Good morning. This is the conference operator. Welcome, and thank you for joining the Rexel's third quarter 2023 sales conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Guillaume Texier, Group CEO of Rexel. Please go ahead, sir. Good morning and good morning to everyone, and thank you for getting up early this morning to join us for our third quarter sales conference. I'm here today with Laurent Delabarre, our CFO. I will make a few introductory remarks on our performance, and Laurent will give you greater granularity on our numbers. I'll conclude by confirming our outlook before handing you the floor for the Q&A session. Let's begin on slide three with the main highlights of the third quarter. In Q3, we continued to demonstrate a solid momentum with same-day sales growth of 2.6%. Rexel teams once again proved their ability to deliver profitable growth, and what is particularly satisfying is that they achieved this in a more mixed environment and on the back of a high 2022 comparable base. We continue to be in solidly positive territory for volumes, up +2.3%, roughly in the same ballpark as in Q1 and Q2. This time, with less of a booster from electrification categories, as we are starting to hit a high 2022 comparable base. This is very good news, as it demonstrates how resilient our model now is, continuously gaining market share in some important countries, while at the same time benefiting from accelerating midterm trends. In terms of pricing, we saw positive contribution from non-cable products, more than offsetting the unfavorable impact of cable pricing. Another highlight of the quarter was the continued growth of our digital penetration. Digitally enabled sales rose more than 300 basis points and represented 28.4% of Rexel sales. If we look at our performance year-to-date, our same-day sales are up +6.3%. The year is unfolding as we had anticipated, both in terms of market evolutions and in terms of action plans. This allows us to confirm our full-year guidance, and I will come back to that in my closing remarks. On slide five, we focus specifically on the two acquisitions I briefly mentioned. Sorry, sorry, sorry. Beyond our Q3 numbers, I would like to highlight on slide four, first of all, all the strategic achievements in the quarter that form part of our Power Up 25 plan. We continue to actively deploy our capital allocation strategy which seeks to strike a balance between value creating acquisitions and shareholder returns. Concerning M&A, we closed the acquisition of Wasco in the Netherlands which we announced last quarter. We are also announcing today the acquisition of a 51% stake in Mavisun, a small-sized French distributor of photovoltaic solutions. I'll describe both deals in greater details on next slide. At the same time, we also continue to execute our share buyback program. Over the first nine months of the year, we have acquired 4.4 million shares, representing EUR 92 million. Over the 2022-2023 period, we target EUR 200 million in share repurchases on a cumulative basis. On the financial side, we issued a new EUR 400 million Sustainability-Linked Bonds, maturing in 2030, at a competitive coupon of 5.25%. This allows us to extend the maturity of our debt while also underscoring our commitment to achieving ambitious 2030 sustainability targets. With this issuance, all of our outstanding bonds are now linked to sustainability objectives. Coming to slide five, we focus specifically on the two acquisitions I briefly mentioned earlier. The first is Wasco, that you know already, one of the leading distributors of HVAC products and services in the Netherlands. This acquisition, which we first announced in May and closed on September 1st, will double Rexel size in the Netherlands, one of the most exciting European markets from an electrification perspective, benefiting from a fast-paced transition from gas driven by incentives and regulations, notably the ban on gas boilers, both in new build and renovation. Wasco is ideally positioned to be an active player in this transition. It's also best-in-class in terms of digitalization. We are very excited to start working with the Wasco teams to unleash the great opportunities that the association of both companies will create. The second acquisition is Mavisun, a specialist of solar solution distributions in France, with sales over the last 12 months through May of EUR 40 million. We are acquiring a 51% stake alongside its founders, and this acquisition will scale up our value proposition in solar by offering kits and technical assistance to our installer customers. We anticipate further growth acceleration as France adopted this renewable energy later than the other European countries. Both transactions allow us to continue to build our presence in electrification categories in Europe through small and mid-sized acquisitions, and to enhance our midterm growth profile through carefully selected synergistic additions. Let me now hand over to Laurent to detail our Q3 sales performance. Thank you, Guillaume, and good morning to all. Slide seven shows you the different building blocks. Of our Q3 2023 performance. Our sales of EUR 4.7 billion were down 3.1% on a reported basis, impacted by forex, and up 2.6% on a same-day basis. Foreign exchange had a - 4.5% impact, mainly due to the variation in the U.S. and Canadian dollar versus the euro. The currency impact is now expected to be circa -2% for the full year 2023, assuming spot rates remain unchanged. The scope effect stood at -0.3%, resulting from the net effect of the disposal of our activities in Norway, Spain, and Portugal, and the positive contribution of acquired companies, including Horizon, Buckles-Smith, and LTL in North America, as well as Wasco in the Netherlands, that has been consolidated as from September 1st. We now anticipate the full year 2023 scope impact to be close to 0.5% based on already announced operations. As shown on the graph, organic same-day growth reached 2.6%, driven by the combination of volume and price that I will describe in the coming slides. On slide seven, you see the breakdown of our growth by geography. As Gio mentioned, we saw same-day sales growth at group level, with progression in Europe and North America. In North America, accounting for 45% of group sales, we posted growth of 2.7% in Q3. In Europe, representing 48% of group sales, we grew by 3.4% in Q3. In Asia-Pacific, accounting for 7% of group revenue, our sales were down 2.7%, resulting from two contrasting situations. On the one hand, New Zealand was impacted by the difficult macro environment, and China was down on a more difficult base effect, our sales got up in Q3 2022 after lockdown, as well as the selectivity and strategy implemented and price deflation in line with the Producer Price Index. On the other hand, Australia and India did well, with India benefiting from very strong industrial demand and Australia well oriented in all three end markets, particularly industrial and commercial. Moving to slide nine. We focus