Suez SA (SZEVF) CEO Bertrand Camus on Q1 2020 Results - Earnings Call Transcript

Suez SA (OTC:SZEVF) Q1 2020 Earnings Conference Call April 30, 2020 2:30 AM ET

Company Participants

Bertrand Camus - CEO and Director

Julian Waldron - Group Senior EVP, Finance

Conference Call Participants

Vincent Ayral - JPMorgan

Olivier van Doosselaere - Exane

Emmanuel Turpin - Société Générale

Arthur Sitbon - Morgan Stanley

James Brand - Deutsche Bank

Fraser McLaren - Bank of America Merrill Lynch

Operator

Hello, and welcome to the Suez Q1 2020 Results Conference Call. [Operator Instructions]

I will now hand over to your host, Bertrand Camus, Chief Executive Officer of Suez, to begin today's conference. Thank you.

Bertrand Camus

Thank you. Good morning and thank you for joining us on this Q1 2020 call. I'm very pleased to be with you today together with Julian Waldron, our CFO. First of all, I hope you are all doing well as well as your relatives. A lot happened since I last spoke to you end of February. At that time, the COVID-19 outbreak had already hit significantly China, where it started in January. Since then, COVID-19 became a pandemic and hit up Europe, followed by the U.S., which are now considered to be the new hotspot.

Suez Group is fully mobilized to ensure the safety of our employees and provide our services essential to our customers every day during this global health crisis. Everywhere, we ensure reliability and quality of our services. Over the past weeks, during my various site visits, I have seen an incredible commitment of the teams. I'm very proud of what we are delivering, and I wish to thank personally all our employees for their contribution and their involvement.

Moving to slide two, we have a rapid overview of what we are going to present you today. First, we are here to discuss Q1 2020 performance. Julian will come back later on, on the solid trends we have seen on most of our businesses pre-COVID-19. We also want to update you on the impact linked to the COVID, starting in January with China and from the second-half of March elsewhere, direct and indirect effects of population containment were apparent in most parts of our businesses. Then I would especially like to focus on how deeply the group is mobilized to adapt to this particular situation, but also and above all, fully engaged to prepare for the after.

Moving to slide four, since the first time in China in January, our group organized to face the health crisis. No region in the world is spared, and we have had to be vigilant everywhere. We defined clear priorities: people, service continuity, finance, and now exit and rebound. It starts with our people, whose safety is our first concern and whose dedication allows to ensure the continuity of the essential services we provide to the public and to the businesses. Our second priority, continuity of services is also about maintaining a seamless relationship with our customers, whether it be municipalities or industries. This outbreak creates difficult situation for a lot of them, and we want our customers to know and to see through our day-to-day actions that we are here to assist them as we have always been. Our first priority is about protecting our financials. As soon as the beginning of the different population containment, we reacted quickly and engaged strong measures to mitigate the impact of this crisis on our revenue and profitability. Julian will present you these measures in more detail later. This global mobilization around our priorities, together with our Suez 2030 plan, will help us prepare for the post-lockdown period and rebound.

Moving to slide five, let's keep in mind that our first and foremost priority more than ever is the health and safety of our employees. Our health and safety team rolled out all around the group procedures that our employees must respect in order to protect themselves and avoid the spread of the virus. Our business continuity plan, now activated in all of the countries where we operate in, include measures such as the rotation of teams on the ground. For instance, we managed to operate our water treatment plants with one-third of the teams, and we organized activity in three shifts, two that rotate and one in reserve. Another example in waste collection, we phased departure times of our crews to prevent the teams from crossing each other. Our health and safety team also ensure that our employees get the protection they need to perform their operations. Supply and delivery of masks was quite complicated, but things are getting under control. It will be a condition to continue operations. We are entering in a world where we need to adapt ourselves to live with the virus, and the way to protect our teams is absolutely crucial.

On slide six, you can see that we are closely monitoring the cases amongst our employees. Those numbers are updated -- were updated last Monday. And you can see that, thanks to the early implementation of our measures, we have been able to limit the spread of the virus among our teams.

On slide seven, where you can see our second priority, continuity of services. We built up business continuity plans across all our geographies, both to ensure the implementation of our health and safety standards to protect our people, but also to comply with the specific requirements of some of our customers. Some activities have been willingly postponed as part of our business continuity plans, while others were stopped due to the decision taken by our clients or partners. This is the case for many projects in China, India, Middle East, France, Latin America and Canada. Continuity of services also means experiences that are new in the way of working for the ones who are not on the ground. Today, we have 25,000 employees working from home. All in all, 86% of our teams are operational, on-site or working from home. Among the 14% inactive, one-third is protected for health reasons or exempted for child care and two-third are in partial unemployment.

Moving to the next slide, we are continuing to deliver our essential services to our customers, and we are keeping close contact with them. This exceptional period is to be recognized as an opportunity to show them that they made the right choice when contracting with us. This is true for municipalities but also for industries. It is also time for them to see Suez is different. We keep close contact with our customers, responding to their needs which vary from one continent to the other, one region to another, from one type of customer to another. This proximity proves to be a very strong asset, which participate to the resilience of the group.

On slide nine, you can see a few examples to those close relationships and the way we adapt to address the particular needs of our customer in this crisis. On our industrial water activity, for example, our teams were able to ensure continuity of service for our food and beverage customer in Brazil. Despite the difficulty linked to the prohibition to access the customer facilities for any subcontractor, we managed to control remotely water treatment. On the municipal side, this health crisis has caused a significant increase of around 40% of medical waste in France, for example. We rapidly put in place the necessary measures to guarantee the highest security in their collection. We also extended the operating hours of our facilities to adjust to the significant rise of volumes, but supporting our customers during COVID-19 crisis is also about helping them adapt to the situation and support them in the changes it implies. In Dijon, the smart city installation we operate is used as a tool to better manage the crisis and help make decisions faster. Another example with Arkema, where the continuity measure we put in place on their facilities contributed to their ability to switch production to hydroalcoholic gels.

And finally, on slide 10, supporting our clients is also about helping them prepare for the post-lockdown period. Our experience in China is a good example of our collaboration with our customers throughout all the crisis from its very beginning to the after period. For a few weeks now, we have been preparing the end of the lockdown. Again, 86% of our teams are active today. We are ready to redeploy more widely our activities and prepare for rebound.

We will come back to that in more detail after Julian's focus on financials.

Julian Waldron

Bertrand, thank you very much, and good morning to everybody. It's nice to be with you. So, in the second part, I will try to go through three matters: firstly, the underlying business pre-COVID in Q1; second, the impacts on our business in quarter one; and thirdly, give you some specific business trends in late March and then April through to this week. As you know, we'll not be giving any forward-looking guidance today, but we will give you the key drivers of the business as we see them as but present in, I hope, quite a lot of detail.

