Spie SA

PAR:SPIE

Earnings Call Analysis

SPIE Boasts Strong Growth and Upbeat Outlook

SPIE has demonstrated remarkable success in Q3 2023, with over EUR 6 billion in revenue over nine months and an impressive 9.5% organic growth, continuing the upward trajectory and outperforming expectations. Q3 margins improved, boasting a 30 basis points increase in the nine-month EBITDA margin despite inflationary pressures. Sector-wise, Oil and Gas led with a staggering 15.9% growth over nine months, while North-Western Europe surged with a 14.9% rise, highlighting a particularly robust Q3 showing an 18.3% increase. Despite a slight Q3 slowdown in France, the region still maintains a healthy 6.1% growth over nine months. SPIE's commitment to energy transition and operational excellence ensures it remains an attractive prospect for investors.

SPIE at the Heart of Energy Transition and Growth Momentum

SPIE, a vital force in energy transition, offers a range of valuable services including industry decarbonization, e-mobility, building efficiency, and Smart City solutions. Supported by a solid operational model with selective growth approaches and pricing power, the company has demonstrated a robust increase in EBITDA margin by 30 basis points over nine months despite inflationary pressures.

Upward Revision of Full Year Organic Growth Outlook for 2023

SPIE is witnessing high organic growth levels and is revising its full-year organic growth forecast upward due to substantiated performance improvements in various sectors, including Oil and Gas and Nuclear, and especially strong momentum in North-Western Europe.

Revenue and EBITDA Performance Highlights

The company has surpassed EUR 6 billion in revenue after the first nine months, with organic revenue growth of 9.5% over this period, and 8.8% in Q3 specifically. EBITDA grew by 15%, manifesting the company's ability to double revenue growth and maintain a healthy EBITDA margin trajectory.

Regional Organic Growth Distribution

All regional segments demonstrated positive organic growth, with a remarkable 18.3% surge in North-Western Europe in Q3. Even the more mature markets like France, though impacted by the declining fiber market, recorded respectable growth. Central Europe’s growth was bolstered by energy-related activities, demonstrating a widespread upward trend across the board.

Strategic Acquisitions

SPIE has carried out five strategic acquisitions so far this year, which contribute approximately EUR 230 million in annual revenue, thereby enhancing the company's market position and expertise in sectors crucial for growth, such as Germany's high-voltage activity and France's energy network rollout.

Strong Commitment to Sustainability and Employee Participation

The company’s dedication to corporate social responsibility is evident through upgrades in its ratings from both Sustainalytics and EcoVadis, placing it among the top-rated companies in the business support services sector. Furthermore, there's notable employee engagement, with a substantial increase in participants in the employee share plan, signifying strong company culture and ownership.

Healthy Financial Standing and Growth Prospects

SPIE is in an advantageous position concerning its full year targets and expects to conclude the year with revenues slightly above EUR 7 billion. The company maintains firm expectations for improved EBITDA margins and has a rich project pipeline and backlog, indicating confidence in growth potential for 2023 and beyond. Their strategic M&A capability is supported by a strong balance sheet, enabling them to seize further acquisition opportunities while remaining committed to carbon reduction goals.

Earnings Call Transcript 2023-Q3

[Operator]

Hello, and welcome to the SPIE 9 Months 2023 Results Call. My name is Laura, and I will be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions]. Today, we have Gauthier Louette, Chairman and CEO; Jerome Vanhove, Group CFO, as our presenters. I will now hand you over to your host, Gauthier Louette, to begin today's conference. Thank you.

[Gauthier Louette, executive]

Yes. Good morning, ladies and gentlemen. Thank you for attending SPIE's results conference call for Q3. I keep saying that it is a good time to be an electrical engineer, and it shows in this quarter as well. So SPIE is definitely a key enabler for energy transition and at the heart of this solution. We have highly valuable services for industry decarbonation, e-mobility, building efficiency or Smart City and a very strong model based on operational excellence, selective approach and proven pricing power, delivering 100% cash conversion. So in Q3, the group reached again a very high level of organic growth, and we further improved our EBITDA margin. I will first start with a few examples showcasing our expertise.

