Earnings call transcript: Spie Q4 2024 shows strong growth, stock rises

Spie SA reported robust financial results for the fourth quarter of 2024, with significant increases in revenue and earnings, highlighting strong performance across its business segments. The company’s stock price rose by 5.1% following the release of the results, reflecting investor confidence in its strategic direction and market positioning. According to InvestingPro data, the company has demonstrated impressive momentum with a 25.3% year-to-date return and currently trades near its 52-week high, with a market capitalization of $7.2 billion.

Key Takeaways

• Spie reported a 13.7% increase in total revenue to €9.9 billion.
• EBITDA rose by 21.9%, reaching €712 million.
• The stock price increased by 5.1% to €39.56.
• Spie announced a proposed dividend increase of 20.5% to €1 per share.

Company Performance

Spie’s performance in Q4 2024 was marked by significant growth across its key financial metrics. The company achieved a 13.7% increase in total revenue, driven by organic growth of 4.3% and strategic acquisitions. This growth is reflective of Spie’s strong positioning in the energy transition market, where it has capitalized on increasing demand for sustainable energy solutions.

Financial Highlights

• Revenue: €9.9 billion, up 13.7% year-over-year
• EBITDA: €712 million, up 21.9%
• EBITA Margin: 7.2%, expanded by 50 basis points
• Adjusted Net Income: €420 million, up 22%
• Free Cash Flow: €570 million, with 122% cash conversion

Market Reaction

Following the earnings announcement, Spie’s stock rose by 5.1%, closing at €39.56. This movement brought the stock closer to its 52-week high of €39.88, signaling strong investor confidence. The positive stock performance reflects the market’s favorable view of Spie’s growth strategy and its execution in key markets. InvestingPro analysis indicates the stock is currently fairly valued, with additional ProTips available to subscribers regarding the company’s valuation metrics and growth potential.

Outlook & Guidance

Looking ahead, Spie is targeting revenue above €10 billion, with plans for continued organic growth and strategic acquisitions. The company is optimistic about further expanding its EBITA margin and maintaining its leadership in the energy transition market. Spie’s future earnings projections for FY2025 also indicate continued growth, with an EPS forecast of 3.03 USD. InvestingPro reveals the company maintains a GOOD overall financial health score, though it currently faces challenges with a relatively low current ratio of 0.79. Discover more insights about Spie’s financial health and growth prospects in the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Gautier Louet highlighted the company’s achievements, stating, "2024 was yet another year of record breaking for Spie." He emphasized the importance of Spie’s workforce, saying, "We are a service company. Our employees are our most valuable asset." Louet also underscored Spie’s role in the energy transition, noting, "Spie is part of the solution and a key enabler for energy transition."

Risks and Challenges

• Potential macroeconomic pressures affecting market demand.
• Challenges in integrating recent acquisitions.
• Fluctuations in energy prices impacting profitability.
• Regulatory changes in key markets.
• Competition from other players in the energy transition space.

Q&A

During the earnings call, analysts inquired about Spie’s outlook for German infrastructure investments and its strategy for sustaining margins in its Global Services & Energy segment. The company expressed confidence in its ability to leverage upcoming infrastructure spending in Germany and maintain double-digit margins in its key business areas.

Full transcript - Spie SA (SPIE) Q4 2024:

Laura, Conference Coordinator: Hello, and welcome to the SPE Full Year twenty twenty four Results. My name is Laura, and I will be your coordinator for today’s event. Please note this call is being recorded, and for the duration of the call, the lines will be on listen only mode. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question.

Today, we have Gautier Louet, Chairman and CEO and Jerome Vanov, Group CFO as our presenters. I will now hand you over to your host, Gautier Louet, to begin today’s conference. Thank you.

Gautier Louet, Chairman and CEO, SPIE: Good morning, ladies and gentlemen. Thank you for attending this conference call for 2024 full year results. 2024 was yet another year of record breaking for SPEED. And first of all, I would like to congratulate our 55,000 employees on their expertise and dedication. They are the backbone of our success.

Let me go first through a few examples of recent contracts. In Germany, for an Heidelberg cement plant, we’re installing the first industrial scale CCU, carbon capture and utilization in the world. This sensation is able to capture 70,000 tons of CO2 per year from the cement production process, and it enables its direct reuse in chemical or food industry. It’s got a complex project requiring ventilation of more than five kilometers of various pipes. And you’ll see we are proud to leverage our technical expertise to make an important contribution to a more sustainable textile cement production.

