promotion. If you look precisely at the key price point of Sosh, we are at this moment at 1,599 ourselves. And the 2 other competitors are actually EUR 2 lower. So we are clearly here as well playing the role of leader we have on the French market, being extremely cautious on the promotion. And extremely, I would say, discipline on the level of promotion we are putting on the French market on the second brand. I mean, so far, so good. Again, as I was saying when we look at our commercial performance, this is exactly as planned.

[Operator]

And next, we have Sam McHugh from BNB Paribas Exane.

[Samuel McHugh, analyst]

Christel, I guess, you've been in the job for a year now. The organic improvement generally has been pretty good across the group. I just wanted to ask about inorganic actions. I mean there are 2 things I would think about Orange Bank and TOTEM. We see a lot of headlines around Orange Bank. Can you just give us a bit of an update on what you're thinking on both those assets? Do you think it's reasonable to think we could see some kind of inorganic deal across the bank or TOTEM in the next 12 months?

[Christel Heydemann, executive]

Thank you. So I think as we've said for the Bank, we are indeed in the process of our strategic review and we have actively looking for partners. We have received interest. We are discussing. But at this stage, no decision has been made, and it's premature to make any further comments.

On TOTEM, similar. I mean, as we said, we are focused on the organic growth for TOTEM and we keep on increasing the tenancy ratio on our sites. At the same time, we are part of the overall European landscape for TowerCos, and we would be considering options if they really make sense and create value, as we've said, improving our road share along the base. So again, no further comment to make and no active, I would say, discussion.

[Operator]

And we're moving to Andrew Lee of Goldman Sachs.

[Andrew Lee, analyst]

I have 2 questions. Just first question was just on your wholesale revenue drag in France in the quarter. Obviously, there's a lumpiness to that. I wonder if you could give us a bit more of an insight into how you see the rest of the year progressing in terms of that lumpiness? And the structural question on that is really, is there any reason to believe at this point that your guidance for wholesale revenue and EBITDAaL losses out to 2025 still holds or that actually you're seeing greater take-up of cofinancing than you might have expected? Those are my 2 key questions.

If I could have a follow-up. I just wondered if there's any -- deviation in your ability to raise prices at the consumer broadband level dependent on region, i.e., where you have greater network overlap, for example, in the densely populated areas?

[Christel Heydemann, executive]

I think, I mean, the wholesale performance in Q1 is fully aligned with our forecast. And so there's no further or no, I would say, improvement or decrease, which is expected around 7% year-on-year for the year. So it's fully in line. And we know -- as you know, I mean, there's the copper and fiber wholesale, but there's also interconnection and low-margin evolution in wholesale, that's also dragging the revenues down. But today, it's exactly as per plan.

As you know, in France, in particular, we have a lot of discussion with the regulator on the unbundling price for copper on the next phase of regulation as well for fiber and for the copper decommissioning. So there will be active discussion, but it's moving as planned, and we see no change -- absolutely no change to our guidance on that front.

[Operator]

And we're moving on to our next question from Stéphane Beyazian of ODDO BHF.

[Stéphane Beyazian, analyst]

Yes. I've got 2 follow-ups, if that's possible. I actually 1 follow-up on the bank. Should you have issues to find a partner? Are you still confident anyway that you can lower the losses from the banking operation in Europe in 2023. And can you tell us a little more about actions that can help to reduce the level of losses there? And perhaps 1 question, you've made a lot of changes in the management team. Perhaps 1 yesterday regarding R&D, do you have any specific expectation from your R&D at Orange? Any area of where you think that the company should do better and bring new product, for instance?

[Christel Heydemann, executive]

Thank you, Stéphane. So on the bank, as you know, we are very -- I mean, on the bank as on everything, we are very focused, obviously, on delivering our guidance and the Orange Bank team are absolutely delivering as per plan. The commercial performance is great, and we have a very solid balance sheet. So we are obviously -- and unfortunately, because we're acquiring customers and structurally, indeed, we are making losses. But I wouldn't say that we will improve drastically the losses in '23. We are very much focused on executing our plan. And the question is more how do we accelerate the breakeven, which is currently foreseen in '25, '26. And that's the reason why we are looking for more strategic options with partners. But on 2023, I don't think it would have -- we will change the plan that we currently have in the guidance.