So on Slide 4, SPIE Facilities, partners with the Department Council of Yonne for a 10-year energy performance contract we target a 25% reduction in energy consumption and a 43% cut in CO2 emissions. We cover 147 buildings including secondary schools, tertiary sites and museum as well as historic location, and this represents a major shift in energy mix. We will replace 22 updated heating system with efficient alternatives like crude fired boilers and heat pumps. It does illustrate our strong know-how and expertise to support our customers in CO2 emission savings targets.

On Slide 5, SPIE Industrie will oversee electrical and mechanical maintenance for the offshore substation and 80 turbine mass at the Saint-Nazaire wind farm. As the French operator specializing in offshore wind turbine system maintenance, SPIE Industrie plays a key role in the buildup of the French Marine, renewable energy sector. On Slide 6, SPIE Belgium is set to modernize the management of 54 tunnels and hoppers in Wallonia, covering nearly 11 kilometers transitioning from manual to advanced technological solution.

The new centralized software implemented by SPIE will provide real-time information to users, our own drivers to make informed decisions, such as choosing alternative route or taking break, enhancing the overall driving experience.

And this should translate to significant time savings for users during internal-related disruption, which should improve the traffic flow by about 60%. On Slide 7, SPIE Vietlubbe chooses, UKA Group to plan and establish a transformer station in the Parchim region in Germany. UKA installs WEMAG Netz it's a green energy developer. And the Parchim area is known for its windy condition. So it's a focal point for renewable energy expansion is in Northeast of Germany.

The decision to consolidate power from various renewable facilities at 1 transformer station both design and implementation challenges due to the diverse power sources. And SPIE longstanding partnership with the UKA Group has been instrumental in the operational management of the developer wind power transformer station, showcasing again SPIE commitments to supporting the energy transition. Now moving to the 9 months highlights on Slide 8.

So we have a very high level of organic growth and significant EBITDA margin increase. We did deliver strongly on our M&A strategy with 2 additional acquisitions in Q3 in France and in Germany. We upgraded the SPIE's ratings, a very good performance being evidence, and we are revising upwards our organic growth outlook for the whole year of 2023.

On Slide 9, our key figures. So more than EUR 6 billion of revenue in the first 9 months of the year, 9.5% organic growth over 9 months and 8.8% in Q3, again, sees a very high level in our business and even a record level of organic growth despite higher comps last year at the same period. The 9 months EBITDA was up 15%, almost twice the growth in revenue. The 9 months EBITDA margin is up 30 basis points despite the inflationary context. So we achieved 5 bolt-on acquisitions year-to-date, representing around EUR 230 million of full year revenue acquired, and we enjoy a strong and active pipeline of opportunities. So definitely a good 9 months performance.

On Slide 10, the very high level of organic growth evidence a good momentum in our markets and our proven pricing power in an inflationary context. We have a buoyant organic growth in all segments with an exceptional level of 9.5% at group level over 9 months and 8.8% in Q3. Oil and Gas and nuclear at 15.9% over 9 months, fueled by a very strong Oil and Gas segment. North-Western Europe being the most dynamic region at 14.9% over 9 months with a record 18.3% in Q3. In Germany and Central Europe, we see a continued strong momentum at 8.6% over 9 months. France at 6.1% over 9 months with the Q3 at 0.7%.

So speaking of France on Slide 11. The Q3 organic growth was hampered by the anticipated decline in the fiber market, France being the most mature market in terms of optic fiber deployment. And also a phasing of a project in information and communication services, it pertains to delivering and installing computers for the region of [indiscernible] and the contract is usually deployed in September. It was renewed for 3 years. There was objections from 1 player. So we had to postpone installation until October with; a, an impact on our production; and b, a pupils going back to school without a computer.

Level of activity is up related to indeed high comparison basis in Q3 2022 where we posted 7.8% organic growth. The Q3 revenue reached a historic level of EUR 725 million, its highest ever for a third quarter. Over the first 9 months, France recorded a solid organic growth of 6.1%. As you know, we have a very limited exposure to new construction. Our Building Solution activity did remain well oriented.

Technical Facility Management continued to be driven by our energy efficiency solution and building upgrade requirements both in public and private sector in an environment where energy prices are still high and where regulation requires even more technical services. Clean Mobility and smart public lighting solutions are a key growth driver for City Network segment. And finally, industry services remain well oriented overall except in some subsectors such as the food industry.