specifically here on volumes, which contributed for +2.3% to growth in Q3 2023, with solid performance both in North America and to a lesser extent, in Europe. Indeed, volumes were up 4.3% in North America, boosted by reshoring of industrial production and +0.9% in Europe on a high comparable base. Overall, volumes were boosted by the four product categories related to electrification, including solar, electrical vehicle charging infrastructure, HVAC and industrial automation, and representing circa 22% of sales. Those categories were up +5% on a same-day basis in the quarter on a very high comparable base. Moving to slide 10, the positive effect from non-cable pricing more than offset the negative contribution from pricing on cable products. Specifically on non-cable products, the positive +1.3% contribution to sales growth results from various situations. Europe is still ahead of other geographies at +2.3% compared to North America at +0.5% and APAC at -2.3%. This notably reflects the fact that Europe started to increase prices later and at a lower pace than North America post-COVID. I would add for non-cable products that overall trends were favorable for the majority of products and more than offset some deflation on limited product categories, including piping, piping and conduit in North America, solar panels, and some industrial automation products in China. The low contribution than in Q2 is explained also by lower carryover effect and by the negative pricing contribution in APAC. Specifically on cable products, the negative 1% contribution in Q3 is better than the previous quarter, but remains negative, largely due to the situation in North America, which should progressively improve over the coming quarters, assuming a constant copper price. Slide 11 focus on our performance in Europe, where our Q3 2023 same-day sales growth was +3.4%. You have all the details in the press release on a country-by-country basis, so I will just highlight the key evolutions of the quarter. By country, we continue to record strong growth in Germany, Austria, Switzerland region, and the U.K., offsetting lower momentum in Nordics and Benelux, largely on a more difficult base effect. We recorded market share gains in France, Germany, and Switzerland. By product, we continue to record good growth on electrification categories, albeit a slower pace, as those categories grew by more than 80% in Q3 2022. By end market, Q3 2023 growth was largely supported by industrial and some commercial segments. Unsurprisingly, the residential market, and more specifically, new build, remains impacted by rising interest rates. On Slide 12, we turn to our performance in North America, where same-day sales grew by 2.7% in Q3. In the U.S., same-day sales grew by 1%. We cite the robust industrial demand, driven by production reshoring and good momentum in commercial segments such as entertainment, governmental spending related, or logistics. These offset the negative trend in the segments impacted by rising interest rates, and notably the residential market and some commercial verticals. The quarter was marked by good backlog execution and market outperformance in Mountain Plains, Midwest, and Gulf Central. Canada saw robust same-day growth of +10.9%, driven by strong industrial demand and more specifically, the oil and gas and utility business, notably thanks to the business we acquired in 2021, as well an additional effect in the quarter related to the servicing of our backlog. Our backlog in North America remain at a high level, still representing three months of activity, and it is gradually decreasing towards a more normalized level. Let's turn on Slide 13 to our balance sheet and liquidity picture. As you know, we have successfully issued a new Sustainability-Linked Bond for EUR 400 million during 2030. First, the environmental objectives attached to this SLB are the new Scope 1, 2, and 3 objectives set a year ago to reach net zero emissions. Those targets have been validated by SBTi. Second, we obtain a very competitive rate for our BB+ rating for the issuance of 5.25%. Third, all our bonds are linked to sustainability objectives. We now have three SLBs for a total value of EUR 1.4 billion. Fourth, with this issuance, we increase the maturity of our gross debt by almost half a year, at close to 3.5 years, including our bonds and our financing from accounts receivable securitization, which, as you know, is an asset-based solution at an attractive rate and no risk of interruption, as we remain responsible for both the receivable generation and the collection. With our strong balance sheet and liquidity, we have no short-term refinancing needs. Thank you for your attention, and I will now hand back to Guillaume. Yeah, thank you very much, Laurent. Now let's turn to our outlook on slide 15. As I said in my introduction, I'm pleased to confirm our full-year guidance, notwithstanding the more mixed environment we are operating in today. I'm even happy in a way that H2 will be an excellent opportunity to answer the most frequently asked question that we have in virtual, which is about resilience. We will leverage the diversity of our portfolio and the strengths of our supporting megatrends to continue to deliver on the top-line side. On the bottom-line side, we will harvest all the efforts we have made over the last few years to optimize operations efficiency, leverage our digital penetration, and use data to optimize our margins. This will allow us to achieve the upgraded financial targets that we announced back in July. Namely, same-day sales growth in the upper range of our initial guiding range of between 2% and 6%, Adjusted EBITDA margin between 6.6% and 6.9%, and free cash flow conversion exceeding 60%. Our performance to date puts us not only on track to achieve our 2023 targets, but also our 2025 ambition that we presented back in June 2022. As a reminder, we are in year two of our strategic plan, which is based on two main pillars, one about exceeding on the fundamentals and one about striving to be a differentiated leader. We remain fully focused on these drivers, and the action plan that we are launched are proving very powerful as our 2023 performance highlights. I would like to invite you today to save some time in your diaries in June of 2024 for a presentation of an update of the strategic roadmap through Capital Markets Day. We will, of course, provide you with further details in due course. In the meantime, thank you for your attention, and Laurent and I are now happy to take your questions. I'm sure you have some. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Akash Gupta with JPMorgan. Please go ahead. Yes. Hi, good morning, Guillaume and Laurent. Thanks for your time. I have two, if I may, and I will ask one at a time. The first one I have is on these fast-growing electrification categories, where you grew by 5% in the quarter. I'm wondering if you can provide some information on how does the pricing and volume growth in each of these four categories were in the third quarter? That's question number one. No, we don't, we don't provide that, that detail. That being said, you know, that there is a, a specific deflation in the solar panels category, which is one part of the solar and PV business. For the rest, apart from this specific situation, which is linked to solar panels, once again, a proportion of one of the categories, of one of the four categories, the rest of the categories is progressing more or less in line with the rest of with the rest of Rexel, I would say. There is nothing particular apart from from that. Just to reconfirm, it's only solar where you have negative pricing in these four categories, other categories still having positive pricing in the quarter? Laurent, yes? Yeah, yes, this is the case and especially on the industrial automation category. Yeah, absolutely. Thank you. My second question is that you mentioned a couple of times that you were outgrowing the market and having some market share gains. Is it possible for you to quantify in key markets in Europe and North America, what was the level of outperformance versus underlying market? No, you know, Akash, it's very difficult to tell. There are countries in which there are federations, professional federations, and when you have reliable data on that. In other countries, it's mostly anecdotal evidence, either through what the suppliers are telling us or through our own data, which is about counting the number of customers and counting the progression in the number of customers. To transform that into quantitative data is quite difficult. You know, what we have mentioned, I'm not sure we can say that at global level, we are gaining market share. say..." So "I would say" stays "I would say". * *Wait, let me re-check the "I think" vs "I'd think".* Original: "...I think..." So "I think" stays "I think". * *Wait, let me re-check the "we mentioned" vs "we've mentioned".* Original: "...we mentioned..." So "we mentioned" stays "we mentioned". * *Wait, let me re-check the "we have put in place" vs "we've put in place".* Thank you. The next question is from Martin Wilkie with Citi. Please go ahead. Yeah, good morning. Thank you. It's Martin from Citi. The first question I had was just coming back to pricing. You talk about a favorable pricing environment, but with a low carryover effect. Could you just give us what that carryover effect was, just so we can see the pattern of that across the year? Specifically on China, I mean, you talk about pricing in Asia-Pac region being down more than 2%. We've heard lots of stuff from other companies about destocking effects in China, things like that. If you could just go a little bit more into what's happening in China now, both on a pricing and volume side, just to understand the specifics of that region. Thank you. Yes, thank you, Martin. Yes, when we look at our price impact, the first topic is the one you describe on China, where we have a bit of deflation on the pricing environment in line with the producer price impact. There are a bit of destocking, what we can see on some categories of industrial automation products. I recall that in China, we are only playing on industrial automation. When you exclude APAC, the global pricing is positive. The combo of Europe and North America is 1.6% price increase excluding copper. In that, we have roughly 1% coming from the carryover and 0.6, which is the net of inflation on traditional products and deflation in limited category of products, mainly piping and conduit in North America, which are made of steel, and solar panels. I know it's an important question, which is a question that we have from time to time about deflation. Let me comment a little bit more on that to say that when we look at, I mean, to say the same thing as Laurent basically, but when we look at the pricing situation, there is a specific situation of China, which is very much about industrial automation. You know that in China, a proportion of our business is done with OEMs, machine builders, and those tended at the difference of many of our other customers, they tended during the supply chain crisis over the last two years to build a little bit of inventory. That, combined with the fact that China, in general, as an economy is in deflation, is creating this deflationary effect, specifically in China. For the rest, I would say that we have three categories of products. You have cable, and you know how to model cable. It's very dependent on copper price evolution, so you know how to look at that. In the non-cable part, I would distinguish between basically two categories of products. One are the products which are very much linked to commodities prices, which means that when we put ourselves in the shoes of a manufacturer, their cost price is including a lot of raw materials. That would be the case, for example, for steel piping in the U.S., conduits, et cetera, et cetera. That represents probably 10%, no more, of the non-cable product. Those ones are evolving with the price of those commodities. It was up very sharply. It was down in the first part of the year, quite sharply also, because of steel and PVC going down. Now it's going to depend on where PVC and steel are progressing for the rest of the year and for the near-term future. I tend to think that when I look at the graphs, it's been stable, more or less, over the past few months, but we'll see. For the rest, for the 90% of non-cable products, which is the bulk of what we are selling, you know, when I talk to our suppliers, their cost equation is not going in the right direction, which means that they are not benefiting from windfall profits. Their cost is progressing because it's mostly components and also salaries, so it's very influenced by that, and they see inflation. They see inflation and their intent and what they are putting out there is to continue to increase price, not in the same proportion that what we have seen over the last few years, but they will continue to push price. I think really the cost question has to be broken down between those categories, China, cable, non-cable commodity, and the big part, which is non-cable, non-commodity. I hope I'm clear in saying that, but that's the way we see it. Yeah, no, that's very helpful. Thank you very much. The next question is from Jingjiao Zhang with Goldman Sachs. Please go ahead. Thank you. Morning, gentlemen. I want to follow up a bit on the electrifications high-growth area, about your expectation into the next quarter and maybe going to 2024, if you have any, given that we're seeing, you know, higher comps as well as a bit underlying decelerations in some initiatives like heat pumps and solar solutions. No, thank you. Thank you for the question. It's difficult for us to predict those categories on a quarter-by-quarter basis, and I won't enter into that. You know, first of all, we have seen a slowdown of the growth of the electrification categories, but the mass is still continuing to grow and to grow faster than the rest of our