Earnings call transcript: Spie SA Q2 2025 shows strong growth

Spie SA, with a market capitalization of €9.6 billion, reported robust financial results for the second quarter of 2025, with revenue rising to €4.979 billion, marking a 5.8% increase from the previous year. The company’s EBITA climbed by 13.2% to €301 million, and its EBITA margin improved by 40 basis points to 6%. The stock reacted positively to these results, increasing by 2.55% in early trading, continuing its impressive 55% gain over the past six months. Spie SA’s performance was driven by strong momentum in Germany and a focus on energy transition and digital transformation. According to InvestingPro, the stock is trading near its 52-week high, with 12 additional real-time insights available to subscribers.

Key Takeaways

• Revenue increased by 5.8% to €4.979 billion.
• EBITA grew by 13.2% with a margin improvement to 6%.
• Stock price rose by 2.55% following the earnings announcement.
• Strong performance in Germany with 15% revenue growth.
• Continued focus on operational excellence and strategic acquisitions.

Company Performance

Spie SA demonstrated solid growth in Q2 2025, with a notable increase in revenue and EBITA. The company’s strategic focus on expanding its presence in key markets such as Germany and Northwestern Europe contributed significantly to its performance. Despite a slight revenue decline in France, the company’s diverse portfolio and market leadership in electrical engineering services helped maintain its competitive edge.

Financial Highlights

• Revenue: €4.979 billion, up 5.8% year-over-year.
• EBITA: €301 million, up 13.2% year-over-year.
• EBITA Margin: Increased to 6%, up 40 basis points.
• Adjusted Net Income: €167 million, up 5.7%.
• Leverage Ratio: Reduced to 1.9x from 2.4x.

Outlook & Guidance

Spie SA raised its EBITA margin guidance to at least 7.6% for the full year, reflecting confidence in its margin improvement trajectory. The company expects full-year revenue to exceed €10 billion, supported by ongoing bolt-on M&A activities and a focus on operational excellence. Additionally, Spie SA aims to maintain a dividend payout target of approximately 40% of adjusted net income.

Executive Commentary

CEO Gautier emphasized the positive outlook for the company, stating, "It is a very good time to be a European electrical engineer." He also highlighted the company’s solid margin trajectory as a core strength in its value creation model. Gautier expressed confidence in Spie SA’s ability to capitalize on the energy transition and digital transformation trends.

Risks and Challenges

• Potential market saturation in France’s commercial installation sector.
• Macroeconomic pressures impacting investment sentiment.
• Challenges in maintaining growth across diverse geographical markets.
• Supply chain disruptions affecting project timelines.
• Competition from emerging players in the electrical engineering sector.

Q&A

During the earnings call, analysts inquired about potential infrastructure investments in Germany and the company’s strategies for improving working capital. Spie SA addressed these concerns by highlighting its focus on margin expansion and talent acquisition strategies in electrical engineering.

Full transcript - Spie SA (SPIE) Q2 2025:

Gautier, CEO, SPI: Good morning, ladies and gentlemen. Thank you for joining us today for H1 results conference call. I’m joined by Jean Vannogh, our Group CFO. And I’m also very pleased to welcome Alexandre Bonassel, our new Head of Investor Relations.

Our first half results confirm the strength of our model, the relevance of our strategy and the quality of our execution. Energy Transition and Digital Transformation are firmly anchored as lasting growth drivers across our markets, it does allow us to confidently navigate the current geopolitical and macroeconomic uncertainties. To begin, I would like to share a few recent contract examples that reflect this positive momentum. In Germany, SPEE is delivering the full technical installation for a new 16 megawatt data center in Schalbach near Frankfurt. Some of the waste heat generated during operation will be recovered and fed directly into the municipal heating network, creating a highly efficient and sustainable energy cycle.

This project also integrates a number of eco friendly features such as rainwater collection for outdoor irrigation, a vegetalized facade and an on-site photovoltaic system. The project is designed to achieve a power usage effectiveness below 1.2 with 100% system availability. In The Netherlands, we installed a 500 kilowatt hour modular battery system to support EV charging at Volvo’s headquarters. This solution allows Volvo to store electricity from both solar panels and the grid during off peak hours and release it when demand is high, effectively addressing grid congestion and ensuring a more reliable charging process. The project includes data collection and smart energy management to support the shift towards a fully gas free and sustainable energy system.

