Good day, and thank you for standing by. Welcome to the Prysmian Full Year 2023 Financial Results Conference Call. We have online with us Valerio Battista, CEO; Massimo Battaini, Designate CEO; and Pier Francesco Facchini, CFO. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Valerio Battista. Please go ahead. Thank you very much, and good morning to everyone. Gentlemen, this is my and Francesco's 68th quarter result call. After 17 years, we are still here surviving and managing the company. So let's go with the result. You have already seen from the press release our EBITDA reached EUR 1,628,000,000 with a, let me say, outstanding 10.6% margin. The net profit reached EUR 529,000,000, and the free cash flow, that is one of the most important chapters of our management, is EUR 724,000,000. Profit, 23.1%. Dividend proposal for the shareholders, and as you know, I'm one of the lead shareholders of this company, EUR 0.7 per share, with a 16.7% growth year-over-year. Last but not least, the greenhouse gas emission. That's a very sensitive chapter for me, at least, with a reduction of 33% on Scope 1 and 2 and 10% on Scope 3. The results, as you have, as you can see on the right side, is growing pretty well with a strong cash generation. The cash generation is our main driver, guys. There are no results if there is no cash attached to. Next, please. Flip into Page two. The margins of our original segmentation. Finally, in Projects, the EBITDA reached EUR 300 million. The margins are not outstanding because they are still at 12% in a good progression compared to the same quarter one year ago, but not yet at the 14+ we are engaged for. It will come, but it's a matter of time and a matter of capacity. So EUR 300 million with 12% is a good step forward towards the five-year plan target that we confirm. We confirm also because the order book has become almost EUR 20 billion, and EUR 20 billion means that we are with an output that we reach EUR 3.5 billion per year are a number of years of certainty in terms of business. Energy. Energy is the largest chunk of our business. The sales reached EUR 11.3 billion with an organic slight decline of 1.3%, but that's not is not terrifying us. It's not a bad sign. Why? Because the demand is, is better. Now, I'm talking about January, February, seems that the demand is not so bad. Of course, the slowdown of the North American market price for T&I is significant, is in place, but is largely compensated in the energy business segmentation by the Power Distribution. You can see also in, in the industrial Industrial Network Component, organic growth is +1.7%. All in all, the EBITDA reached EUR 843 million with an outstanding 11.1% EBITDA margin, and in the Industrial Network Component, EUR 361 million with 10.8% EBITDA margin. Very well. Telecom. The demand on [inaudible] happens, guys. It's not the first time that we see the Telecom swing negative swing very strong. But as well as is a strong decline, usually is quite strong also the pickup and the recovery. That's the life. EUR 140 million only after last year at EUR 271 million. The volume in H2 have been very low, especially in the U.S. Moreover, we had some one-offs exactly two affecting the Q4. But if it's a ticket to be paid to solve the issue, I can tell you that we are quite strongly defining a restructuring plan for the Telecom, at least in Europe. All in all, organic growth minus 1.1%, almost flat, with an adjusted EBITDA of EUR 1,628 million, 10.6%. Very good. Now is my turn to leave the floor to the CEO Designated, Massimo Battaini, because you have to get more colors from him because he's gonna manage the company after my leave. Thank you, Massimo. Valerio, thank you. Good morning, everyone. I'd like to ask you a bit of an effort because now we have to forget the three segments that we discussed thus far and get acquainted to the new segmentation: Transmission, Power Grid, Electrification, Digital Solutions. You see the new names, and the faces, actually. You recognize that all of them have been working as CEO, regional CEOs in the last 5, 10 years. So they are experienced people that we bring to the center to lead the market trends and their impact in our organization and our business streams. So here is the picture of the new segmentation. I thought it was good to provide you with an historical trend, and I think 2021, 2022, 2023 are enough years to make you appreciate what is going on in these four segments. So starting from Transmission, you see a continuous growth in EBITDA, absolute value, EUR 170 million to EUR 230 million, EUR 270 million. You also see a slight deterioration in the EBITDA margin, which in 2022 was the result of the high inflation that hit the business, with the fixed prices. In 2023, to be honest, we were not expecting this slight, further deterioration, which is particularly related to one segment of the business, the inter-array business, due to having inherited some projects whose installation was a bit complicated by delays and other effects. And shortly, you will see in 2024 this to 12.9%, resuming around the level of 14% and building the trajectory and the way and the path towards the 16% that we mentioned to you at the Capital Markets Day. EUR 273 million is still not where we need to be in 2027. We still have EUR 300 million to achieve the EUR 600 million EBITDA by 2027, but the backlog that we show you in a second is the strength that we have behind this segment and behind the confidence that we will get there. Power Grid made a fantastic job in 2023 with an 11.5% EBITDA margin, twice as much what we used to have in the past, and a staggering EUR 390 million. It is obvious that we hint at the fact