On Slide 12, moving to Germany and Central Europe. So starting first with Germany, where organic growth further accelerated in Q3 at plus 7.9%. So over 9 months, we are now at 5.7%. As announced, the ramp-up of the high-voltage activity continued in Q3, and the record backlog provides with a good mid-term visibility. Technical Facility Management Solutions and Information and Communication Services remain dynamic and well oriented. City Networks and Grid activity was stimulated by the growing need for smart solutions in distribution grids. To conclude on Germany, we do benefit from our exposure mainly related to energy efficiency and the massive structural change in energy mix.

In Central Europe, we enjoyed a double-digit organic growth supported by energy-related activities in Poland, transport infrastructure installation in Austria, where we are the country's leader for [ routinal ] installation. Central Europe is now a business of roughly EUR 500 million annual revenue. It does illustrate our capacity to successfully replicate model through a mix of bolt-on M&A and organic growth. Switzerland continued to benefit from a good level of activity with no more supply chain delays in Information and Communication Services.

Moving to Slide 13, North-Western Europe. We did record an outstanding organic growth in Q3 at 18.3%. Over 9 months, the organic growth was up 14.9%. The total revenue growth was impacted by the disposal of our U.K. operation in 2022. In the Netherlands, organic growth was at a record level. We also continue to have positive impact from Worksphere acquisition, where we do develop cross-selling activities among our client base on the back of the customer base as the historic [ evidence ]. We saw a strong dynamic in Industry Services with a lot of investment in electrification. A growing demand for complexation associated with high sustainability challenges in large and sophisticated buildings, which is driving our operations in Technical FM and Building Solutions activities. And the further strong momentum in City Networks and Grids, supported by optic fiber rollout and data center activities.

In Belgium, we have a strong dynamic mainly driven by building renovation activities and significant investment made in the transmission grid with the national operator area. And now on Oil and Gas and Nuclear, we did continue to enjoy a very good dynamic and a strong visibility on our market in Oil and Gas Services. Overall, revenue was up 22.6% organically in Q3 and 15.9% over 9 months. We had in Oil Gas Services, a strong double-digit organic growth in Q3 with the ramp-up of pluriannual contracts, which do provide with a good midterm visibility. For Nuclear Services, as expected, the revenue growth was still constrained in the first 9 months. We are already bidding for contracts related to the new generation of EPR.

Moving to margin on Slide 15. So the EBITDA margin increase is confirmed quarter after quarter. Over 9 months, our margin is up 30 basis points, fully in line with our full year target. Such performance does evidence our ability to pass on cost increases and to further leverage on our strong positioning and operational know-how. We do spread our best practices across the group and in the newly acquired companies in the context of a much higher demand for our Technical Solutions, we continue to be highly selective and to focus on operational excellence.

On Slide 16, we had a strong delivery on our M&A strategy. Since the beginning of the year, we continue to be very active on the bolt-on M&A front. We have done 5 acquisitions representing about EUR 230 million of cumulative full year revenue.

In Q3, we did finalize 2 acquisitions, BridgingIT in Germany, a company with 700 highly qualified employees and nearly EUR 140 million of revenue. The company provides tailor-made digital transformation services across the full value chain from consulting, system architecture to software engineering, migration to the cloud, cyber security and managed services. This acquisition will create significant value, thanks to the anticipated high organic growth, combined with best-in-class margin levels and delivering high added value services.

Réseaux Environnement in France is a company with 120 employees and EUR 38 million of annual revenue. It is a leading player in Normandy towards the rollout of energy, heating and smart city networks. With this acquisition, we do strengthen our position in the energy transition market in France. And looking forward, we still have a rich pipeline of bolt-on opportunities. The markets, as you know, are highly fragmented, it gives us the opportunity to constantly consolidate our position in our key markets.

A word on CSR on Slide 17. As you know, it is at the heart of our motive and increasingly important to our customer. So we are more than ever mobilized to dive on our 2025 road map. Our commitments and achievements are widely recognized by external agencies and SPIE's rating have been upgraded by Sustainalytics and EcoVadis in Q3.

Our rating with Sustainalytics improved by 2 points to a score of 9.7%. We are not considered as negligible risk in the top 3% of companies rated in business support services. Our rating improved on better risk management in health and safety, and thanks to the good management measures taken to achieve our science-based carbon footprint reduction targets. With EcoVadis, we obtained the gold category for the ninth consecutive year. We are now among the top 5% of companies rated in each sector. Our writing improved, thanks to better integration of CSR principles into our procurement processes and the high attention given to the development of employees' competencies has also been rewarded. These upgrades confirm our significant efforts to achieve our ESG objective and our positioning as a key player in the energy transition.