So, if I can turn please to slide 12. So, comments on quarter one, excluding COVID, a number of underlying trends, positive first, continued progress at WTS where the chemicals business in the U.S. returned to growth. There's more work to do for all of us on WTS, but the teams have worked very hard and have shown good results in the first quarter. Second, working capital overall was better year-on-year, with both WTS and Recycling & Recovery in France improving substantially. Third, the teams in France and Northern Europe in Recycling & Recovery had a very successful commercial start to the year. We said going into 2020 that we believe the industry as a whole had pricing power, and our results in those first two months showed that this was the case. And lastly, it was a good quarter for commercial activity, selective growth being our aim and significant wins, for example, in the Middle East and in Central Asia.

On the right of slide 12, as always, we'll identify those areas where we saw headwinds. I've called out three of them. Activity in Recycling & Recovery in Australia was still low. That's a continuation of the 2019 trends. Secondly, commodity prices continued to be a negative. Some of that, I think, is due to COVID, and I'll come back to that point, and last, we would call out the drought in Chile. We're actively working with our municipal clients to reduce water consumption in Chile in the case -- in the face of that drought, and we're also incurring additional cost to pump water during the first quarter.

On slide 13, in numbers, the headlines are revenue grew organically 0.5%. By segment, the usual bridge of revenue can be found in the appendices, but some comments, firstly, overall and then segment by segment. Currency was a headwind, with the weak currencies being Chilean peso and Australian dollar, offset by a stronger U.S. dollar. Per segment, in Water, organic revenue growth was up 0.6%, with good volume and good price trends pre-COVID. Recycling & Recovery, minus 0.3%, but again, with good pricing trends, stable volumes but negative commodities in the first few weeks of the year, and in Environmental Tech & Solutions, plus 2.9% with a strong WTS.

We estimate the impacts of COVID on our revenue at around two points of organic growth. Group EBITDA was quite stable with an organic decline of only 1.5%. The impact of COVID on EBIT was, obviously, more substantial in percentage terms. And I think throughout the presentation today, I would caution you against looking at percentages, which in some cases can be substantial, but the underlying numbers are quite often quite small. The direct impacts of COVID, we assess at around EUR 60 million, so a range, let's say, of EUR 50 million to EUR 70 million on both EBITDA and EBIT for around EUR 15 million in China. And part of this impact was from volatile and low commodity prices pretty much across the board, so in metals, paper, electricity, and plastic. Fuel prices were better, but they didn't offset those four negatives. Technically, I would note that we have around EUR 20 million additional depreciation in quarter one compared to last year, which is asset amortization including notably for IT and also higher renewal expenses.

And the last comment on slide 13 concerning net debt, you have a bridge in the appendices on Slide 38. We had seasonality, as always, in quarter one, but the debt level was stable year-on-year, and this is a positive outcome. Seasonality is less than half the level a year ago, reflecting good control on CapEx and a better year-on-year performance in working capital, as I mentioned earlier. There's also a positive impact of currency, which is equivalent, as you would expect, to the negative impacts from revenue and EBITDA noted above.

So that closes my comments on Q1, and I'd now like to turn to COVID. Slide 14, we start by focusing on China, both in Q1 and in April to date. China is in line with our expectations. You have two charts on the page. On the left-hand chart, you see the volumes in our hazardous waste activity. You will recall we had six incinerators stopped during February and most of March. When you look at the chart, Chinese New Year was in week 4. There is always a drop in volumes in that week, but as you can see, volumes did not pick back up in the following weeks. In March, volumes start to pick up slowly but surely, and we've seen further progression in April to date.

Turning to Water volumes on the right, we see the same impacts from week four onwards. In Macau, for example, the drop in tourist activity went 20% lower volumes during this period, again, a progressive recovery in March and April. At the end of February, we estimated the impact from China would be between EUR 30 million and EUR 40 million in total across Q1 and Q2. The experience of March and April confirms this estimate and probably brings it in closer to the bottom end of that estimate, and we had an impact of around EUR 15 million in quarter one. We can use the experience of China as we prepare exit and rebound elsewhere.

Slide 15, I want to focus on the Water segment, and in particular, outside China in March and April. In Europe, the strongest impacts on consumption at this point have been in tourist areas, with some additional impacts from commercial clients and, for example, offices in lockdown in areas such as the public sector. On the right-hand of this page, we've indicated just how variable volumes have been region-to-region in a country like France, sharp declines in the north and the south and in tourist areas like the Alps, volumes stable or rising in other regions. The range of impacts is between plus 4% and in the mid-teens minus, with an average of around minus 6%. Outside Europe, we've seen very little impact on volumes in North America in Q1. And we've seen Chile impacted in the first quarter by the drought I mentioned earlier and by the fact that we've been actively working with the local authorities to reduce water consumption. Two other matters to call out: first, as you can understand, we voluntarily suspended water disconnections in all impacted areas; and second, most of our construction projects, the physical progress is stopped during this period.

Slide 16 to conclude on Water with April and today. The trends in France during the first-half of the month are in line with what I mentioned earlier, so around minus 6% overall, elsewhere, three contrasting trends. So we confirm that Water volumes are still in line with historical trends in North America, slightly down year-on-year as usual, and we view the movements week-to-week as largely weather-related. In the Czech Republic, during the hard period of lockdown, Water volumes were down again 5% to 10%, mainly linked to commercial and business activity and some tourist activity in the west of the country, but restrictions are currently being lifted, and we're seeing volumes progressively improving. In Spain, tourism in areas like the Canaries and the Balearics is very sharply down, 20% to 40% in some weeks, and there's no change seen as yet. We expect to see some improvement in commercial and business, as the lockdown is improved as we've seen in other countries.

On slide 17, we turn to Recycling & Recovery. From the lockdown in mid-March, we've had a sharp reduction in volumes collected from industrial and commercial clients. The pie chart on the right gives you some background information of the split of our business between sectors, and I would pick out two outliers: on the downside, anything that's automobile related, they're seeing much lower volumes; on the other side, more positively, all activities related, for example, to health care. Bertrand mentioned hospital waste volumes in Paris. We do the same job in Amsterdam. They require careful handling, and obviously, we've been more active in those areas since the lockdown.

