Rexel SA

F:E7V

Thank you. Hello, and good evening, everyone. Thank you for joining us today for Rexel's Second Quarter Sales and First Half 2026 Results Call. So as you saw in the figures that we just released, we delivered a strong performance in H1, both in sales and profitability.

And beyond the figures, what is particularly satisfactory for us is that those results are the direct results of actions we have taken over the last few years in terms of portfolio positioning, growth initiatives and operational excellence actions. Laurent will cover the financials in detail. Before that, I will highlight the strategic themes behind the numbers, and I will come back, obviously, with our concluding remarks and outlook.

So shifting to Slide 3, I will share the main messages that summarize our strong first half performance. First, sales reached almost EUR 10 billion for the first time, and North America became our biggest platform in the second quarter. Second, same-day sales growth accelerated, up plus 6.7% in Q2. This results from our targeted investments in high-growth segments that are becoming increasingly visible.

Third, sales momentum, productivity and disciplined execution are supporting margin progression with adjusted EBITA up 40 bps at 6.2% and non-adjusted EBITA margin at 6.4%, including the one-off gain on copper. And lastly, free cash flow is robust for our first half at close to EUR 250 million, confirming the cash-generating profile of the company.

Moving to Slide 4. It's important to mention that we delivered those robust results in a low-cycle and volatile environment with limited visibility and geopolitical tension. Our sales growth in Q2 was above the high end of our guidance, supported by our positioning in high-growth segments, including data centers in North America and electrification in Europe.

More specifically, volumes were positive in all geographies for the first time since Q2 2023 and selling price increases were also positive in all regions, driven by raw materials, energy prices. On profitability, we reached a 6.2% adjusted EBITA margin despite negative product and market mix effects. This performance was supported by higher volumes, increased selling prices that more than offset OpEx inflation and record productivity of 4%, thanks to our optimization programs and AI transformation.

Moving to Slide 5, focusing on electrification in Europe, a major growth driver in the quarter. The external context is clearly supportive. Successive heat waves are increasing the need for cooling solutions, while energy price volatility and energy security concerns are driving customers to invest in efficiency, self-generation, and energy independence.

This is visible across our HVAC, solar and EV charging businesses. These categories represent 22% of our European sales and grew by a strong 15% in Q2. France and the Netherlands, for example, benefited from the growing demand in HVAC. Switzerland, the Netherlands and France saw support from EV-related infrastructure, while solar boosted several markets, including Austria, Ireland and Belgium.

Moving to Slide 6 and the data center opportunity in North America, the other major growth pillar in the quarter. This trend is linked to major structural needs around AI, cloud infrastructure, power availability, cooling, connectivity and reliability. These projects require complex electrical capabilities, strong execution and close customer relationships. We are moving up the value chain and are increasingly supporting our customers with technical capabilities and solutions.

In the U.S., our data center activity grew more than 80% in the first half, supported by large project execution, notably in the Mountain Plains area and Southeast regions. Order intake remains robust with data centers now representing around 25% of our backlog. In this vertical, we continue to gain market share, thanks to our service capabilities and execution reputation.

We now anticipate that this segment, which accounts today for 9% of our U.S. sales, will grow above 50% in 2026 versus our initial objective of above 20%. In Canada, we have also built a strong credibility from scratch in less than a year, reaching a 7% exposure to the data center segment. And we are now starting to expand into adjacent areas such as white rooms, fiber optics and cooling systems. Finally, our latest acquisition, Techno-Contact 360, also brings additional solution design expertise.

Moving to Slide 7. On M&A, we had a busy first part of the year with 3 acquisitions executed. We are acquiring capabilities, technical expertise and increased exposure to attractive end markets where Rexel can create additional value. The 3 transactions completed this year will be adding EUR 400 million of sales and strengthen our exposure to industrial automation, advanced services and data center-related applications.