In France, ECT Networks uses drones to improve project design and maintenance operations for five gs infrastructure. The operational efficiencies improved as tasks are simplified and completed more quickly, limiting use of heavy machinery and thus reducing the cardboard footprint. In The Netherlands, on Slide six, the high voltage grid operator, Tenet, which is our major customer, will invest EUR 60,000,000,000 to strengthen the Dutch high voltage grid in the next decade. One of those investments is a new 150 kV substation to supply the North Of Amsterdam and the harbor. We have spent the last one point five years designing the substation, and the construction started last December.

Lastly, in Belgium, our customer, Daelin, a Flemish transport company, aims to provide zero carbon transport services by 02/1935. After a successful first collaboration, Dalian reaffirmed his trust in SPIE and signed a new agreement to increase the number of electric charging points to 300 by 02/1932. Our services contribute to the decarbonization of public transport throughout this project. D Line requires advanced expertise for this electrification project, and this is precisely what SP is able to bring to the table. Now moving to our standout points for 2024.

’20 ’20 ’4 definitely was an Olympic year for Speed. Revenue grew by nearly 14%, highlighting our strong positioning on attractive markets as well as the remarkable execution of our intense bolt on acquisition strategy with more than EUR $550,000,000 of annual revenue acquired. EBITDA reached a new record high of EUR $712,000,000, rising 22% year on year as we managed to step up our margin by as much as 50 basis points. Free cash flow reached an outstanding EUR $770,000,000, supported by exceptional working capital performance and a remarkable 122 cash conversion. Finally, we confirm our sustainability leadership with 49% of revenue aligned with EU taxonomy.

This gives us the number one position within the SBS one hundred and twenty. Moving on Slide nine to the financial KPIs. I’m very pleased to report an outstanding set of numbers. Revenue at EUR 9,900,000,000.0, up 13.74.3% organically, 4.3% EBITDA exceeding the EUR 700,000,000 mark with a 22% growth EBITA margin at 7.2% with a remarkable 50 basis point improvement free cash flow reaching an outstanding EUR 170,000,000 with an exceptional cash conversion of 122% and the leverage kept as low as 1.6x. Bolton M and A was intense through the year and we concluded eight acquisitions, representing EUR $457,000,000 in annual revenue.

And finally, our adjusted net income grew by 22%, and we will recommend a dividend of EUR 1 per share, up 20.5%. Looking at the growth per segment on Slide 10. So this growth was a combination of dynamic organic growth at 4.3% and a high contribution from acquisition at 9.2%. Germany, North Western Europe and GSE, namely Global Services Energy, recorded remarkable organic growth. France was robust with a 1.4% organic growth.

Central Europe was slightly negative organically due to contract phasing impacts. The contribution from acquisitions was very high in Germany, representing 26.7% and in J. C. At 10.1%. Looking more in detail at bolt on acquisition.

In 2024, we announced eight acquisition totaling EUR $457,000,000 of full year revenue. And we closed three acquisitions, which had been signed in 2023. In Germany, we made three acquisitions for EUR $320,000,000 of revenue, of which Itsegay, EUR two thirty million in the take home infrastructure market and OTO LSA, EUR seventy five million in the pharmaceutical sector. In Poland, we acquired Ekstromontas Postnan, EUR seventy million revenue, which will expand our presence in the building technology sector. In France, EUR Thirty Five Million of revenue, which provides exposure to the worrying nuclear inspection and maintenance services.

Let me remind you that our bolt on M and A is a low risk, high return growth strategy at the core of our model. As we do operate on highly fragmented markets, our pipelines of opportunities remain very rich. And moving now to the EBITA margin. In 2024, we managed to expand our EBITA margin by 50 basis points. This remarkable performance reflects our pricing power, operational excellence and also the accretive impacts of some recent acquisitions in Germany.

We improved our margins in all segments. Germany gained an impressive 90 basis points and is now the best in class with a 7.5% EBITA margin. France proved to be a steady shape with a 7.1% EBITA margin, up 10 basis points. North Western Europe continued to improve, reaching 6.3%, up 40 basis points, while Central Europe improved by 20 basis points. Global Services and Energy remains our top performer with a 10.1% EBITDA margin, which increased significantly by 120 basis points compared to 2023.

Looking at the segment and starting with Germany, which is now the top contributor to group earnings as the EBITDA reached over EUR $242,000,000. Revenue in Germany grew 33%, driven by intense volatile M and A and a strong 6.3% organic growth. High Voltage Services posted double digit growth in a booming market where we capitalize on our leadership position. Distribution Grid related services, the country’s largest activity, followed suit this year with the impact of the transformation of the high voltage grid. Technical facility management activities remain solid.