Every year, we launched an employee share plan, which is to share for you 2023. It has been a tremendous success around 17,000 employees participated, up 55% compared to last year for a total estimated subscription of around EUR 35 million. More than 5,000 employees invested for the first time, including a number stemming from just recently acquired companies. 14 countries were involved upon completion of this related capital increase, the share of employees would account for close to 7.5% of SPIE's capital. Involving our employees in the SPIE entrepreneurial mindset is really important to us, and it is a key factor of our success. We are a people business, and we are really very pleased with the take-up for this operation.

Now I will hand over to Jerome, who will comment further on our financial performance.

[Jérôme Vanhove, executive]

Thank you, Gauthier and good morning, everyone. I'm on Slide 20, starting with the highlights of our income statements in Q3 and the 9 months period. In Q3, we recorded a plus 8.8% organic growth with a contributed EBITDA margin expansion. The EBITDA reached EUR 152 million for the quarter. The strong performance in Q3 enabled the group to reach in the first 9 months, EUR 6,259 million of revenue with a very high level of organic growth at plus 9.5%. EUR 372 million of EBITDA, a year-on-year increase of plus 15% achieved, thanks to the combined effect of our top line growth and a plus 30 bps increase of our EBITDA margin.

Moving to the revenue bridge. The exceptional plus 9.5% of organic growth benefited from the strong momentum across all our segments as well as our proven pricing power. The net scope effect stands at minus 0.8%, reflecting, on one hand, a positive plus 2.4% from acquisitions, notably with one additional month of contribution from Worksphere. It is 9 months this year versus 8 months in the previous year and the contribution of our 2022 bolt-on acquisitions. On the other hand, we have the scope effect of minus 3.2% being mainly explained by the deconsolidation of our U.K. operations since December 31 of last year.

Currency effect is negligible, minus 0.2%, primarily related to the oil and gas businesses foreign currencies. Overall, our consolidated revenue was up plus 8.4% at EUR 6,259 million in the first 9 months of the year. In the next 2 slides, we wanted to provide you with some color, some speeds, key success factors to further increase our margins and maintain best-in-class cash conversion levels across all our organization. First, starting with Slide 22, regarding margin protection and increase despite the context of higher inflation. Our contracts are indexed to reflect the evolution of the actual cost components. The short cycle of the lion's share of our activities allows for real-time pricing based on permanently updated pricing tools.

We are able to actively negotiate with our clients, thanks to our deep knowledge of their assets and, more importantly, our mission-critical service offering. All this, combined with our unique positioning and a growing demand on energy-related markets, clearly provide us with a proven pricing power. Moving to Slide 23. Since we have legitimate questions regarding cash conversion in the context of higher interest rates, let me first reiterate our confidence in our ability to deliver cash conversion at circa 100% for the full year. Here is how do we proactively manage such targets across the group, nearly 4,000 contract and project managers are closely monitoring their working capital KPIs on a daily basis. Obviously, also tracked by the world management chain and including Gauthier and myself.

First, the invoicing metrics, including the monitoring of the invoicing revenue gap level to ensure that the production effectively realized, trigger the corresponding amount of the invoicing and this in a timely manner. Second, the optimization of payment terms and conditions, including advanced payments. Finally, the cash collection itself with the very close monitoring of overdue, which remained at group level at a very stable and low level for the whole group. Last but not least, as you know, criteria of incentive at all levels at SPIE, remaining safety, margin and cash. This concludes my presentation, and now I hand it over to Gauthier.

[Gauthier Louette, executive]

So thank you, Jerome. Before I move on to the outlook 2023. I would like to highlight the strong and unique positioning of SPIE across Europe, including a well-balanced business profile. The group benefits from a very sustained demand in energy transition, and we remain predominantly exposed to asset support. Let me mention, by the way, that our exposure to new construction of office building and residential is less than 3% at group level. And now moving to Slide 26. So the outstanding 9 months performance has given us confidence to revise upwards our organic growth guidance now at above 7%.

Other targets are confirmed EBITDA margin of circa 30 basis points in line with the months achievement continued high focus on bolt-on M&A with a good number of active deals in the pipeline, continued dividend policy with a payout of circa 40% of adjusted net income. With this, I thank you for your attention. And now with Jerome, we are pleased to take your questions.