Revere Electric Supply enhances our position in industrial automation and expands our partnership with Rockwell Automation to the attractive Midwest region. Techno-Contact 360 strengthens our Canadian data center capabilities and supports our move into higher value-added services.

And DEE Electronics, our latest acquisition, closed on July 10, adds advanced manufacturing capabilities, including cable assemblies and panel solutions for leading OEMs here again with a sizable exposure to data center. Together, this acquisition increased the share of the portfolio exposed to secular growth trends and supports our medium-term ambition. So with that strategic context in mind, I will now hand over to Laurent, who will go through the financial review.

Thank you, Guillaume, and good evening, everyone. On Slide 9, you can see our momentum improved sequentially. We moved from plus 3.4% in Q1 '26 to plus 6.7% in Q2 '26 with a good balance between volume and price contributions. First, volumes contributed for 3.1% in the quarter with all regions in positive territory for the first time since Q2 '23.

Second, selling price contributed positively for 3.6%, including non-cable pricing for 1.4% and cable pricing for plus 2.2%, reflecting the higher copper price. Briefly on our 2 main geographies that I will highlight in the next 2 slides. North America, representing 47% of sales, accelerated and was up 7.8%. Europe, accounting for 46% of sales, posted robust growth of 2.4% (sic) [ 4.4% ], significantly higher than Q1.

Focusing on Asia Pacific, which accounts for 7% of group revenue and grew by 17%. Sales in China and India grew by plus 9% and plus 31%, respectively, supported by industrial automation activity. In Australia, sales growth further accelerated in the quarter at plus 22%, boosted by solar activity. I'll now go into more detail on North America and Europe in the next slide.

Starting with North America on Slide 10. Project activity, especially in data centers and automation was the main driver of the sales acceleration. Digital adoption continued to progress rapidly, almost up 400 basis points to 27% of sales, supported by new quote and order entry tools. This is important because it strengthens customer stickiness while also improving productivity. In the United States, same-day sales grew -- growth reached 7.8% in the second quarter.

The performance was driven by very strong data center activity, up more than 100%, continued growth in Industrial Automation, up 15% and positive trends in markets such as the space industry, hospitals and water -- wastewaters. Canada also delivered solid growth, supported by data center activity and strong performance of our latest acquisition.

As presented on Slide 11, Europe showed a clear sequential improvement in the second quarter, up plus 4.4%, driven by double-digit growth in energy transition solutions. And more specifically, France was notably supported by HVAC, both in the commercial and residential segments. Benelux benefited from HVAC and EV solutions in the Netherlands and solar in Belgium.

The DACH region improved sequentially, notably supported by the solar activity, significantly growing in Austria and returning to close to breakeven in Germany. In addition, the region also delivered growth, thanks to good strategic execution and improvement in the residential market. Lastly, the U.K. remains more challenging, but the strong growth in Ireland helped to partly offset that weakness. Moving now to the half year picture.

I'll start on Slide 12 with the sales bridge. We delivered H1 '26 sales of almost EUR 10 billion, up plus 2.2% on a reported basis. The organic performance was the main driver with same-day sales growth up plus 5.1%. Volumes contributed for 1.9% and pricing added plus 1.3% in non-cable and plus 2% in cable.

M&A also contributed meaningfully with acquisition added plus 1.4%. And these positive elements were mitigated by a minus 2.6% currency effect that will reverse in H2 and a minus 1.3% impact from the disposal of our activity in Finland completed in Q3 '25. Let's now move to profitability and margin performance.

On Slide 13, we bridge our adjusted EBITA margin with the improvement mainly driven by operating leverage and well-executed action plans. Adjusted EBITA margin increased 40 basis points at 6.2% despite a more competitive environment, negative product mix and investment for growth. First, scope and FX were positive, contributing plus 11 basis points from good portfolio management.

Second, you see that operating leverage contributed 17 basis points, mainly driven by volume growth in North America and Asia-PAC and European volumes turned positive in Q2 '26. Third, the delta inflation. As you know, the gap between selling price increased and OpEx inflation returned to positive territory with a plus 6 basis point effect, mainly driven by Europe.