The very high renewal rate of maintenance contracts recorded in 2024 does bode well for the future. Fiber world activity, while our presence was reinforced by the acquisition of ICG, continued to ramp up. Germany is lagging behind most European countries and will invest massively in cybernetworks going forward. Industrial Services benefited from a good start of OTO LSA in the pharmaceutical sector and a good performance of three Industrial Services and Wind, formerly Orgo, which in the operation is very well advanced. EBITDA margin increased sharply by 90 basis points to reach 7.5%, driven by a positive mix effect from fast growing high voltage services, sustained focus on selectivity and operational excellence and the accretive impact of recent bolt on acquisitions.

Turning to France on Slide 14, we did deliver a robust performance, highlighting the strength of our business that covers the entire technical services spectrum and serves a well diversified quality customer base. Revenue grew 3.1% and EBITA margin improved 10 basis points. The growth in Technical Facility Management was supported by sustained demand for Energy Efficiency Solutions, while building solutions benefited from a high backlog at the beginning of the year. Industry was driven by strong momentum in energy related services, which are the largest contributor to the de efficiencies revenue. City Networks was impacted by the run down of mature fiber deployment activities.

And lastly, Nuclear Services revenue growth picked up in the second half, and we have a positive outlook supported by significant long term orders. On Slide 15, in North Western Europe, we delivered a 10.5 revenue growth, topping the EUR 2,000,000,000 mark. Momentum in The Netherlands was excellent, driven by significant Energy Transition investment, not only in High Voltage, but also in Industry and Building Solutions. Cross selling between building solutions, so X Worksheme and other division has created opportunity for more than 60 clients in 2024, opening up new avenues for growth. In Belgium, the growth was robust, driven by strong momentum in High Voltage and a good performance in Technical Facility Management.

Our EBITDA margin continued its expansion to reach 6.3% in 2024, up 40 basis points, driven by a positive mix effect, sustained pricing power and operational excellence. The revenue in Central Europe on Slide 16 remained broadly stable in 2024 as a 2.9% organic decline was offset by a 0.4% growth from bolt on acquisition and a 2.1% foreign exchange impact. In Poland, the high voltage market benefits from strong investment in grid infrastructure and renewable energy production. However, in the short term, activity was impacted by contract phasing. We did see similar impacts in Slovakia and in The Czech Republic.

Austria posted an outstanding growth across all divisions with particularly strong momentum in Transmission and Distribution Services and Transport Infrastructure projects. Suzanna revenue declined compared to a very high comparison basis in 2023. The EBITA margin in Central Europe was 5.2% in ’24, increasing by 20 basis points. And moving now to Global Services and Energy. The revenue rose sharply by 24% in 2024, including a 13.7% organic growth.

The activity was exceptionally high in H1, driven by a major shutdown maintenance operation in West Africa. Q4 was broadly stable on a very high comparison basis. GS activities are firmly anchored at a high level. Contribution from acquisition was 10.1%. The integration of Coral Group accelerated diversification towards renewable energies.

EBITDA margin expanded by 120 basis points, reaching 10.1 in 2024, reflecting strong operational leverage and the focus on operational excellence. A look at our shortening structure on Slide 18. We are a service company. Our employees are most valuable asset. SPEAK 2024 employee shorting plan was a resounding success with the participation of more than 21,000 employees from 19 countries, representing a 25% increase compared to 2020.

Notably, over 5,000 of these participants were first time shareholders in the company. As we involve our employees in this entrepreneurial journey, we enable them to participate in our long term value creation. As a result, with 9.6%, it’s in the top seven companies in the SBF one hundred and twenty index, where employees are the largest shareholders of the group. Early in 2025, we launched a share buyback to partially offset the addition of this employee’s holding plan. Now I will hand over to Jerome, who will comment on our financial performance.

Jerome Vanov, Group CFO, SPIE: Thank you, Gauthier, and good morning, everyone. So I’m pleased to take you through our 2024 financial results. This year’s fee delivered a record performance with revenue reaching EUR 9,900,000,000.0, up 13.7%. Organic growth stood at 4.3%, while acquisitions did contribute a strong 9.2%. EBITDA surged to EUR $712,000,000, up 21.9% as a combination of our top line growth and margin expansion margin expansion at plus 50 bps to reach 7.2% in 2024.

This strong margin performance was again driven by operational efficiency, pricing power and discipline as well as accretive acquisitions. Adjusted net income increased in line with our EBITDA at 22% to EUR $420,000,000 with adjusted earnings per share reaching EUR 2.5, up 21% year on year. Let’s go deeper into the numbers. So I said total revenue growth of 13.7% to EUR 9,900,000,000.0, of which organic growth on one side for 4.3%. This is reflecting our strong positioning on well oriented markets.