[Operator]

[Operator Instructions] We will now take our first question from Simona Sarli of Bank of America.

[Simona Sarli, analyst]

So first of all, if you could please remind us, you mentioned what is your exposure for construction at group level. So if you could please detail what is the exposure specifically for France? Also, you mentioned that in France, you had a slowdown related to optic fiber installations and data centers. So if you could please specify how much the organic revenue growth in this country would have been excluding those 2 headwinds?

[Gauthier Louette, executive]

So regarding the slowdown, it is in optic fiber and not in data center. And the data center is a good business in France, and there is no change there. not only in France, but in other countries as well. The optic fiber slowdown is anticipated. It is linked with the maturity of implement in France. With regard to exposure to construction, figures are not very different from 1 country to the other. And so not give first the detail, but there's not a big variance from 1 country to the other in this regard.

[Simona Sarli, analyst]

Can I please squeeze 1 more question, if I may. So this year, so clearly, all the companies have been benefiting from very elevated price increases. Based on your discussions, probably for contracts already for next year, is there any indication that you can give us in terms of prices and what would be potentially the contribution to organic revenue growth.

[Gauthier Louette, executive]

This is not possible at the moment. We are working on our budget for next year. And as you know, at SPIE, it is a very thorough and bottom-up exercise, which is a consolidated upwards. So we're in the midst of this exercise. So couldn't provide any color for next year yet.

[Operator]

We'll now move on to our next question from Augustin Cendre at Stifel.

[Augustin Cendre, analyst]

I'd like first to come back on France. It seems like a slow down quite a lot faster than expected. And you mentioned the effect of the fiber market and the phasing in ICS. I was wondering if it was possible to split the impact of these 2 effects. What I really would like to understand also is how long this could last. It sounds to me like the ICS contract could resume in Q4. So I'm wondering what the impact of the fiber market could be over the next few quarters?

[Gauthier Louette, executive]

Well, first, no, we're talking -- you are talking of a slowdown, but we are talking very high comparison, we achieved an organic growth of, I think, 8% in Q3 last year. So we still are higher than very high compound. So you should keep this in mind. And again, we have a record level of activity for third quarter in France, it was the highest ever. Regarding the 2 effects I mentioning about the roughly half-half for this quarter.

And we're talking for optic fiber, we're talking in the range of, let's say, to EUR 20 million compared to where it was -- sorry, EUR 15 million compared to where it was last year same time but I think it will gradually continue to decrease over the next quarters.

As we mentioned in the past, it's partly compensated by the growth in E-Mobility, which is going to further ramp up over the next year. So it's not exactly balancing up quarter-on-quarter, but we see a good opportunity to compensate with the mobility in the quarters going forward. Sorry, the other part is clearly a one-off, and we should see the production in Q4. So altogether, we expect probably a better level of organic growth in Q4 in France. Again, Q4 was really high at 13.3% organic growth. So we are facing a very tough comparator for Q4. Nevertheless, I think we're going to beat it.

[Augustin Cendre, analyst]

Okay. And just when you said EUR 15 million for the fiber effect, do you mean for Q3 or the whole 9 months this year?

[Gauthier Louette, executive]

No, no, for the quarter. For the quarter.

[Augustin Cendre, analyst]

For the quarter, Okay. And I've got just a second question on the nuclear division. I was wondering if there's any insight you could give us on possible resumption of growth, both in terms of timing and upscale going forward.

[Gauthier Louette, executive]

I think it should at least stabilize, if not start to grow again in next year. But again, we're working on the budget right now, that's where we are. The progress in repairing the [indiscernible] has been an issue at TDF and bring the maintenance program in the assemble. This is progressing well. And so we expect a better situation next year.

[Augustin Cendre, analyst]

Okay. And I've got just 1 last question on the organic growth guidance. You raised it was 6% to 7% I believe this implies a Q4 growth of at least 0.7%, which to me remains extremely cautious given the Q3 performance. So is there any reason for that cautiousness? And why haven't you raised the guidance further to, let's say, 7.5% or even 8%, for example?