It is a step forward in Volvo’s global ambition to reach net zero emission by 02/1940. In Poland, SPE carried out the initiation of mechanical and electrical systems in a large industrial complex near Lutz. The project features a unique heating and cooling system with six outdoor air source heat pumps, generating 3.6 megawatt of power. This project showcases P ability to deliver demanding installation covering a large scope from industrial gas system to fully integrated building management system with the effective collaboration of our specialized subsidiaries in Poland. In France, Spin Nuclear signed a contract as part of the consortium to create ventilation system study for EPR two reactors.

The contract is part of the plan to build six new EPR two, so new generation reactors in France by 2050 to support the country’s low carbon energy strategy. And this contract is SPI’s active contribution to this new program. It is a second contract for SPI linked with the new EPR generation. Now moving to the key H1 highlights on Slide six. Revenue increased by 5.8% with a solid 2.4% organic growth.

EBITA margin stood at 6%, reflecting a new step up of 40 basis points. Our structurally negative working capital improved over twelve months, highlighting our steadfast focus on financial discipline. As a result, leverage ratio decreased significantly compared to June with a historically low H1 seasonal re leveraging. Bolt on M and A activity remained sustained with €96,000,000 in annual revenue acquired, focusing on attractive markets. Finally, these H1 results strengthened our confidence to meet our 2025 targets.

We even frame up our margin guidance to at least 7.6%. Taking a closer look at the key figures for H1. Revenue amounted to 4,979 million euros up 5.8%, as I said. Growth was well balanced between the 3.8 contribution from acquisition and the 2.4% organic growth. EBITA was three zero one million euros that is another double digit increase of 13.2% and also a new margin step up of 40 basis points after the 50 basis points achieved in 2024.

Our margin trajectory is extremely solid, and this is a core strength to our value creation model. On the balance sheet side, as I mentioned, leverage was down by zero five ton over twelve months to 1.9x EBITDA at the June 2025. And now focusing on revenue growth. At constant exchange rates, revenue grew by 5.9% in H1, driven by two segments: Germany, which once again delivered very high growth of 15%, well balanced between organic growth at 6.6% and the contribution from acquisition at 8.4%. Northwestern Europe, which also performed strongly with revenue up 8.9%, driven by strong organic growth at 8.1%.

Meanwhile, France continued to demonstrate good resilience with revenue down only slightly by 0.8%. Central Europe grew by 0.9%, driven by a 5% contribution from acquisition, offsetting a minus 4.1% organic decline. Global Services Energy reflected normalization after an exceptional H1 twenty twenty four, which has benefited from a one off shutdown maintenance contract. Overall, this performance underscores the strength and balance of our multi local, multi technical model, which continues to deliver across a range of geography and market environments. Moving to Slide to the margin page.

So we delivered another step up of 40 basis points, reaching an outstanding 6% in H1 twenty twenty five. All segments contributed positively, 40 basis points in Germany and as much as 100 basis points for Northwestern Europe. Once again, this margin expansion reflects our unwavering focus on rigorous contract selectivity, pricing discipline and high quality execution. It was also supported by a favorable mix effect from very strong growth in Transmission and Distribution Services and by the slightly accretive contribution from some acquisitions completed in 2024. So talking of acquisition, in H1, we signed three new acquisitions: Eltek in Poland, adding EUR 19,000,000 in annual revenue, strengthening our capabilities in Building Automation and Management Systems SD Fiber in Switzerland, adding €70,000,000 revenue in the fast growing fiber optic services market Rovitech in The Netherlands, EUR 7,000,000 revenue, complementing our data center offering in the country.

And meanwhile, the integration of all twenty twenty four acquisitions is progressing well and fully in line with our plans. Looking ahead, we maintain a robust pipeline of bolt on acquisition opportunities, providing good visibility on sustained external growth momentum in a highly fragmented market. Turning to the segment and starting with Germany. With a 15% revenue growth in H1, Germany is now our number one revenue contributor. High Voltage recorded very high growth, supported by exceptionally favorable project phasing in H1.

Technical Facility Management delivered a solid performance with energy efficiency, firmly established as a lasting growth driver. In Building Solutions, the example I showed earlier does illustrate our strong position in data centers, while our Transport Infrastructure business is also a strength. In Industry Services, performance was solid as well, driven by our sector specific positioning, focused notably on Pharmaceutical, Wind and LNG projects. EBITA margin increased by 40 basis points to 5.6%. This improvement reflects a favorable mix effect from the strong growth in High Voltage, the accretive impact of acquisition completed in 2024 as well as relentless focus on operational excellence and contract selectivity.