business, which is exactly in line with what we had said at Capital Markets Day, if you remember well. We had said at the time that we expected to see those categories growing at least twice as fast as the rest of our business. Even in this quarter, which is a quarter where we are hitting high comparison basis from last year, we are delivering that. We continue to be on the market, which is of accelerated growth. Now, what I said many times in road shows is that we should expect ups and downs because of the high comparison basis, because also of the dependency on this regulation or this incentive in this country, et cetera, et cetera. For that reason, it's quite difficult for me to predict what's going to happen in Q4. In Q4, we are going to have slightly less difficult comparison base compared to Q3, but still a high comparison base. When I look at the environment, the global environment, there are countries where we have seen slowdown. For example, we have seen a slowdown in Italy since the beginning of the year. It's a small country for us, but it's very clear that the Super bonus going away was a hurdle in terms of that. There are many countries where we see acceleration, and one of them being our largest country, the U.S., where the megatrends towards especially industrial automation, but also the incentive plans and the stimulus plans favoring more PV and more electrical vehicle, et cetera, are helping us to progress. Difficult, I mean, pluses, minuses, comparison base is evolving. I think midterm, we are very comfortable, still very comfortable with what we said. It's going to be a high-growth area, and it's going to be something which is going to sustain a higher level of growth overall over a cycle for Rexel. Over a quarter, I'm at a difficulty to predict what's going to happen, and I would refer to the global guidance for Rexel for the fourth quarter. Thank you. Sorry not to be able to be more precise. No, that's helpful. If I may follow on a different question, maybe about your own cost inflations, what have you seen this quarter, you know, on your own cost inflation base, like wages, things like that? Laurent, do you want to take this one? Yeah, yeah, yeah. I mean, we are in line with what we already discussed, having a bit more pay rise this year than in the past year, in the region of 4%-5%. I would say everything as expected so far. In this more mixed environment, we have also implemented some productivity action in order to make sure we have the right level of profitability. Thank you. The next question is from Alexander Virgo with Bank of America. Please go ahead. Thanks very much indeed. Morning to you, morning, Laurent. I wondered if you could talk a little bit more for us into some of the underlying dynamics in Europe and the U.S. I think last quarter, last few quarters, you've called out specifically the contribution from the electrification products to the overall number. Obviously, France and Germany were much stronger, I think, than you would have expected because of solar, and you called that out specifically. I just wondered if we could get the actual contribution. I think it was combined, there were about 60% of the 8% growth you saw in Q2. What was the growth or the mix in Q3? Presumably it implies the underlying or the non-electrification stuff was down a bit. Second question was on North America. You talk here about a stable backlog of still about three months of sales, despite the overall backlog being down about 6% since June. Obviously implying smaller next three months than the last three months if the backlog is still covering three months of sale. I wondered if you could talk a little bit about the run rate there and the verticals or the moving parts within that. If I could sneak a small one in at the end on Canada. You called out a sort of a backlog effect or an oil and gas effect. I just wondered if you could calibrate that for us, because obviously that was much stronger growth than the rest of the Americas. Thanks very much. Okay. I'll take the first one. If I understand well, you're asking a question about contribution of electrification to European, to European sales. You know, no, overall, electrification in the last quarter was very balanced between, in terms of growth between, Europe and North America, with a strong push in North America, also in automation. Which means that when you do the math, I mean, you know, if you do the math at global level, you have 22% of our sales in automation, 5% growth. If you, if you do the math about the contribution to total sales growth, it's not turning it into negative. In Europe, it's not, it's not that either. The volumes and the growth in Europe was positive without electrification, which is something quite satisfactory, because I understand that we could project the impression over the last quarters, that all the growth was about electrification, but it's not actually. It's not especially in Europe, where we have still healthy growth, probably north of 2% without electrification. That's what I can say. Maybe one comment about what you said, to correct one thing. I think Germany, yes, was boosted by strong electrification trends, especially in the PV business, and continues to be very active in the PV business, actually. The push towards the photovoltaics in Germany continues to be quite strong. France was a little bit less in this situation, so that's not the one I would have mentioned. I would have mentioned mostly Netherlands or Sweden as countries which benefited in the past from electrification. Now, North America demand and relationship with backlog. What we are seeing is that the supply chain situation is normalizing a little bit, especially on those large and complex items which were making up a big part of the backlog. You know, the backlog is not disappearing. It's still relatively stable, you know, stable minus, going down, but it continues to contribute. The execution of the backlog continues to contribute to the U.S. growth rate to a certain extent, not to the total extent, but to a certain extent. When you look at the backlog evolution, you're thinking, "Okay, if I look at the backlog in end of June and the backlog end of September, it decreased a little bit," but it didn't decrease by three months, obviously. It decreased by a few days. Overall, the contribution to the growth was relatively limited. We still have a healthy backlog, which, if we continue at this pace, will last a few more quarters in terms of execution. I'm not sure the calculation on the backlog is leading to the conclusion that sales in the U.S. will be weak in Q4. Now, what do we see in terms of trends in the U.S.? The trends in the U.S. are very much the same as what we see in other markets. We see overall a slowdown of the economy in residential, an impact of high interest rates on new residential, in particular. Some pockets of slowdown in other markets, but some segments of commercial, especially those helped by the stimulus plans, as well as industry, remaining very