Slide 18, a lot of variability in April and today. On the left, concerning Germany, you can see from the chart that volumes have held up very well, not only through March, but into April as well. And whilst we must remain cautious, we would take this positively, Australia, very little COVID impacts before April. The recent lockdown has impacted volumes in the first few weeks of April, but again, we're expecting the lockdown to be slightly eased over the coming days and weeks. France has been the most impacted, and I'm going to spend a moment just on trying to explain the underlying movements in France; first of all, I&C volumes, down as much as 65% in the first 20 days of April. Household recycling centers have been shut. Collection of large household waste and green waste have been suspended, so that overall municipal volumes are also down, but where we seen the main impacts in France? The biggest impact has been on commercial and industrial collection. Second, construction and site intervention have been impacted as there is no field work, and the third area, recycling and sorting. So the biggest impact, commercial industrial; second, construction and intervention; third, recycling and sorting. Those three areas account for more than 3/4 of our total impact in France in R&R. All other impacts are much lower.

Slide 19, March/April trends. In ETS, this is the segment that, obviously, has the most business with industrial clients, and you see the approximate breakdown in the pie chart on the right. I'll start with hazardous waste because that's been the area most impacted. First, of course, in China, but also in Europe, there's been a strong impact in volumes from construction and associated soil remediation. Chemicals activity by contrast is resisting better with almost stable volumes year-on-year. Next, WTS, apart from a small supply chain impact in February and March in China with our factory there, we saw minimal impact on our business in March and in April. The business has proven resilient up to now. Now of course, we're going to assume that we will see some form of slowdown, but I would reiterate strongly that we've not seen that in our numbers yet. In smart solutions, some slowdown in consulting, this decline in any field activities both in France and in the U.S. The digital activities are holding up well, and indeed, we're seeing more inquiries about those.

Slide 20, I'd like to turn to mitigation. First, I'd reiterate the point made by Bertrand in his comments. Our teams have been focused first and foremost on safety and on ensuring continuity of service. We also need to ensure that our vital public services reach those who are at this point the most disadvantaged. And of course, that underpins our decision to suspend disconnections in all impacted areas. Now in terms of mitigation, let me give you some granular examples of what we've been doing. So, in Northern Europe, closure of household recycling sites, in particular, also here for safety reasons. In some countries, we've stopped around 50% of our collective -- collection vehicles, and we route optimize the remainder. We have kept our energy from waste facilities open. And I would just stress this point. Throughout Europe, our incineration sites are operating at or close to normal capacity throughout the period including into April. We've also postponed routine shutdowns in some of those facilities because we have the volumes to keep them running.

We've also put in place temporary salary reductions and early vacations, and we've made a substantial reduction in the number of contractors in the business. In Australia, for example, early vacations, early leave and overtime reduction; in Asia, acceleration of some hazardous waste projects and the construction to get them on stream earlier, and also hiring delays, early leave, holiday; in WTS, temporary salary reductions, early vacations and again, a reduction in the substantial number of contractors in the business; and in France, closure of merchant centers where we can, return of leased trucks, reduction of collection regularity on the field, reorganization of routes, freezing of non-critical interventions in both water and in waste and partial unemployments and furlough.

Two last points specifically, we benefited from lower fuel costs, as you know, and last, to highlight one specific theme. In normal times, we were undertaking between 7,000 and 8,000 travel and living actions per week. At the moment, the numbers for last week were 41. Travel and living is around $150 million of spend per year for us. I think just to close, what I'd like to do is to comment on mitigation actions around fixed and variable costs. Now historically, in the numbers that we've communicated to you, we've generally assumed that our costs are 60%, maybe 70% fixed and 40% to 30% variable. We've also noted that this is different between businesses and also from one mark to the other -- market to the other. We've also noted that Water has, on average, more fixed cost than in Recycling & Recovery. We've also noted that our industrial activities generally have more cost flexibility than in either R&R or Water.

However, across all of our business, I think those historic paradigms are behind us because we've seen our teams able to react to variabilize their costs very substantially than the above headline numbers indicate. In some parts of R&R, we're reducing the drop-through so very substantially and a variabilized 60% to two-third of our cost. Based with the unprecedented challenges of the current markets, our teams are quite simply working differently, and we think this is important as we plan the exit from confinement and ask how we will restart and how we will restart differently and more profitably going forward.

So, I want to bring this together on slide 21. In April, we can estimate the impacts, of course, now for an affected month across all of our business. We estimate that the March impact in total for the group was in a range between EUR 50 million and EUR 70 million at EBITDA level and at EBIT level, and that that's roughly the equivalent of a two-week impact across the whole of our business. In April, we can, of course, plan for new areas of risk in countries like Australia and Chile or in businesses such as WTS, which has not yet been affected. We can also identify clear areas of stability such as our North American utility. And last, we can confirm that the impact in China is significantly lower. In short, some differences, some pluses, some minuses, but a parallel overall between the two-week impact in March and a full month impact in April.

In addition, April has been evolving. First, the first three weeks that we saw showed largely stability in the volume and activity declines in the major impact areas, and data from the last seven days is even slightly positive. So, commercial collection volumes have picked up. Having been maybe minus 65%, we're now around 10 percentage points better than that. Now again, I'd be cautious about taking one week, but still, there are preparations to open construction sites, which supplies with hazardous wastes across Northern Europe. Industrial facilities in Europe, I mentioned the Czech Republic earlier, are reopening. Germany continues to be solid. Paper prices have rebounded from very low levels in April. And last, cash collection in Europe has been very resilient, indeed, normal up to now. Looking forward, most governments are determined to exit the lockdown in some way in the coming weeks. So the current trading is tough on our teams, particularly those in Water and in R&R and WTS, who drove such a promising start to the year. And I would encourage you not to ignore P&L and cash risk looking forward, either of additional confinement actions or, for example, financial impacts on our clients, but there is a case for arguing that what we saw in the first 15, 20 days in April is a low point.

Last, on slide 22, we've been focused like all companies on liquidity. Here are the points I'd like to stress. Since April 1, we've raised nearly EUR 1.5 billion of new gross cash. We've continued to have access to both short-term and long-term borrowings, as you've seen. In the commercial paper markets, we've actually lengthened our average maturity. In long-term markets, we borrowed seven, eight, and 12 years at interest rates below 1.4% on average. We have a EUR 2.5 billion revolver with a 2025 maturity recently extended with no covenants like all our group debt, and all our long-term debt repayments for the year have been made with the exception of EUR 148 million in June, and we only have one redemption in 2021. Pro forma for the April debt issuance, we have a total of EUR 5.6 billion of liquidity available, of which EUR 3.6 billion in cash.