In France, revenue was broadly stable in H1, demonstrating strong resilience in a subdued local macroeconomic context. Only two divisions saw a decline in H1, City Networks with the ongoing ramp down of mature fiber optic rollout activities Building Solutions, where we kept a high level of selectivity and secured a solid backlog of quality projects. TechFM continued to benefit from a solid recurring revenue and long standing relationship with high quality clients. Industry and ICS both confirmed their resilience, thanks to diversified sector exposure and the mission critical nature of the services they provide. Lastly, Nuclear Services posted a solid performance supported by strong execution of the maintenance programs.

EBITA margin improved by 10 basis points, which clearly demonstrates how lean and flexible our cost structure is. Moving to Northwestern Europe. We delivered an outstanding performance both in terms of revenue growth and EBITA margin improvement. Organic revenue growth was very strong at 8.1%. EBITA margin increased sharply by 100 basis points, the highest gain across all segments to reach 6.9%.

The Netherlands indeed delivered an excellent performance, confirming strong positioning on key markets such as high voltage energy efficiency for buildings or data center services. In Belgium, high voltage services are emerging as a key growth driver, supported by

: a step up in grid investment for the national TSO and booming demand for battery energy storage systems. Building Solutions and Technical Facility Management also contributed meaningfully

Gautier, CEO, SPI: to the performance. In Central Europe, revenue grew by 1.6%, entirely driven by a 5% contribution from acquisitions mainly in Poland. Organic growth was minus 4.1%, but is expected to turn positive in the second half, supported by high backlog. In Poland, revenue was impacted by delay in project execution in High Voltage. That said, the outlook for this activity remains very positive, driven by high energy transition investment.

Austria sustained a high level of activity supported by strong momentum in Transport Infrastructure as well as in Transmission and Distribution Services. Overall, the EBITA margin increased by 30 basis points in H1, reflecting the continued focus on operational excellence and a strong contribution from Austria. And lastly, Global Services Energy’s revenue declined by 8.2% due to an exceptionally high comparison basis in H1 twenty twenty four, which had benefited from a one off shutdown maintenance projects offshore Nigeria. Business trends were solid in oil and gas maintenance activities. In Offshore Wind Energy, commercial momentum is positive as we are leveraging our enhanced expertise and technical capabilities following the integration of Corel Group.

EBIT margin increased by 20 basis points to 8.6 in H1 twenty twenty five. And I will now hand over to Jerome, who will comment the financial results.

Jerome, Group CFO, SPI: Thank you, Gautier, and good morning, everyone. Starting with a quick overview of our first half financial performance. We delivered revenue of EUR 4,979 million, up 5.8%. This performance reflects a healthy level of organic growth, notably in Germany and Northwestern Europe, and proven resilience in France. External growth accounted for 3.8%, mainly including the contribution from the twenty twenty four acquisitions.

EBITDA reached EUR $3.00 1,000,000, increasing sharply by 13.2%, underpinned by a 40 basis point margin step up to 6%. The negative net income for this first half of the year due to the impact of our Ornan convertible bond that I will comment later on. I would finally highlight our adjusted net income at EUR 167,000,000, up 5.7%. Moving to our revenue bridge, which provides for breakdown of our 5.8% revenue increase. As already pointed out, solid organic growth at plus 2.4%.

The M and A contribution from the twenty twenty four acquisitions as well as the ones consolidated for the first time in H1 twenty twenty five, supporting our revenue growth by plus 3.8%. The limited impact from the disposal at the end of last year of a small Belgian IT support business, which accounts for minus 0.3%. Currency effects were close to neutral over the period. Let me now comment on our adjusted net income for the first semester. At €166,600,000 adjusted net income was up 5.7 year on year, supported by the strong increase in EBITA.

The progression was however partly held back by an unfavorable FX gain and loss balance during the period and this at the level of Global Service Energy that was especially due to the evolution of The U. S. Dollar Euro parity. Our normative tax rate is kept identical to the one we retained for the full year 2024 at 29.2%. So solid results overall despite exceptional FX related impacts.

Turning now to our reported net income, which was exceptionally and quite significantly impacted this semester by the non cash accounting loss due to the IFRS treatment of our Ornan convertible loan. Given the sharp increase in our share price over the period, we recorded in our P and L a negative fair value adjustment of the for the Hernan of around €160,000,000 This was mitigated by €41,900,000 deferred tax assets. As a result, our reported net income stood at minus €13,400,000 for this first semester. By the way, let me remind you that this an accounting treatment is particularly of the IFRS, obviously not considered under U. S.