robust. It's a little bit the picture that we see, which is more or less the same as the one we saw in Q3, in reality. That's what I would say about our outlook for North America. For Canada, you know, that we are very exposed to industry in Canada, and industry in Canada is doing very well. Laurent, I don't know if you want to mention. Just a point from the oil and gas that is up small double-digit in Canada in the quarter. Quite healthy industrial segment, especially oil and gas in Canada. Yeah. Thank you very much. The next question is from Phil Buller with Berenberg. Please go ahead. Oh, hello. Good morning, guys. Thanks for the question. In terms of the comments that you made to Martin's earlier question on price and the price cost dynamic still not being favorable for a lot of your suppliers, I'm keen to hear what you're seeing on the ground in terms of price elasticity at this point, because I know over the past couple of years, that didn't seem to be much of a thing. We talk about tough comps and different dynamics in resi and so on, but I guess I'm a bit surprised that there isn't more caution in some of the prepared remarks, as the financial market is pretty concerned about volume and price, I think, in 2024. Can you comment on your thoughts on when you might look to stimulate demand for volume through pricing? Is that something that's not really on the agenda in the next 12 months? That's the first question, thanks. Well, I think at our level and overall in the industry, the price elasticity is relatively limited. You know, when you look at any given project, it's very unusual that the price of electrical materials would make a difference in terms of the global balance of the project. In any new construction or renovation project, the price of electrical materials is, I don't know, less than 5% of the total cost of the project. Really, the elasticity to price is very limited, and we have experienced that in the past. No, there is not going to be really a trade-off between volume and price in the next few quarters. I would say, and I'm not in the head of all the suppliers in the industry, but to talk a little bit with them, that's a little bit the reason. There is not much elasticity there. I think as far as we are concerned, we are going to continue to protect the margins, which we have done a good job at doing in the past and in the recent quarters that you have seen with the guidance. The volumes are going to be driven by the market. Right now, I think we have proven over the last few quarters that the volumes remained quite healthy. You know, we are still in positive volumes. I don't think that many people back one year would have predicted that. I think we are proving that the model and the exposure to healthy end markets is providing a good resilience in terms of both volume and profitability. Okay, thank you. Just if you could expand on the situation and the strong performance in India, please, that would be great. I think we can often forget non-U.S. markets outside of China. What's happening there? Is it a one-off that we should be thinking about, or is there some really interesting dynamic? It's not a one-off. You know, in India, first of all, it's unfortunately, in a way, a very small country for us. But it's a very good success story because we are focused on one activity, which is industrial automation. This activity is doing well. Industrial activity is booming in India, and the demand for optimization of operations, especially because even in India, the availability of qualified workforce, as well as the cost of labor, is becoming a topic. The appetite for industrial automation is very high. I think we have a very good teams which are delivering not only products, but also solutions, a bunch of services, help to the customers to use industrial automation, to design, et cetera, et cetera. We have been able to deliver very high growth rates, both because of the market and because of our success in the market, on top of that. You know, I think it's small, but it's a good example of what we can deliver with a mix of good teams, solutions, associating products and also services. Yeah, a good example of what can be done, but not a one-off, for sure. We will continue to enjoy growth in India. Clearly a model that we can hope to extend or to take learnings from for other countries also. Thank you very much. Even though not all countries have the economy of India. Yeah. Very true. Thanks again. The next question is from Eric Lemarié with CIC. Please go ahead. Yes, thanks for taking my question. I got a question about France, actually. We have seen yesterday and this morning in the French newspaper some comments from the French Craftsmen Federation, you know, the CAPEB. This federation mentioned some relatively poor dynamic industry in France for works in renovation related to energy efficiency. I was wondering if you have any comments on that? I got another question, actually, on your guidance, actually. I was surprised that you are not more precise on the guidance for the full year, considering that we only have two months left in 2023. I know you explained how this is complicated, but I don't know if you can add something. Last point to check the numbers you gave us related to the split between products, cable product, non-cable, non-commodity product, and the rest of your products. To confirm, you got today 20% product for cables, basically, so related to some different copper price, and 10% of non-cable, non-commodity? Yeah. Okay. Non-cable- I will start with the last one. In our global mix, cable is a little bit less than 20%. It's what? 17%. Yes. 17% of our global mix of sales. Out of the remaining 83%, less than 10% of that would be linked to what I called commodity and the rest would be linked to non-commodity. You would have to carve out maybe the 3% of China somewhere. That's a little bit the order of magnitude of what we are talking about. You know, energy renovation in France, you know, I don't have many comments to make at this stage. I think when the CAPEB is making comments on energy renovation, usually what they have in mind is very much insulation and heavy renovation, heavy renovation works. It's not so much the electrical renovation that we're talking about. You know, in France, we continue to have very good growth rate on all categories except new residential. I think this is maybe a little bit skewed by the fact that we are gaining market share in France, so I'm not sure we are the best observers of that, but for us, French- Mm. France continues to be a good market. When I look at the recent announcements of the French government, for example, on heat pumps, I'm thinking heat pumps to which we are exposed. I'm thinking it goes in the right direction. Now, short term, I wouldn't be able to comment on the comments of the CAPEB. Now, why don't we change the guidance? That's a good question. You know, we try not to change the guidance every quarter and not to refine the guidance every quarter