Before handing back to Bertrand to conclude, trends in the business pre-COVID were in line with what we expected. The revenue and EBITDA performance in Q1 shows the benefits of our diversification in this environment and the areas of resilience that we have. The impacts of COVID in China are in line with what we estimated at the end of February and are declining. We can learn a lot from how our business in China has managed the exit and rebound. The impact of 0.5 month in Q1 is a guide for April. Volume in April appears largely stable across our business with some slightly positive impacts more recently. We've raised a substantial amount of additional cash. Now there are, of course, risks to bear in mind looking forward, and we should not underestimate them, but there are also signs in some areas of a modest bounce.

And with that, I'll hand back to Bertrand.

Bertrand Camus

Thank you very much, Julian, and we are now on slide 23. Since the very beginning of the crisis, we are working on preparing the redeployment of our activities so as to successfully achieve containment exits. We know from our Chinese experience that this is a long process and that there can be some volatility from one week to another. We also know that the path to the normalization will, obviously, differ from one country to another. With that in mind, we are working to anticipate the mid-term impact and to plan for rebound. Our strategic plan Shaping Suez 2030 will be key in that context.

So moving on slide 24, as you can see, we remain focused on Suez' transformation. Based on selective growth, simplified ways of working and employee engagement, our differentiating strategy bring us the agility we need to adapt. Shaping Suez 2030 is moving forward, progressing as planned in some areas. In other, this context is an opportunity to accelerate our transformation and go faster with our performance plans, for example. We announced additional measures coming on top of 2020 transformation savings already launched. Of course, we adapt the path of the various components to the situation, but the direction and the trajectory remains the same. We can also anticipate the shock on business models of our customers and in the behavior of consumers. The international supply chain will probably suffer from the different time lines of national exit strategies. This will create new business opportunities for us. Shaping Suez 2030 will help us resist to the impact of this crisis but also put us in a better situation when time for rebound comes.

Moving to the next slide, rebound is about operations and business opportunities, but it is also about anticipating the so-called new normal. The stringent containment policies are most likely leading us to a new wave of social and economic disruption. There will be political impact, notably on welfare, border controls, employment policies, for example. Some changes derived from the crisis are likely to persist on the long run. Moreover, the environmental emergency remains a priority in the current context. In that perspective, our value proposition defined in the context of our strategic plan is more relevant than ever, focused on solutions.

With a positive impact on health, quality of life, climate and the natural capital of the planet, we bring concrete answers as soon as now. Those concerns were there before and will be there after, and we can anticipate that investment to tackle those topics and enhanced resilience will be made in the future. In that regard, Suez is supporting various initiatives in collaboration with government and authorities, which are advocating for strong economic recovery measures directed towards the fight against climate change and the protection of the environment. Even if the current environment is complex, I am very confident that over time, the group's resilience does materialize to the benefit of all our stakeholders.

With that, we like now to open the floor for all the questions you may have.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] The first question comes from the line of Vincent Ayral from JPMorgan. Please go ahead.

Vincent Ayral

Yes, good morning, and so, a question obviously on COVID here, so basically, furlough, using that, can we have an idea of the number of employees or the amount of savings basically which is generated there, and it's quite important, it could be somewhat material, and the furlough, when the economy reopen, I would expect it to end on the same day. What do you expect there actually in practice, or is it something that could last a bit longer as long as there is a business need for it? And second, waste volumes in France and in Europe since the lockdown, so the last two weeks of March, what you've seen in April, where are we standing, and how much is it as an impact on EBIT per month, just the waste and the impact of the lockdowns would be interested. And doing that, if we look at the EUR 60 million of EBIT impact you're talking about for Q1, some of this is from China. You said there was about EUR 30 million for the year. So let's say there is EUR 15 million for China in Q1. So that's EUR 45 million for Europe, and that's two weeks of a lockdown. And so, is it the way we should look at it and somehow prorate to that, say, okay, if it's basically a month, we'll be multiplying that by two, so a small 100; if it's two months, by four, about 200 plus the ramp-up. Is it the type of order of magnitude in terms of EBIT impact you're thinking about? I know there is plenty of uncertainty, but I think we can always think in terms of impact per month and leave the uncertainty on the duration and the ramp-up to be clarified later. Thank you.

Bertrand Camus

Thank you, Vincent, for your question. I will start giving some answers, but first of all, with respect to our employees, we never stopped activity. We maintain continuity of activities in most of the geographies, as you could see in the initial slides around the percentage of employee active which reaches 86%. And a partial unemployment was only taken for activities where basically our clients decided to stop activities, as you could see also maybe in one of the press release we had a couple of weeks ago about the solidarity measures we have been putting in place. With respect to our employees, the decision was taken to maintain all people and keep employment, and of course, to take advantage whenever the local regulation was in place -- of the mechanism put in place by the various governments which are more or less generous according to the geographies. For the one who do not have regulation in place or coverage in place, we decided to at least cover 50% of the salary of the teams, and we took a commitment not to reduce employment during this period, not to aggravate, I would say, the situation not only of our people, but more generally speaking, about the economy. So in a world we are not making, I would say, profit or benefit from the situation, and of course, in the numbers we have been presenting you, all the benefit eventually derived from the local measures put in place by the government are fully taken into account.

Julian, do you want to address the other questions of Vincent?

Julian Waldron

Sure. Good morning, Vincent, I hope you're well. So if we look at March and April, a couple of things I think are important when we look at our Recycling & Recovery activity. First of all, is the differences between different markets. As I mentioned during the slide presentation, France has been the market in which we've been most impacted. I&C volumes down as much as 65% in the first 20 days at the end of March and in the first days of April, and therefore, commercial and industrial has been the biggest impact. However, the second biggest impact is not volume-related. Second biggest impact has been in construction and intervention in France. Now some of that's in waste, some of that's in water, but there is a very significant impact on our waste activity on our Recycling & Recovery activity in France from the inability to go out into the market, to go out onto the field. And that's not waste volume-related, as you can expect.

Overall, the Recycling & Recovery business out of our three segments is the most impacted, and we expect that to remain the vision we have of the business. The volatility of activity in Recycling & Recovery will continue to be a challenge to manage. Again, I mentioned -- I moved you away from volumes because I think not all of the impacts we're seeing can be and should be linked to that. Secondly, as I mentioned on Germany, Germany, if you look at volumes overall in the market are essentially flat. If you look at the U.K., they're down. If you look at Belgium, they're down. If you look at the Netherlands, it's very contrasted between different types of activity, with some things like hospitals, for example, up. So, very contrasted view country-by-country. Overall, as I mentioned, R&R, the most impacted of our three segments; and Europe, the most impacted geography.