that we will certainly beat that target much earlier than 2027. This is the result of a strong negotiation across all utilities contracts to reflect inflations and also additional contribution coming from the smart grid, the solution system, solution system provider approach that we applied to this Power Grid space. Electrification, also here, I think we have to acknowledge a fantastic job because we have been able to affect entirely the Industrial Construction, so the former T&I price normalization North America with additional upside in specialties, the former Industrial Network Component, and this is visible from the level of EBITDA which we had at EUR 800,000,000 despite the price normalization. Digital Solutions is fully overlapped with the Telecom business, so I will not comment further. What we can comment is that the 9.4% EBITDA margin is certainly very low. 2024 is expected to be higher than this 9.4%. Let me move to one important component for the Transmission Division, so the backlog. That line represents the position we had at the Capital Markets Day: EUR 20 billion backlog—EUR 20 billion, sorry, order intake, as you remember, made of EUR 10 billion backlog, so orders with notice to proceed, and EUR 10 billion of orders without notice to proceed but with high confidence because there were solid commitments. You see that today, meaning four months down the road, we are very close to EUR 20 billion, namely EUR 18 billion, of backlog. So we have converted the high confidence, high solid commitment project into backlog in just four, five months. With this EUR 18 billion backlog, not only we have full coverage of the revenue that we need to have, in the next five years to achieve the EUR 600 million EBITDA, but we go well beyond 2027 in terms of, coverage of the revenues and of the capacity, installation, and manufacturing capacity that we're gonna bring, we're gonna bring, up to speed in the coming, years. Let me shift to another important topic for us. You see here the two pathways of the Scope 1 and 2, so our internal emissions, and the Scope 3, the emission of our cables in operations. Scope 1 and 2, we are happy to confirm that we will increase significantly the target by 2030 from 47% to 55%-60%, so maintaining good pace and, making the goal of 90% decarbonization by 2035 really, achievable. Equally important, even more important, I would say, for us is the Scope 3 because these are the emissions of cables in operation which are the emissions important to our customer, and we are working end-to-end with our customer to provide innovation and innovative solution in terms of cables with low carbon footprint to help them achieve their sustainability goals. This becomes an important lever to make more to generate more business opportunities with our customers. Our overall sustainability journey and program is made of five streams of activity. I will not dwell on the numbers, but maybe draw your attention on the first stream of activity, which is the role that we have as the enabler of the Digital Solutions, digital transformation, and energy transition by connecting homes, by connecting households with green electricity and with Digital Solutions. You see the million homes, incrementally growing as we deploy our cables to connect houses and buildings. I will draw your attention also to the center, the two center streams, the Scope 3 emission which I already talked about. We will, we are heading for a -23 reduction in 2027, so this 23% will provide a significant help to our customer to achieve their goals. And to achieve the Scope 3 emission reduction, we also work on sustainable products, on recycled material, on recycled cables, which is the next stream down in the table. Last but not least, let me share with you how excited are we about the 46% shareholders employee threshold. It's an unbelievable target. The 2027 target is probably very easy to achieve now with the 46% already scored now. In fact, we will beat it, and we will enhance it. This including white-collar staff, management, and more importantly, blue-collar workers. Guidance. EUR 1,575 million-EUR 1,675 million is a short range, EUR 100 million, which is what we consider the proper guidance for 2024. Two main considerations. The midpoint is exactly in line with the result achieved in 2023, so we are confident that we will at least deliver in 2024 the same result as 2023 despite the normalization price in the Industrial Construction, the Telecom, and all the rest. And if things ended up better, we will certainly fall into the second part, the top part of the range. The second point is less visible to you. By the time of the Capital Markets Day, we had in mind for 2024 a completely different number. It was actually below the number that we set for 2024, below the low point of the current range. It was below the EUR 1,575 million. So in the last four months, five months, we gained much more confidence in what 2024 would look like. With a EUR 1.65-EUR 1.625 midpoint, I think the message I want to give you is that we have strong confidence also for the 2025 target, which you see on the right, set at EUR 1,775. We confirm our journey towards the Capital Markets Day goals, and this guidance it is exactly delivering this message. Free cash flow-wise, of course, you see that we are well ahead not only of the 2024 Capital Markets Day number but also the 2025-2027 Capital Markets Day number that was EUR 700. We set also in this case a guidance whose midpoint is set at EUR 700 now with a free cash flow delivered in 2023 confirming that at least we will deliver the same number as 2023 in 2024, if not better. And again, this is giving even more confidence that, not