[Gauthier Louette, executive]

Well, we -- first, this guidance shows more growth in Q4, maybe possibly 5%. So it's not the 0.3% you mentioned. We have very high Q4 '22 to compare with. And altogether, the growth group in Q4 '22 was 10.2%. So it's, again, very set comparable. But again, we'll have the organic growth for Q4, probably in the range I just mentioned. And so the basic reason is the heat of comparative. Let me stress it again.

We do not -- we are in very strong markets, and we do not see signs of a slowdown generally, except for some minor sectors. So clearly, the energy transition is at work and we're looking at a very, very favorable trends. So the main reason for lower organic growth is the height of the comparable not the market.

[Operator]

We'll now move on to our next question from Rory McKenzie at UBS.

[Rory Mckenzie, analyst]

Just 3 questions, please. Firstly, in Northwest Europe, where there's been a significant step-up in organic growth and how much of that revenue growth relates to multiyear contracts or are there any shorter-term works that we should be aware of in modeling that division going forward? Then secondly, there's been lots of headlines around delays or cancellations to some energy projects, specifically offshore wind.

So could you comment on your exposure there and whether that's having any impact in your pipeline at all? And then finally, can you just talk about staff retention rates. Has that continued to track that into the end of the year?

[Gauthier Louette, executive]

Rory, I didn't understand the last bit of your question, the very last bit.

[Rory Mckenzie, analyst]

Last one was can you talk about staff retention rates.

[Gauthier Louette, executive]

Staff rentention. Okay. Yes. Well, let me start with that. We're doing all right on staff retention. In fact, slightly, we see some decrease in the resignation rate, which is satisfying. So I think we -- as you know, our resignation rate had moved from historical 5% to 6% to closer to 8%, but now it tends to go down again, which is satisfying.

With regard to offshore wind, we're very little exposed to offshore wind, obviously, no impact whatsoever for us or for what's taking place right now. Having said that, I think that it is an area where there will be growth in the future. So we have started to establish a position in France, as I just mentioned, and it is an area of interest for the future. But presently, no impact of the projects that have been postponed.

And regarding the growth in Netherlands or in North-Western Europe, so Netherlands and Belgium. It is not linked to one-off projects or multiyear contracts, it is a general trend, and we have a very good year in the industry. The Worksphere acquisition is proving absolutely excellent. And we have also growth in infrastructure we see all the high-voltage projects. So it is generally across the board, a very strong growth in the Netherlands.

[Rory Mckenzie, analyst]

Could you comment on how many contracts or what the revenue contribution has been from the technical FM business in the Netherlands once you bought Worksphere. So I get what were the revenue synergies you've unlocked how do we think about how you managed to drive growth in that business?

[Gauthier Louette, executive]

Well, it's still obviously early days, but we have now revenue will be achieved this -- I'm not talking order intake, I'm talking production to be achieved this year, thanks to synergies is in the range of EUR 10 million.

[Operator]

[Operator Instructions] And we will now move on to our next question from Eric Lemarie at CIC.

[Eric Lemarié, analyst]

I got 1 on Germany and in the high voltage business, you suffered this year in Q1, if I'm not wrong, some phasing issues in the high voltage business in Germany. Do you expect any similar kind of issues in 2024? Or do you think it will be more -- will be smoother in this defense?

[Gauthier Louette, executive]

Well, we hope that it will be -- and we think that it will be smoother next year because now a number of large projects have been launched, and the issue is always start because you have a last minute to recourse, et cetera, and last administrative orders to overcome. So now we're in a better shape because these large projects are on the move. And so we then have a bit of fluctuation with weather. Obviously, this can happen as that. But we have probably a better pattern in front of us. And also the backlog has improved tremendously. So we should be able to work on more projects at the same time. Which would probably a low for a better distribution of resources.

[Eric Lemarié, analyst]

And can I ask just a follow-up one, just a confirmation. So in Q4, in terms of organic top line growth, should we expect something around 4% to 5%. Did I understand totally?

[Gauthier Louette, executive]

4% to 5% would bring us to 8% organic growth. So I'm not giving guidance for organic growth for fourth quarter. This is a very -- this would be too risky at business, but this was to mention the order of magnitude. But again, this is not a quarterly guidance.

[Operator]

We'll now move on to our next question from Patrick Jousseaume Societe Generale.

[Patrick Jousseaume, analyst]

So I have a quick 1 regarding oil and gas. There is a very strong negative ForEx impact of 18% for Q3. Could you please explain and maybe tell us what are the moving parts there? What are the currency involved? And what should we expect for Q4 in this year.