And on the other hand, bolt on acquisitions, which have added a significant 9.2% corresponding to circa million contribution in 2024. This is reflecting our intense bolt on M and A activities over the past two years. Currency impact was rather minimal at 0.2%, primarily driven by the Polish Zolote. As anticipated during our Q3 release, organic growth on revenue rebounded in Q4 at 4.2% coming from the there was a weak 1.7 in Q3. This resulted in a 3% organic growth for the second semester.

Slight quarterly swings may happen due to some project phasing, but our long term trajectory remains well supported by strong market momentum overall. Looking now at our adjusted net income, it increased by 22%, strictly in line with our EBITDA growth. Into details, the net interest, predominantly the cost of our debt, which increased by 1819%, sorry, in 2024. This is in line with the progressive increase in net debt throughout the year, and this is driven by M and A related cash out on the basis of steady and attractive financial conditions. Other financial charges remained stable and mainly include the interest cost on our GR9 defined benefits pension schemes as well as to

Gautier Louet, Chairman and CEO, SPIE: a lower

Jerome Vanov, Group CFO, SPIE: extent, the net FX impact. Finally, on the income tax, our normative tax rate is slightly up by one point to 29.1%, reflecting the slight increased contribution of Germany to the taxable income base. Reported net income reached EUR $273,000,000. This is up 14.5% in comparison with 2023. This increase reflects the 22% increase in adjusted net income, slightly mitigated by an increase in some specific noncash charges, starting with the amortization of allocated goodwill, which increased 35% as a result of new allocated goodwill from intense bolton M and A and the change in fair value and amortization cost of the convertible bond or NAND derivative, which was EUR 23,600,000.0 in 2024 compared to close to zero in 2023.

This is a purely again, this is a purely IFRS accounting charge. As a reminder, the actual recurring cash cost of the Harnan is 2% coupon, meaning EUR 8,000,000 per annum. Moving to working capital. Our structurally negative working cap further improved this year down to circa minus EUR 1,000,000,000. This is representing minus thirty six days of revenue compared to EUR $884,000,000 at the end of twenty twenty three, which represented minus thirty seven days of revenue.

So the stability of our working cap expressed in days revenue results from, on one side, the slight improvement at constant perimeter and on the other side, a slight offset by the first entries into the perimeter of positive working capital from the companies acquired in 2024. This performance reflects permanent focus on early invoicing, cash collection as well as the positive business mix impact on the working capital structure. Regarding the acquired companies, even though with positive working cap, we already saw good results from the implementation of Spee’s working cap management policy at the end of the year. To finish on this topic, let me stress the high quality of our working capital at December and our strong confidence to deliver once more a 100 cash conversion in 2025 and beyond. The immediate consequence of this outstanding working capital performance is an exceptional 122% cash conversion, lifting our free cash flow to an all time high of EUR $570,000,000.

This is a remarkable cash conversion, which evidences a strong quality of earnings first and, of course, a permanent disciplined execution. This outstanding free cash flow generation enable us to mitigate the impact of the very high M and A activity on our leverage ratio in 2024. Let’s move to the evolution of the net debt. Net debt stood at EUR 1,200,000,000.0 to EUR 1,300,000,000.0 at year end and increased by EUR $469,000,000 precisely year over year, driven by significant M and A investments. Operating cash flow reached EUR $852,000,000, up from EUR $7.00 1,000,000 in 2023, in line first with our EBITDA growth and thanks to a cash conversion well above 100%.

We continue to demonstrate our ability to efficiently translate earnings into cash. CapEx remained stable at EUR 75,000,000, which represents 0.8 of revenue, while net interest and taxes absorbed EUR $244,000,000. 20 20 4 was very intense in terms of bolt on M and A, as already said, notably with the closing of the acquisitions of Auber, Idsege and Oto. Altogether, this translated into a significant cash out of more than EUR 900,000,000.0 fully self financed. Our strong cash generation allows us to self finance our M and A while keeping a very solid balance sheet.

Indeed, as shown, our leverage ratio was kept as low as 1.6x at the end of twenty twenty four. This performance is fully in line for the fourth consecutive year with our stated financial policy of maintaining leverage not higher than two times. Our financial structure remains strong, supported by well diversified and long maturity debt instruments. We benefit from attractive financing conditions with 3.4 average cost of debt, of which more than 80% of our debt bears a fixed cost, ensuring stability this in a volatile interest rate environment. Our liquidity remains very high at more than EUR 1,600,000,000.0, notably thanks to the renegotiation this year in 2024, the renegotiation and the extension of our revolving credit facility from EUR 600,000,000 to EUR 1,000,000,000.