because, especially when we are within the guidance, we prefer to continue on the same guidance. It was not our habit in the past to change it every quarter. We don't want to get into that, so we leave it like it is. I understand that it's relatively wide, but it is what it is. You know, you made the math, the translation in terms of top line is from -3% in Q4 to +5% in Q4. I understand that it's relatively wide. It's not by difficulty of forecasting, it's mostly because we don't want to get into the business of updating the guidance every month. That's, it is what it is. Eric, I'm sorry. You will have the results at the end of the year, but we have a good level of confidence in our guidance, obviously, or else we wouldn't confirm it. You confirm it's not, it doesn't mean that you consider today that the visibility is lower? No, no, no, no, not particularly. It's just that we don't want to get in the process of having a different guidance every quarter. You know, in theory, we would have a guidance at the beginning of the year, and we continue with the guidance until the end of the year. Here, in the middle of the year, first of all, we were better than expected in terms of profitability. Also we felt that, you know, the overall top line guidance was becoming way too wide. Here in Q3, we decided to leave it like it is. It doesn't mean anything in terms of low visibility or in terms of either bias, positive or negative. No. Okay, got you. Thank you. The next question is from Supriya Subramanian with UBS. Please go ahead. Good morning. Thank you for taking my question. I had two questions. One is on sort of the regional end market color, like you gave for North America. Could you also sort of share the trends that you're seeing across resi, non-resi, and industry in Europe, and also maybe between sort of new build and renovation cycle? My second question, and apologies if I missed this earlier in the call, did you share what you see as sort of the pricing carryover effect into 4Q for the non-cable product segment? Thank you. Yes. I will let, first of all, Laurent answer the first one because he already. You're right. Yeah. He already answered it, but we are happy to re-answer it. I answer for the Q3, and I say Q3, it was 1%. Mechanically, the carryover is reducing quarter after quarter, so it will be almost 0 in Q4. Okay, thank you. Yeah. As far as the economy in various parts of the world, I mean, first of all, I would say that seen from our window, economy is quite resistant. You have looked at the volumes. The volumes where if I look at Q1, Q2, Q3, they were a little bit above 4% in Q1, 2%, something like 3% in Q2, and 2% in Q3. So we are very steady in terms of volume, and that despite the fact that the electrification contribution is slowing down because of high comparison base. So overall, the economy is quite robust and quite resistant. Now, it is resistant, but we obviously see signs of the economy slowing down a little bit, which was expected with interest rates having an impact. We see that obviously, very acutely in residential, in new residential, and it continues to be the case in all countries. I don't think there is any exception to that. The effect is, in general, less pronounced on RMI and on our commercial business. Industry is holding very well in all of the countries where we are. You know, it's difficult to make a big difference between North America and Europe from this point of view, because the picture is very similar in all of our markets. When you strip out the electrification trends, more related to industrial automation in the U.S. and more related to sustainability in Europe, at the end of the day, you get the same picture, which is that new resi is not doing well. RMI, commercial holding well, with some pockets of weakness here and there, and industry very solid. That's the most color I can give you because it's very, very homogeneous in reality. Perfect. When you look at our figures, and we have given a lot of details by country, you know, most of the outliers are explained by electrification comparison base and nothing else. When you take Netherlands, Sweden or California, that's what it would be. Okay. Okay. Got it. Thank you very much. Thank you. The next question is from William Mackie with Kepler Cheuvreux. Please go ahead. Hi, good morning, Laurent, Guillaume, everybody. Thank you. I guess a few questions and a couple of follow-ups, please. The first question would be, Guillaume, you know, how are you sort of guiding your leadership team at the moment with respect to managing the stock and inventory levels going into the fourth quarter and the beginning of next year? I mean, what are you thinking about managements of stocks and replenishing your inventories going into this period? The second question, and then some follow-ups, which I'll leave for later, relates to your thoughts about the bond rating, actually. As financing becomes more important in terms of a cost issue, you're not far off an investment-grade rating. What is the board's position about recovering into an investment-grade status? Okay. A very, very good question. Thanks, William. First of all, stock and inventory management is a point of very high attention. I mean, overall, I can give you the mindset of the company. The mindset of the company since one year is a mindset of being extremely attentive to cash generation, stock management, margins, et cetera, while still keeping an eye on growth, and you have seen that we have done that quite successfully. Really, the mindset of the company is to protect margin, and we are having a good success, a good success there. One point of particular attention is obviously stock and inventory management. Because in a market where one, there are variations in demand, and two, the price effect is not as positive as it was before, it makes a lot of sense to be very strict on stock. That's what we are doing. We are asking the country managers to have a super high level of attention to stock and especially to be personally involved in many ordering decisions. Because the danger is, you know, that we are exiting a supply chain situation, which was very tense, so it was important to have the right inventory at the time. We want them to be involved to make sure that we slow down in the right way as the supply chain is easing. I have to say, when I look at, and we don't disclose the working capital features in Q3. That being said, when I look at that, we are seeing quite good results in terms of managing our inventory situation. But it's a point of extreme attention. We had a call not longer than yesterday to talk in particular about that. Very high level of attention, which, by the way, because I know that you are following also our suppliers, is translating for them into a weakness in order intake, obviously. Because as we are managing through that, we are not particularly heavy in inventory, maybe at the difference of some competitors, but we are not that heavy. But as we are adjusting in number of days, it can