Good afternoon, ladies and gentlemen, and welcome to the Prysmian Group nine months 2021 financial results call. At this time, all participants are in listen-only mode until we conduct a question and answer session, and instructions will follow at that time. Just to remind you all, this call is being recorded. I'll now like to hand over to the chairperson, Mr. Valerio Battista, CEO of Prysmian Group. Please go ahead. Thank you very much, and good afternoon to all the audience. Welcome to the nine months 2021 report of Prysmian Group. Okay, let's go immediately to the page number three. The key highlights of the first nine months. The performance has been good, with a solid organic growth of 13.2%, with a significant recovery across all divisions. The margins have kept, at the end of the story, pretty well. 7.8% adjusted EBITDA margins. That is the 9% of 2020. But if we consider the metal price that has been inflated, has been inflating our top line, the real margins could have been 8%. Not so bad. Record backlog and order intake in the growth. We have EUR 4 billion order backlog. Let me remember that a part of it is coming from the U.S. market that has taken. We got three important projects in the U.S. market. The SOO Green HVDC, value $900 million. That is the biggest single HV project in the U.S. The Dominion Energy we got just one week ago with a value of EUR 630 million. That is the largest project ever awarded in the U.S. for submarine. Last but not the least, finally, the Vineyard Wind offshore wind farm got the notice to proceed, and all the related authorization by the government. We are gonna start the execution. Let's flip to page four, sales. Sales reached EUR 9.3 billion, with an organic growth of 11.4%. The related EBITDA has been EUR 725 million, with an adjusted EBITDA margin of 7.8%. You have to consider the effect of the metal price in that percentage, but those costs are the U.S., not the percentages. The sole, not extremely positive note is about the free cash flow because of the weight of the working capital due to the very high level of cost of raw materials. Going back to the organic growth. Organic growth, very good, especially in E&I and T&I. The industrial network component business, as well as the renewables, works very well. The telecom too. The telecom miles posted a 13.5% organic growth. From the adjusted EBITDA point of view, we can say that the nine-month adjusted EBITDA is at the same level of 2019, if we exclude the price effect. The energy business adjusted EBITDA is better than the COVID level, but yet a little bit down, not sufficient. We expect in the last quarter to see a strong ramp up of the energy projects, thanks to the order we got in the last years. Free cash flow, we are seeing that the problem of free cash flow has been hit by the strong increase of raw materials, and consequently, the operating working capital that grew quite a lot. We are working though. Let's move to page five. Page five, the order intake. We have EUR 2.3 billion awarded year to date, the first nine months, with two big projects in U.S., Dominion and SOO Green, and the other various projects. The Sofia, first of all, the offshore wind farms in U.K., the Goldwind, the Turkish Crossing, the Saudi-Egypt, the Blue Sand offshore wind farm, and then the Ibiza. A number of fairly big order intake, to which we are still missing the Tyrrhenian Link. That is, at least for this year, the Tyrrhenian Link, expected to come in the last quarter. Let's flip to page six. Let's compare quickly the organic sales above pandemic level of internal volumes and in terms of mix, North America and try to compare the volume, the sales of the first nine months, 2021 with 2019. Because the reference year for us is 2019, is not anymore 2020, because 2020 was affected largely by the pandemic. As you can see, North America, we have a +1% organic growth compared to 2019. In EMEA, plus a modest +0.4%. Even if, obviously, the comparison with 2020 is much higher, 11%. Latin America posted a +14.1% compared to 2019, and a +32% compared to 2020. Obviously, Latin America is not a giant market, is a pretty good market that is growing, and we are able to develop pretty well. The sole negative comparison compared to 2019 is APAC. Why? Not so much because of China, but much more because of ASEAN. In ASEAN, some of the customers have closed the orders, and that's the reason for the -2.5% you see in the chart compared to 2019. 2020 obviously is an easy comparison, and is a +11.3%. By business, E&I is the first driver of the growth, 3.3% compared to 2019, and 12.3% compared to 2020. In my opinion that this will be energy, I'd say because the same is for or similarly is for industrial, is the medal, the gold medal of resiliency in terms of performance, even in a difficult condition market. Telecom, unfortunately, whereas compared to 2020, has posted a positive organic growth of 13.5% versus 2019. The performance is negative, especially in Asia in the H1 of the year. You may remember that in 2019 the volumes were extremely high during the peak in December 2019, then the market collapsed, and the first nine months, we are suffering for it. Moving quickly to slide number seven, the performance in energy and telecom. Having the projects on the left side that is not yet at the proper speed, I have to say that the projects, sorry, has posted an organic growth that is 1.3%. In the Q3, posted 11.1%. That's the picture or an anticipation of the results that we expect to come in the last quarter. At the end, the EBITDA, that is what counts, is very similar to the nine months 2020. The last quarter will be the real indicator for next year. E&I. In E&I, the sales grew 4.3%, in the last quarter 16.8%, and the result of the EBITDA of the division went up from EUR 134 million- EUR 150 million. With a very good ramp up and a pretty good margin, 5.7%, that with the metal of 2020 has to be treated 7%. The margins are really growing in energy. Industrial & Network Components posted a 9.2% organic growth, and in the last quarter, 8.9%. What does that say? It's stabilizing with a pretty good organic growth around about 9%, and a pretty good EBITDA margin. Moving from EUR 130 million- EUR 150 million in the first nine months, 2021. Finally, Telecom. Telecom has posted an organic growth in nine months of 13.5% with a last quarter of 9.7%, rising the sales from EUR 1.047 million-EUR 1.204 million sales, with an EBITDA that moved from EUR 162- EUR 178. The margin went stable from 15.5%- 14.8%. The 14.8% in reality, if we use the methods well, because there is a lot of MMS Multimedia Solutions or cables that has inside the copper can be read as 15.4%. The volume has been good in the U.S. especially, and the contribution of YOFC has been almost stable. You can see that, EUR 11 million versus EUR 12 million in the nine months 2020. Overall, sales went up from EUR 7.5 billion roughly to EUR 9.3 billion, with a growth of 10%. In the last quarter, the acceleration is clearly there with a 12.9% organic growth. EBITDA too, because it moved from EUR 647 million- EUR 775 million after EUR 19 million of Forex negative