Alstom SA
Q4 2021 Earnings Call Transcript

Published: 11 May 2021

[Operator:]

Ladies and gentlemen, welcome to the Alstom conference call. I will now hand over to Henri Poupart-Lafarge. Sir, please go ahead.

[Henri Poupart-Lafarge:]

Good morning. Good morning, everybody. Welcome to our full year results conference call for the fiscal year ending March 2021. We're going to go through the classical agenda, starting by the 2021 highlights, which I will detail. Now, if you see the slides, here they come. So in terms of global takeaway from this year, which has been, by any means, a very exceptional year for Alstom. It’s been a year of a lot of progress, a lot of improvements, a lot of actions. So globally, we are looking at Alstom first, Alstom in its old perimeter before the integration of Bombardier, we are fully in line with the guidance that we gave to you at the time of the capital increase a few months ago.

[Laurent Martinez:]

Thank you, Henri. Good morning, everyone. So let's start to review our profitability trajectories for 2021. First highlighting the very positive uplift of our adjusted EBIT margin on our Alstom legacy perimeters up to 8% compared to 7.7%. The key drivers the first one has been our positive gross margin evolution which has been backed by strong project execution, but as well our continuous effort on operational excellence initiatives such as leveraging our best cost countries for sourcing and engineering. Overall, I'm pleased to confirm that our average backlog margin continued to improve in 2021. Second driver has been our cost structures with -- and our R&D, which is overall stable despite COVID-19 impact on volume. And finally, as you see CASCO, our signaling JV in China continues to deliver nicely. All-in we are adjusted EBIT for the group at 7.3%, including two months contribution of BT of 2.7% and this consistent with 2020 recurring performance. So moving to our detailed P&L and going straight below adjusted EBIT. We have limited restructuring charge at €14 million. We booked as well in number of one-off items including €117 million of charges related to the Bombardier Transportation acquisition and as well €84 million PPA impact, which are mainly driven by BT acquisition. COVID costs recorded below adjusted EBIT amounted to €68 million, and as you know all expense in our H1 2021. Finally, we had our usual profit mechanical reversal to our EBIT of our Chinese JV at minus €50 million including CASCO, and as well our ex-BT rolling stock JVs in China leading to an EBIT of €300 million. Below EBIT, our ETR stands at 27%, financial cost at €68 million and contribution from our equity investees at €83 million, slightly down compared to last year due to lower TMH contribution. So, all-in, adjusted net profit at €301 million putting aside the PPA impact after tax of €61 million. Moving to the cash. First of all, we are very pleased by the positive performance on Alstom legacy in line with our guidance and this despite the very specific COVID impact, and altogether €48 million for this year and after a very positive free cash flow of €301 million in the second half of 2021. So, a very strong H2 in terms of cash performance for Alstom legacy perimeters. In terms of drivers, we had as expected a working capital increase by around €240 million, which is linked to our Rolling Stock ramp up and overall contained our CapEx to around €150 million. Moving to the free cash flow usage for former Bombardier Transportation in February and March of €750 million. This has mainly been driven by one-off items of around €550 million specifically suppliers repayment and reduction of working capital instruments, the rest being related to working capital and cost phasing. All-in free cash flow for this year at minus €700 million driven by this Bombardier Transportation cash usage in Feb and March. Moving to the net debt situation. End of March standing at around minus €900 million. So starting from the end of September at €840 million, what are the key drivers of this evolution? Number one, our capital increase of €5.1 billion and the net proceed of BT acquisition at €4.4 billion. Second, the BT net debt at acquisition date on Jan 29 at around €1.4 billion. Third, obviously, the free cash flow movement, I was commenting for the second half of Alstom legacy and two months of ex BT. And finally, as you see some evolution in terms of M&A that Henri has been commenting. And as the last point, we have also reclassified a number of working capital instruments related to factoring and third-party advanced payment arrangement in net debt for a total amount of €453 million. All of that leading to our net debt end of March at around minus €900 million. So, turning to the Bombardier Transportation project review. As mentioned by Henri, we have implemented as of Jan 29, a full task force reviewing in-depth 120 project of BT legacy perimeters representing 70% of the total backlog. And we are now deploying comprehensive action plan on three dimensions; number one technical engineering, which are focusing obviously on the development side of the project; second industrial and supply chain ensuring industrialization and ramp-up which is definitively ahead of us; and of course reinforcing the commercial and customer relationships on this project. Financially speaking, this review led us to build additional provision for risk of contracts of around €630 million incremental to the €450 million which has been accrued for by Bombardier Inc. in December closing leading to a total as you see of provision for risk on contract of around €1.1 billion considered in our opening balance sheet. So, project stabilization remains, obviously, a key priority moving forward. We understand now the challenges in depth and we are deploying mitigation across the board. So, moving to liquidity status, we have at March 2021 strong liquidity position exceeding €4.5 billion including €1.5 billion of RCF and €1.75 billion of short-term RCF facilities replacing the Alstom and BT existing RCF as well in the context of COVID-19 which are both fully undrawn. We have bonds amounting to €1.45 billion including a €750 million bond issued in Jan at a record coupon rate of 0%. And our target obviously remains to stay in a strong Baa2 rating. Finally in terms of the dividends the Board of Directors will propose to the general assembly a €0.25 dividend per share resulting in a 31% payout ratio. Henri back to you for the conclusion.