In addition, we've been able to keep our incineration plants fully occupied. And indeed, in some places, we've postponed shutdowns and maintenance, as I've mentioned, to keep them running because we have capacity. In April, the last few days, we've seen an improvement in France from being down minus 65%. I think at the beginning of last week, we moved to minus 62%, minus 63% on the Monday. And we asked ourselves, is that a trend? And we thought, no, probably not, and yet towards the end of the week, we are at minus 55%, I think, on Friday Saturday, and at the beginning of this week, we've been a little better again. So we think that's a trend. Now again, I don't want to read too much into a one-day movement, but as you can see, we can follow these things really day-by-day. And after four, five days a week, I think we can say that we're starting to see an improvement in activity. Germany continues to be very stable. Incineration continues to hold up. So that's, I think, where I would summarize the March-April situation in waste.

I would make one more general comment, and you'll forgive me because I've -- you and I have had this debate at length over the last few months. In 2018 and certainly in 2019, the impact of volume in waste on our business was far less important than the impact of price and the impact of commodities and actually in the places where we do energy from waste and the performance of our industrial facilities. In the first two months of this year, we had a negative impact from commodities. Volumes were pretty much flat. Bid up in Manchester or elsewhere, not, but the teams were able to drive price increase. The performance plan that with Jean-Marc and the teams we're driving through, one of the main pillars of that performance plan is improving the saturation, the throughput, the efficiency of our incineration plants, and there's big upside if we leveled the performance site-by-site. So I think when I look at our Recycling & Recovery business, everything we're doing and everything we're seeing is disconnecting individual markets from the impact of volume. And I think, certainly, when we look today, some of the biggest impacts we've had are completely disconnected from volume and just linked to a lockdown.

As far as your third question on March to April is concerned, I'm going to take you back, if I may, to the comments I made on slide -- I'm finding the right slide, Slide 21 because I think your question is absolutely valid and is one that we tried to answer. So in April, we can estimate the impact, roughly speaking, for an affected month across our business. Well, let's say we take the last week or so of March and the first three weeks of April, the Q1 impact, roughly the equivalent overall of a two-week impact on the whole of our business. In April, we've got some new risk areas, Australia, Chile. I think we need to assume. We don't see it in the numbers as yet, but I think we need to assume that we'll have an impact in WTS and in smart and digital. We can also identify the areas of stability such as in our North American utility, and as you mentioned and as you asked, we can confirm that the impact in China will be significantly lower going forward. We estimated EUR 30 million to EUR 40 million. We are around EUR 15 million in Q1. I suspect we'll come in at the bottom end of that EUR 30 million to EUR 40 million range, assuming that things continue as they are.

So, Q1, that EUR 50 million to EUR 70 million, roughly the impact of a two-week impact on the whole of our business, and that gives you the differences, but the parallels also between that impact and the full month in April, but again, I caution you about extrapolation. Volume and activities in the first three weeks were largely stable. I mentioned I won't go back on it the areas where things have been slightly picking up over the last five, seven days, but I listed them around construction, around hazardous waste, around some volumes, around industrial facilities opening, around paper prices, for example. I do not want -- I think in everything that I say, I need at one point to come back and just highlight the risks, and I do think it's important that we all bear in mind that there continue to be risks, but I've seen the resilience of the teams, their ability to adapt, and I think there is a case for arguing that April is a low point.

Thank you very much, Vincent.

Operator

The next question comes from the line of Olivier van Doosselaere from Exane. Please go ahead.

Olivier van Doosselaere

Yes. Good morning, everyone. I hope you can hear me, and again, I hope you are safe, and thank you for taking the time to speak with us today. I also had a few question. I guess three, first one is on the Environmental Tech & Solutions division and more specifically on the industrial water operations. In the United States or North America, I think you delivered an 8% organic revenue growth in the first quarter, which is obviously very strong. I wonder when you say that you can see some risk actually, maybe on the operation of that division going forward, where exactly the reason for the caution comes from? It is because you feel that confinement measures in the U.S. have come later, and therefore, we might get a later impact, or is there also a certain degree of concern around the fact that the oil price is so low, and I think we had seen that GE Water had maybe struggled in the past at some moment with the low oil price. So I wonder what the main reason of concern is. And also what we could expect, therefore, if the confinement starts, but if the oil price stays low or at a low level, what you would expect your WTS business would be able to deliver the performance.

Second one, maybe -- I mean you've already spoken quite a bit on that, but I wonder if you could detail a little bit further. You alluded to the fact that we shouldn't be too focused purely on volume in waste. And indeed, in the last two years when volumes were actually going up, we maybe didn't see the full benefits of that pricing was more important. I wondered to what extent the same can be said on the downside. So you mentioned that you still had good pricing discussions in the beginning of the year. How is that -- how do you see the duration of those strong pricing trends in waste now that, obviously, your customers have experienced some pressure? So I wonder when the pricing discussions come up next on waste activities, is it annual pricing? Is it healthier pricings? And then if you mentioned that actually some of the recycled centers were closed, but maybe your other facilities like incineration or land filling are actually running more as normal in taking all the volumes, I think in the past, it was generally said that that margins on recycling were a bit lower. So I wonder if maybe we see volumes drop if we might actually expect a positive mix effect here that might help contain the pressure.

And then the last question is on the balance sheet. As you flagged, you're at 3.3x net debt to EBITDA. That ratio might weaken a bit as we get through Q2. And I guess there is uncertainty going forward. You previously said that you wanted to drop below 3x and you have a disposal plan. You haven't spoken too much about it in your presentation, but you had expected to sell between EUR 3 billion and EUR 4 billion of assets, half of which probably this year. I think in the podcast, you mentioned that you might even bring some of the disposals forward from next year to this year. So I wonder where you are on discussions on disposals. How urgent you think it is given the balance sheet situation? And also how confident you are that actually you will be able to deliver the disposals in the way that you wanted because I think you clearly highlighted that the disposal plans were supposed to help improve your business mix. And therefore, you were looking to primarily sell underperforming assets. And I wonder how confident you are that in the current market conditions, you could still dispose those types of assets at a reasonable price? Thank you.

Bertrand Camus

Thank you, Olivier. Maybe I will take the first one with respect to water treatment and solutions, our industrial water global business unit. So, as Julian explained, and we are very pleased about the results of the first quarter, I would say the good commercial dynamic we saw at the end of 2019 went on during the first quarter. Where we -- but why we are a little bit cautious is about the fact that maybe we will be impacted in the latter part of the year. Even so it's a very specific. I would say it's a different situation because when we look at our business model and especially the fact that we have activities like products or mobile units, the fact that -- independently of what happened with the economy, as long as the facilities are in operation, you still need to replace the product. You still need to maintain them. You still need to use our chemicals to take that example. So the business models are quite resilient. We are also targeting markets which are not affected or even are benefiting, if I may say so from the situation; for example, food and beverage, pharmaceutical, microelectronics. I think that we all never spent so much time in front of our computers all the time. So, the resilience of the business models plus the activities in which we are positioned, I would reiterate that we have very, very little exposure in upstream oil and gas. And our intention was to exit from that type of business as part of our strategic plan, make the WTS entity is quite resilient.

Another comment is that the manager of this entity was there during the previous crisis in 2008, 2010. And therefore, knows how to adapt to the economical cycle. And I would say been much more reactive in the way to manage the situation. So where we are a little bit concerned or cautious or where we have question is that we may see some project delayed or stopped as a consequence of the economic impact of the crisis for some of our customers, but so far, as Julian says from the number of Q1, the global BU has been resisting very, very well during the first months of the year.

Julian?

Julian Waldron

I think, Olivier, just -- you'll forgive it, it's a sort of overarching point, but I think to come and say that any of our businesses with the probable exception of the North American utility are going to easily go through this period without impact, I don't think that's the right way for us to think about the business and run the business. So, to try and be a little bit risk averse, maybe preempt issues, and you've seen in some of the mitigation actions we've already put in place in WTS some of those mitigation actions. And we just think that that's the right way to think about the business even if we don't always have the immediate KPIs, which trigger it.

On waste mix, so I talked about price at the beginning of the year. I think given the impact on volumes, you're right to call it out as a risk, and it's one of the things that I mentioned. On the other hand, I think as our costs per ton, for example, are higher given that volumes are lower, I think was also an argument for a constructive discussion with our customers about our true costs at the moment and how those costs should be recovered in pricing with our customers. So I think the debate over the next 12 months will be an important one for us to follow. Generally speaking, in Europe, if you introduce price at the beginning of the year, it's for the year. Again, let's just have a word of caution. Many of the old rules go out of the window in this sort of environment. But formally speaking anyway, if you start off at the beginning of the year with a change in price, that price is effective for the year.

On debt, liquidity and the disposal plan, I think like most companies at the moment, the first focus throughout the first weeks is ensuring that cash is fluid within the company; that our cash reserves can be used, can be upstreamed, can be downstreamed, raising new funds; making sure that our liquidity is stable. And as I mentioned, we've raised nearly EUR 1.5 billion of new cash, new gross cash since April 1. We've continued to have access to the CP markets where we've lengthened our maturities. Our last issuance was for a year. In long-term markets, we borrowed at seven, eight and 12 years at low interest rates. We've extended our credit facility out another year, and we have minimal debt repayments over the next 12 months in terms of long-term debt.

The disposal plan, I think we wondered how much to talk about things like that. I think we felt that we ought to focus much more on the details of COVID. So apologies if we missed a few things. But to reiterate very firmly, the preparation of all the things that we wanted to dispose in 2020 continues. We're not naive. Some of those will be affected in terms of timing. Some of those we will want to put on hold. But for the moment, preparation on all of them advances. We will see, and you called out the podcast, and we did mention it then, and I'd reiterate it. If we can pull into 2020, some of the things that we were planning to do in '21, I think that gives us additional, forgive the word, optionality, and I think that's the right way for us to, again, to behave. When we look at M&A activity in our sector, it continues. I'm not going to draw too many parallels with the U.K., but you know those events as well as I do. And we continue to have a good dialogue with interested parties on some of the more critical assets that we are looking to dispose. So I won't say that I'm confident. I won't say that I'm the opposite either, but work continues, no change and there's no external reason for us to stop.

One last thing that I wanted to be clear on, we have the list of things that we want to dispose so that we can align the profile of the business with our strategy. We won't change from that plan. We do not feel financially that we need to go faster or that we need to change our plans. Therefore, our disposals will continue to be driven by the strategic considerations that enabled us to draw up a list to begin with. There'll be no change to the list.

Operator

The next question comes from the line of Emmanuel Turpin from Société Générale. Please go ahead.

Emmanuel Turpin

Good morning, everyone. And my first question will come back on the waste activity and starting with volumes. You gave us the data point of a 3.3% drop in volumes in Q1. You also gave us some indications per geography or business of the latest, but what would be very useful is an aggregate number, looking at maybe the latest rolling four weeks of activity what sort of year-on-year trend are you seeing in volumes, please? I was very positively surprised to hear that your incinerators were fully saturated at the end of Q1. And I think I heard you say that they were fully saturated or almost saturated on the latest KPI you have, maybe the past few days. Is that right? I find it extraordinary considering the massive drop in volumes of waste collected in the economy. On prices, in previous crisis, a sharp drop in volumes have sometime led to competition on prices. On the latest data point that you have, so at the incinerator or at the gate of your landfill today, are prices still stable versus what you had a month ago? And I appreciate that you've just mentioned that you were busy renegotiating prices up, but I would be quite reassured if you tell me they were not going down at least.

On WTS, maybe could you update us on revenue backlog as a leading indicator of what could happen in coming months? On working capital, you mentioned, I think a pretty good working capital in Q1. Again, latest data points on that in terms of new collection or suppliers' payment on your expectations in terms of bad debt. How bad do you expect it could be at the peak of the crisis? That will be all. Thank you very much.

Bertrand Camus

I think Julian, they are for you.

Julian Waldron

WTS, maybe I pass to you. Good morning, Manuel, nice to talk to you. Forgive me, I'm going to take working capital first. As of the beginning of this week, no -- cash collection continues to be satisfactory pretty much everywhere we operate, and therefore, I think your point is really very valid. I don't think we should ignore the risk of late payments, bad payments. I said -- or nonpayment, sorry. I did call out the fact that during the period of confinement, we will not disconnect. So I think you're absolutely right to call out the risk. As of today, I don't have a data point in our big geographies for you. So I think it remains a risk rather than an actuality. In quarter one, if I can just -- two small but important practical issues on the ground. Firstly, as you might imagine, organizing invoice issuance during a period of lockdown is complicated. And I'd like to thank all of the teams in our big geographies because their ability to work remote and issue has been phenomenal, so there's been no slowdown on our ability to issue invoices. And of course, if you want to collect, the first thing you need to do is to issue the invoice for it.

Secondly, just on our supply chain, we're also trying to be extremely sensitive to stresses on our supply chain. Not all of our suppliers have been as able to issue invoices as we have. And so we've been working to make sure that they can work around issues with either electronic or physical transfer of invoices to us. So I think beyond the risk, and I agree with you, the risk is there, but I don't have a data point because I don't see it in the business and the big parts of the business at the moment. Just wanted to clear up, I think you shouldn't also ignore the technical challenges, but I think the teams have really responded well to those technical challenges.