effect. Let's flip to page 8. Let's have a look over the last two years cumulative. The reference year, as I was saying before, has to be considered 2019, when we reached EUR 1,007 million EBITDA. Today, we have to consider that there is a certain Forex effect that is roughly EUR 50 million, just to simplify. Other than that, there is a very strong increase of raw material costs and distribution cost increase. These effects, negative effects, have been partially compensated, modestly compensated by the volumes, but very much by the prices. Consequently, that is demonstration that especially energy is able to transfer the cost increase to the customers because there is no way, or the players are gonna transfer it quickly or are gonna lose money. The volume in the telecom segment has been a little bit negative, and the price mix in telecom has been pretty tough. You know, because obviously in comparative 2019, the price went down mid of 2019. The price, yes. And the volumes went down, and the price too. The projects have been still suffering a little bit, but we are sure that the last quarter, the result of the projects will recover completely the gap, will close completely the gap. Finally, the efficiencies and the fixed costs have helped us to reach the guidance and probably in the upper side of it. Let's flip to page nine. By region, we can say that sales-wise, EMEA went reasonably well. Let me say that, North America has suffered more than EMEA, and that's the value of the geographical differentiation. You remember that last year, we were commenting the very hard ramp up of North America. Today, we are here telling that vice versa, it's EMEA to drive the gain in terms of absolute value. Latin America too. You can see that Latin America grew 32% in terms of sales. With an EBITDA that grew from EUR 41 million- EUR 73 million. Latin America gave us an outstanding performance, whereas North America suffered a little bit of the decline of the very strong power distribution business we have seen last year. Last but not least, Asia Pac. That obviously accounts for a not very big amount, EUR 54 million, with an organic growth of 11.3% compared with the first nine months 2020. The results anyway are pretty solid, and COVID-19 is now over. At the end, our total group grew 11.4% in terms of organic growth, with a very significant improvement from EUR 647 million- EUR 775 million EBITDA, with the projects still late in recovery. I guarantee you that the last quarter will be significantly better. The business in the regions, vice versa, went very well. Let's move to page ten. The guidance is confirmed. 920-970. I can tell you that we will be not so far from the max of the guidance. That's not the same comment for the free cash flow. Why? Because whereas the guidance for free cash flow was EUR 300 million ± EUR 60 million, the max of the guidance will not be easy to be reached. Why? Because in the last or in the first nine months, we suffered a lot the increase of raw materials and energy that obviously are gonna absorb cash to us. Reason why our today's guidance is more in the middle of the range than in the upper side. Last but not least, page eleven. On the page eleven, you can see the trend of the last five years. In 2017, EUR 940 million. In 2018, EUR 932 million. In 2019, EUR 1,007 million. In 2020, EUR 840 million because of COVID. This year, let's say something like EUR 960 or around about EUR 960. Now, what happened is that the energy business, is the blue line, enjoyed the acquisition of General Cable, raising the light blue line, raising the results. For the next years, medium term in five years, within five years, we expect as in the past to be more or less stable. The other two key businesses, telecom and projects, are expected by Sylvester to grow. Why? Because whereas telecom, after the peak of eighteen and nineteen, went down in 2020 because of the crisis, in 2021 has started to recover. Despite the very high volatility of this business, we believe that there are no reasons to expect another worsening of the telecom business in terms of EBITDA. The projects are really in the ramp to take off. Why? Because after three years of difficult market, finally, we have an outstanding order book. The problem is on or maybe only the execution, but we are totally focused on the execution risks, and we are quite sure that the projects will ramp up in terms of performance, starting from the last quarter this year. Let's have a look on the lower side of the chart about the coherence between the performance of the business and the budget, the CapEx allocation we made. You can see that in the... I always said that our CapEx were round about EUR 250 million after the acquisition of General Cable, and that has been the history. You can see very clearly the very big increase of telecom CapEx in the years 2017, 2018, 2019, the green chunk of the column. Starting from second half 2019, we dropped the telecom CapEx because of the crisis we have seen in this market, and we started to grow the CapEx, the green, dark green CapEx that are the ones that are related to projects. Now, what about the future? We see a slight increase, a slight further increase for the next three years of the CapEx. Why? Because we have to fuel our power to follow the project, the project development. You see that the dark green chunk of the total of the CapEx are gonna be the largest part of the CapEx itself, at least for three years. In this CapEx is included the new submarine cable, as well as in the CapEx of the last three years, 2019, 2020, and 2021. We have been able to include also the new ship, the Leonardo da Vinci, that is completed and already working moreover with very good performance. The cable laying ship has been able to lay also the Viking Link, the first chunk of Viking Link, with very good results. We are very happy with the investment we did. The next big investment is gonna be the new plant in U.S. Thank you very much. I leave the floor to Francesco before to move to the Q&A session. Thank you, Valerio, and good evening to everybody. As usual, I start from the consolidated profit and loss of the sales of about EUR 9.3 billion, affected by pretty huge effect coming from the metal prices worth more like EUR 1.3 billion for the nine months. As Valerio explained, organic growth was extremely positive compared to 2020. Here, by the way, you see organic growth, including also the projects, which is year to date 10% better than the half year organic growth of 8.5%, so improving it in the Q3. Even more importantly, I would say, as Valerio explained, the level of organic growth or organic sales is above the pre-pandemic level of 2019 in the energy business for approximately 3% above, and even not too far from the pre-pandemic 2019 for the telecom business. These are extremely positive signals and indications. Adjusted EBITDA EUR 725 million. A very good margin 7.8%, which however is stated to account for the copper price increase risk as 9%, up from the 8.6% of the previous year. A quite strong margin increase, in particular in the energy business and in particular in the E&I business. The Q3 was