We contemplate the refinancing of our bond maturing in June 2026, and this as early as in the second quarter of this year. Lastly, our credit rating is unchanged at BBB plus with a stable outlook. Given such a strong performance, the Board of Director of the group will recommend to the AGM a dividend of €1 per share. This is up 20.5% in comparison to last year. That’s 40% payout ratio.

This is right in line with our long standing commitment to sustainable and growing dividend. This dividend to be paid in cash includes an interim dividend of EUR 0.25 already paid in September 2024 and therefore, a remaining EUR $0.75 per share to be paid on 05/16/2025. As usual, an interim dividend will also be paid in September 2025, representing 30% of the approved 2024 dividend. I will now hand over back to Burkitt.

Gautier Louet, Chairman and CEO, SPIE: Thank you, Jerome. As you very well know, sustainability is at the core of our business, and we made significant progress through 2024 on track to reach our 2025 targets for the year 2025 specifically. 49% of our revenue is aligned with the EU taxonomy, and we are now very close to our 50% target for 2025. Our scope one and two emissions have already decreased by 20% since 2019. And we also have made significant progress in our Scope three.

50 eight percent of emissions related to our procurement are now made with suppliers having set ambitious reduction targets for themselves. Regarding our people, a key target for us is to achieve excellence in safety and it is a constant focus across the group. While the size of the group increased strongly, we managed to keep the number of civil accident at a stable level compared to 2019. The total recordable accident frequency rates continues to decrease year after year. And finally, our gender diversity is progressing as we continue to attract and retain key female talents.

After five years of measuring our progress, the share of our revenues aligned with the EU taxonomy reached 49% in 2024, which make us a top performer or probably the top performer within the SBF one hundred and twenty. SPE is part of the solution and a key enabler for energy transition. Shift in the energy mix accounts for 22% of revenue. It includes electricity transmission and distribution as well as renewable energies. Energy efficiency solutions accounts for 25% of revenue.

This area includes all our work for highly energy efficient hydraulic systems in buildings, energy efficiency in data centers as well as solutions contributing to industry decarbonization. And finally, low carbon mobility accounts for 2%. This category primarily regroups charging infrastructure for public transportation and electric vehicles. On Slide 34, having a look at our workforce, our employees are our greatest assets and we now boast close to 55,000 talented and strongly committed professionals. In 2024, our recruitment strategy led to approximately 6,800 new hires with 1,500 new apprentices.

I would like to highlight that 1,700 recruitments by MADE SOAR RESOL program. It is a remarkable success, is fitting the strong commitment and trust of our employees. The voluntary turnover rate decreased this year at 6.6%, down from 7.5% in 2023. And as I already mentioned, employees are the group’s first shareholders, sharing a strong entrepreneurial mindset. Moving to the outlook for 2025.

On the back of a very strong 2024, we are looking at another year of strong financial performance. We target strong total growth, pushing the group revenue well above the EUR 10,000,000,000 mark with further organic growth and active bolt on M and A. And we aim as a way that further expansion of our EBITA margin obviously translated in 100% cash conversion. The proposed dividend payout ratio will remain at 40% SEK of the adjusted net income attributable to the group. And to finish, please join us tomorrow at our Investor Day, which will be held at the Aero Club de France in Paris or virtually.

This event will be an opportunity for us to provide an in-depth look at our strategy, value creation model and future growth prospects. We’re looking forward to see you there. And this concludes our presentation. Now with Jerome, we’ll be happy to take your questions.

Laura, Conference Coordinator: Thank Thank you. We will now take our first question from Alexander Pritek of Bernstein. Your line is open. Please go ahead.

Alexander Pritek, Analyst, Bernstein: Yes. Good morning and thank you for taking my question. I’d have just two on business areas. So in Central Europe, you mentioned that there was some catch up of the mix in the previous quarter in high voltage in Eastern Europe. And so this catch up was partial in Q4.

So should we expect a continuation of this catch up into the current quarter? And more generally, have the high comps now washed out of the base, particularly in Switzerland, that weighed on this geography throughout 2024? That’s my first one. The second one is in Global Services Energy. We saw the expected normalization of revenue trends after the very strong first half of this area.

Now should we expect in the first half of twenty twenty five a noticeable decline given that you had some sizable more or less one off contracts in twenty twenty four H1? Thank you.

Gautier Louet, Chairman and CEO, SPIE: So regarding Eastern Europe, yes, we’re looking at catch up and we’re looking at positive growth for Q1 twenty twenty five. And clearly, it was our transmission and distribution activity, but it’s not the only thing we do in Central Europe and where there are areas like telecom, which are doing very well right now. And for high voltage, be it in Poland or in other country, we look at a stronger level of activity for the beginning of this year. So no drag there. Regarding high comps in Switzerland, but Switzerland, it is a smaller part of the business.