Turning to your question on waste, saturation continues to be excellent in energy from waste. No -- and I've got no particular issues in our geographies to call out. The impacts so far -- if I can call out one impact, for example, I don't think it's been so much on volumes. The electricity price is not helpful just to give you one area within energy from waste, which is a headwind. But for the moment, we've been able to adjust the volume flows that we have and make sure that those incinerators have remained charged. Can we do that forever at minus 65%? Obviously, again, I would like to be clear about risks. But on the other hand, we have seen volumes slightly pick up. So that continues to be a focus for us in keeping those volumes directed towards -- particularly our merchant energy from waste plants.

In terms of pricing, if I misspoke earlier on, forgive me. The price increase is a January, February event across Northern Europe in waste. So, that is done and behind us. Today, again, this week, if you will, no data points, gate fees, but the -- for example that I can call out which indicate pricing moving in any particular direction, and my point about prices going up, no, let me not get ahead of that. It's not what we're seeing. I'm just saying that when we have customers who maybe want to come back to us to say that volumes have gone down, therefore, equally, our costs have gone up. So we need to make sure that that discussion over time is a balanced one between ourselves and our customers. Recognize the risk; as of today, nothing to call out for you.

In terms of volumes, I won't go back on the minus -- on the collection and industrial in France. It's a little better week on week, Germany, flat week on week; the U.K. probably down 50%, 60%, same as -- similar to France. We're not out of lockdown there, so no particular change this week. We've seen better volumes this week in Czech. We've seen better volumes in Poland, slightly better volumes in some parts of the Netherlands. Belgium continues to be quite weak. Australia, I think volumes are stable, possibly slightly again ticked up. Again, forgive me for going market by market, but it's very much a market-by-market approach that we're taking to the business at the moment. I hope those are helpful comments.

WTS, Bertrand?

Bertrand Camus

Yes, the WTS, when we speak about backlog, once again, what we observed in Q1 and what we see from the first weeks of April is that the order intake looks good at this stage, both in term of products and project. Once again, this business has been quite resilient, certainly, thanks to the diversity of businesses or business models, also the critical nature of many of the services that also have to go on despite the situation. I spoke about the priority sectors, which are the one which are also resisting to the crisis, food and bev, microelectronic, pharma. And as Julian mentioned, it's more a word of caution, given the fact that -- given the situation, the global situation. Especially on the economic side, we may see most probably some slowdown in the second part of the year, maybe starting Q2 even if the order intake still looks good at this stage, but on the other hand, I mean this is a sanitary crisis, water, health crisis. Water quality is something that has been very much discussed in the media over the past weeks. So we can, on the other hand, expect more requirements on water quality, and therefore, more demand for WTS, the products and services. And the last comment, as we told you end of February, we're quite happy about the order intake, the revenue growth of WTS. But we considered that we were not where we wanted to be in term of profitability and all the plans to improve the performance of our business that have been launched are still being implemented to improve the profitability of that business.

Operator

The next question comes from the line of Arthur Sitbon from Morgan Stanley. Please go ahead.

Arthur Sitbon

Good morning. Thanks for taking my questions. I have two. The first one, so you provided an impact in Q1 from COVID-19 on revenues, 2% approximately, and you provided at EBIT level, EUR 60 million. So the drop-through ratio is quite high. And I was wondering if you think this ratio will decrease in the future for April and May? Or given you're taking actions to mitigate the impact at cost level? Or do you think it will remain stable or increase? That's my first question. And the second one would be regarding the EUR 60 million impact on EBIT in Q1, would it be possible to break that down with the different divisions? Thanks a lot.

Julian Waldron

Arthur, thank you very much for those two questions; the drop-through ratio in April already, I expect to be significantly better than that. Obviously, when you go immediately into lockdown and you see volumes go from 100% to 65% less your ability from one day to the other to switch your cost off is constrained. And what we've seen since is a very significant effort on the part of everybody in the team to variabilize that cost. Again, this is a very headline number, but having generally thought of our business as being 60%, 70% fixed, we're seeing -- and in particular, in waste of that order of magnitude. We're seeing a flip of that, and we're seeing some areas where we have our teams able to variabilize 60%, two-third of their cost. So I'm comfortable that the drop-through in April is going to be significantly different than the drop-through in quarter one. I should also just caution on quarter one, you do have an impact in there from China. And for some part of China, given the consolidation method, you have an impact on EBIT, but you don't have the revenue associated. So again, there's some things which slightly distort some aspects of the Q1, but in response to your specific question, the drop-through ratio has been improving throughout this month.

In terms of EBIT and EBITDA, first comment is the impact on EBIT, the impact on EBITDA is roughly the same. There's no particular difference between one and the other. I just reemphasize that. And then if I look at the three segments, in the -- without giving you a specific breakdown, but in the first quarter, recycling and recovery was the biggest impact in absolute numbers; water, second and ETS third. ETS looks -- ETS is generally a business that ramps up through the year. So, again, you're slightly dealing with small numbers there, but it's -- but throughout, as I mentioned earlier, recycling and recovery is the most impacted, water second and ETS third. We've got time for a couple of last questions.

Operator

The next question comes from the line of James Brand from Deutsche Bank. Please go ahead.

James Brand

Good morning. I also wish you and your families and employees good health through this period. I have three questions. The first is, hopefully, a relatively simple one. In Q1, you had quite a material, a large drop in EBIT than EBITDA, EBIT was down EUR 60 million or so and EBITDA was down EUR 30 million. So just wondering what was going on there, whether there was any provisioning related to the crisis, or maybe there's just higher D&A from more projects, but it's quite a material increase just to be normal D&A?

Second question, I thought your comments on variable costs versus fixed costs, which you've repeated a couple of times are pretty interesting. I was just keen on understanding them a bit better. So why are you finding that you are able to variabilize a lot more of your cost? Is it the ability to furlough staff? Is it the -- is there other factors? And do you think that, I guess, if it is related to the ability to furlough staff, that might not be something that remains the case once the crisis is over, but if it's driven by other factors, it maybe is a bit more sustainable. So maybe you could comment on what's driving that and how sustainable do you think that change might be.

And then the third question is just a clarification. My apologies because you repeated the number a couple of times, but the -- when you were giving the sensitivity for the last one to two weeks of March, were you saying EUR 50 million to EUR 60 million for a two-week impact, or is it EUR 50 million to EUR 70 million? And then -- and just to clarify, if we're thinking about April, we should be multiplying that number by two. And then maybe we're thinking about future months, we should maybe be seeing it moderating. Is that the right way to think about it? Thank you.