pretty strong, EUR 255 million, at the same level, more or less, of the Q2. Excluding the more or less EUR 50 million, EUR 46 million ForEx effect accumulated over the last two years, this level of EBITDA is totally comparable with the 2019 EBITDA, the pre-pandemic level. Once again, in my opinion, in our opinion, a very good indication. For all these reason, as Valerio mentioned, we are quite confident to close the year in the very high part of our EBITDA guidance, so very close to EUR 917 million. You see on the box, top right, the comparison quarter by quarter of EBITDA with the prior year, with the previous year, broken down by business. Projects, energy, telecom, excluding share of net income. Let me just make one remark. It's pretty evident how the very strong Q2 and Q3 is supported by the very significant and positive progression of the energy business. You see that the deviation, the positive deviation compared to the previous year, is growing quarter after quarter, from EUR 13 million in Q1 to EUR 20 million in Q2, EUR 35 million in Q3, even helped by the easing of the ForEx effect. The ForEx effect is EUR 19 million year to date for the first nine months, and you see that was particularly negative in the Q1, relatively negative in the Q2, and even slightly positive in the Q3. This of course will also support the full year EBITDA and the full year closing. Adjustments below the adjusted EBITDA line, meaning mainly restructuring costs, are decreasing down to EUR 25 million, as totally expected after the South European footprint electric footprint of 2019 and 2020. The special items, which are basically non-monetary items, not affecting the cash, are also very low. Last year, they suffered from a pretty sizable impairment in South Europe. This year, we are not having this negative effect, and this is of course, in the end, driving up our net income. Good news also from financial costs, from financial charges. You see EUR 10 million down compared to last year, even if I have to say that real net interest expenses are quite stable, whereas this positive effect is mainly coming from a one-off effect related to the issuance of a new convertible bond back in late January, beginning of February. Tax rate is also decreasing, down to 32%, despite some negative one-off. One for instance, the tax rate increase in U.K. But despite this, we have a nice four percentage points tax rate decrease. In a summary, all this is boosting our group net income up to EUR 255, which is almost doubled compared to the previous year. Let me now go to the following slide, the balance sheet. Let me start from the stability, obviously disappointing, of the net financial position, of the net financial debt. At EUR 2,663 million, substantially stable from September 2020. Also, in this case, Valerio anticipated the reasons for this very clearly, and the substantial reason is a major impact coming from raw material prices, from a huge increase of raw material prices. Just to mention you a couple of numbers, over the last 12 months, so September to September, we are counting a negative cash impact and working capital impact from metal prices of approximately EUR 320 million. It's much more difficult to estimate the non-metal raw material prices increase, much more difficult to estimate. I would estimate it is at least EUR 80 million. All in all, we can count a EUR 400 million impact on our balance sheet and operating working capital coming from the raw material prices. Of course, we have tried our best to compensate this. It was not very easy, I have to admit. We benefited from a pretty good reduction of working capital from Prysmian PowerLink, pretty strong cash flow from Prysmian PowerLink over the last 12 months. Of course, we suffered on the other end from a necessary restocking or stock rebuild, also to follow the good volume trend, and to follow in principle the market recovery, the good volume trend. I think we achieved a very good reduction of working capital, both on the front of receivable and the front of payables. This allowed us to partially compensate the raw material prices effect. Let me finally go to the cash flow, following page. Here we have the usual bridge of the debt, showing the debt stability from September to September. You see here LTM with a 12-month last 12-month free cash flow of EUR 202 million. This reconciles with the EUR 282 million, taking into consideration the EUR 80 million antitrust cash settlements that we had over the last 12 months, and the EUR 282 million is the number which is consistent and coherent with our year-end guidance at EUR 300 million ±20%. This means that overall we anticipate a Q4 in terms of cash flow pretty much in line with the previous year, maybe slightly better, allowing us to grow the EUR 282 million at least up to the midpoint of the guidance, to the EUR 300 million. I think I'm over with my part of the presentation, and we can go ahead with the Q&A session. Thank you very much. Thank you. Ladies and gentlemen, if you have a question at this time, please press star one on your telephone keypad. To cancel your question, you can press the hash or pound key. Once again, that's star one on your telephone keypad to ask a question and the hash or pound key to cancel. We have a question coming from the line of Lucie Carrier from Morgan Stanley. Please go ahead. Hi. Good afternoon, gentlemen. Thanks for taking my question. First, I need to apologize if maybe I ask something that you've already mentioned, but my line is very poor this afternoon, so I couldn't follow everything with a lot of details. My first question was around the free cash flow performance after nine months, and how do we bridge that to your guidance of EUR 300 million for the full year. Because it would imply a quite significant kind of reversal maybe of working capital or a lot of down payment coming through. Can you help us understand how do we bridge the free cash flow at nine months, which I think is a heavy negative, to the EUR 300 million positive for this year. Sure. Hi, Lucie, Francesco speaking. The drop of the working capital and the huge cash flow generation in the Q4 is pretty normal. It's related with two factors mainly, with the seasonality, factor number one, and normally with order intake and also milestone delivery in the project business, which are very cash generative in the last part of the year, mainly in the Q4. If you allow, I prefer maybe to start to at least take out of the picture one of these factors, the seasonality, to start from the last twelve-month free cash flow as of September, which is the well-known 282, and bridge this, say, with the 300 that we target. It's not a big change. We will certainly benefit of an improvement of EBITDA compared to last year, coherently with our guidance. We may also benefit of the metal price, of some metal price effects because the copper price flattened in the last period, even decreased a little bit. In the Q4, we may benefit a bit. Whereas in the Q4 last year, you remember that there was the start of the metal price increase. The two trends are quite opposite, should be quite opposite. Of course, we