On the R&D and innovation, indeed, we announced yesterday the appointment of Bruno Zerbib as CTIO for the group who -- and he will start on June 1. He will succeed Michael Trabbia, who has been managing this organization for several years. He will bring a fresh perspective on things, but also rely on the large expertise that we have inside. The focus is go as -- I mean as much from virtualization in our networks and improving or accelerating our plan as well as driving the collaboration with our peers also in Europe.

And as you know, we have a number of very important initiatives. The open gateway initiative, which was announced in Barcelona is an important initiative. So it's really delivering our plan, continuing to accelerate on using technology to accelerate our performance and improve the services we bring to customers as well as accelerating on a number of innovations and no doubt that we will come back to you later in the year with more specific examples. But Bruno has been both inside the telecom industry for a long time as well as outside. So he will bring a broad perspective on many initiatives.

[Operator]

And up next, we have Emmet Kelly from Morgan Stanley.

[Emmet Kelly, analyst]

Yes. I've got 2 questions, please. The first question is just a follow-up on Andrew's question on the wholesale business. So it looks like the trajectory is EUR 200 million less wholesale revenues in Q1. And if I put that into a full year context, would it be fair to say that the trajectory of wholesale EBITDA declines might be a little bit more front-end loaded in '23 and '24 compared to '25, given the top line that we see in Q1? I think you said you expect EBITDA to be down by EUR 400 million over the 3 years by 2025. So should we expect the phasing to be a little bit more front-end loaded there?

And the second question is just coming back to Barcelona, Christel in the speech that you gave at the Mobile World Congress, I know the European Commission has asked for submissions on the fair share debate with tech companies. Do you have any updates that you can share with us this morning, please?

[Christel Heydemann, executive]

Thank you. I will answer first with your second question, and then we'll hand over to Jean-Michel to comment on the wholesale trajectory. On the -- as you know, the European Union, the commission has launched a consultation in which is broadly open to many players on the future of digital infrastructure. So the debate is not the fair share, it's much broader than that. As everyone, we will respond and provide our inputs to this consultation by mid-May and we will be happy to comment in more detail. So it's really too early to say what will come out of this consultation, but at least there is now an open debate on how and who should invest and innovate for the future of our digital infrastructures in Europe, which is an important debate. So no more comments at this stage. Michel...

[Jean-Michel Thibaud, executive]

Yes. So Emmet, on wholesale. So again, we have the EUR 1 billion impact on revenues and EUR 400 million in EBITDAaL that we communicated 2 months ago. So we are perfectly in line with that. And indeed, that means that -- well, that means 2 things. First, we have a bit of front loading compared to '25, that's true. And also, we have some lower margins, if not close to 0 margin activities that are a bit softer in Q1. And so these are the 2 elements that explain this number, which does not surprise us at all.

[Operator]

[Operator Instructions] And we now take a question from Georgios Ierodiaconou from Citi.

[Georgios Ierodiaconou, analyst]

The first one is regarding Spain and the improvement we've seen this quarter. Just looking through the numbers, I don't know there's been an improvement in the uptrends on convergence. But based on your disclosures, a lot of the improvement has come from non-convergent revenues. And I just wanted to ask if that's more B2B driven? What we have seen in the past some of the other players, is this tend to be a bit lumpy in terms of phasing. So just curious what are the drivers of this improvement and whether you believe that's sustainable in the coming quarters?

And my second question is around -- as a follow-up on TOTEM. I know it may be early to comment in detail, but I just wanted to maybe understand your broad thinking around how the asset fits in the portfolio? In particular, what we've seen from some of your peers is after a certain point, the realization that if you allow a TowerCo to behave in maximizing its business, it tends to be a bit draining on the cash flow and sometimes the balance sheet of the owner. So whether deconsolidation is something that could be preferable for you or whether you want to maintain control and whether any partners you see have to be like-minded MNOs or whether you could be perhaps a bit more flexible in that?