GAAP. Without this on an accounting effect, our reported net income would have amounted to a positive €107,000,000 compared with €57,000,000 last year. Given the significance of this accounting impact, let’s delve a bit on this topic. And before we get more technical, two major principles you need to have in mind on convertible bonds. One, when it is out of the money, meaning share price is lower than conversion price, the issuer, in our case SPI, remains liable for the nominal amount of the instrument.

As soon as it is in the money, the value of the convertible bond in our balance sheet does increase and this proportionally to the share price. To be more specific, the derivative component of the Ornan is revalued at fair value at each closing based on SPI’s share price. SPI’s share price rose sharply from €30 at the December ’24 to EUR 47.7 at the June 2025, thus significantly surpassing the EUR 32.43 of the conversion price set for this Ornan convertible loan and thus leading to a significant increase in the fair value of the derivative instruments recognized as a liability in our consolidated balance sheet. I remind you once again that this is strictly non cash IFRS accounting entry, remaining non cash at redemption and this at the end of the issuer, in other words, at our end. As already disclosed at the time of the issuance of this Ornan, the potential dilution at redemption, assuming the mixed redemption in cash and in shares would be very limited.

If we retain 145% premium to the conversion price, meaning a share price of circa EUR 47, the one off dilution would be limited to 2.3%. Turning to working capital, which remains a structural strength of SPI’s business model. As you know, we consistently operate with structurally negative working capital throughout the year. Compared to last year, we further improved intra year working capital performance with a ten day reduction from minus seventeen days at the June 2024 to minus twenty seven days at the June ’25. This improvement was observed in all working capital items, of which a very effective work in progress management, which evidences a strong invoicing discipline and cash collection

: overall.

Jerome, Group CFO, SPI: Moving on to free cash flow. The starting point is obviously our growing EBITDA by more than 13%. As mentioned, our strong working capital performance translated to a limited cash outflow of $277,000,000, a significant improvement compared to the first semester of last year. As a result, operating cash flow turned even positive for the first time in H1 and this considering the usual cash flow seasonal pattern of the group. Free cash flow improved accordingly to minus €109,000,000 to be compared with minus EUR $211,000,000 in the prior year.

In line with our commitment to optimizing value to shareholders, we also executed a EUR 39,000,000 anti dilutive share buyback program in the first quarter at an average price per share of circa EUR 31. Overall, our net debt increased over the first half by EUR $347,000,000. With our leverage ratio, I’m moving to the deleveraging page. With our leverage ratio down to 1.9x at June compared to 2.4x a year ago. We further evidence the deleveraging power of our cash generative model.

It also marks an exceptionally low H1 seasonal re leveraging only 0.3 times compared to December. Lastly, to conclude my part, a word on our financing structure. In May, we successfully refinanced our twenty twenty six bond with the assurance of a new five years EUR 600,000,000 sustainability linked bond. It was largely oversubscribed. It carries a fixed coupon of 3.75%, implying a spread below 150 bps, which, by the way, rather belongs to investment grade issuer category.

SPI’s entire debt profile with this new bond is now fully sustainability linked, in line with our midterm ESG targets. 81% of our gross debt is now at fixed rate with a weighted average cost of such debt at 3.4% over the first semester. High liquidity level ensured all along the year with, at June, 1,300,000,000.0, including EUR $295,000,000 in net cash and EUR 1,000,000,000 of undrawn credit lines. Our shareholder returns continue to improve, starting with the inaugural EUR 39,000,000 share buyback program as well as the successive dividend payments of €0.75 and €0.30 corresponding to the for the first part, the final 2024 dividend payment and to the 2025 interim dividend respectively. Thank you for your attention.

I now hand over to Gautier.

Gautier, CEO, SPI: Thank you, Jerome. Based on these H1 results, we confirm our full year outlook and we even frame up our margin guidance. So we expect strong total growth, pushing revenue well above the €10,000,000,000 mark, supported by further organic growth and active bolt on M and A. We now expect an EBITA margin of at least 7.6%. And as every year, we intend to maintain a dividend payout of around 40% of adjusted net income.

Thank you very much for your attention this morning. And in case you would have forgotten, let me repeat it once more. It is a very good time to be a European electrical engineer. And with Jean, we are now ready to take your questions.

Conference Operator: Next question comes from Alexander Peter C from Bernstein. Please go ahead.