are assuming a stability now of the metal price. If I may add a consideration. Sure. Hi, Lucie. Valerio Battista speaking. There has been an effect, that is a traditional effect when materials become scarce, that everyone is running behind additional materials. That has been our mistake, the mistake of our team in several regions, the reason why we gave a very strict control on the orders of raw material. Because when something becomes scarce, you remember, you may remember the fibers in 2019, the first six months 2019, you are surely perceiving the race behind the raw material in the first nine months, first six months especially of this year. That has been the effect that touched in the months. reason why, with the raw material going up in terms of price so much and the scarcity of raw material perceived by some of the markets, we made the mistake to run for higher volumes in our stock. That is going to be compensated because we are acting pretty strongly in our separation. Yeah. As a matter of fact, what Valerio is saying will mean a summary covering working capital, specifically in stock in the Q4 last year. This will be a positive factor. Whereas we will have certainly a higher level of CapEx. The EUR 248 million of last twelve months CapEx will grow to EUR 290 million-EUR 300 million, and this will be on the negative side. Like also the fact that last year was a particularly strong cash flow of the project business in the Q4. This year is much more distributed. As I said, we had a very good dynamic of cash flow from projects in the first nine months, in the last twelve months. Compared to last year, I think we will have a less positive contribution, still positive, but less positive contribution from projects in the Q4. All in all these factors are substantially compensating each other to deliver a full year free cash flow in the region of EUR 300 million compared to the EUR 282 million last twelve months September. The bridge in principle is not very material. You have a lot of compensating effects, plus and minuses, but the reality is that our full year free cash flow should remain pretty stable from this last twelve months of September. I don't know if I was clear, Lucie. Yes, thank you very much. Thank you for all the color. My second question was around the order pipeline. I was just kind of wondering how do you think about the awarding in the next few quarters in terms of large contract and whether you see yourselves keeping your share. Because effectively you've had a very strong momentum in order already year to date. You know, it was quite clear from your slide. If you think about 2022 in terms of execution, you have a backlog of EUR 4 billion. If I also add some of the U.S. project and the Middle East project, which is not yet apparently in the backlog, it's nearly EUR 6 billion. How much of that backlog do you expect to materialize in 2022? You've mentioned in the past, you know, capacity utilization of different technology, XLPE and MI. How should we think about that into next year considering that enormous backlog you have? Lucie, you are trying as usual to anticipate next year. What I can tell you is that the orders are here, and we expect in the last quarter that will help probably also the cash flow. With the advance payment, we expect to materialize some more orders, of which the biggest one in the history that is going to be this year. Which is going to be our share of this project I cannot anticipate to you, because we are under the silent period. I'm quite confident. For next year, obviously, that's a trend that we are reasonably confident to be able to catch. Next year projects will hopefully confirm the trend of the last two quarters and will grow significantly. Thank you. Lucie, do you have a question? Yes. I mean, I guess, you know, I was maybe hoping a slightly more precise kind of conversion rate of the backlog if you had in mind, but maybe it's a bit too early to ask. I know we are only in November. That's way to when we are gonna give the guidance for next year. Okay. Maybe last question on the CapEx you are mentioning, the step up. You had already mentioned that before, but just as a matter of update, for the submarine project or the submarine plant in the U.S., what is the current situation? Do you have a site? Do you have a timeline that you can maybe share with us? Also how much capacity do you expect to add to the market or maybe versus your current capacity? I mean, you have about 40% market share in the market. Is there anything you can share on that at this stage? The answer is yes. We have pretty clear what we have to do. The site is identified but not yet secured. Consequently, in the next weeks, we have to be able to secure the property of the site in order to start the construction beginning of next year. That's the result. The total value of the investment will probably be at about EUR 200 million in the next three years. Thank you. You're welcome. Our next question comes from the line of Monica Bosio from Intesa Sanpaolo. Please go ahead with your question. Good evening, everyone. First of all, I apologize because also my line is quite disturbed. The first question is on the Tyrrhenian Link. Should we expect some news flow by year-end? In this case, in case of a potential award of a large part of the link, is it the Tyrrhenian Link already included in your CapEx guidance, or the Tyrrhenian would require additional CapEx on top of the one you have already announced? My second question is on, for Francesco. I know it's premature, but considering the performance of the energy projects for the next year, and on the other side, the still challenging cost scenario, would you view as feasible an improvement of the free cash flow year-on-year up to EUR 400 million, or would it be more prudent to be below this level? Thank you very much. Okay, Monica, I try to give you an answer on Tyrrhenian. As I said, we cannot as of now clarify completely the position on Tyrrhenian. We are confident to be able to catch at least a significant part chunk of it. Investments in CapEx related to the execution of Tyrrhenian are not in. Why? Because they are not foreseen. The capacities we have to manage Tyrrhenian, and consequently, there will not be an additional CapEx to manage Tyrrhenian. Okay. That's a bit clear. No additional CapEx? No additional CapEx for Tyrrhenian. Okay. Thank you. You're welcome. Monica, regarding the free cash flow question, if I understood well, obviously it refers to 2022? Yes. Well, in principle, if we think how much the raw material price is affected the cash flow this year, I think it should be feasible, the level that you mentioned of EUR 400. Of course, as usual, we have a target to improve our results. That's the first component. Then, of course, we shouldn't suffer from this major raw material price increase. Of course, on the other side, we will have the kick in of the higher level of CapEx that Valerio has mentioned. In all these, the most material component is definitely the raw material price increase. If this will not further penalize next year, I think that the level you mentioned should be feasible. Of course, let's take some more time to give a more precise indication on the full picture of the guidance, profit and loss and cash flow when we will publish our year-end results. Okay. Got it. Thank you very much. Thank you. Thank you. See you. Our next question comes from the line of Akash Gupta from J.P. Morgan. Please go ahead. Yes. Hi, good afternoon, Valerio and Francesco, and thanks for your time. I have three questions as well, and I'll ask one at a time. My first question is on slide 11. First of all, thank you for giving some medium-term picture on EBITDA. But looking at this slide, and if I look at the dots for projects business, it looks like you are indicating substantial increase in projects EBITDA in the medium term, which could be above EUR 500 million if I just measure these bars right. Can you confirm that? Can you say when you say medium term, is it 2025 or is it 2026 that we should read here? Akash, good afternoon. You are asking me something that is too much precise. I already gave the indication that we expect for projects, and I can confirm the ramp up of the sales, the project sales and the margins going to reach by 2025 within five years, let's say, something like in between 400 and 500. A little bit more than doubling the results. Is that clear with your question? Yeah. No, I think that is in line with what I was expecting. The second one I have is also on projects. I mean, you have said explicitly that you are going with a new plant in the U.S., but I wanted to ask about the U.K. I mean, especially after Brexit, there is a very high focus here on getting as much local supply chain as possible for offshore wind, and government has come up with some kind of support for local supply chain. Just wondering, I think you have a high voltage factory here, but do you have any plan to have a subsea factory in the U.K. for offshore wind? Honestly, I met some people from U.K. government about it. I cannot say no, but I cannot say yes as of today. Also, because it makes no sense to populate the world of the submarine plant. Submarine plants are very expensive, very difficult to be managed, and we cannot have 10 plants of submarine. The priority we choose is the U.S. Later, we are going to see. Never say never, but it depends on the development of the market. We have capacity in Finland. We have capacity for the medium voltage in Germany. We have capacity for the extra-high voltage in Italy. For the time being, it is enough. Thank you. My final question is on price cost going into 2022. I think you mentioned early on that you were able to recover some inflation through better pricing. As we go into 2022, we are talking about labor inflation, which may be higher than what we have seen in recent years. Just wanted to know your thoughts on could that be a headwind for the bridge in 2022, or do you think that this better pricing that we are seeing in the market will allow you to pass this additional headwind coming from labor inflation on top of supply chain and component and Akash, that's a very difficult question. I understand perfectly. What I can tell you, it's difficult to tell because the labor cost, the total labor cost of the company is something like EUR 1.2 billion. Obviously, if we are gonna see a 5% labor cost increase, it will not be easy to be passed to the market. Of course, that labor cost increase and the related base is different country by country and division by division. I would say that there shouldn't be an issue in our P&L if limited to a single little digit. The goal I'm giving to the HR and to the local is to control and to keep under the level of 3%. That obviously depends on the development of the market. If- Sorry, just a clarif- Sorry? No, just a clarification. You just said that you are aiming to contain this inflation in single-digit million EUR. Is this what you said? I said that 3% salary inflation is the theoretical limit I want to be able to reach. Thank you. It depends on a country by country, market by market, which is gonna be the effect of the contract revenues. Thank you, Valerio. You're welcome. Our next question comes from the line of Renato Gargiulo from Stifel. Please go ahead with your question. Yes, good afternoon. Well, first question is on Telecom. If you can provide an update on pricing on the competitive environment. We have seen also the last Channel Back tender. So an update on that side, also in the European market. The second question is on your new submarine cable project in the U.S., Coastal Virginia Offshore Wind. Can you provide any more color on that about the competition you are experiencing in the bidding process? It's the first balance of plant contract. You expect more contracts like this. Also in terms of profitability, can we assume a similar level of profitability of a similar project in the offshore wind segment? Third and last question is still on your CapEx plan in North America. Basically, you have announced EUR 100 million plus EUR 85 million for the telecom segment and your investment in the energy project for the new plant in the short term. Can we assume these are the investments you plan for North America or maybe necessary to think about more investment going forward? Thank you. Okay. Let me start from your last question. The North American investment is gonna be something like EUR 200 million at least. Then, however, is already in the number I presented to you. If I'm not wrong, I already told you that we were going to raise the CapEx level for the next three years, 2022, 2023, and 2024, around about EUR 300 million. EUR 300 million up to EUR 350 million. Why? Most of all because the ship is over, but the US plant is coming. The US plant will be something like an average of EUR 70 million per year, cannot be absorbed by the other CapEx of the group. You are able to consider that it is quite clear in the slide that we have to dedicate some millions to the decarbonization. That is our aim, that we are asked and we accepted to execute. Once we say yes, we do it. We are planning a number of CapEx, not very huge, to reduce the level of emission of the company, Scope 1 and 2. The other two questions, the U.S. submarine, okay, we touched. Project pipeline. Project launches in the U.S. Awesome. Yeah. Yeah. Projects pipeline. The U.S. market is, I don't know if, Hakan, that should be on the line. Yes, I'm connected. On the line. I'm connected. Okay. Mm-hmm. Just the question and give them up. Okay. The question was about Dominion, the balance of plant, and the pricing in the U.S. If I comment on the Dominion, the Dominion is the first balance of plant offer that we have made together with DEME. In an environment like the U.S. where you know offshore wind is just emerging, sometimes customers prefer to buy the whole system, including transportation of the poles and also installation of the poles together. The balance of plant approach becomes an important element. We have done the first time a partnership with DEME to approach that new way of business. I think the important thing here is that the pricing definitely is relative to the risk that you're taking. We can say that