[Henri Poupart-Lafarge:]

Thank you, Laurent. So, as a general conclusion, so if you look backwards, again, 2021 has been absolutely extraordinary year where Alstom has managed to meet all our own targets from Alstom scope standpoint on the back of a good market rebound at the end of the year to a very, very good year indeed. We have now -- we are on our way to integrate Bombardier. We have now I would say again put in place all the necessary processes and routines to manage satisfactorily the project of Bombardier. And we don't ignore the challenges, but I think we are up to them. We expect going forward a very good market momentum for the coming years starting this year but even more importantly on the years after. We imagine that you will have a lot of questions and we'll open the floor for Q&A. We will host a Capital Market Day beginning of July to give you more perspective on the mid to long term. We need to -- as we did I think a few years ago with Alstom in Motion so we need to have a complete plan to present to you at the time. So we'll give you a further update beginning of July on what should be our trajectory going forward. But having said that I'm more than happy to answer with Laurent to any questions you may have now. So, thank you very much and we'll open the floor for Q&A session. Thanks a lot.

[Operator:]

Thank you. I will now give the floor to Ms. Daniela Costa from the company Goldman Sachs. Madam Costa, your line is open.

[Daniela Costa:]

Hi, good morning. Thanks for taking my question. I have three if I may. But first one I wanted to ask you regarding what you talked about in terms of unwind of working capital at Bombardier. And I guess before you had sized it from the Bombardier accounts at roughly €1.3 billion between factoring extended payment terms and customer advances. And I wanted to understand clarify what is the right number to compare that with? Is that the €450 million of reclassification of working capital instruments or I think you've also mentioned now during the €550 million of one-offs. So based on that, is there more unwind that you might have to do? And how will you go about it? That's my first question and I'll ask the others after it maybe.

[Henri Poupart-Lafarge:]

Let me -- thank you for the question Daniela. I may leave the floor to Laurent to answer to these questions.

[Laurent Martinez:]

Yeah. Thank you, Daniela for this question. So in a nutshell, we have classified €450 million as debt out of the €1.33 billion you are referring to which are referring to a specific arrangement with the customers and with the factoring and factoring by the way has been repaid. So that's €450 million which is part of that. On the rest, we have reduced the reverse factoring to some extent as well and a part of it is classified in advanced payments and will continue its life along the project. So bottom line, out of the €1.3 billion €450 million has been classified in debt; around €110 million €150 million has been reduced; and the rest will be unwinded following the life of the project including the reverse factoring which will be continuing because we feel that this is something which is positive in terms of our supply chain management.