So I don’t think we should dwell too much about it. But yes, this Cisco story is behind us and also now we are looking at more normalizing levels. Generally and for GSE, we had this shutdown which brought a very strong Q1 last year. So you see we’ll have a different pattern now. However, the GSE business is generally well oriented, but it will not prevent probably to have this difficult comparison basis for Q1.

But again, it’s a quarterly variation, which doesn’t mean a lot apart from the arithmetic point of view. And clearly, the be it the Oil and Gas part of GSE or the wind part of GSE, we’re looking at a strong year.

Alexander Pritek, Analyst, Bernstein: That’s great. Thank you very much.

Laura, Conference Coordinator: Thank you. And we will now take our next question from Remy Greineau of Morgan Stanley. Your line is open. Please go

Remy Greineau, Analyst, Morgan Stanley: ahead. Good morning. Thank you for taking my questions. Sorry, if I may. So the first one is probably not going to come as a huge surprise, but just wanted to have your thoughts on the potential decision by the upcoming German government to increase infra expense.

How are you thinking about the potential impact on SPEAK, whether it’s about securing the pipeline, accelerating it or incrementally positive? So that’s the first one. The second one is on the T and D activity specifically, which seems to have experienced a little bit of an acceleration as expected. I guess what I wanted to ask was about the size of the backlog and whether you’re still facing some constraint on the supply chain and the hiring there. So should we see this acceleration?

Can you further accelerate the organic growth you think this year? Or is it about increasing the size of that backlog and the visibility? So that’s second question on T and D. And then the third one is on the guidance for top line. I guess with the M and A embarked, you’re probably already above billion.

So I understand the guidance is well above billion. But can you help us quantify a little bit what you expect for 2025 organic growth? Should we expect it to be stable below or above 2024, for example? And if you can tell us more about the phasing of that growth in 2025?

Gautier Louet, Chairman and CEO, SPIE: Okay. So regarding the announcement in Germany, obviously, it is positive for the business, and that’s for sure. I think it will support clearly the growth going forward and what we will discuss tomorrow at CMD, It will also take a lagging time before it really comes into effect. But it’s we are exposed to infrastructure sector in Germany. So the plan is EUR 500,000,000.0 for infrastructure, EUR 500,000,000.0 for defense.

Clearly, we are well exposed to the infrastructure sector in Germany, but you know the T and D story, but we also do a lot with regard to tender infrastructure. And you will remember the lagging situation with regard to telecom in Germany, specifically, Optic Fiber. So these are positive news. And we are a bit exposed to the defense sector in Germany, but it was at SPE level, our exposure to defense is roughly 2%. And not surprisingly, conversant with Fakouir and with the share in the GDP the share in the GDP in Germany was lower so far.

Regarding T and D, the backlog is we’re talking several years of backlog. And we see it takes a bit of time between signing of the order and getting into production. We have some engineering and planning activities still to complete. But it does bode well for the future. And whether it will sustain the organic growth and whether the organic growth is going to accelerate in transmission, these are chunkier projects, so there’s always an amount of variation, but it will remain at a good level of organic growth.

And with regard to distribution, yes, in distribution, we are likely to see some acceleration of the organic growth, which was already strong this year, by the way. But clearly, in Germany, now that the main trunk lines are being built, there is an impact on the substations and on the distribution networks. And this is what we are benefiting from that as we speak. And clearly, we had good organic growth in Germany in 2024, and we think we’ll see a good dynamic in 2025 as well. Regarding the guidance, again, as always, at the beginning of the year, there are lots of moving parts.

I just mentioned something where we see some good traction in Germany. As you know, even if France did resist well and specifically in the fourth quarter, the perspective in France is that it’s probably a bit more hazier at the moment. So we are it calls for a bit of caution. We see North Western Europe on a good trend. We had a very strong year last year.

So obviously, it’s difficult to reproduce this type of growth, but will the comparable basis becomes very difficult. And we see positive trend in Northern Europe. And I just mentioned something probably slightly better this year in Central Europe and a good level of activity in Oil and Gas. So altogether, lots of moving parts, but we’re confident about the organic growth for this year. We think we should not be miles away from what we did achieve in ’24.

And regarding the total growth, again, it’s also moving parts and depending on the sort of acquisition we’re going to achieve, we have the contribution of the acquisition already made and so the pro form a top up of the acquisition already made and the in 2024 and this recent acquisition in Poland. So we’re looking probably at an additional contribution of a quarter of EUR 1,000,000,000 from this top up pro form a and last acquisition, which then will be compounded by organic growth. So well above is well above. No doubt about it.