it's comparable to the overall offshore wind projects that we have. I cannot say that it's extremely high, extremely low, but it's in line with the expectations and in line with the risks that we are taking. It is not going to be the first one and the last one. We foresee to have more, especially when the wind farm market is growing, to utilize also external installers apart our own fleet in some projects, and we are expecting that to continue. I can say that it is more complicated to have a balance of plant approach, but it is also, I think, a good approach for our utilities or for our TSOs to reduce the risk overall of the project, splitting it into pieces. I don't know if I answered your question. If you have any further Yes. Expectation, I can- Yes, very clear. Okay. Yes, thank you. Very clear. Renato. The last question on telecom. Yes. Yes. The third question, we went back from the last to the first one. I leave the floor for the telecom to my friend, Philippe, here around the table, to give you the answers about the pricing and the environment in telecom. Okay. Good evening, Renato. First on the volume, the telecom market is back up. It's growing again after two years of recession. It's growing very strongly in the U.S. It's now also growing very strongly in China after the China Mobile tender showing a growth of 20% year-on-year. It's also growing in the other regions to a lesser extent. Europe is fragmented in different countries, and the rest of the world is also growing. There is a global trend for the volumes to be up. As far as prices are concerned, you have seen also that the China Mobile kind of ended up with more than $1 increase in price, which was expected because the previous prices were definitely too low for the industry. I think this will drive the prices globally to be on an upward trend. We already see that in many places. Both trends, volume and prices, are up and both globally with different speeds depending on where we are. I don't know if that answers fully your question. Last but not least, of course, you have to consider that the anti-dumping procedure. We cannot disclose it, but in the next quarter, I believe that it will be possible to discuss. The deadline for the European Commission to announce the anti-dumping measures is the twenty-fourth of November. It's gonna come in the next two months. We will see what the outcome is. Okay. Thank you. Thank you very much. You are welcome. Okay, our next question comes from the line of Max Yates from Credit Suisse. Please go ahead with your question. Thank you. Just my first question was around the evolution of the projects business in the Q4. I think when I look back at this business, the kind of good quarters of revenue are typically around sort of EUR 450 million-EUR 460 million of revenues. Is that a sort of good indication for where this business could get to in Q4? Sure. I think so. Yes. I think so. EUR 400 million maybe a good model. Maybe even a little bit more. Okay, I mean, similarly then on the margins, I mean, you talked kind of about an improvement in the margins and that being a good indication of where we might be for next year. I know you've kind of historically talked about wanting to see this business get back to 15% margins. Maybe that's a little bit aggressive for Q4, but do you think sort of, again, good utilization, this division has done sort of 14% in recent years. Is that a sensible assumption? Let me give you a different way of reading. Our forecast for the last quarter is telling us that the year-end margin is gonna be over 13%. The year-end margin energy projects is gonna be above 13%? Yeah, the last quarter I don't have directly, but it will be quite significant. Yeah, 'cause you're at 11.6 year to date, so that would be 16- Yeah. We are gonna have over 2% margin in one quarter. That's the forecast, then I like the actuals. If I can say one thing, let's always keep in mind that in project business what is very relevant is the full year margin because if you go back many years, you will always find a very significant difference in margin between the first part of the year and the second part of the year. I wouldn't take this 16% as safe for the Q4. The compounding calculation is 16%. I wouldn't use this for 2022. I think we should use the 13%-14%, of course, with the growth of the business, we have operating leverage. Not certainly use the Q4 for the following full year. Sure. Understood. I guess, is it right to think the reason that you might get to 16% is because you're closing on projects and those sometimes have some provision releases in- Absolutely. Yeah, which is why that margin can be so strong, just so we understand it a bit better. Is that correct? Yep? It is correct. Yeah. Okay. That’s helpful. My next question is just on this sort of EUR 400 million-EUR 500 million sort of project EBITDA number that you’ve talked about. I mean, we get asked about it quite a lot. The thing I’d like to understand is we’re talking about EBITDA kind of in energy projects nearly doubling, so adding about EUR 200 million. If we think about kind of what that means in terms of revenues, we’d need to add, assuming it’s a 15% margin, sort of somewhere north of EUR 1 billion of revenues in order to achieve that. Absolutely. I guess what I'm trying to understand, when I look at your CapEx and you're spending EUR 200 million on a U.S. facility, but I'm struggling to see where the CapEx in the current assumptions is to get that kind of revenue growth. Unless in the next couple of years, we're gonna see a real step up in CapEx on top of what you've just announced. Can you help me understand how spending EUR 200 million-EUR 300 million on a new plant is gonna get you EUR 1 billion more of revenues? Or where with your current capacity set up that kind of step up in revenues is achievable from? Okay, let me give an answer in a different way. In terms of installation capability and capacity, we are already there. We need some additional CapEx are foreseen, and honestly speaking, we have authorized an additional CapEx in Finland to be executed this year. We have already authorized, and is ongoing, the CapEx for capacity increase in Arco Felice. We are missing still the U.S. plant. We have already authorized also the U.S. expansion for this agreement. At least in the medium term, we should be not so far from the required capacity by the markets with the investment that I already told you. Okay. The level of Yeah. Sorry. The level reported in page 11 is a really reasonable level. Maybe there's some other opportunity will come, and we are gonna follow with additional CapEx. Okay. That's clear. Just so I really understand that. You can potentially do an energy project about EUR 3 billion of revenues based on the CapEx that you have laid out in slide 11. Just to make that crystal clear. Yeah. Yeah. Okay. Yeah. Understood. Maybe just one final one for Philippe. I mean, I sort of appreciate the sort of comments on the volumes getting better, the pricing sort of maybe having reached a bottom. Should we also translate that to your sort of telecom margins also having bottomed? Because I know