only we will achieve, the, free cash flow target of the Capital Markets Day, we will certainly heading for beating this target and the cumulative number of EUR 3.2 billion in five years of free cash flow. Scope 1 and 2 are confirming the same, target, increased target for, that we discussed at the Capital Markets Day and Scope 3 as well. Thank you. I will hand over to Francesco for the, last part of the presentation. Thank you, Massimo. Good morning to everybody. Wrapping up the profit and loss statement on the left part of the slide. Organic growth, substantially flat -1%, due in the fourth quarter to the sharp drop of the, Telecom business, specifically in North America. Adjusted EBITDA right in the middle of the guidance range, EUR 1,628 million, and notwithstanding, once again, a sharp drop of the Telecom business, you clearly see the drop in the right part of the slide where we bridge quarter by quarter the 2023 to the prior year. You see that in the second half, the Telecom dropped, compared to 2022 by more than EUR 100 million, EUR 43 million in Q3, EUR 64 million in Q4. Notwithstanding that, the other businesses performed very well, projects, energy compensated for that and allowed us to close right in the middle of the 2023 guidance with a very significant improvement in terms of margin at 10.6% from the 9.3% of the previous year. Other very strong point that I want to remark is the net profit. Group net profit, going up to EUR 529 million. Consider that in this net profit, we took the charge of an impairment in the Telecom business, by far the largest part in our YOFC investment of more than EUR 200 million. So let me highlight very clearly that without this impairment and non-cash impact, the net profit would have achieved the incredible level of over EUR 700 million, which is, I will go back to this commenting on our progress in terms of earnings per share in a while. Let's move to the cash flow. As Massimo and Valerio anticipated, really strong in 2023, EUR 724 million. You see that it is it is clearly boosted other than the EBITDA, of course, by a very strong and good dynamic of the working capital, a decrease of almost EUR 200 million, mainly driven by the outstanding results of the order intake in the project business, which, of course, brought with it some very large down payments, that, by the way, will stay in place in terms of level also for the next year, and this relates to the very strong guidance of cash flow also for 2024. That's very important because in this same chart, you see that this strong cash generation is allowing us to even accelerate on our CapEx plan within, of course, the boundary of the EUR 2.7 billion CapEx of the five-year plan, which stays unchanged. You see that in 2023, our CapEx exceeded the EUR 600 million. Again, cash is the key because cash allows to accelerate growth, to accelerate CapEx, to deleverage, to pay dividends. I think is the key of almost everything or even everything. Cash is king. Thank you. Let's move to the following. This just to say that to reiterate our confidence on the strong result and cash generation for the next years, we are deciding to propose to the next shareholders meeting a dividend increase in terms of dividend per share up from €0.60 to €0.70, which is an increase of almost 17%. You certainly remember that at the CMD in Naples, we were hinting at a 10% year-on-year increase of DPS. We are starting with the right momentum because in the first year, we are already doing significantly better or at least proposing to the shareholder meeting, significantly better than this. Massimo already anticipated this, but focusing on the right part of this slide, you certainly remember the EUR 3.2 billion cumulative free cash flow that we committed to in the CMD. I think that just based on the strong achievements of 2023 and the 2024 guidance for free cash flow, I'm very confident we are very confident that we can top up that cumulative cash flow by a few hundred million EUR. Let's move to close my presentation on our commitment to deliver, so where we are in 2023 compared to where we were supposed to be as a baseline of our five-year journey, of our five-year plan. EBITDA, we already said everything. In the midpoint, with a weaker Telecom but certainly better in the other businesses. This once again confirms the importance of a very broad and diverse portfolio, which is our strength. Cash conversion, EBITDA conversion into cash already at 45%, ROCE 23.1%. You see significantly higher than the baseline that you have on the red, on the green column of this slide, the baseline that we were assuming as the starting point of our CMD targets. Dividend, I have already commented. EPS, earnings per share, very important. You also remember in this case that we were hinting at an EPS growth over five years greater than 10%. Well, let me tell you that the first year is starting with a 33.8%, of course, net of the impairments that I was highlighting, which is certainly a good start. The debt in terms of leverage, net debt on EBITDA, is staying where it is supposed to stay in the corridor between 0.5-1 times. Very good. I think I'm done with my presentation. We can move ahead with the Q&A session. Thanks a lot. Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will take our first question. Your first question comes from the line of Daniela Costa from Goldman Sachs. Please go ahead. Your line is open. Hi. Good morning, everyone. Thanks for taking my, my questions. I have three. I can take them one at a time to make it easier. But starting with projects and thinking about sort of the 2024, can, can you elaborate a little bit more about how should we think about growth? I guess you have the Finland capacity coming on stream, but you've also been operating at capacity on the rest. So thinking abo ut the balance there and also the mix, compared to the mix you had in 2023 to think about margins. Then I'll ask my other questions as we go. Thank you, Daniela. I leave the floor to Hakan that is here around the table. Massimo, would you like to say something? No. O kay. Go ahead. So, first of all, talking about 2024, we are seeing, as Massimo also was explaining, a growth in our, let me say, profitability and also in terms of the absolutes, we will see also an improvement because of the mix and also because of completing some of these projects that we have initiated some years ago, in 2023, like the Viking project. So therefore, we are going to see some profitability improvement. On the other hand, on the capacity, we are still constructing capacity, as you know. The effect of the capacity, we will not see exactly in this year. But there are some small improvements that are coming from the DC side of the German Corridors in terms of production that will be a positive effect on top if we talk about capacity overall. One additional integration, Daniela. I think you should expect for 2024 a similar growth in EBITDA as the one that you've seen in 2023. So the range of EUR 50-60 million is what we can achieve despite the capacity is what is stable and more or less in line with 2023, but the project mix will help us and some HVDC additional benefit will help us to achieve this number. While in 2025, you should expect a much larger leap in result than this EUR 50 billion-EUR 60 billion because in 2025, there will be the first wave of extra capacity coming to fruition. Very clear. Thank you. Let me add, Daniela, that today in projects, we have one issue still ongoing. That is the medium-voltage inter-array. This is a segment into which we are in. We have to honor certain contracts, but we are not happy at all because the margins of this business is very, very low. Why? Because we produce the cable. We give we make the installation, and this is a headache. Reason why our goal already decided and shared with the project team is to move to only supply only of the cable. This is in order to remove the difficulty we have using third-party installation. That is a nightmare. Okay. Thank you very much. Thank you. My second question relates to the you had commenting prior quarters that the readjustment on the former Trade and Installers could be sort of up to EUR 200 million of EBITDA. Just, an update in case I missed it to during the presentation of where do we stand in that? Is that still the right number to think, and how much was the readjustment already within that? Daniela, thank you. We confirm the EUR 200 million. In reality, we had EUR 100 million EBITDA adjustments in North America, partially offset by improvement in the industry and construction space elsewhere, mainly in Europe and LATAM in 2023. And that's why we held the energy business result EBITDA in line with the 2022 number. For 2024, we expect the same EUR 100 million, but, but, we think that we are going to be less impacted by this normalization than the ones that come from the EUR 100 million because the start of the year is much better than anticipated volume-wise and price-wise. So we might have a positive surprise in terms of soft landing in 2024, less disruptive than the EUR 100 million that we mentioned to you a few months ago. Thank you. And my final question, just related a bit to the comments you've mentioned on Power Grids and towards 2027 potentially exceeding the targets. But as we think in 2024, you had in the guidance, I believe, around 10% EBITDA margin over the long run staying flat. You've done more than that. When we think about 2024, are there any headwinds that we need to keep in mind from frame agreements or from something, or have we now resettled to a higher level already? Daniela, we believe that we are stable at this 10%+ EBITDA margin also in 2024. 2024 will be the year where we will achieve incremental EBITDA thanks to the incremental capacity. We had some, let me call it, 20,000 tons, which is 20% of the North American volume in capacity coming on stream already in quarter one this year. And then in 2024, we will beat the 2027 target in Power Grid thanks to the incremental capacity and the EBITDA margin stable at 10%+. Super clear. Thank you very much, and all the best to Valerio's next steps. Thank you, Daniela. Thank you. We will take our next question. Your next question comes from the line of Max Yates from Morgan Stanley. Please go ahead. Your line is open. Thank you. I've just got two questions. Just the first one is around the Telecom business. And obviously, a lot of what we've talked about this year in terms of the headwinds have been in North America and the destocking. Yet I think you were saying that you were planning to restructure your European footprint, and you were thinking about taking actions there. So I guess my question really is, how much of what we're seeing in Telecom is just a U.S. destocking issue, or actually, is there something structurally that has also changed in other parts of the business, maybe Europe, that has driven some of the move down in EBITDA? Thank you. Thank you, Max. Let me, let me take my opinion, my humble opinion. The telecom, okay, have had a serious destocking in 2023. Is part of the game. It's very fast accelerating when the market is booming, but the boom has usually a quite quick swoon later on. Now we are in the swoon happens is, has to be foreseen, and consequently, we have to act. That's the reason for the restructuring we are planning to execute in 2024. