E.ON SE (EOAN) Earnings Call Transcript

Hello, everyone, and welcome to our H1 2026 earnings call. I'm here with Leo and Nadia and who will present our half year results. As with every occasion, we will leave enough room at the end for your questions. And with that, I hand over to you, Leo. .

Thank you, Iris, a warm welcome to all of you also from my side. Today, again, we have an overall simple message and what you actually used to from E.ON. We keep delivering our operational and financial promises and the momentum and outlook for electrification and infrastructure remains positive. So first, we have strong H1 results. We are fully on track to deliver our full year 2026 guidance. Second, grid capacity is the key enabler for the next phase of the energy transition, rising demand from changing customer behavior, renewables, batteries, data centers, puts especially the distribution grid at the center of the energy transition. A positive for E.ON. Third, operational excellence is a prerequisite for sustainable growth at scale. Our standardization, digitization and innovation measures enable efficient capital deployment and higher grid utilization which supports an efficient system and therefore, an affordable electrification, again, a positive for us. And fourth, policy direction is shifting from target setting to actual implementation supporting the outlook for our house case. So on my first as a messages, a few details. H1 results came in strongly with an adjusted EBITDA of EUR 5.4 billion and an adjusted net income of EUR 1.9 billion. CapEx momentum continued with investments substantially exceeding depreciation. And as always, Nadia will walk you through later through the details of our financial performance. As usual, also, let me now point out a few examples of our operational delivery in the last month. In our Energy Networks business, we connected additional 5 gigawatts of renewables to the E.ON grids in the first 6 months of this year in Germany. And we further accelerated the smart meter rollout up 25% over the same period. And by the way, the expansion of renewables is not limited to Germany. We had a similar number outside Germany also connected to our grids. In our energy retail business, our bidirectional charging product for electric vehicles, which we offer together with BMW, won an energy award in the category innovative energy infrastructure projects. The product marks the first commercial offering for an end customers in Germany to integrate vehicles in a steerable components into the energy market or differently, we turn household flexibility into a scalable grid asset. On my second message, the rising demand for grid connections from further electrification connection of renewables, batteries and data centers, highlights the progressing need to expand, modernize and reinforce the power distribution grid. It's all, again, it's a clear positive for E.DIS. Energy security objectives to achieve geopolitical independence from fossil fuels accelerate and broaden the electrification demand and adds to the energy transition objectives and we see that also on the European legislative scale. But whilst the first phase of the energy transition was about building renewable generation, the second phase is about integrating it which means ensuring that every kilowatt hour produced can actually be used, and that is a different task. It's more complex, more decentralized, more digital. And it puts the distribution center the distribution grid at the center of the energy transition. Let me give you 2 examples which illustrate the continuously growing demand for network connections. And let me start again with battery storage. Requests across our German business for battery storage connections increased by more than 30% in the first half of this year from an already very high base. In this very period alone, we have committed 10 gigawatts of additional battery capacity to be connected to our grids. This lifts our total commitments to 26 gigawatts around 1/4 of Germany's peak load. As a second example, changing customer behaviors also supporting demand for grid infrastructure. German EV registrations are up 50% and heat pumps applications around 35% year-over-year driven by continued geopolitical uncertainty and improving economics of such solutions for our customers. The economics are becoming increasingly compelling. EVs already offer an advantage in total cost of ownership of around 13 and heat pumps can produce heating cost -- can reduce heating costs by up to 19%. This brings me to my third message. Operational excellence is a prerequisite for sustainable growth and E.ON is all focused on delivering that. Considering the scale of the required infrastructure, investments for electrifications, the necessary grid build-out needs to be executable and efficient to ensure that the energy transition stays affordable. And this -- the task is to manage execution on an industrial scale within a complex system and with efficient use of the capital and the resources. And that requires consistent standardization, process optimization, digitalization and innovative adheres. We have put our focus exactly on these aspects. We operate in a complex system and the scale of the digital transformation and process optimization is significant. This means continuous optimization and learning remain integral part of the execution process, and let me share a few examples here as well. [ Scars ] grid connection capacity requires a more efficient allocation approach. Some of our regional DSOs are working intensively on a new pilot project. They look for ways how connection capacities can be allocated in a more targeted and system serving approach for connection requests with large power consumption needs. We will communicate in more detail about this approach very soon. For batteries, our flexible connection agreements enable faster connections while aligning storage operations with actual grid conditions. This is important as batteries need to be connected in a controlled system serving way. Without prioritization, local signals and the consideration of grid constraints, they can also block capacity for years. Therefore, we have developed a pilot concept for a flexible connection agreement together with our partner, [indiscernible] and we are now rolling it out across our German network operators during 2026. What this shows you that innovation can also happen in the way that we actually run our processes and obviously, this needs support also from the regulator and from the legislator. But we are doing even more. We are also harmonizing and modernizing our network control systems across our German grid companies. System operation is the digital brain of the grid. A standardized and smarter scatter landscape enables us to make faster, more secure, less dependent operations without external providers, and we are better able to scale new functionalities. The first companies will go live on the new system starting January 2027. At the same time, we are making our grids more observable and more controllable. In Germany, we have already exceeded 1.2 million installed intelligent metering systems and we are operating more than 30,000 smart secondary substations. The 1 gives us visibility on the low voltage, the other 1 on the medium voltage. With this, we are on track to reach 20% controllability in medium voltage by year-end and already have more than 20% observability in the low-voltage area. And why does this matter? Because only if we digitize across all voltage levels and measure real utilization, we can use all available capacity efficiently before building new lines or new substations or new transformers. Our analysis platform, grid lens, which we built makes this tangible. It shows and historic grid utilization and helps us to allocate CapEx where it's really needed. In our energy retail business, our connected assets under management have doubled over the last 6 months, supported by more than 30 live partnerships. Flex propositions constantly grow across 6 markets, and this expands our installed asset base and creates a foundation for future flexibility services and additional value creation so that also, our customers can benefit from the energy transition. This brings me to my final message. Policy focus is shifting from setting targets to actual implementations. And this creates a supportive outlook for our growth case, which again is a positive. A recent survey conducted by our E.ON Foundation showed that European societies support the energy transition, but they have clear expectations it also needs to be affordable and reliable and executable not only sustainable. And the recent policy packages on the European and on the national scale are pointing in this direction. On the European level, the EU Grids package puts faster permitting procedures, stronger recognition of grids as critical infrastructure and clearer rules for objective and transparent prioritization of connections requests into the focus. And we think that this is the right approach. Efficient grids are the precondition for further electrification, integration of renewables and security of supply. The EU electrification action plan published this summer targets a doubling in the share of electricity and final energy consumption from today, 23% to 46% by 2040 even if those targets are not as literal targets, they are also not legislative, they can be seen as a signpost for the desired direction of travel and clearly supportive for our infrastructure business on the electricity side. And the same objectives can be seen in Germany. The German grid package contains provisions for capacity restricted network areas and active grid capacity management instead of the current first come first serve logic. The distribution grid package strengthens the emphasis on acceleration of permitting processes for grid build-out. The amendment of the renewable energy law targets to move from pure volume growth to a stronger market integration of PV and a shift in support mechanisms towards systems efficiency, cost effectiveness and security of supply. Overall, the objectives and fundamental principles of all these different legislative proposals go in the right direction. The second half of the energy transition needs to be considered in its entirety to stay executable and affordable. We need an efficient and future-proof connection regime and effective steering incentive to avoid unnecessary complexity and cost. In any case, what is clear is that the distribution grids stay in the center of the second phase of the energy transition, Policy direction reinforces the case for sustained grid investments. And we are now obviously looking forward to see what the final legislation will really contain. So let me conclude with the key messages you should take away from my introduction. First, E.ON continues to deliver Second, grid capacity is the critical enabler for the energy transition and E.ON is all about grids and customer solutions around that. We continue to standardize digitize and optimize how we execute in our growth program and policy objectives point in the right direction, and we look forward to the final design. So the momentum and the outlook continues to be positive, a successful energy transition requires significantly more network investments and what we now need as a closing remark is obviously an appropriate policy framework and an attractive, predictable and reliable network regulation. We need long-term planning certainty and financial attractiveness to support this further expansion of critical infrastructure. As I said, we stand ready to invest if conditions are sufficiently attractive. And with that, let me hand over to Nadia. Nadia?

Thank you, Leo, and a warm welcome to all of you from my side as well. Since we last spoke, the volatility in global energy and commodity market has remained high. as geopolitical tensions in the Middle East continued. After the -- against this backdrop, our strong H1 performance once again demonstrates the resilience of our business model in a world of increased geopolitical uncertainty. We are well positioned to capture the long-term structural growth opportunities, particularly through our investments in Power Grids. This resilience enables us to continue with our investments in the energy transition and to deliver on our capital market promises. With that, let me take you through our financial performance for the first half of 2026. Here are my 4 key messages for today. First, E.ON delivered a strong operational and financial performance in the first half of the year. Adjusted EBITDA reached EUR 5.4 billion, slightly above the prior year level, while adjusted net income amounted to EUR 1.9 billion. With these results, we remain fully on track to deliver our full year guidance. Second, our investment momentum remains firmly intact. Investments continue to materially exceed depreciation with the bulk of our investments allocated to our German Power Networks business. Third, our balance sheet remains strong. Economic net debt stood at EUR 46.7 billion at the end of H1, showing the normal seasonal pattern of our business. It reflects the annual dividend payment and continued investment activity. partly offset by strong operating cash flow generation in Q2. And finally, we fully confirm our short and midterm guidance, including our dividend policy. Let us move on to the details of our H1 adjusted EBITDA development, which increased by around EUR 70 million year-over-year to EUR 5.4 billion on group level. Looking at the business segments. In Energy Networks, we delivered a broadly stable earnings performance year-over-year, fully in line with our expectations. Our continued investments in our regulated asset base provided earnings growth across all business regions. We also benefited from positive FX effect in our European markets, particularly in Sweden and Hungary. This was partly offset by the no negative structural effects. These included portfolio changes following the deconsolidation of 1 of our regional utility investments in Germany, NEW as well as the disposal of the Czech gas network. In addition, we saw higher costs to support the continued expansion of our Networks business. In Energy Infrastructure Solutions, we had strong 19% earnings growth year-over-year mainly driven by the commissioning of new projects for industrial customers and the continued harsh of higher procurement costs from previous years. In Energy Retail, we saw slight earnings decrease compared to the last year. This development was expected and reflects the impact of the deconsolidation of NEW in Germany. In the U.K., the performance of our B2B business has continued to normalize where we have seen positive effects from higher average margins compared to the prior year on fixed price contracts in our B2C business. Let us now turn to our adjusted net income, which increased by around 5% year-over-year to EUR 1.9 billion. All managed P&L elements below EBITDA developed in line with our expectations. As highlighted during the Q1 call, financing expenses are expected to increase over the course of the year. This is mainly driven by 2 factors: first, higher net debt because of significant investments and second, higher refinancing costs by maturing local pawn bonds. Looking ahead, the current development in adjusted net income is, therefore, expected to normalize over the of 2026. Overall, we remain well on track to achieve our full year adjusted net income guidance for 2026. Looking at the development of our economic net debt, which increased to EUR 46.7 billion at the end of the quarter, I would like to highlight 4 key points. First, -- the development of economic net debt was fully in line with the typical seasonal pattern. While the dividend payment in May and our ongoing investment increased indeed. These effects were partly offset by strong operating cash flow and a reduction in provisions in Q2. We Second, our investment spending continues to demonstrate disciplined execution. The H1 CapEx will rate stood at around 34%, in line with our expectations. We remain on track to deliver our full year investment guidance of around EUR 8.7 billion. This amount does not include the over transaction. As a reminder, our network investment profile is weighted towards the fourth quarter which typically accounts for around 40% of annual CapEx. Third, our strong balance sheet remains a key pillar of our investment case with all 3 rating agencies continuing to affirm our comfortable balance sheet position in the last few months. This validates what we have consistently communicated, our investment program is fully funded within our current balance sheet capacity -- and in addition, we continue to see substantial additional headroom to fund further value-accretive growth if the conditions are right. Fourth, this brings me back to the need for an attractive regulatory framework in Germany. The proposed 7-year averaging methodology for determining the RP5 cost of debt for existing assets would not adequately reflect current and expected refinancing costs. For gas network investments, we expect the first draft of the WACC assumptions in the next days. The resulting cost of debt allowance will probably not cover our financing cost and will include additional low interest years compared to power. However, the financial impact on E.ON should remain limited as depreciation in our Gas Networks business exceeds investment levels, resulting in declining refinancing needs. In addition, most of our regulatory asset base relates to power networks which have grown significantly and are expected to continue expanding. In any case, it is essential that the regulator sets in an internationally competitive remuneration for power network, including a cost of debt allowance that covers refinancing costs. This is fundamental to attracting the investment needed for the energy transition. Let me conclude the financial section with 3 key takeaways. First, we once again demonstrated the strength of our business model in a volatile environment, delivering a strong first half of 2026 with adjusted EBITDA and adjusted net income, fully in line with expectations. Second, our investment-backed growth story is grossing well. We continue to invest significantly above depreciation with disciplined execution and a clear focus on value creation. Third, our balance sheet remains strong and provides a strong foundation for our current investment program with additional capacity for further growth. However, realizing this opportunity hinges on obtaining sufficient certainty that the P5 regulatory parameters in Germany will be strengthened and finalized as expected. Finally, we fully confirm our full year 2026 guidance and our 2030 outlook, including our dividend policy. And with that, let me hand back to Iris.