[Gauthier Louette, executive]

Sorry, Patrick. I've not understood what you were concern is.

[Patrick Jousseaume, analyst]

My question is about the 18% negative impact of ForEx in the oil and gas and nuclear division in Q4. I wanted to understand what are the currency involve, and I wanted also to understand what we should expect in Q4 for this right impact maybe.

[Gauthier Louette, executive]

Well, I think we'll -- maybe we'll have a separate [ too confusing ] because in our view is, overall, the exchange impact is negligible. Also, I don't understand your 18%.

[Patrick Jousseaume, analyst]

That's on Page 3 on the press reading, to EUR 3 million, 18% [indiscernible].

[Gauthier Louette, executive]

I think that we'll look into it.

[Operator]

And we will now take our next question from David Green at Boldhaven.

[David Green, analyst]

Just a couple of quick questions and clarifications. So with that $50 million that you talked about in France, am I right in saying that your organic sales growth in France without the project phasing would have been closer to 5%?

[Gauthier Louette, executive]

Yes. We're talking -- I think it's more in the range of [ 10% to 16% ] something that's about. We would have been in the range of [ 3%, 4% ], I think.

[David Green, analyst]

And then more generally, how much has the specifically the fiber market being as a percentage of France in total?

[Gauthier Louette, executive]

Well, in our best years, we were looking at a business above EUR 200 million, maybe I think we picked that EUR 230 million in fiber but this was 2 years ago.

[David Green, analyst]

And in terms of thinking about just the ongoing run rate of that business, is there still an underlying level of growth there? Or is that tapering down.

[Gauthier Louette, executive]

No, no, the optic fiber, it was linked with the deployment. So this is an underlying decrease in optic fiber. Definitely, it will continue to decrease for the years to come to a point Y-o-Y, it will be very small. So this is why I say it's really good that we managed to compensate this trend with, for instance, with e-mobility, but also with things we do for transportation systems, et cetera.

[David Green, analyst]

And then just a final couple of questions on the sort of cash flow going back. Any color you can give us on sort of working capital and the trends there. I think you were at 16 days at the H1. Are we seeing sort of stabilization there because I think it had been declining a little bit. And then just finally on net debt level, so you were at [ 2.7x ] at the H1, and I think you were talking about around 2 or less than 2x for the full year. Just to confirm that we're still on track for that.

[Jérôme Vanhove, executive]

Yes. Regarding the working capital, very clearly, we did not indicate clearly some normalized level of working cap. I think we stated again, and I'm pleased to confirm our confidence in reaching the cash conversion for the full year at circa 100%. So historically, and we made a comment in H1, we have seen at December '22 and June '23, a slight drift, which was explained very clearly by a very high level of activity in the quarters preceding those closures. Again, going forward, we will not drive you through or guide you through working capital in number of days, but rather towards the cash conversion, which is the most important and a key element of our free cash flow, obviously.

Regarding the net debt, we've said constantly below [ 2 ] over the last years. We did 1.6x of leverage ratio at the end of December '22. This is now heavily depending on how our bolt-on M&A strategy will end for this year and with what level of cash out for M&A. But all in all, definitely below 2x at the end of the year.

[Operator]

There are no further questions in queue. [Operator Instructions].

[Jérôme Vanhove, executive]

Maybe before -- unless there is any other question, Patrick, I would like to come back on your question regarding the foreign exchange impact on oil and gas, obviously, 18%. Sorry, we did not pick up the question immediately as for the first 9 months at the group level, it's very negligible as we said, minus 0.2%. I understand that our oil and gas business in some of the countries is conducted on the basis of the U.S. dollar, we had some fluctuation plus other local currencies, notably in Africa.

And when we do compare for the quarter 3, especially the currency levels in those regions and euro against dollar '22 versus '23 we came up with such an amount. Overall, for the 9 months, and you will see for the year, it will lower much more.

[Operator]

So I didn't see if there are any further questions in the queue. I will now hand it back to Gauthier Louette for closing remarks thank you.

[Gauthier Louette, executive]

Well, thank you all for your attention and your interest in SPIE as you see, the business is going strong, and we are reenjoying a very good positioning. So we work very hard to deliver on our guidance for the year. And I'll just conclude in reminding you that it's a great time to be an electrical engineer. Thanks a lot. Have a good day.

[Operator]

Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.