Alexander Peter C, Analyst, Bernstein: Yes. Hi. Good morning, and thank you for taking my questions. So I just have three. The first one is on on guidance for 2028 that you issued at the at the CMD.

So the 7.7% margin, I think, if I recall correctly. Is that now going to be be achieved early? Because you need only a very small progress versus what you’re gonna achieve this year to get to that target. So is that already achievable in 2026? Second question and third question, just very briefly on geographies.

Can France improve to year on year growth for the year with a stronger second half as the difficult comps wash out? And then Central Europe, again, we had a similar decline there as in Q1. Will that also reverse into stronger growth? And can we end the year in positive territory for Central Europe? Thanks.

Gautier, CEO, SPI: Yes. Well, thank you. Regarding the guidance for the margin, mentioned at least 7.7% in 2028. But we have made good progress so far, and we confirm we’re going to make good progress for the year. So let’s deliver on our guidance for twenty twenty five first, and then we’ll take it from here.

Regarding organic growth in France, while it’s we the visibility is not outstanding at the moment. It might improve during H2, but it’s not something I would guarantee today. We are reasonably confident for the second half of the year, but we’ve seen quite significant fluctuation in France. Let’s the mood is not over enthusiastic at the moment in the business world. Let me stress again that the decline on H1 was solely on the back of our Optic Fibers business within the City Networks division, where we continue to increase, I.

E, also at a slower pace. And then on Commercialization, where we have a deliberate selectivity on the market where barreast inventory are always a bit lower. We also might benefit from an easier comparison basis for H2 in France. And whereas and for Central Europe, well, again, we have a number of high voltage projects where in Poland, usually, we are also responsible for getting the authorization before starting work. And this might prove sometimes a bit difficult to forecast in terms of completion of this task, and that’s why we it does create fluctuation.

The backlog in High Voltage is good in Poland, and we see a constant flow of new call for tenders coming up. So we are confident in that. And altogether, the Building and Station business in Central Europe, I mean, is also a bit under pressure right now. Keeping a long story short, also on the back of very good activity in Austria, we think that we will have a positive H2 in Central Europe.

Alexander Peter C, Analyst, Bernstein: Great. Thank you very much, director.

Conference Operator: Next question comes from Remy Greno from Morgan Stanley. Please go ahead.

Remy Greno, Analyst, Morgan Stanley: Three questions, if I may. So the first one would be on Germany. So interested in having an update on the potential acceleration of investment from authorities, if you have been getting any more clarity on the timing and the potential magnitude in the end markets where you think you could benefit from these? So any updates versus when we discussed that last at Q1? The second part of this question would be on the overall sentiment of your customer in the private sector in that country as well.

If you feel like there is potential to accelerate further from the already quite good organic growth that you’re generating in that country, so that’s first part on Germany. The second is still on that same country. I think that there is a sentence where you’re calling a very positive phasing of high voltage contracts responsible for the good organic growth in H1. Any risk that this could reverse in the second half and we see slower organic growth? So just some clarification on that.

And then the last question, probably for Jerome, on working cap improvements. Can you elaborate a little bit on the drivers of that? If there was any one off or particularly strong cash collection at the end of H1, which could imply a little bit of reversion? Or do you believe that the improvement you delivered is something that is structural and we are going to continue to see over the next few semesters? Thanks.

Yes.

Gautier, CEO, SPI: Thank you, Remy. With regard to investment programs in Germany, as you know, the budget is currently under discussion in Germany, and it will be approved towards the second I mean, towards the end of the year. And this budget reflects the program announced by Chancellor Metz. So clearly, there is a stronger push towards infrastructure investment, towards defense as well, so very much in line with which would have been announced back in March. So it does confirm these trends, which are favorable.

Does it translate immediately in orders for SPEAR? Obviously, see no, right? It will take some time. It does create a more positive sentiment for our customers in Germany. That’s why, for instance, in technical facilities, see good trends right now and as well as in Industry.

With regard to high voltage phasing, I think it is important that you mention it and that we keep it in mind. Yes, we had a very, very positive and when I say very positive, I’m talking double digit growth in High Voltage in the first half of the year. We don’t anticipate to have this kind of very strong growth in the second half. Clearly, these projects are fairly bulky. You’re talking sometimes €40,000,000 50,000,000 project, as I mentioned several times.

And it is with four customers. So it is the same contract, the same technology, the same teams. So it is very safe and at good pricing. So it is very safe in terms of margin execution and margin delivery, but it does create volatility. And from one quarter to the other, depending on when we start the year before, depending on if one project is delayed for last minute planning permission hiccups, etcetera, it does create volatility.

So we had a very, very strong H1. We don’t anticipate this to last for the whole year.

Jerome, Group CFO, SPI: Respect to your question on working capital, very clearly, no one off considered in this first half and especially at the June. It’s basically an improvement across, as I said, all the working capital items constituting it. Basically, what we observe is a very clear improvement in our ability to invoice, so very strong discipline in that respect, thus leading to an optimization of the WIP inside the working cap. I think that trend will sustain an obvious reduction in the working capital swing in prior, not necessarily at this stage in favor of an over achievement toward the end of the year. So it’s much more the curve in prior year, which is flattering a bit.

We’re obviously putting us in very confident to achieve once more our 100% cash conversion target for the whole of the year.

Remy Greno, Analyst, Morgan Stanley: Great. Thank you very much.

Conference Operator: Next question comes from Christophe Chapou from ODDO. Please go ahead.

: Yes. Good morning. Good morning, Jerome. I’ve got three questions as well, please. The first one is a quick follow-up on Central Europe and Poland.

You stated a negative impact from the delayed acquisition in Eivolt, Belgium. Could you give us a rough idea of the impact in €1,000,000 And are you going to catch up in Q3 or Q4? It seems to say that well, you say that H2 will be positive, but just to have kind of magnitude. The second one is, could you come back on the margin improvement in H1? I’d like to know if you can share with us the impact of the accretive acquisition on the plus 40 bps.

I mean, I calculated the plus 15, but just to have your view. And also the impact of the mix effect on the transmission and distribution. And the last one is on the full year. I totally understand, let’s say, that you are cautious in France on top line. But would you say as well or nevertheless, that the margin in France for the full year will be at least flat, considering that you see an improvement by 10 bps in H1?

Thank you so much.

Gautier, CEO, SPI: You, Christophe. Regarding high voltage impact in Central Europe, I’m afraid I cannot disclose a month. Again, the trends are favorable. There are fluctuations. It is really part of Life in Central Europe, also linked with the nature of the contract, as I mentioned.

Regarding margin improvement, we’re talking about 10 basis bps for well, or slightly less than that for the first half of the year for acquisitions. And we expect it to be in the range for the whole year, maybe kicking up slightly with some of the acquisition where revenue will be stronger in second half. Impact of mix effect, very difficult to quantify per se. But obviously, as I mentioned, high voltage, be it in Germany or in Netherlands or even in Belgium, these are accretive to the margin. And but again, we have lots of moving parts.

We have all our countries progressing. In Belgium, it’s not only the energy. We’re also progressing well in the industry. In The Netherlands, we have a very smooth also progress for building solutions. So I think everybody is playing a role, and the mix effect is one of the moving parts.

But altogether, I’m really satisfied with the quality of execution and also the discipline on pricing. We still enjoy good pricing power. And I was mentioning in the past that inflation was more a drag towards our margin improvement. But with less inflation, I think it shows that margin improvement will be linked with the quality of execution from bidding to delivering the projects. The full year margin in France, I’m not worried.

I think we’re able to maintain the progress achieved in H1. Again, a very disciplined team, very seasoned. We have a flexible cost base, and so we’re able to adapt rapidly to fluctuations. And we always kept the business lean. So we are as I’ve mentioned several times, we don’t mind to play defense.

It’s something SP is very good at. So no no worry at all about the margin in France for the full year.

: Thank you so much for the answer. Thank you.

Conference Operator: Next question comes from Rory McKenzie from UBS. Please go ahead.

Rory McKenzie, Analyst, UBS: Morning all. It’s Tory here from UBS. I’ve got two questions, please. Firstly, can you talk about in France? You referenced the strong sectors within building solutions that are holding up quite well, you know, data centers and defense.

What are the markets that are weakest in France at the moment? And could you give us a sense of the relative exposure to those sectors? And also, are you, you know, putting staff out permanently and redeploying them within that that market? And then secondly, I wanted to ask about pricing power generally. You obviously referenced it.

It’s still strong, but wage inflation indicators are cooling across many markets. So could you speak specifically about the shortages of electrical engineers that you’re facing or the market is facing? And obviously, given that you keep saying it’s such a good time to be an electrical engineer, do you think people are being attracted into the market at all at the moment? Thank you.