Thank you, Nadia. And with that, we will start our Q&A. [Operator Instructions] We will start today with the first question coming from Anna from UBS.

Hopefully, you can hear me 2 questions and 1 clarification, if I may. The first question is on the U.K. retail market. Can you give us some numbers color on the bad debt. I mean this is a real issue in the B2C in the U.K. bad debt can raise to GBP 7 billion and you are growing into that market following the acquisition. Your centric card, they provide the market with bad debt charges, straight receivables and provisions. So I would reappreciate if you could share some numbers around about that in the [indiscernible]. The second question is, can you talk about the direction of travel of the talks with the general regulator., We are waiting for the proposal for Gasworks at some point next month. But any qualitative comment on the talks would be much, much appreciated. And just 1 clarification on the guidance. Nadia is the midpoint of the range of the best point? Or should we look at the top half.

Thank you, Wanda. Okay. So then I have all got -- I think it was 3 questions. Yes. So on the U.K. bad debt. As we have already said in some of our last meetings, the U.K. team and [ Onex ] has been worked hard on what we call account health over the last couple of years where we are firm that we are industry-leading in the U.K. on our bad debt management. So what does that mean account health? So first of all, we looked at debt segmentation activity so that we say we struggling customer groups, and then we sort of offer early interventions to help. Secondly, we also have a very active management on our direct debit payment adequacy, i.e., we look very carefully, which is the right level of the build to avoid build shocks, which is then also, of course, helpful not to run into bad debt issues. And secondly, we have -- thirdly, we have got a debt management improvement system, which also allows a better foresight on bad debt risk and allows early interventions. So we are not disclosing the exact number but we are confident and we have been seeing from the past couple of years that we are industry-leading in this segment, and it is for us in a sign of our operational excellence in this field, which we, of course, also intending to transfer to the overall customer base once we have lost the transaction. Second question was with regards to the regulation. So we expect the first draft of the consultation for the gas WACC in the next days. So not that long to go. Of course, that will have -- first of all, you assess that from a gas perspective because we -- as you know, we are operating gas networks business in Germany. But of course, we also look into what that means for the different parts of the WACC from the power side. So when you look at sort of course of debt first, as gas is determined 1 year earlier than power we will have 1 year more of the low interest rate years, i.e. '19 to '25, whereas in power, we will have most likely then 20 to 26. Then on the cost of equity, cost equity is also including 3 very relevant parameters. First of all, the risk free [indiscernible] This has been -- this is using a 5-year averaging period, i.e., for gas that's going to be in 2022 to 2025 where we saw 2021 to 2025 and for electricity that's going to be 2022 to 2026. So we will also see improvements there. On the market risk premium, we expect to actually get some certain read across from the determination because that's looking back like 100 years and to have 1 year more or less in 100 years for market risk premium shouldn't swing the needle. And on the beta factor, we don't know yet at all how both the peer group or the time series will combine, therefore, we also don't know what kind of across possibilities they're going to be on power. So as you highlighted, that's going to be quite interesting. First of all, for our small gas business, what it means for that? And secondly, not from the nameplate numbers because there, we see quite a bit of differences, but maybe also from the subjects from the publication, we might get some insights the power determination, but we don't know at this point in time.

And it's maybe fair that it's the beginning of the consultation -- and then at the end of the year, beginning of the next year, we will know a little bit more on all the stuff that you just mentioned.

Exactly. As the typical pattern, first consultation and the final determination for the gas WACC is then after we and the whole industry have set in our feedback is going to be at the back end of the year. And then to your third question, as long as as you know from the past, as long as we don't specifically highlight, you could always assume that the mid-vol is the best estimate from the very small guidance range that we gave.

And with that, we come to the questions from Harry.