Alexander Pritek, Analyst, Bernstein: Okay, understood. Thanks very much.

Laura, Conference Coordinator: Thank you. We’ll now take our next question from Rory McKenzie of UBS. Your line is open. Please go ahead.

Rory McKenzie, Analyst, UBS: Good morning. It’s Rory here. Two questions on Germany, please. Firstly, the German margins, which were up a good 90 bps in the year. Can you just say how much of that was M and A?

And then in terms of the underlying margin in Germany, can you talk about how much comes from mix or like for like improvement? For example, we know that transmission distribution is growing faster than average and has perhaps more like low double digit margins, but have those margins in themselves improved over the past year? And then secondly, I wanted to ask about your German positioning overall. With Roobar and ICG, it feels like you’ve really kind of broadened the exposures overall. So could you give us perhaps the latest breakdown by sector or your activities in Germany?

And what are the plans around bringing these all together into kind of one platform? Thank you.

Gautier Louet, Chairman and CEO, SPIE: So regarding margin expansion in Germany, yes, we had done excellent progress this year. And there is a contribution from the acquisition because they are all relative. So it’s probably a good half of the margin expansion. And then there is the first progress general progress in areas where we keep progressing the margin even in very classical areas like Techese. And then there is a mix effect coming from transmission and distribution.

So this area is growing faster than the average of Germany, and it has a relative impact, especially transmission. And within transmission, we also aim at further progressing. So in 2024, we see also good progress in the rail substations, which was a bit lagging behind high voltage lines. And we did progress in this regard. So we are not at the end of the road.

We’re aiming at further progress in this area. It is by the way, and just in passing, this is true for Germany, but it is also true for Netherlands. We experienced very very good margin and progressing further in this sector. Regarding so our strategy is to in every country where we are present is to cover the whole spectrum of the economy. And if you see that that’s what we’re aiming at in Germany.

So we have said for a long time that we wanted to be in the Industrial Services. We did manage that with Rogo. So Rogo, now called Industrial Services and Win, it’s above EUR 400,000,000 mark in terms of turnover with relative margin, yes, relative margin, good margin. We are really pleased with performance of Robot. And then ICG in the Optic Fiber also relative margin, good customer base and satisfactory factory start within SPE.

Maybe I could mention also a smaller one, which is M. Dege, which is in the area of solar. So solar panels for in the built environment, so not large photovoltaic fabs, but in the built environment. And they are doing really well, so we are very pleased with this acquisition as well. And then O2LC, but contribution is obviously smaller because they joined later in the year, but they’re also trading at very satisfactory margin.

So it will help Germany progress further in terms of margin. That’s clear. In terms of platform, with the contribution of the acquisition of last year, Germany is now our first segment in terms of volume and also at the best margin of the group. So it will really help going forward, but that’s part of the discussion of the CMD tomorrow.

Rory McKenzie, Analyst, UBS: That’s great. Thank you.

Laura, Conference Coordinator: Thank you. We’ll now move on to our next question from Erik Lamoure of CIC. Your line is open. Please go ahead.

Erik Lamoure, Analyst, CIC: Yes. Good morning. Thanks for taking my question. I got three. First, as you mentioned, 2024 has been very dynamic in terms of acquisition and you mentioned the pipeline is good.

But how is the pipeline today compared with the pipeline last year? Do you think it’s or do you consider it’s as healthy as it used to be? And are you still comfortable with the multiple paid or the multiples asked by the sellers? And maybe you could share with us the average multiple paid in 2024 for acquisitions. This is my first question.

I’ve got a second question on the possible impact of the copper supply unbalance? Do you think it could be a threat in the future for your business? Or a medium long term question, I guess. And the last question on Global Services and Energy division, do you think the double digit margin is sustainable? Thank you.

Gautier Louet, Chairman and CEO, SPIE: I will take the two last questions and then Jerome will give you some color on M and A. Corporate supply, well, it’s not an issue right now. And as you know, there’s quite a bit of recycling going on as well. Most of the time, especially for the transmission lines, the cables are supplied by the operators. So it is free issued to us, and they organize the supply chain quite long in advance.

And then for other type of activity like building, as you know, aluminum is a good alternative to copper. So we have ways to do that. So And at the moment, we do not see the copper price operating and not at all. Regarding GSE, double digit margin, yes, it

Rory McKenzie, Analyst, UBS: is

Gautier Louet, Chairman and CEO, SPIE: sustainable. In my book, Oil and Gas is double digit, and so that’s where where we should be and should remain.