[Christel Heydemann, executive]

Thank you. So I think on Spain, I mean, the improvement is not coming from -- I mean I'm not sure if your point is that the improvement of the situation or the turnaround is coming from non-convergent revenues, I don't think that's the case. Actually, there's -- it's a combination of several elements. Number one, the reduction of churn. As you know, this was a massive issue a few years back in Spain. So the churn has decreased and we work hard on improving the average revenue per user. So it's really the combination of the 2 that's driving the return to growth. And maybe I don't know if Marie-Noelle wants to give more color, but...

[Mari-Noëlle Jégo-Laveissière, executive]

No, nothing more to say. Both B2B and B2C contributes to the growth with a very good B2B activity in Q1 this year. So there's no balance between one and another. They all contribute to growth. The churn is under control. And this is foreseen to continue over 2023.

[Christel Heydemann, executive]

On TOTEM, as we said in the Capital Market day, I mean, for us, driving growth in our infrastructure business is very important. So we do allocate resources to the growth of TOTEM, which is obviously driven by contracts that they can sign not just with Orange as a telco, but with other players. And we will be, I would say, opportunistic and strategic in reviewing opportunities to move forward with the structure of TOTEM only if it creates value, but not just in a move that's just a balance sheet move. So it needs to create business value for Orange as a whole and for TOTEM, of course, but not just tactical, I would say, move on the -- as the deconsolidation move as you mentioned.

[Operator]

And our last question for today comes from Nick Lyall of Societe Generale.

[Nick Lyall, analyst]

Was too pleased, Christel, if I could. The first one was again back to Spain. Could you just tell us what the competitor reaction has been like to the Spanish rises? It looks like everybody is rising -- raising prices apart from Digi possibly. I mean how do you think the EC will view that as part of its investigation. Could you maybe just expand please?

Secondly, on the enterprise, it seems like a lot of enterprise changes going through. Is there going to be a large change to restructuring cost because of that? Is that something that might affect guidance a little in terms of cash costs over the next couple of years, too?

[Christel Heydemann, executive]

Thank you. So as you know, we're in the process with the European Union and the commission on -- for the approval of the joint venture with MásMóvil and the process has moved to Phase II, as you know, early April. So we are obviously very active responding all questions. The price moves that happened in Spain are really reflecting the pressure on our cost structure with inflation. So it's -- and as a reality, they started to happen way before actually we initiated our transaction with MásMóvil. So we continue to be very strong in our plan with MásMóvil, which will create value for the Spanish customers and the Spanish market.

As you know, for us, the JV is really a way to generate more ability to invest in our infrastructure in Spain, and that's our key message with the commission, but obviously, it's too early to comment on the outcome of the process. Maybe I'll let Marie-Noelle comment on the...

[Mari-Noëlle Jégo-Laveissière, executive]

Just interestingly, when we were discussing with the commission for the Belgium case, we were exactly in the same situation because we increased the prices at the very beginning of the Phase II. And we had that discussion. Unfortunately, these increases are so widespread across all the countries and all operators that we really explained to the commission that it was absolutely 2 separate questions. And that was the point also of the commission for Belgium. So I foresee that for Spain, it will be the case and it will not have any effect on our discussions.

[Christel Heydemann, executive]

Then on your question on the transformation of our enterprise business, which we commented in our Capital Market Day, the discussions are moving as per plan, but I will let Jean-Michel provide more colors on the restructuring side.

[Jean-Michel Thibaud, executive]

Yes, Nick, so I confirm that the cost of this restructuring plan for the voluntary departure plan is fully embedded into our financial trajectories and the guidance. So no worries on that.

[Operator]

And now I would like to hand the call back over to you, Ms. Heydemann for any additional or closing remarks.

[Christel Heydemann, executive]

Thank you all. So I'd like to wrap up this earnings presentation to conclude by insisting on the fact that our value strategy is on and price increase will deliver impact over H2 or over -- the rest of the year. And as you understood, our transformation is also ongoing. So once again, we are fully confident in achieving our full year guidance, which remains unchanged, and we are in motion. So thanks a lot and look forward to exchanging with you in the next quarter and for H1 results.

[Operator]

Thank you. Ladies and gentlemen, that concludes today's call, and you may now disconnect.