[Operator:]

I will now give the floor to Mr. Guillermo Peigneux from the company UBS. Sir, go ahead. Your line is open.

[Guillermo Peigneux:]

Thank you. Good morning. Thanks for taking my questions. I wanted to ask about the extra provisions that you booked the €632 million on the back of Bombardier Transportation risk. And you gave us a little bit of an indication of the timing of the different projects that you're basically referring to on these provisions. Is there any particular year that we can see a bigger allocation of provisions as we understand? Thank you.

[Henri Poupart-Lafarge:]

Thank you for your question. First of all, this amount of provision is consistent with our previous guidance in terms of the backlog of Bombardier. So we knew that they were -- we had a different view, let's say than Bombardier on its own backlog. So this is the transition into numbers of this different view. They will be unwinded not to zero. We always have and if you look at Alstom in the past, we always have a certain level of provisions of course, so it will decrease to a more normative level over one to two years. But it will not go to zero. Of course, we still have a number of provision. I tell you that these provisions are not only loss-making for loss-making, but are also general provisions on contracts. So it's -- you see the amount for Alstom was €500 million -- roughly €500 million which we can see as a recurring level. Laurent, you want to add something?

[Laurent Martinez:]

No, I think it's clear. Thank you.

[Operator:]

And I will now give the floor to Mr. Alexander Virgo from the company Bank of America. Sir, go ahead. Your line is open.

[Alexander Virgo:]

Thanks very much, and good morning to everyone. I wondered maybe you could talk a little bit about the pipeline of order intake and how things look over the near term like 12 months or so? And particularly, maybe you could answer the question as to why you've chosen to providing full year guidance until the Capital Markets Day?

[Henri Poupart-Lafarge:]

Well in terms -- thank you for the question. We see a good order pipeline. There are a number of projects which are being discussed. It's clear that order intake is always a little bit volatile. I mean we -- there are very large orders to come like the very high-speed trains in the UK for example. We have also some large orders to come in Mexico. We have large orders to come in Canada. We have -- so of course, it depends on our commercial successes. That may be why we are not necessarily giving today guidance on this perspective, but I can tell you that we are very positive on the commercial momentum. And we'll know more in a few -- of course in a few months from now but the long-term trend is extremely positive. It's a very, very large sustained pipeline. I mean I can quote we are also waiting orders in Israel for example. So we have a number of good commercial to come.

[Operator:]

And I will now give the floor to Mr. Gael de-Bray from the company Deutsche Bank. Gael, we have your lines open.

[Gael de-Bray:]

Thanks very much. Good morning everybody. So I have a few questions please. The first one is, I mean we've been now four months into the consolidation of Bombardier. So how do you see the integration process progressing? I know it is early days, but what surprised you the most in a negative and in a positive way? So that's question number one. Question number two is about the net debt position of Bombardier. What drove the sort of a €400 million increase in Bombardier's net debt to €1.4 billion between December and January? And the third question is about your future free cash flow generation. Given the need to continue to be engaged from some of Bombardier's working capital financing initiatives and all the project charges already booked could you help me understand, how potentially significant the disconnect between cash flows and profit might be in the coming year or in the coming years? And how long it might take for cash flows to fully reconnect with the P&L?

[Henri Poupart-Lafarge:]