there's been this effect where your contracts get renegotiated, that can have a delayed impact on margins. I'd love to understand whether based on the pricing of volumes, we feel like margins have reached a bottom this year or whether there is still that delayed effect that may need to come through in 2022. Yes, Max. Certainly in the quarter three, we having the full effect of the new contracts that we discussed over the last quarter. We now have the full effect of prices, of the price reduction in our numbers. The second thing that we have is of course the impact of the increased raw materials and transportation. Of course, as you know, we are permanently working on our cost in general. I would say if you take the quarter three isolated, you are at a level that is to me, unless we have surprises on the raw material prices, should be unsustainable if we do not have any big change in the mix of geography that we serve. I'm sorry to add a consideration that in my opinion is quite important. If you look at the inflation on the transportation costs, that is very helpful to us because our industrial presence all over the market is everywhere. Whereas the Indians, for instance, or the Turkish will have a much higher problem or much higher costs to export to the other markets, we don't. That is helpful to us. We are seeing this in the U.K. market, where the Turkish were a significant exporter of energy inputs, and today they are suffering a lot, the availability as well as the cost of containers. The transportation cost increase is not totally negative to us. It's a double effect. Yeah. It's more expensive also for us, but we are, I think, at least I can speak for my business. I think we are the most local of the global players. We Okay. If I've seen it will be the other way around. Yes, that's for everything I can see as well. Okay. Valerio, could I just check, because I struggled to hear during the presentation. You didn't make it. Did you or did you not make a comment on 2022 margins in telecom? Did I hear a comment on 2022 margins in telecom or did you not say anything? I did not, honestly. You did not. Okay. Perfect. Thank you very much, all. I don't like to talk right now about the margins of next year. It's a little bit early. Understood. Thank you. You're welcome. Our next question comes from the line of Sean McLoughlin from HSBC. Please go ahead with your question. Good afternoon. Thank you for taking my question. The first is coming back to slide 11. Could you just talk a little bit more about what you mean by climate change and digital in terms of CapEx allocation? How should we think about this? How are you enhancing your product? You know, how can we think about, you know, profitability, new products in climate change and digital? I leave the floor to Massimo Battaini, our CFO, because what I mean, I start the answer, then I leave the floor to Massimo for more details. Obviously. In order to catch up with our sales based target commitment, we have to reduce our emission. To do that, we need some CapEx. For instance, the relamping of all our factories are already ongoing. There are other CapEx, not significant CapEx, but other efforts that we have to do. If I can just follow up on the lesser degree of- There is someone that has the line open. Consequently, we need to foresee some investment, some medium-sized CapEx, in order to reduce our CO2 emissions in the next five years. That's the reason for the climate change in digital CapEx. More climate change, the digital is something much more stable than foreseen. Massimo, do you want to give more color? Simply that in line with our commitment, Sean, the net zero by 2035, we have allowed some EUR 100 million CapEx over 10 years to be deployed in our factories to make this plan solid and achievable. This is what this climate change is about. We also are working on removing some SF6 gas, which are very contaminating in our footprint, the one that we use, as do our competitors, for high voltage and accessory cable testing. This requires some additional CapEx. So this is showing the problem that is CapEx for the climate change and sustainability target. The climate change we take very seriously. If we tell something, and we are gonna do. That's our style. Understood. How should I think then about the digital part of that? 'Cause surely that is going into new product areas. No, the digital is a quite important chunk of investment. We every year are implementing in order to improve our digital structure, meaning the IT systems. That includes the General Cable perimeter. For instance, now we are implementing the new SAP S/4 in the entire perimeter. Right now we are doing it in North America, and it's a quite expensive CapEx. Did I answer your question? Yes, that's very clear. Thank you. If I may, just one follow-up, just to be clear on the project CapEx. We know about the U.S. facility. I'm just thinking about the split between submarine and high voltage. I guess the ship is obviously submarine specific, but can I assume there's complete overlap in new capacity in the projects for both submarine and underground high voltage? Yes, of course. I'm not sure to have understood very well your question, but the CapEx we are referring to are the total CapEx, including the HV land and the submarine. Yeah. Now, of course, from the share of the incidence of the high voltage CapEx, land high voltage CapEx out of the total energy project is lower than submarine. The chunk of this capital will be deployed in the submarine capacity, more in the voltage capacity, in the range of probably 30%-70%, 30 being land and 70% being submarine, especially in light of the US brand new plant in the submarine space. You have to consider that the CapEx required for German corridors are almost already done. The CapEx for submarine are under execution. That's right. They're partly in the numbers, surely in the numbers of 2022. What we miss today is part of the CapEx for submarine. Unless some other big land projects may come. Okay. Thank you. You're welcome. Our next question comes to the line of Prathamesh Saigunkar from Goldman Sachs. Please go ahead with your question. Hi, good evening. Thank you for taking my question. I am Prathamesh. I work with Daniel at GS. I had two quick questions. My first one was, like, you seem to be winning a lot of projects in the U.S. without having a U.S. submarine plant. I was just wondering that, do you still need a U.S. plant, or is it possible to just produce all the cable that you need for U.S. from your European facilities? I can ask the second one later. We continue to believe in a U.S. plant. The question is it possible for Europe to produce for the U.S.? Yes, it's possible, but the transportation will be expensive. Moreover, the local content unfortunately is something that's appreciated by the customers in Europe. The reason why, having no additional capacity or available capacity for various markets in Europe, being also the European market expected to further grow, we have decided to move into the market. Let me remind you that we have been the first to build the HV plant in the U.S., followed by our