Gautier, CEO, SPI: That’s a very good point, Rory. Thank you for that. Yes, yes, it’s a very good time to be an electrical engineer, and we deploy a lot of efforts to help people discover the world of electrical engineering. And so we do try to bring people from adjacent markets, adjacent skills to our business and not unsuccessfully. We managed to train people from other areas, and it’s something which does help a lot.

We also work a lot on the retention. And I always mentioned the very helpful factor of shareholding plans, which do create a strong bond to the company. And in fact, we perform on a regular basis satisfaction surveys of our employer employees. We have this great place to work certifications, which are increasingly deployed over the business. So it’s working a lot on that.

And also on co optation, So our own employees recommending hiring of people they know, so which is a good way to have a mutual understanding of the business. In apart from electrical engineers, which are still short supply, it’s fair to say that in other areas such as administrative jobs, etcetera, the tension has eased a bit. So it is easier to recruit these qualifications, and then we have more time to focus on the technicians. Regarding market, I think the what’s weakest in France at the moment is Commercial Installation. It accounts for EUR $05,000,000,000 of our revenue roughly, which by the way, margins which are slightly dilutive compared to the average in France.

And we do focus on technical installations, technical buildings. Obviously, the run of the mill office block or the run of the mill school or college, it’s fairly out of bonds for us at the moment. This is our lower barrister entry. And also people moving from the housing sector, which is very subdued at the moment, They try to address this kind of projects, and so that’s not what we are focusing at all. But we have nice wins in data centers.

We have nice wins in some industrial buildings. And we have also a number of carefully selected projects for the health care sector, and that’s why how we managed to maintain a decent level of production. But this is clearly the area which is mostly fought for at the moment.

Rory McKenzie, Analyst, UBS: Great. Thank you. And and do let us know if you ever come up with a program to train research analysts to engineers. Thank you.

Gautier, CEO, SPI: It will be a walk in the park for you, Rory.

Rory McKenzie, Analyst, UBS: I I wish. Thank you very

Alexander Peter C, Analyst, Bernstein: much. Thank

Conference Operator: you. Our next question comes from the line of David Sirdan at Cavers Group. Your line is open. Please, sir, go ahead.

David Perdan, Analyst, Kepler Group: Yes. Good morning. This is David Perdan from Kepler. I have two two questions. The first one is regarding your backlog or order book.

Can you give us the trends regarding order book and backlog per region? And my second question is related to Germany and the mega stimulus. Do you think that there there is a a constraint from, the human factor? So in other words, do you think that, the stimulus is also constrained by, the lack of skilled people to for the construction and for the electricity part of the building?

Gautier, CEO, SPI: Well, obviously, we do not lose backlog by region. I’d say let’s we mentioned that at speed levels, the backlog is very healthy. And obviously, we have a few situation by country, by sector. But altogether, we see a trend which remains very reasonable with positive organic evolution of our order intake. Regarding the margin stimulus, I think it is a fair point, But it’s not only pertaining to our own resources, it also pertains to the resources at customers’ end because they need to plan for new projects, and they need to organize the funding and issue the call for tenders, etcetera.

And we see also limitations at that end. And it’s often the case that our customers ask us to second people to them to help on the engineering phase. It is also the case that they tend to do less engineering at their end and tell us with a contrast where we are going to do more basis or even sometimes process engineering. So it also creates opportunities for us. But you are right, you have to see the whole picture, which is it’s not only printing the money, it is also creating all the technical documents before you are able to launch a project.

However, it this is fairly well recognized in Germany right now. And I think people are really looking for reinforcements for the solution also coming from outside of Germany to help them support this investment plan.

David Perdan, Analyst, Kepler Group: Thank you. I have the last question regarding your exposure to the defense sector. Are you exposed to this kind of clients?

Gautier, CEO, SPI: Well, at group’s level, surprisingly, our exposure to defense is a bit under 2% of our turnover, which is fairly in line with the GDP spend for with the proportion of GDP spend for defense across Europe. And again, not surprisingly, the lion’s share is in France, where we work a lot for all branches of the army. We do maintenance of nuclear submarines. We do maintenance on air base. We work on logistics center of the Army, etcetera.

But we also do maintenance of barracks of data center for the Dutch Army. And last year, we gained a contract for the overhaul of the naval base in Northern Germany. So it is and that’s for the defense ministries, but we also work for the industrial companies in defense, and we do maintenance for Dassault plants in France. Work for Thales for Airbus. We maintain the helicopter factory in close to Marseille.