So first one is on the German government distribution package, which you talked a little bit about in the opening remarks, but I wanted to dig into it a bit more. So I think from the coalition agreement, it focused on 2 things: permitting, which you mentioned, and it also mentioned financing and we're all trying to figure out what that actually means. So I wondered if you could flesh out a bit what do you actually expect from the German government distribution package? And when do you expect that it's likely to be passed? And if the financing elements applies to you? Could that change anything? Or if it applies perhaps to the municipal operators could that create some more opportunities for you to provide services to them if they're able to raise their CapEx? So just interested in the bigger exploration of that package? And then following on from -- or developing on Wanda's question. The gas draft. Nadia, you mentioned that there might be some elements of it which read across to power. Could you just be a little bit more explicit about what parts of the gas draft you're most focused on to read across to power -- is it the allowed return? Is it statements in there on how they're going to treat OpEx, et cetera? Just to help us a little bit when it's released on what's important for you and what might drive your views on it at proposed power .

Yes. So Harry, I'll take the first question on the distribution package. Since it's actually quite confusing, all these different packages on the European national level, we have, I think, on Page 16 in the pack, we have put you the time line of the different packages so that you have an idea when it might materialize. And so the first message is the German distribution grid package is a second package, which should happen after the German grid package. And actually, we have E.ON we advocate strongly for doing step 1 first and then step 2 rather than discussing everything forever and never getting to a conclusion on anything. So in the German distribution grid package, you rightly pointed out speed and financing as the 2, let me call it, subtopics. permitting. We think what happens here is that there is an acknowledgment that the speed of permitting needs to be accelerated not only on the transmission system operator level but also on the especially high voltage level, the 110k, which is part of the distribution in actually in most European markets. And -- if we do not accelerate the high voltage level, we will actually struggle to follow the dynamic development in the energy transition. So just 1 example. The data center boom that we have seen over the last 5 years happens mostly in the 110 kV level. Now if we have a speed of development, which is accelerating year-over-year, and we have an average permit time of 8 years. we're just not going to be able to react fast enough to the needs of our customers. So the fact that now also the high voltage level is being included in making it faster, not only the -- so far, the acceleration was mostly focused on transmission is a clear positive and will enable us to react faster to the needs of our customers. On the financing side, actually, E.ON has low expectations. We do not want state money. We want a regulation, which is sufficient to attract the private capital, which is clearly out there. And if we can actually make that work, then we are fine. So -- but now there are other players in the market, which have no direct access to capital markets. And for them, there might be financing opportunities provided by the state in whatever structure -- now for us, the only thing is we, as E.ON, we do not want to have a distortion of competition by the state offering like conditionalities, which are better than what we can achieve in the capital markets. But I'm actually confident that this will be the case. And if not, then we will either apply for the money ourselves, which would certainly trigger some reactions or we will see against that, which would also trigger some reactions, so much on the distribution package. But again, -- we think that is more end of the year, first focus should be on the grid package and for the gas WACC?

Yes. So for the gas WACC that will only include information regarding the gas WACC everything regarding cost allowance, et cetera, we don't assume to give specific insights into that. And then as we tried to allude to. I think we will get from this name -- from the number as such, we will only get a real insight into the MRP. And then for the other elements on the cost of equity, we -- you know there is a different time series for the -- for example, for both cost of debt for existing assets and also for the cost of equity. And on the cost of debt, you know there is this assumption that for power, as we have an increasing amount of CapEx in the whole industry, that there will be a specific weighting that the later years will have higher weightings. On the gas side, we haven't seen an increased investment activity over the last years. So there, we would rather assume that this is more spread equal over the years, and that would be then also something where you cannot take direct number for cost of debt for existing assets, but there wouldn't be that much read-across opportunities on that.

Okay. Understood. So just to clarify, so it's just the cost, it's the is the returns that are relevant, but you expect some quite significant modifications of power, right?

Yes. I think from logically from the methodology, but also from the different status that both power and gas have in the relevance of the energy transition.

Got it. And sorry to stretch things out. But just a follow up on the grids package. If you did see a significant improvement in the pace of permitting, what would that mean on the ground for you? Do you think that could allow you to get more done to accelerate things, other financial implications of that, if that's passed by the end of the year? .