competitors. Now, we are not the first, sorry. To summarize in HV, we wanted to be the second and not more than the second. It is also a way to balance our capacity versus the demand. We will have situation in which we produce from Europe and deliver to U.S., even if we have a plant in U.S. and also the other way around, because it will be difficult to guarantee full saturation of our assets only sitting in one geographical area, being in Europe. The plant in the United States will help us saturate full plant across the world and respond promptly to market demand. Thanks, Alessandro. My second question was around telecom. I don't know if you have already answered this, but the telecom PPI data seems to have moved up, but your commentary around pricing was still challenging. How much time do you think it will take for the telecom pricing to reflect the PPI data? Margins. To pre-pandemic. Yes. Sorry, but your line is a little bit disturbed. No, the question is about how much it will take to go back to pre-pandemic margins in telecom. Uh, it's, uh... I would say, which pre-pandemic? The pandemic in telecom in reality is not the main event. The main event was the slowdown of the Chinese market in February 2019, which was one year before the pandemic. Right. Since then, prices went down by something like 30% very suddenly, and they stayed down and even went down further for a while. We are going to be back to these levels, I hope one day, but I don't see it yet. What I see is something like half the gap being fulfilled in the coming 12 months, something like this. You know, you have to take that really as a gut feeling. The gut feeling of someone knowing the market and having feelings about it. It's not scientific at all. The volatility of the telecom market is unfortunately pretty high. Consequently, now we are recovering. What will happen in the next 24 months is difficult to predict. Yes. The trends are on the right side. Thank you for answering my questions. Okay. Thank you. Our next question comes from the line of George Featherstone from Bank of America. Please go ahead with your question. Hi. Good afternoon, everyone, and thanks for taking my question. Listening to some of the commentary across the wind energy sector recently, the industry has clearly struggled with logistics and raw materials cost inflation. I just wondered if you'd seen any changes to pricing dynamics or contract structures and conversations with customers within your wind and offshore wind exposure. Thanks. The energy business is a pretty steady business in terms of volumes, slightly growing. Let's say kind of keeping growing with the GDP. Now, the raw materials increase and the transportation increase, we have been able to transfer to our customers. That's very good because at the end, once you transfer the copper price increase or the insulation material cost increase, something remain in your pocket, especially if you are able to negotiate properly. The growth of raw materials in our business is positive if the demand is good, because we can pass it to the market, to the customers. If the demand is not good, that's another problem. It's a very big problem. It usually doesn't happen. In the last 20 years that I'm in this business, I've never seen it. In the offshore, as you were asking for, you mean the projects. In the projects, the metals is fixed in advance. Once we get the order, we fix the metals for the entire quantity of the project. We cannot fix vice versa, the derivatives on the estimate. That is the base raw material for the compound. There we may suffer a little bit the margins, but it's not an amount that is gonna kill us. The raw material cost increase is usually passed through the customers. For the projects, of course, the timeline to execute the projects and to realize the cable is longer than the move of the raw material price. The contracts do not usually foresee an adjustment of the price due to the raw material fluctuation, if not for the customer randomly, and sometimes period. It's not going to damage significantly the margin of the projects. Hakan, I don't know if you wanted to add something about the project margins plan. Yes. Valerio, you explained very well the project part. I can only add that it is very project specific to adjust sometimes also raw materials other than metals. If the customer is in agreement that we can escalate, you know, with an escalation formula the price according to the indexes of other raw materials, we are taking that into consideration. In case we are not in agreement and the customer wants to keep a fixed price in the project other than the metals, then we include some inflation into our project that cover partially, you know, the normal increases in the market regarding the raw materials. Of course, if there are short-term significant fluctuation, they are not covered by the. Let's say, by these adjustments. However, we do not see such a situation lately, especially when we sign the contract after the raw material price increases that has happened. We are already including all the updated raw materials and also expected increases going forward. As Valerio said, we from time to time are affected, but it is not changing the profitability of the project significantly. Okay. Thank you very much for the color on that. Thanks. Okay. If there are no other questions. We appear to have just one question that just been registered, sir. Would you like to take it? Yeah. Of course. Yeah. It comes from the line of Luigi De Bellis at the Equita. Please, go ahead with your question and announce your company's name. Hi. Good afternoon. Can you hear me? Luigi De Luigi De Yes, just one question on the energy. If you can elaborate. I lose Hi. Sorry for the line, but it's very disturbed. Can you elaborate on the speed of organic growth and volume for the coming quarters for the Energy & Infrastructure division based on your visibility and backlog? Thank you. Speed of organic growth in the project business. No, the- In the energy business. The E&I. Listen, I have to be very honest with you. I rarely have seen energy business, especially E&I, going up sharply. Consequently, our forecast, I tell you the truth, is to be able to maintain the volume of energy. That could be already a success after the very big increase we have seen in the last three years. Massimo, do you want to comment? Yes. Volume will remain conservative, but we are very positive about what we've done this year in terms of passing cost inflation to the market and price rise. You will see an organic growth not related to volume and more related to prices than anything else. This is standard that we foresee lasting at least for the first six months of next year. Beyond that, we still don't have visibility, but we are confident that we'll do next year the same good job that we did this year. Thank you very much. Thank you very much to all of you. It has been a pleasure to have this conference call with you, and goodbye till the next one. Ladies and gentlemen, thank you for your participation. This concludes today's conference call. You may now disconnect your lines. Thank you very much.