So yes, we have a good exposure and a good knowledge of the processes. In Poland, we also qualify the special qualification to work for the British Army, which we own. And we have all the processes in place for those contracts where you need to have a special qualification like in France and equivalent certification in other countries.

David Perdan, Analyst, Kepler Group: Thank you.

Conference Operator: Next question comes from Laurent Gellebard from BNP

Laurent Gellebard, Analyst, BNP: Good morning, Gauthier and Jerome. So I have two questions. The first one relates to your pipeline of bolt on headings. So could we expect acceleration in terms of M and A into H2? And the second one is a technical one on the ODR NAM.

So for Jerome, so could you confirm that when you will repay your bond, you will repay it in cash, so EUR 400,000,000?

Gautier, CEO, SPI: So regarding M and A, we are constantly working on a strong pipeline. And actually, we have a number of deals cooking right now. So let us hope that they come to fruition in various geographies. So yes, we expect further sustained M and A activity for the second half of the year as usual.

Jerome, Group CFO, SPI: Regarding the Hernan, Laurent, the specificity of the Hernan type of convertible bond is especially to provide for the issuer the optionality to redeem in cash and or in shares. I do confirm that the base case at SPE so far, it’s definitely to redeem in cash the principal amount, so EUR 400,000,000 and to consider issuance of new shares for the complementary part. Thus, the very limited dilution that we have already articulated, 2.3%, for instance, if we retain a share price at EUR 47 at the time of redemption, and then you can make a linear extrapolation starting from there.

Laurent Gellebard, Analyst, BNP: Thank you.

Conference Operator: And we will have a follow-up question from the line of Remy Greno at Morgan Stanley. Your line is open. Please go ahead.

Remy Greno, Analyst, Morgan Stanley: Yes, it’s me again. Just one follow-up question, which relates a little bit to what David was discussing on the backlog. I guess one of the key reasons for margin acceleration has been an evolution in the mix over the last few quarters. So can you give us a little bit insight from what you’re seeing in that backlog momentum of activity? Do you think that the pace of margin improvement you’re getting from that evolution in mix is something that can be sustained over the midterm?

Or have we seen over the last few quarters a little bit of an exceptional situations where it was firing on all cylinders within activities where the margin is supportive and a little bit subdued activity in lower margin part of the business? So just want to have your view on whether that improvement in margin coming from mix is, you think, sustainable?

Gautier, CEO, SPI: Well, obviously, the pace of increase over recently were 50 basis points last year, another 40 basis points this year at least. And so well, we see it’s a strong pace. So we cannot guarantee we’re going to increase 50 basis points every year. That’s however, we think we’re not at the end of our tethers. We’re quite able to further progress.

There is a mix effect you have mentioned. There’s a contribution from acquisition, and I think this will be a bit stronger in the second half of the year compared to the first one. And also, is a constant focus everywhere. In the market, the demand in a number of sectors remained strong, and customers are aware of the scarcity of good resources of well trained people. So I’m confident going forward that we’re able to maintain further margin increase, but I would not commit to this kind of step up every year, obviously.

Remy Greno, Analyst, Morgan Stanley: Thank you, Gauthier.

Conference Operator: And we now have a follow-up question from doctor Arkevicius. Your name is Kopin. Please go ahead.

David Perdan, Analyst, Kepler Group: Yes. A follow-up question regarding your M and A. Do you have the plan to open some new geographies, new countries in Europe?

Gautier, CEO, SPI: It is not a plan right now, but we do not rule it out for the future. Again, we still have a lot to do in our existing geographies. And I keep mentioning how Germany is important to us and that we still have a well, number two in Germany with a market share of roughly 4%. That is a very good country to be in, and it’s going to get even better by the look of it. So it’s clearly our priority going forward.

We have also countries like Poland, where there’s quite a bit to do. And Poland is it’s 80% of the GDP of The Netherlands, as an example. And these are countries where the indebtedness is reasonable, it’s roughly in the range of 50% of GDP, give or take. It’s the same for The Netherlands as well, by the way. So you can expect a good pattern of the economy going forward.

And I think it is worth reinforcing our positions in these countries. Having said that, we do not rule out at some stage to expand our geographical footprint. There are no concrete plans as we speak. You.

Conference Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing remarks.

Gautier, CEO, SPI: I thank you very much for your attendance today. Thank you for the interest you take in SPI. And you can rest assured that we’re going to work very hard on delivering on our promises. And do not forget, it’s a good time to be an electrical engineer. Thanks a lot.

Have a good day.

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