Thank you for the question. So, I will take the first one and I will leave the next one for Laurent. On the first one, yes, we have been now with our new colleagues for a few months. And it's true that we have some positive and negative surprises. The very first positive surprise is the very good integration. And I would say, I know it's a very -- it's like a buzzword nowadays, but I feel that the Bombardier teams are extremely resilient. They have been under a very -- in a very deep crisis at -- in Bombardier Group for years and years and they still have a lot of energy. They want to rebound. They are extremely enthusiastic to embrace the new challenges to embrace the new company. So there was no negative feeling about leaving Bombardier and moving to Alstom on the contrary and we have made some surveys and we have more than 90% of the employees of ex-Bombardier being positive on the merger not only from a strategic standpoint but also for their own individual perspective. So I think it's extremely good. And that I think was -- and that has helped us to work extremely fast not only in terms of putting in place the organization, but indeed and this is the second very good surprise indeed in terms of solutions. And we have already offered -- I was mentioning a tender in Mexico for example that we have offered where we are combining both Alstom and Bombardier solutions. We have already worked in India to improve some of the Bombardier projects with some of the Alstom technology. So the ability to combine the different subsystems with one each other has been much quicker than I thought. And I think this is because people are really collaborating with each other. And really now on each of the tender, we are acting as if we had a combined portfolio. Of course, we need to rationalize it. We need to improve the interfaces. We need to maybe discontinue some of the redundant technologies. But in the main now when we are doing a tender we are already benefiting from the very, very large portfolio. On the more negative side and this is indeed a feeling of this organization which was very profound and I said that for the project and I will repeat it again and again. I think that from a technological standpoint, our colleagues from Bombardier were absolutely competent and there is no big technological problem. So there is no, trains that will not be, I mean handed over to the customers and so forth. I think that we are far, far from this kind of situation, where we have a big technical problem. And already we are helping as I said, Alstom, experts are helping their Bombardier colleagues to cure their technological issues. And there is nothing which is impossible to cure. But it's true that, the project management, the management in general was profoundly perturbed by the situation of Bombardier. And we need to restore some basics, in terms of stability, in terms of a long-term perspective and not only a very short-term perspective in day-to-day management. So I think this is something that the Bombardier colleagues themselves are welcoming, but this is something that takes sometime. So I'm very confident that we'll achieve it. But it's true that, the depth of the perturbation in terms of management of the company from the Bombardier Group was probably higher than what I thought, maybe Laurent, on the more financial side?

[Laurent Martinez:]

Yeah. Thank you, Gael for your questions. So, on the net debt of ex-BT as of Jan 29 of the €1.4 billion we have two elements into it, to get to your point, the debt, as of end of December, which was in the range of €950 million, as we communicated. And we had cash flow usage of €450 million in the month of January, which is chiefly related to a working capital phasing. On your second point and which is more looking ahead, I can provide you some of the key moving parts we will have in the next years. Definitively on the positive side, we see a very strong market traction which will of course generate down payment and progress payment which will be of course positive evolution. We definitively confirm as well, our positive trend on the free cash flow generation on the Alstom legacy perimeters. On the kind of the other side of the equation, we will need indeed to unfold in terms of cash the risks on contract provision and we may have as well some impact in terms of working capital phasing, on the ex-Bombardier perimeter. So these are the four moving parts. And we'll provide you more colors on the netting of this moving part for 2021, 2022 and as well more important for, the mid-to-long-term in our Capital Market Day.

[Operator:]

And I will now give the floor to, Mr. Simon Toennessen from the company Jefferies. Sir go ahead your line is open.

[Simon Toennessen:]

Yes. Good morning everybody. I've got a question on the, sort of the due diligence part at Bombardier and what you've discovered so far in the review. I thought the 70% target -- or the 70% of acquired backlog that we reviewed was an older target that we said in the past. And I believe you're going through a 100% review at the moment. Is it that you're going to comment at the Capital Markets Day, about the -- about having reviewed the entire backlog? And you will then be able to say, whether there are further issues relative to what you've found so far? And the second question is on the, U.S. infrastructure programs. If you could elaborate a bit more of the announcement that you've had so far, on Rolling Stock but also maybe on Signaling you said you're positively surprised, but maybe you can go into a bit more detail here. And in relation to that, do you think your footprint in the U.S. is sufficient given also that obviously bombardier has a decent footprint there, or do you think given the discussions that are currently happening. And I know it's early days that you might have to invest more into the footprint in the U.S. Thank you.

[Henri Poupart-Lafarge:]

So thank you for your question. To your first question, no, we have reviewed the entire backlog now. So what we give you as the global picture with the amount of provisions being booked and so forth corresponds to 100% of the backlog not 70%. So where we want to give you more color is on the outlook, because we need to look at the commercial momentum and how it translates into our sales and profitability going forward. But in terms of now I would say the due diligences on the past and the review of the past backlog this is now behind us I mean what we are showing today to you with the entire backlog. In the U.S., yes, I mean it's -- these are extremely large numbers. It's true that most of the investment will come to the infrastructure. As you know there is a need to rejuvenate a lot, rehabilitate a lot the infrastructure in the U.S. We talk about bridges and whether it's a road or for track. And that will consume the vast majority of the sums, which have been announced. But still the remaining portion is huge as compared to the current market situation and this will go for rolling stock as well. And we expect not this year, not during the next 12 months because of course we need to translate that and Amtrak need to translate that into concrete orders both on the main lines and on the urban side. On the main lines directly on track; on the urban side through some co-financing of project including PPP project and so forth, a significant increase in the market. So this will be in two years and of course it will translate into sales the year after. So when I say significant, it would be a double-digit increase of the market in the U.S. related to these elements. And the question of the footprint is a good question. We have a very good footprint in the U.S. already Alstom but even more importantly with our new footprint Bombardier footprint. Nevertheless and you will probably see it, it's not big amount but we are investing in the U.S. on the back of the Buy American Act because we have also a large footprint in Mexico. As you know we have a large footprint in Canada coming from Bombardier, but the Buy American Act pushes us to produce everything that we sell in the U.S. and we are fully compliant everything is Buy American Act. And, therefore, for example for the Metra project, which we have been awarded we are investing in terms of capacity in the U.S. So it will not be a huge amount. We are talking tens of millions of dollar and compared to the size of the market it's not huge amount. But it's true that the future market will require some investments mainly triggered on the back of the Buy American Act rather than on a global perspective. Thank you. Next question?

[Operator:]

Just as a reminder, only one question is allowed. I will now give the floor to Ms. Iris Zheng from the company Credit Suisse. Madam, go ahead. Your line is open.

[Iris Zheng:]

Thank you for taking the question. Can I have a follow-up on the provisions that have been taken? And in the past you've mentioned that some portion of the backlog of Bombardier Transportation is of lower margin and could you give an update on that? And also on the provisions, are they mainly linked to the rolling stocks? And any portion of that is linked to for example service and signalling potentially?

[Henri Poupart-Lafarge:]

I'll leave it to Laurent. On the split of provision between the different product lines, the vast majority is on rolling stock, could be one or two on signalling. But frankly the signalling portfolio of Bombardier was same and we had one or two elements. The vast, vast majority is on rolling stock. And then on the unwinding Laurent?

[Laurent Martinez:]

Yeah. So on the unwinding of this provision and overall on the backlog. so it will be an unwinding, which will be over the next around three years, I would say related to the rolling stock deliveries, which is very much as we indicated rolling stock driven. In terms of the update on the backlog, overall, Henri say that there is no major evolution in terms of the way we look at the backlog from this deep dive phase, so we are in the same kind of ballpark overall.

[Operator:]

And I will now give the floor to Mr. Martin Wilkie from the company Citi. Sir, go ahead. Your line is open.

[Martin Wilkie:]

Thank you. Good morning. It's Martin from Citi. Just one question coming back to the cash flow, you talked about some of the unwinds and the reclassification and so forth. But another part was, there was an impression that there was some excess contract assets at Bombardier with some pending cash, which don't look like it's appeared in your balance sheet. I know there can be differences. And just, if you can talk about has that cash been received or is it no longer expected to be received, or is it now shown in a different line somewhere in the balance sheet? Thank you.

[Henri Poupart-Lafarge:]

Yes. I'll let - Laurent, you can take this one

[Laurent Martinez:]

Yes. So, Martin thanks for your question. So this has been overall considered of course in the overall balance sheet we have. This is something that we will as well provide you with colors Martin in terms of the key moving part of the cash moving forward. I have mentioned, we will have some working capital phasing, which are related to contract assets. So this is something, where we'll be able to provide you more colors, early July in our Capital Market Day.

[Henri Poupart-Lafarge:]

Yes. As you know, there were some stocks and inventory in terms of finished goods. And it's true that there are a lot of trains, sitting on the backyard of Bombardier to be expedited and this will generate some cash. On the other hand, we have some liabilities in front of that. So overall, it's relatively balanced. But the way, I should have mentioned, it makes me think that one of the good news in terms of supply chain, it's true that in terms of inventories, the level of inventories of Bombardier is relatively low and we have discovered that they have a nice management of their inventories. And I think that's beyond I would say a number of -- I would say artificial measures to have supplier payment. But beyond that, from a physical standpoint, they had some nice inventory management, which we could apply to Alstom as well. So some good practice as well. Next question?

[Operator:]

I will now give the floor to Mr. Jonathan Mounsey from the company, Exane. Sir, go ahead. Your line is open.

[Jonathan Mounsey:]

Thank you. Good morning. Thanks for taking the question. Just back to the previous question briefly, I think the magnitude of those -- of that cash trapped on the balance sheet has been discussed before as you remember a number €1 billion or in excess of €1 billion without a huge amount of detail. I mean it seems to roughly offset the off-balance sheet financing that you also inherited. Is it still the view that the magnitude is there? And maybe, as well you mentioned, it will take three years for the provisions to normalize. What about this cash trapped on the balance sheet in finished goods? Is that really the story or could we actually see that coming in sooner given that a lot of these trains are finished or close to being finished? And also, just a follow-up on the deal-related revenues, are we close to that all being done now, or how much longer will we watch for?

[Laurent Martinez:]

So, thank you, Jon for your question. On the excess inventories, indeed this is something which will be unfolding in the next two years or so related mainly as well to the UK situation. You need to bear in mind that, a part of this finished good or inventories has been already paid by the customers. And so, when you deliver a car, you don't have 100% of the car value, but a fraction of it. So this is something, which will be as well, I would say a positive in the next two years or so in terms of excess inventory unfolding. And to the €1.3 billion of the unwind of the working capital and back to the question of Daniela, the first question. So just to recap €450 million has been taken into debt and we have €650 million, which are left in our balance sheet. €400 million of reverse factoring, which we will continue, because we feel that this is a competitive tool for our supply chain, so we'll continue and adapt. And €250 million, which are specific arrangements, which are of advanced payments with one of our key customers that we will continue as well.

[Operator:]

I will now give the floor to Mr. Alasdair Leslie from the company Societe Generale. Sir, go ahead. Your line is open.

[Alasdair Leslie:]

Hi, good morning. So you haven't given an initial guide for the fiscal year at this stage, but you do say the additional provisions you've taken at Bombardier are in line with expectations and you've reconfirmed the double-digit EPS accretion target as well by year two. So just wondering, can you confirm the sort of trajectory of Bombardier margins as well over the next couple of years is in line with your kind of original expectations as well? And should we maybe expect a year one margin for Bombardier in line, perhaps with the Q4 level, just to kind of help us anchor expectations over the next couple of months before the CMD in July? And then perhaps a follow-up question as well just outside the review of the Bombardier backlog. Are there any situations where you've kind of identified some risks around pricing contract terms at Bombardier on pre-tendering activities where there might be some form of legal commitment already to the customer? Thank you.

[Henri Poupart-Lafarge:]

Laurent?

[Laurent Martinez:]

Yes. So on the trajectories of the gross margin of Bombardier, we are confirming very much the perspective that we have been explaining which is a recovery to a standard margin in the mid-term. We do not see why we cannot achieve this. We need to unfold the kind of a difficult project in the next three years and the job will be essentially done in this time frame. And we are now benefiting as well from the technologies and the support of the full group to get a fix on these issues and get order intake with good quality and good margin. To your second point on the downside risks. Moving ahead, we don't see any price pressure. I think there is a stability in terms of the overall competition background in the main. And in terms of T&Cs as well, it's stable. There is no negative evolution. Of course, it depends standard by standard, region by region. But in the main, we do not see any downside pressure on these two aspects.

[Henri Poupart-Lafarge:]

Thank you. Next question?

[Operator:]

I will now give the floor to Mr. James Moore from the company Redburn. Sir, go ahead. Your line is open.

[James Moore:]

Hi, everyone. Thanks. Well, it's James from Redburn. Just going to the BT backlog. Now you've reviewed 100%, can you say what the margin is for the legacy BT trains and systems business in the backlog because that's clearly the area of risks that investors worry about. And what confidence can you give them that orders were not heavily discounted by parent trying to stay alive with advances? And a follow-up would be, with all the many complex moving parts that you have laid out the coming fiscal year and I know the outlook is coming, could you at least say, if you expect positive free cash flow for the whole group, in this fiscal year?

[Henri Poupart-Lafarge:]

In terms of due diligences, we can confirm in the main what we say that, at the time of the acquisition, that the overall margin in the backlog of Bombardier is around 3% to 4%. And it's consistent with this number, which is by the way consistent with the two months profitability of 2.7% that we have recorded at the perimeter of Bombardier. So we are in this vicinity. In terms of backlog flow as Laurent said, it's in the coming two to three years. I mean the, ballpark numbers are not different from what we have announced. Of course project-by-project there are pluses and minuses. We have booked some provisions on some projects and so forth, but this is no different from what we've seen -- what we announced in the past. In terms of cash flow generation, I think, it's -- we'll tell you at the CMD. There are pluses and minuses. So we need to -- it will depend as well on down payments. So we need to review the coming full year assumptions, in terms of what could be the down payment of the year. I mean, as you can imagine, now with the size of the company the amount of down payment which is expected for one year is very, very significant. So we need to put that into one equation. And we'll let you know, the consequences.

[Operator:]

And we will now take the last question. I will give the floor to Ms. Katie Self from the company Morgan Stanley. Please go ahead. Your line is open.

[Katie Self:]

Hi. Good morning. Thanks for taking my question. So, yeah, just going to a follow-up to James' question actually, I think as you said a lot of different moving parts. But perhaps if we just take a step back and look at the bigger picture, in your view, has that €1.1 billion of provisions that you've now taken essentially covered everything, right? Does that really draw a line in the sand on the risk that people have been concerned about here? So that's kind of question A. And then, if we just think conceptually, how long do you think about -- when you think about that cash momentum at Bombardier coming through, how long could it be for that Bombardier cash to really become positive? Is this something that's very long dated or something that could be happening in the next couple of years? Thank you.

[Henri Poupart-Lafarge:]

Thank you very much. It allows me to conclude a little bit on this subject, and as you said to step back a little bit. Yes, what we have done as a review of the project is, drawing a line on the sand. And we don't expect at all to come back to you, with any further deterioration. This is what we have recorded. And that's what is needed. Absolutely, no more I would say, to execute the contract. We and as well if you step back a little bit -- considering the speed of the integration, considering what we do today, we believe that the turnaround of Bombardier will take two to three years. And during this time, we'll have some pressure on the margin. We'll have some pressure on cash, definitively. And we'll come back to a more sustainable profitability, sustainable level of cash generation in the next two to three years. And from there as you know, we are going to benefit from the high-level of synergies that we are expecting.

[Henri Poupart-Lafarge:]

So thank you very much. I think it concludes our Q&A. So of course, we'll -- all and the IR team is all at your disposal for further questions, during the day and later on. Thanks a lot. Thanks to all of you. Have a nice day.