Fourth, action plans contribute for 22 basis points to the adjusted EBITA, including a record level of 4% productivity from the gap between sales volume growth and reduced average FTE combined with other cost initiatives. And by geography, the progression was mainly driven by Europe and Asia Pacific.

On Slide 14, we look at the bottom-line part of our P&L with a zoom on other income and expenses, financial expenses, tax rate and recurring net income. Other income and expenses stood at minus EUR 8 million, mainly related to acquisition and integration costs as well as restructuring notably in Europe. We anticipate to be closer to EUR 35 million in full year '26 as we further integrate acquisition and execute turnarounds in some countries. Financial expense stood at EUR 113 million, slightly above last year, reflecting lower cost of debt and higher gross debt.

It includes EUR 37 million of interest on lease liabilities. And for '26, we anticipate financial expense of circa EUR 230 million, including EUR 75 million of interest on lease liabilities and EUR 155 million on pure financial expense, excluding one-off. This assumes current interest rate conditions remain unchanged. Our tax -- income tax rate stood at 30.5% due to the impact of the exceptional tax in France. Excluding that, the normative tax rate stands at circa 27%. And as a result, our recurring net income stood at EUR 347 million, a growth -- a double-digit growth of 13%.

Moving to Slide 15. We generated gross cash flow before interest and tax, reaching EUR 247 million, implying a free cash flow conversion rate of 37%. Trade working capital stood at 16.3% versus 15.9% last year, mostly coming from strong sales growth acceleration in Q2 '26. It's worth noting the good management of inventory and receivable with lower days. And lastly, the CapEx to sales ratio stood at 0.7%, similar to last year.

As shown on the next slide on Slide 16, our capital allocation is well balanced between acquisitions and return to shareholders. Overall, our net debt increased by EUR 390 million, mainly resulting from 2 factors: first, EUR 398 million cash out from net financial investments, mainly from the acquisition of Revere in the U.S., TC 360 in Canada mentioned earlier by Guillaume. Second, the dividend payment relating to the 2020 to 2025 for EUR 353 million, corresponding to EUR 1.2 per share. All this leads to a net debt of EUR 3.3 billion and an indebtedness ratio of 2.4x.

We also continue to actively manage our financial structure as shown on Slide 17. We extended our debt maturity profile to EUR 125 million Schuldschein with '29 and 2031 maturities and successfully issued a first convertible bond in May for EUR 400 million with very attractive financial terms, mainly 1% coupon and a conversion rate above EUR 50. If you also add in the EUR 1.8 billion liquidity, we have the financial flexibility to execute our strategy and fund growth opportunities. I will now hand back to Guillaume for the outlook and guidance.

Thank you, Laurent. So let me now turn to the outlook on Slide 19 and share the reasons behind the 2026 guidance upgrade that you saw in our press release. So first, we had a strong start to the year, both in terms of growth momentum and disciplined execution. Second, we are capturing secular growth trends across a more diversified portfolio, particularly in data centers, electrification and industrial automation.

Third, our record backlog improves the visibility of our activity for the remainder of the year. At the same time, we keep monitoring potential risks. The macroeconomic and geopolitical environment is still uncertain with energy price volatility. We are also operating in a competitive market and maintaining and progressing gross margin is a constant battle.

On Slide 20, let's look maybe at our order backlog in North America, which has reached record levels. We have crossed $2 billion in the U.S. and CAD 1 billion in Canada. In the U.S., our backlog now represents about 3.1 months of sales. You can see the trajectory on the chart since 2022. After a relatively steady phase, we are clearly moving up from $1.8 billion in Q1 to $2.2 billion in Q2 '26.

A sequential increase of plus 25%, mainly driven by several projects in data centers and in the space industry. In Canada, the momentum is even stronger. The backlog covers roughly 5.5 months of sales with a steady decline since 2024 and a sequential increase of plus 30% in Q2, mainly driven by a large contract won by TC 360, thanks to the increased execution capability brought by the Rexel team.

This good start of the year leads us to increase slightly our guidance despite the still uncertain conditions, and I'm now on Slide 21. We now expect same-day sales growth of around 5% compared to the previous range of between 3% to 5%. We expect current adjusted EBITA margin of at least 6.2% compared to circa 6.2% initially and free cash flow conversion is still above 65%. Let me now finish with 2 slides projecting ourselves beyond 2026 and using the H1 results to illustrate the key levers that make us confident in our capacity to reach our medium-term target sales growth guidance.

The chart on this slide illustrates how our portfolio is built. And I would stress that these splits are indicative meant to show the balance of our exposure rather than a precise segmentation. So today, roughly 2/3 of our sales are exposed to the traditional construction and economic cycles, split between renovation and new build in Europe and in North America. This gives us a solid, well-diversified base that will also benefit from any economic recovery.

The remaining 1/3 of our sales is exposed to structural megatrends such as AI and data infrastructure, the energy transition and industrial modernization. And as illustrated in recent financial presentations, these markets grow faster than the underlying construction cycle, and this is where our targeted investments are increasingly visible. What is also interesting is how independent from each other those trends are.

You saw in the first half that our good results didn't come only from data centers, but also from energy transition-related trends in Europe and industrial automation throughout the world. This is the kind of balance we have been trying to build over the years, and which is now delivering. Now on the profitability side, and I know that the markets are very focused on our midterm goals of 7% EBITA profitability.

Let me try to share with you on Slide 23, why we are increasingly confident in our capacity to reach it. Our Axelerate 28 strategic plan works as a road map. As we advance and execute it, we progressively validate the different pillars. Please note that the figures on this symbolic bridge are illustrative. They are meant to size the potential of each lever and to explain our reasoning not to give precise guidance brick by brick as not all will materialize at the same speed.

Let me walk you through the main pillars, starting with the drop-through on additional growth. This growth will come both from cyclical recovery and accelerating trends. There are many uncertainties here, but we know that drop-through on additional sales is usually around 5 bps to 10 bps by additional growth percent on volume. And we see also on this year's results, for example, the order of magnitude of how much electrification trends can bring to the top line.

Second, productivity and automation. Salaries and benefits represent around 10% of our sales and our current initiatives point to a double-digit additional productivity potential. This is where AI is a very significant opportunity for us. That said, this is a calculation one should be very cautious about for many reasons. Firstly, because this is only an initial evaluation. Secondly, because theoretical productivity doesn't always translate into real productivity, especially in parts of our organization with small groups of people.

And thirdly, because in a competitive world where every competitor is working on AI, parts of the benefits may be given back to the customer in price. But you get the idea, which is that the potential of those initiatives is quite sizable. Third, the turnaround of our least profitable countries. Our 4 least profitable countries represent around 15% of sales. And we think that there is a triple-digit bps profitability improvement potential here.

And actually, in H1, we have started to deliver that. But here again, many caveats, the first one being about execution risks, obviously, and the second one about double counting with other pillars. Fourth, operational excellence. Several programs launched under Axelerate 28 in pricing, supply chain, procurement, product mix carry overall a double-digit bps global EBITA improvement potential.

And finally, portfolio management, adding around -- as a back of the envelope calculation, adding around 10% of acquired sales with a 200-bps accretive effect, for example, from synergies, will generate roughly 20 bps of EBITA. So once again, the idea of walking you through this bridge is not to give you guidance, but rather to share with you 2 main things. First of all, there are many initiatives taking place.

Some will succeed beyond our expectations, and some will, to the opposite, not realize their full potential. But the fact that there are so many action plans is giving a good degree of comfort. And obviously, the second takeaway is that the sum of all the potential is higher than 80 bps. Even if there are double count things, probably over optimistic assessment and bumps in the road, we feel relatively safe that the path we are taking is leading us to our goals.

So that concludes today's presentation. And in summary, H1 2026 demonstrates that Rexel is delivering profitable growth transforming its portfolio and improving visibility. We are very pleased with the performance, but we also see it as further evidence that our transformation is gaining momentum. Thank you. Laurent and I are now happy to take your questions.

So good question, Martin. First of all, on the electrification trends in Europe, it's difficult to predict with certainty. I mean, first of all, it was a little bit unexpected. The turn of events triggered a high level of interest in electrification. And I can tell that this level of interest continues in July. So this is the first thing I would share with you. Obviously, energy prices were trigger. Energy prices are still relatively high with a lot of geopolitical uncertainty. So we continue to see a high level of interest into that.

One thing on which I know a little bit less so for H2 is obviously the high level of interest that we had in June, in particular, to air conditioning technologies. That doesn't -- it's not a big proportion of our sales. It's around 2% of our sales in Europe. But that being said, there was a high level of interest due to the heat wave in Europe. It seems like we're going to continue to have a hot summer. So we may continue to see some of that, but it's not a given and it's really a weather dependent.

But for the electrification trend, at this stage, we continue to see a high level of interest. And I have to say many customers I'm talking to are realizing that it's not just adapting to the short-term energy variations, but it's also making sure that they build an energy supply source, which is resilient and risk-free. So I think probably the market -- there is a little bit of structural in there.

But obviously, if the price of the -- if the oil price drops down, we may see a little bit of a slowdown here. But at this stage, I don't see that. When it comes to pricing, we have a few price increases happening at the beginning of H2. I don't think it's going to be of the order of magnitude in terms of sequential pricing of what we have seen in H1. But that being said, we have a little bit of sequential pricing coming in. That's what I would say.

Laurent, do you want to answer this one or...

Yes. I mean we guide -- on the margin side, there are 2 components. The first one is the gross margin where we -- in the first half, we have -- we are globally flat with 2 balancing acts. A bit of pressure on the commercial margin that will continue all over the year because of product mix. And we have also some inflation, as we just said, that will not be there in the second half.

So on the margin side, we'll have a bit more pressure on the second half than in the first half. And in the OpEx side, in the first half, we are benefiting from the carryover effect of last year's action plan, which help us, which will be less there in the second half. And globally this year, we have also a bit more inflation globally on the OpEx. That's why today, we have kind of H2 that has not the usual drop-through that you can expect.

But you're right, Akash, like-for-like, H2 margins are usually higher and particularly this year where we have more working days in H2. So that's the basics. But Laurent is right, there continues to be a little bit of pressure on gross margin, which we are taking into account, a little bit also of timing effect in the transformation plans. So it explains a little bit our caution at the bottom end of the guidance, but obviously, we are shooting for higher than that.

Look, I mean, in France, it was done almost organically, but it was done over 20 years. So I think it will come with an acquisition if we were to do it somewhere else. Let me remind you why we picked France and Netherlands to be a little bit more exposed to HVAC. It's for 2 reasons. First of all, those are countries where the 2 trades, HVAC installers, plumbers, let's put it this way, and electrical installers are converging more and more. We see common customers.

So there is a demand for one-stop shop, and that's the reason why we invested in those 2 countries. The second thing is in those 2 countries, there is a strong trend in the direction of electrification of heating through heat pumps for different reasons, availability of electricity in France, not availability of gas in the Netherlands. So we felt that the combination of those 2 things made it value creative for a company like Rexel to invest in that.

Now are we going -- is it our plan to invest in all European countries? No, I don't think so. We may look at opportunities, but really strategically and always looking at what is the level of synergy and what is the level of growth above the cyclical market in the countries where we would be interested. So that's a little bit the answer for me. We will continue to be selective.

Yes. Two good questions. On HVAC and specifically on air conditioning because there was a strong demand in France and in the Netherlands for air conditioning. We happened for non-particularly strategic reasons, but mostly because of correction of past situations. We happen to have a high level of inventory in the Netherlands. At this stage, I don't know of any particular shortage in France or in the Netherlands.

We have replenished our inventory, and we are not going to face shortages in H2 if there is additional demand. Now if there are 5 heat waves between now and the end of the summer, it may become an issue, but it's going to be -- from a business perspective, it's going to be a good issue. But at this stage, I think we are in pretty good shape, not better, but not worse than any competitor.

Now when it comes to Australia specifically because I think the rest of the growth in APAC is mostly China and India and Industrial Automation. But you're right, in Australia, part of the growth, a small part of the growth is that the market is doing a little bit better outside of PV, but a big part of the growth is PV and batteries. There has been a program, a plan, the reduction of incentives in Australia. But that being said, I think the reduction of the incentives was 2 months ago, I think in May.

And we have not seen such a sharp slowdown in PV. I think it's a little bit the same answer I was making to Martin about electrification. Australia understands that overall, they are super dependent on oil, specifically oil coming from the Middle East. The Middle East conflict is not finished. And so from a risk management perspective, it continues to make sense even with slightly lower incentives, which are still at a good level to invest in PV and batteries.

So we continue to see a good level of interest, plateauing a little bit. But that being said, still much higher than 1 year ago. I'm not able to predict exactly what's going to happen in the future, but it feels like many economic players or residential homeowners in Australia are continuing to be very interested in photovoltaic technologies.

No, I think there are many things playing into the guidance upgrade. On the positive side, there is obviously the data center business, and you have seen the backlog. So we feel very comfortable with what we are going to deliver between now and the end of the year. I'm not saying it's in the pocket, but frankly, it's quite secure. Then the second thing is there may be -- I mean, on the full year basis, there is a little bit of electrification effect in Europe, and there may continue to be a little bit of the tail end of an electrification effect in Europe.

So that's the second part. Thirdly, you're right that there is a little bit of pricing compared to the initial guidance in copper, that's contributing also. But on the opposite side, there are a few negatives. The few negatives are that the economy in Europe is not doing better. And to the opposite, you remember that in the initial guidance, we had integrated a progressive recovery of the economy in Europe, given the geopolitical situation, given inflation, given interest rates, I'm not planning on that anymore.

And in the U.S., there is also a little bit of question mark about the economic prospects. If you look at the Q2 sales, if you subtract data centers from North America or the U.S., and I think I'm pretty sure that you have done the math. And if you subtract price, you will see that we are probably slightly negative in the U.S. despite automation being up by double digit. So the real economy in the U.S. is not doing that credibly well. There may be a little bit of the fact that electrical installers are mostly focused on data centers.

So the capability to install other things is reducing. But that being said, it leads us to be a little bit more cautious than what we were at the beginning of the year on the rest of the U.S. economy beyond data centers and industrial automation. So that's a little bit how the guidance is made. You're right that if I take only data centers and copper and electrification, I will get to a higher result than the -- around 5%, but there is also a level of caution and uncertainty around the macro economy.

Yes. So I'm not sure I completely understand the question, but let me remind you how it works, which is that the one-off specifically on copper is a difference between the 6.2% adjusted EBITA margin and the 6.4% that we usually don't report -- I mean, it's written somewhere in the press release, but we usually don't report on the first page. So the difference between the 6.2% and the 6.4% is the one-off on copper. In times, in 2021 and 2022, not only -- I mean, there was a little bit of inflation on copper, but more importantly, there was inflation on the rest of the price of products.

And when there is inflation and therefore, let's call it, inventory one-off effect on the rest, which is not copper, we take it in the EBITA percentage, the adjusted EBITA margin. That's the way it has been built with Rexel. It's a little bit strange to understand, but copper is outside of the adjusted and the rest of inflation is within the adjusted. And that's the reason why in 2021 and 2022, we disclosed to the market not only the adjusted, but the adjusted without one-offs also. I don't know if I'm clear.

There was a little bit in H1, but relatively limited. And remember that there were also the same kind of limited one-offs last year in North America because of the tariffs. So on a like-for-like basis, the evolution is a little bit positive, but not that meaningful or else with that specific one-offs.

It's difficult to enter into this degree of detail in terms of -- I mean, we have seen -- I don't know the answer to that, Laurent, do you know?

Well, we pointed out the ones that are growing significantly and the ones which were a bit quite diverse. For example, we are a bit low in the automotive industry, for example, in some regions. That's one example, yes.

But I wouldn't point at a specific vertical. Overall, I mean, growth is still positive. It's volume growth that we are talking about, which would be slightly negative. I remember that last year, we had a strong activity in retail and so maybe there is a negative here. The office space is still not super active, but nothing very dramatic apart from what Laurent was mentioning, which is a little bit of -- yes, Laurent...

Yes. Obviously, yes.

Well, the residential was mostly helped by the electrification as we are working mostly in Europe in the renovation side. When -- outside of renovation, the new construction is still negative. And we don't see any structural improvement overall, but we benefit strongly from this electrification trend that is going into the construction mostly in residential.

I would say apart from that, if we try to do the math, we had a growth of residential overall of, what, 7%, something like that. Out of that, we have 20% of Europe, which is the electrification and energy transition-related businesses, which are growing double digit, a little bit more than double digit. So there may be a 3% to 4% contribution of that. So there is still growth in the residential space. There is growth in the residential space, I think, in H1, mostly price, but a little bit of volume, too.

The answer -- the quick answer is yes. It's doing well. In both countries, we are progressing triple digit in bps in profitability with good evolutions on margin. Our actions are paying off. I mean I'm not declaring victory here because it's a long-term effort and there may be a little bit of circumstantial. But that being said, yes, it's contributing importantly to our profitability improvement in Europe in this quarter. And this is the reason why we illustrate it in the bridge that we put in the last slide. Yes, absolutely. It's doing according to plan. Let's believe this way.

I think overall, we are less exposed to very large projects in Europe than we are in the U.S. The way the industry is organized, but large or super large projects are usually a little bit less distributed in Europe than they are in the U.S. It would be a long story to explain why, but that's a little bit the case.

But that being said, what we have seen in the U.S. is that there are the hyperscale data centers, but there are also the colocation data centers, the edge data centers where the opportunity for distribution, including in the white space is much higher. So I think overall, the answer to your question is you're going to see a little bit of less of an exposure to data centers in Europe, but you're still going to see an exposure.

Yes, good question. There are 3 effects that I will mention. I mean the first one is, you're right. I think the very large projects, including data centers are probably slightly dilutive, not very much on EBITA, not much because we are quite selective in general and able to compensate the low gross margin through optimized OpEx but a little bit, so there is a little bit of that. There is a little bit of investment in the future, too.

We are leading transformation programs quite ambitious to optimize our service and cost to build AI capabilities and to position ourselves even better on those fast-growing verticals. So that's consuming a little bit of OpEx on a temporary basis. And last but not least, I mean, we have seen price inflation, that's true. But we have also seen inflation in OpEx, in medical benefits, transportation.

We were overall able to serve higher volumes with stable headcount in North America, but the decrease of OpEx in percentage of sales was not as high as what a perfect sales drop-through situation would have led to. I don't know if I'm clear. And this is because of the inflationary environment, which on the other side, creates over positive effect in the rest of the P&L. But I think those are the 3 reasons why the margin evolution, the EBITA margin evolution was not as high as people would have calculated from an outside perspective.

I didn't do the calculation. Laurent, who is super strong, will do it immediately in 5 seconds, 4, 3, 2, 1 -- by saying it's not super major. It's helpful, but it doesn't completely change the directional picture in Europe. But -- unfortunately, Laurent will have to come back to you. Yes. yes. Inside other segments, heat pump and structural things. Look, I mean, it's -- no, it's not major. It's less than 1%. It's less than even 0.5%, I think.

Something like that.

It's -- I think I said it at some point, but I said it quickly. We said more than 50% growth of data center vertical. We -- initially, we were starting the year saying it would be more than 20%. We are now planning for more than 50%.

In terms of price cost inflation, price cost delta, I'm a little bit cautious about that for the rest of the year because we are also seeing a little bit of -- we are also seeing that inflation of our cost when it comes to transportation, when it comes to medical benefits and salaries, there is a lag effect from time to time. So I think the best assumption for us is to keep it neutral, basically. We have taken a little bit of a head start. And we are quite proud of what we have done overall.

I mean we have tightened cost everywhere we could. We have renegotiated. We have also passed through fuel surcharges in the places where it was justified by the fuel evolution. So I think we have done quite a good job compared to our initial expectation, which was to be slightly dilutive. But that being said, for the rest of the year, I'm a little bit cautious, and I would say neutral.

You remember that there were many action plans initiated during last year, and we knew that the benefits of those will be front-end loaded, so that's a little bit of what it is. But that being said, we are relaunching in a certain number of countries some additional action plans. And so because of that, I think you're going to have a contribution of the action plans, which is going to be maybe slightly lower, but not that much lower, but with a different means.

There's going to be less carryover from last year and a little bit more of new action plan. That's also the reason why Laurent flagged the fact that we would probably have nonoperating costs a little bit higher in H2 than what we had in H1. I think that's how you should see. A little bit less contribution, but not super material compared to H1.

So PV is starting to be positive again. For the other categories, we have basically -- it's relatively homogeneous with price increases across the board between 0% and 5% effect. And lighting is a little bit weaker, but positive. That's what I would say.

Yes. On M&A, it's true that we have a specific focus on services, not on services independently of products. I mean if you look at DEE Electronics, they are selling wire harnesses, for example, not to the automotive industry, but to professional OEMs, including in the data center cooling area. So we are always more interested in those companies which add specific value to their customers through services. And we have -- it's one of the main pillars of our Axelerate 28 programs.

We strongly feel that to continue to be profitable and to increase our level of profitability, we need to add more value. So we are pushing that organically. But whenever we can, we also acquire companies having this particular capability, and we will continue to do that. Now that being said, is it going to be a pure new services pillar disconnected from the product-based activity? No, it's always complementary with synergies.

When it comes to industrial automation, I said plus 15%, but it was a plus 15% year-over-year, Q2 to Q2. So it was not a sequential improvement. So -- no, no, that's fine. That's fine. Maybe I was not clear. When it comes to datacom, I think the category overall, I think, was positive. I'm not sure. But when it comes to tele, I know the answer. Tele in Q2 was slightly negative in terms of progression compared to a super positive quarter last year, double-digit positive last year.

And this was completely expected. We know that tele is also a little bit dependent on the overall cycles of investment of the big telecom operators in the U.S. We know that we have to be used to variations. Overall, we had a very good run, and we continue to have very positive prospects, but we have to get used to a road which is a little bit lumpy. I think if you take the datacom category, it is probably quite positive because it includes a little bit of data center in Canada where we have also experienced strong growth. So I don't have the figure on top of my mind.

Yes, it's positive, absolutely.

I mean, look, we are not flagging any particular slowdown. Now the second quarter was particularly good with a good timing of delivery of orders in data centers with the additional effect of the air conditioning, which I'm not sure is going to repeat in H2. And there is, yes, a level of caution in the guidance. So we have not gone absolutely all in on the guidance because it's a guidance, and we want to deliver it also.

No, no particular closing remarks. As I said in conclusion to my presentation, we are proud of this set of results, both because they are good figures and also because they illustrate the success of what we have done over the last few years. And we hope to continue to deliver a very good year. Thank you.