Yes. So first, we assume that the -- so right now, we have only an intention, and let me call it, what is it, 34-point plan on the table, which needs to be put into a legislative package, which then can enter the parliamentary process, which we expect only for next year. So the current time line would indicate as we have fleshed out in the backup, would indicate that we get this distribution grid package somewhere in 2027. And then obviously, if permitting becomes faster, that has no immediate impact because for the existing permitting processes, you probably need to finish them as you have started them. But for the next projects, it would allow us to allocate less engineering resources. So probably, we would have more engineers to do useful stuff rather than lengthy procedures and it would allow us then to accelerate then in the years afterwards. And then again, if -- especially if combined with an acceptable regulatory package. So that's a bit the time line.

Thank you. And with that, we come to the next question from Alberto from Goldman. .

The first 1 is on guidance. You've done 70% of full year midpoint already in H1. So basically, you're guiding EUR 900 million essentially net income last year, you did EUR 1.1 billion. So because you had some value-neutral timing effects last year, -- would you be able to provide maybe a bridge between H2 2025 and H2 2026 as you see it today because I'm really struggling not to be EUR 2.93 billion, let's say, to see EUR 2.93 billion, given what you just reported right now. So I was trying to see what I'm missing. Or is it you been overly prudent perhaps? And then maybe you give us an update in November again? So the second question is, again, going to this German distribution grid package, I understood from the economic reform package that the collision put out in the summer that there was going to be also essentially a sort of an infrastructure plan in power distribution. So should we also expect hard CapEx number from this German package by year-end. And if so, when can we assume that you can start embedding that CapEx number in your business plan, even though the parliamentary approval is next year. Does it mean we need to wait for March '28 for you to embed all of this into your business plan? Or can that happen sooner? So do you have enough visibility sooner? .

So I continue with the grid package and then the -- any guidance again to Nadia. So first, on the infrastructure plan, I -- first -- we don't know what the final package will really contain Alberto. I just mentioned a list of 32 points was mentioned what should or maybe -- could potentially be in the distribution grids package. But actually, I do not assume that we will get a detailed infrastructure plan that provides a CapEx number from the legislative package I assume we will get that from the grid development plan, which we do anyway, irrespective of the grid distribution package. So what we are currently doing in 2026 is that we are working on a revision of the net and [indiscernible] plan, the grid development plan. on a German level, which is deriving the development needs, the investment needs of the German grid, and it's a process run by the TSOs and really the large DSOs, especially E.ON. And it covers actually the high voltage and the extremely high voltage. So the 110 kV upwards, it does not cover medium voltage and low voltage. Now this revision of the process will deliver a number somewhere at the end of 2026 probably that number will be higher than the number of 2024, but only for the 110 kV. It doesn't really say something about the total investment needs of E.ON, again, as I said, because it doesn't cover the lower voltage levels. But in any way, I think the key point is investment needs are going up because requests for grid infrastructure going up and because the grid is already experiencing kind of like being at the limits of what it can do. So for us, I can only see upside coming from that. we will incorporate the high-voltage level developments into our investment plans because we are obliged to do so. The grid development plan is a legal basis for us for our own investment plans. So we will incorporate that. But on the other side, the real increase of the total investment, that depends on the regulation, and that depends on how we include the other voltage levels. So that's -- so on that side, the grid development package is not as important as you might see the first moment in time. But here comes to connection. Obviously, the 110 kV is the part is what is covered in the grid development plan, and that is covered also by the permitting acceleration that we expect.

So regarding the ANI development. First of all, also on the EBITDA side, we have also in the past, always had a stronger H1 than H2 as a part of the normal seasonal pattern. Then as I have just said to [indiscernible] expecting the midpoint to be the best estimate. You have been seeing that we have been already done some significant part of our refinancing over the course of the year and some of the law maturing low interest rate bonds have matured, and we had to finance that attractive, but at current market price levels. You have seen that when you look at Q1, we had an ANI increase adjusted net income increase quarter-over-quarter of 7%. That has now started to normalize to go down to 5%, and we expect that to continue to be broadly flat then by year-end mainly due to the fact that interest expenses will increase.

And yes, sorry, if you allow me. Am I wrong in understanding flat growth versus last year would be essentially over EUR 1 billion, like EUR 1.1 billion, though, in the second half of net income. So that's why it's -- or if we want to go away from numbers, are we an agreement that sticking to the midpoint if there are no unforeseen events, most likely is very prudent.

I don't go there. I can just reiterate what I have said earlier, i.e. that with what we know now, -- the midpoint is the best estimate.