Julian Waldron

James, thank you very much. We had around EUR 20 million of additional depreciation and amortization. A chunk of that is IT and additional renewal expenses. That's the delta. There was no particular movements overall net in provisions from one year to the next. Variable costs, I think we would put it more into tangible operational matters for the vast majority. And I would characterize it as follows. If what you're doing is adjusting to say a 1% volume move or a 2% volume move, then two things. First, there are fewer levers that you can move. I would agree with you there, but also maybe your drive and the need to variabilize is lower. And so maybe you're just less inventive. And I think one of the challenges for us is to look at how we variabilize cost and see how we can replicate those things going forward. So I think your point on sustainability is the question that we are spending a lot of time at the moment as we think about the exit and the rebound, how do we make sure that we restart differently? And I think probably one example is around truck usage in R&R. We've been very successful, very proactive, very aggressive in taking trucks off-line, and we found that our ability to operate effectively with a lower fleet has been greater than we expected. Can we maintain that attitude, that way of thinking as we go forward?

We clearly have seen that in some of our markets, we have more subcontracting. We have more temporary labor and that is more variable. Again, a deeper compare and contrast across our activities, I think, will drive sustainability. So I think we wish we could sit here and say that we have a clear and straightforward and exact answer to your question. I think we call it out more, firstly, as good reactivity to the current volume declines but also as an opportunity for us to perform better going forward.

On your last question, impact on quarter one is around EUR 60 million. If you want to take -- the only reason why I called out some variability or some -- a range between EUR 50 million and EUR 70 million, is because within that quarter one COVID impact, you have commodities. Now I think, but I can't prove it that a significant amount of the commodity volatility, and therefore, the cost in quarter one was due to COVID. And again, I think overall, that's probably around about a two-week impact globally in the business. In April, some things are going better. Some things are stable. So what's going better is China, for example. We've got additional risks. We've pulled those out. We've got areas of the business like the U.S. which is stable.

So if you want to read two weeks into four weeks, I don't have a better way to guide you on April. I would just caution you against in three ways. Firstly, the way in which the lockdowns will be executed are going to be different in timing and in execution method. Secondly, let's not -- so therefore, I think extrapolation is difficult just from one overall high level set of group numbers. The impacts country by country are very different. And for example, our biggest impact country in April is France, particularly in R&R but also in water. With France recovering in C&I from minus 65 to minus 53, if those sorts of trends are confirmed, then that's a far more important movement for us than, let's say, Australian waste. So I do caution you about read forward. I think that's a very difficult and risky game, which is why we are not doing it. And lastly, we've seen again, things at the end of April, which look different and in some cases, better.

Bertrand Camus

Maybe to rebound on your second question around the variable and fixed cost, I think that Suez is a very resilient group, and we -- but we never experienced a crisis of this magnitude where most of the economy starts being global even if it's not happening everywhere at the same time, and definitely, there will be lesson to be learned from what we are experiencing. We put a small team to -- four weeks ago to capture all what we have been modifying, changing and to try to capitalize on that. One thing which really amazed me and I'm very proud of is the superb reaction of the teams. It's absolutely fascinating the way they have been able to cope for that situation, which is not a sprint, it's a marathon because we have been in Europe, for example, in this situation for seven weeks. But definitely, there will be lesson learned. And as Julian said, we fully want to capitalize on things that we may not have been realizing in normal conditions, but that definitely could be capitalized and used in the future. Thank you, James.

Julian Waldron

We have one more question, I think, and then we will need to drop.

Operator

The next question comes from the line of Fraser McLaren from Bank of America. Please go ahead.

Fraser McLaren

Good morning, everyone. I have three very brief questions, if I may. The first is just with reference to slide 14. I'm just wondering to what extent the 100 base there does, in fact, represent normal volumes? Or if there was already some impact starting in China at that point? The second is just regarding what parameters you think will be the most important when assessing the appropriate level of the 2020 dividend? And then finally, you've experienced some optimism about being ready for the recovery. So I'm just wondering if you think that your 2021 targets are still achievable.

Julian Waldron

On China, the beginning of those graphs is January 1, so they are reasonably normal starts. You never quite know in China whether the fact -- given the positioning of Chinese New Year, but no, you can consider the beginning of those charts is actually relatively normal. On the second point on -- and then Bertrand, I'll hand over to you on point three and ending. I think the most important point for us to reiterate on when we talk about the dividend is, firstly, for this year's dividend, i.e., the one we're about to pay, we started out with the intention because financially that's what we felt was sustainable to pay the EUR 0.65 as planned. We felt as the crisis moved into a more extreme level that it was important to -- for all of the stakeholders to contribute to what was going on, and that's what led to the decision to recommend the dividend lower, but we're in 2020, the decision on '21 is a '21 decision. I think what's important for us to reiterate is that all that we have been looking at doing around Suez is 2030, is to grow recurring cash flow, grow recurring earnings per share and grow those in a way which enable -- which would enable us, which enables us to think about the dividend becoming more progressive, and there's no change in that determination, which is a good segue on to maybe some final comments, Bertrand.

Bertrand Camus

Yes, on that question of 2021, but first of all, we haven't commented beyond 2020 because once again, we have clear priorities to manage the current situation, which is about security and securing, I mean the health of our teams, maintaining the service continuity. Once again, we do it. But I can tell you, it's not an easy job. We want also to take advantage of our strong position and fundamentals to be able to prepare for the rebound. So that being said, we fully stay focused on our 2021 and 2023 objectives. As Julian said, we continue working on our cost, on our selectivity, disposal program, digital offering. I mean all what we presented you in October of last year, and the guidance we gave you for 2021 and 2023 are the numbers on which we want to focus. So we don't know how 2021 will be. And of course, we have to adapt the path, the various components to the situation. But we want to reiterate that the direction and the trajectory remain the same.

Thank you very much for your presence, participation. I think that we have been sharing with you, I mean as much information as we have access to so that you have a better feeling on how our group is handling the situation. Once again, I'm very determined and confident for what comes next. I think that the thing that is really, really surprising me the most, amazing me the most and making me proud of is the teams we have everywhere in the world. Everyone has been preparing, reacting to maintain the continuity of our services, which are absolutely essential and critical in normal time, but even more in this situation. And we have a clear path forward with our strategic plan. What we also see in this crisis is that a lot of the options and decision we made when we built this plan are validated with the experience we are going through. And you can count on me, count on the team of Suez and the management team to make Suez a successful company not only now but in the near future.

Thank you very much for your participation, and once again, be safe in the coming weeks, and I hope that we will have the opportunity to meet face to face as soon as practicable. Thanks a lot.

Julian Waldron

Thank you very much, everybody.

Operator

Thank you for joining today's call. You may now disconnect your handsets.