Jerome Vanov, Group CFO, SPIE: Regarding your question about the M and A pipeline, I think we should bear in mind the high level of fragmentation of our market, and this is a very clear driver to building a solid pipeline. So to your question, yes, we still benefit from a very rich pipeline in terms of opportunities. In terms of M and A, there is always a question about the sequence. It’s not like a Swiss clock with one deal every month. There is a certain element of phasing.

So we start the year with the pipeline as solid as it was in the previous year, same number of active M and A situations. Let’s see how it does develop, not necessarily as dynamic and intense as it was in 2024, but definitely a good starting point. And to your question regarding valuation multiples, I think we are still successful deploying a very disciplined approach, and we do not vary from the range of multiple we customarily apply from mid single digit to high single digit depending on the performance, the dynamic, the expertise of the targets we are facing and this ensuring for value created M and A. If sometimes sellers have extravagant expectation in terms of valuation, we just don’t go there on full stop. We stay disciplined and so far it does allow for successful M and A

Laura, Conference Coordinator: We will now move on to our next question from Augustin Sandray of Stifel. The line is open. Please go ahead.

Augustin Sandray, Analyst, Stifel: Yes. Thank you for taking my questions. I’ve got three, if I May. The first one is on your North Western Europe performance in Q4. It looked actually quite strong at up 12% organically.

I know you talked about 2025 being relatively strong in that division, but I was wondering what happened in that division in Q4 to have such a strong organic growth? And is that the level that targeting for the growth level that you’re targeting for 2025? My second question relates to the corporate tax impact in France. I don’t think you’ve given an estimate of the new law of the new budgets for 2025. So could you give us an indication of what you expect it to be in 2025?

And finally, on your margin guidance, you guide for an improvement of the margin. Do you could you give us maybe more insight into your working assumption for the current perimeter in 2025? Any indication would be helpful.

Gautier Louet, Chairman and CEO, SPIE: So regarding Q4 in North Western Europe, yes, it was strong. No, it is not an indication for the whole year to 2025. And it does vary from one quarter to the other. In Q3, it was 2.9%. In Q4, it was 11.9%.

In Q2, it was 6.8%. So I would not jump to conclusions from a quarterly organic growth as there are elements of variation. So in Q4, it did happen that a lot of things moved in the same direction. So we and it’s not a sector specifically. We had a very good activity in transmission and distribution in The Netherlands.

We We had a good activity in Industry in Belgium. We had a strong activity in Building Solutions in The Netherlands. So more various contributors. And we ended up with this 11.9% growth for Q4, which is obviously not the guidance for North Western Europe in 2025. But the trend will remain good in Northwestern Europe in 2025.

That’s very clear. Regarding the margin guidance, we I think we always work at improving the margin. I am absolutely confident that we are going to improve the margin in 2025 again. At this stage of the year, I will be not more precise.

Jerome Vanov, Group CFO, SPIE: Regarding your question about the exceptional corporate income tax contribution from large corporates in France, as we understand now, it would represent not more than circa million. In terms of impact, it would be in our P and L as from the fiscal year 2025 and with 98% of related cash out as from 25% as well as in December. That’s what we understand from the law. So nothing really, really major in light of our operating cash flow and free cash flow.

Augustin Sandray, Analyst, Stifel: Thank you. If I may add just one question. I was wondering if you could give us an update on the ICG integration and the various steps you have to do going forward? Thanks.

Gautier Louet, Chairman and CEO, SPIE: Well, it’s see in fact, you have two parts in ITG. You have one part which is mobile telecom, so with customers such as Vodafone. And you have a part which is optic fiber fiber with customer who can be telecom operator or who can be also Stadverk, the local operators in cities in Germany. So we are obviously with the optic fiber part, that’s something we already do in Germany. So we’re trying to coordinate the force in this regard and optimize the allocation of workforce depending on the region.

And mobile phone sorry, mobile telecom, we’re not doing too much in Germany. So basically, it’s the success of Iseig, so it’s going well.

Augustin Sandray, Analyst, Stifel: Thank you very much.

Laura, Conference Coordinator: Thank you. That was our last question. I will now hand it back to Gauthier for closing remarks. Thank you.

Gautier Louet, Chairman and CEO, SPIE: Well, thank you very much for your attention this morning. As you see, we did deliver rest on 2024 and we are very confident for 2025. We have an excellent workforce, excellent customer base and supported by a really good management team. So very confident to deliver again on our guidance for 2025. And looking forward to seeing you tomorrow at our CMD.

Have a good day. Thank you.

Laura, Conference Coordinator: Thank you. This concludes today’s call. Thank you for your participation. You may now disconnect.

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