translate from time to time into a weakness in order intake from us to our customers. Now, in terms of bond rating, maybe I'll let Laurent come on first, and maybe I can add my own two cents after that. Yeah, it's a good question, and it has been discussed with the committee and the board. We feel that we are well positioned in the high bond space. We have, as you have seen, a great appetite when we issue bonds. We want to keep the flexibility in term of shareholder return, in term of M&A going forward. With the leverage, probably with higher interest rate around 1.5x is, I think, a space we consider as adequate. The upside to moving to investment grade is not such as we consider it as a strong priority today. You know, look, William, that's a question that we are obviously looking at all the time with the board. For the moment, we are benefiting, even if we are not investment grade, we are benefiting. Apart from the fact that the windows of opportunities may be shorter for us in terms of rate, in terms of cost of financing, we are almost as if we were investment grade. From this point of view, it doesn't change much to our cost of financing. If we were one day to go investment grade, we would like to be comfortably investment grade. We wouldn't want to be at the limit and being always thinking about, okay, but what is the risk on the financing ratios, et cetera, et cetera, because we don't want that to become a hurdle to our strategic flexibility, let's put it this way. That's the reason for the moment we have not done that, but we are revisiting that all the time. It's a good question. Thank you. Three short follow-ups, I hope. The first one would be, could you give us a sense of the underlying non-cable pricing if you stripped out the effects of the conduit and other non-commodity or the commodity-related products? The second follow-up relates to specifically market trends. You called out residential, but could you quantify in some way the scale of the declines that you've seen across residential, mainly in, I imagine, Europe and North America? Perhaps the last, just to push you a little bit on market share. You gave at the introduction comments about it, but you've called out France a couple of times. I mean, how are you measuring market share gains in France, and who are you winning from? On the other side of the equation, why did you lose customers in the Nordics? Thank you. Okay. I will start with the last one because it's the easy one. Market share in France, there is a professional organization to which a majority of the players are reporting their figures. We are basing our evidence on that and also on feedback from suppliers. That's the way we are, I mean, we are triangulating by the professional associations, the feedback from suppliers, and us counting the number of customers, which is always a good proxy of market share. Obviously, there is a question of mix of customers, et cetera, but counting the number of customers is an easy way of measuring the health and the momentum of our business. To whom are we gaining market share? I wouldn't comment too much on that. I don't like to comment on competitors too much. But in general, I can give a more general comment overall. When we are gaining market share in the midterm, it's usually at the expense of smaller players who don't have the capabilities to be able to go digital, to offer the additional solutions, additional services, et cetera, which make our value proposition in the end. You know, the base of our value proposition is delivering the product at the right price, but more and more we see that additional services, like digital services, like expertise services, are counting more and more for our customers. When we win market share, we like to do it this way. Now, the specific case of Sweden, and it's also the case in China, when we lose customers, I mean, it's usually because we are not competitive. If we are not competitive, it's because we, at some point, do a trade-off between margin and volume. You know, in many cases, we tend to protect margin, even if it's at the expense of volume, while still, in the midterm, trying to hold our positions and to progress. But, you know, on a quarter-by-quarter basis, it can happen that we make a decision, especially on some very large customers, which tend to be the ones negotiating the hardest. It may happen in one country or the other, and it was the case in Sweden and in China since H1 that we decide that it's in our best interest to reduce a little bit the scope of the business and to continue like that. You asked us about underlying. You know, the question basically is if I take out everything which is negative, what is the remainder? The answer is, it's positive. Joke apart, joke apart, I don't, you know, I didn't make the calculation. We do the calculation, obviously, on cable and non-cable, but then separating in non-cable what is the deflation effect of the commodity businesses and what is the inflation effect of the rest. I don't have the answer. I think the order of magnitude is probably in the order of magnitude of 2%-3%, something like that, with a little bit of carryover and a little bit of sequential price increases. That being said, I'm not even prepared to give more color on that. You had a follow-up. I mean, those were more than follow-up questions, actually, William. You had a question about resi versus the rest overall. On this one, I would say that it's not so easy for us to measure, but resi overall, for us, you know, overall resi is approximately one quarter of our end market, out of which a small proportion is new resi, and a bigger proportion is RMI. Overall, the evolution is positive for residential, with a fairly negative evolution in new residential and a positive evolution, including some electrification, on the RMI side. I'm not sure I can give much more color on this one, but resi overall is positive. That's great. Thank you very much, Guillaume, for your patience. No, no, no problem. Thank you for the follow-up questions. The next question is a follow-up from Akash Gupta with JPMorgan. Please go ahead. Yes. Hi, thank you. Thanks for taking the follow-up. It's on the inventory situation. When we had inflation and very high inflation period, you had a positive boost to margin, which you also quantified as one-time positive impact. The question we are getting is, is there any risk of inventory write-downs because we see deflation in some of the product categories? Maybe if you can address that. Thank you. Yeah. First of all, well, okay, Laurent, start the answer, and I will. No, as you know, as a distributor, we are used to manage the price fluctuation for years with the copper on cable. You know that we have a limited inventory around 60 days. They are gradually adjusting to new pricing. In that inventory, the number of products concerned by the decision are quite limited and are managed really with a lot of care. When prices are going up, it was on all category of product, and we had this very significant gain last year that we restated for 66 basis points. In this decreasing trend on limited category of product, of course, we try to slow down the reduction in price on the market. Sometime also we get compensation from supplier. At the end of the day, we have not any significant impact on our profitability on that, but it's managed with a lot of care across the countries. Yeah. To be clear, in our guidance, we don't expect to have negative one-offs in 2023 from inventory readjustments based on the small categories that we talked about. As you can understand, on those categories, we have a specific focus of the teams in terms of, as Laurent said, inventory control, and especially because usually those are commodity, it's easier to do inventory control, and also in terms of negotiation with suppliers. Because there is always a way of being protected by negotiating with suppliers. Now, if the question is more longer term, can we see in the future a complete reversal of what we experienced over the last few years? I don't think so, frankly. That's the reason why we try to give you a lot of granularity on what the inventory is composed of. Because on the 90% of the non-cable, I mean, on cable, first of all, my belief overall midterm is that copper is going to be in short supply. But, you know, I'm not a specialist in copper price prediction, so I will let you do your own forecast. But on non-cable and especially on the 90%, which are not exposed to commodities, as I said several times in the past, our scenario is to see positive evolutions or neutral evolutions, but certainly not a reversal. Because when we talk to suppliers, their own cost is progressing, is continuing to progress. Are we at risk of seeing a reversal of that? You know, I'm quite confident that it's not going to be the case. Thank you. The next question is from Miguel Borrega with BNP Paribas Exane. Please go ahead. Hi, good morning, everyone. A couple of questions from me. First, on pricing. I remember at the time of Q2, you mentioned a planned price increase in the second half of this year. Has that been implemented if the carryover was really 1%? Can you maybe give us some color on where that price increase has been implemented? That's the first question. Laurent, you want to? Yeah, yeah. I mean, the price increase has been implemented on most of our traditional product. The input cost of our supplier is probably integrating around 30% of salary and benefits, which are facing inflation. At the end, they increase their price. We had some price increase in July. For example, industrial automation products are carrying inflation. That's the kind of inflation that we are seeing starting at beginning of Q3. Has that been more in the U.S. or Europe? It has been a little more in the U.S. because of, yeah, the mix on industrial automation. Yeah. No, I mean. Uh- Yeah, yeah. You go ahead, Miguel. on pricing from competition." * Wait, "there's, there's". * "if there's, there's an effect" * This is a stutter. Remove one "there's". * Final text: * I'm just wondering, because U.S. growth was only 1%, and Oh, no, no, not really. I mean, in terms of tension, in terms of pricing tension, no, I'm not going to comment on what our competitors are saying. No, we don't see... If the question is, do we see an increased pressure on gross margin because of distributors competing with each other and fighting for contracts? It's not the case at this stage. You know, in the past, even in situations of lower volumes, we have been quite good at maintaining our margin at the exception of the one-offs, obviously, restated from the one-offs. No, we are not seeing that. We are not seeing a big, I mean, at least for the customers that we are serving. Keep in mind that we are not exactly aligned in terms of category of customers with the competitor you're talking about. For the customers that we are serving, we have not seen major destocking effect, and we have not seen pressure on gross margin, even though, I mean, in Q3, we don't comment on gross margin. That being said, I understand your question. No. Okay, that's great. Can you just explain why Benelux was so weak? You mentioned Netherlands as one of the key countries to first having benefited from solar. Can you comment on what's going on there, especially because you've recently completed an acquisition there? Yeah, it's very much about what you said. It's very much about the ups and downs of the photovoltaics business. I mean, first of all, the Netherlands economy in terms of construction is not the greatest in Europe right now. There are headwinds in terms of construction in the Netherlands for various reasons. But that being said, the main explanation for us is very much about photovoltaics specifically. Because of that, we have seen a drop. This lower growth is almost entirely explained by lower electrification, by lower electrification contribution on photovoltaics. Now, in terms of heat pumps, which was the second part of your question, and in terms of Wasco, I'm not going to give the figures of Wasco since we have integrated it only since one month, but I can tell you that it's much better than the rest of the Netherlands, especially because what is true for photovoltaics is not necessarily true for heat pumps. We continue to see good trends on the Wasco side. I hope it helps. Yes, very much. My last question, just wanted to go back to your comments previously about growth in Europe, excluding electrification. Just wanted to know how you get to that, because if you say electrification is at least 2x the headline growth in Europe, was about 3%, and then electrification represents about 20% of sales, how can volumes be positive if pricing overall was also 2.6%? Oh, I'm not sure I follow the math, but you know, when we say that electrification is 2x the growth, it's not something which is, first of all, valid on a regional basis. There may be differences between regions. As we said, a big contribution in electrification in quarter three was North America, with especially industrial automation. You know, that's the beauty of electrification. On a country-by-country basis, those trends can have ups and downs, but on a global basis, it continues to be a fast-growing market. In Q3, a big contributor was, once again, automation in North America, which explains the math. But the math is right. Okay. Thank you very much. Thank you. Mr. Texier, there are no more questions registered at this time. Well, thank you very much. I mean, we'll see each other for the end of the year results in February. I mean, as you heard, quite happy with the good results obtained in an environment which is slightly more difficult in terms of comparison basis. I think that we are delivering well and especially proud of the volume performance that we had in the third quarter, and quite confident about our ability to deliver the guidance. Thank you very much, and see you in February. Talk to you in February. Bye-bye. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.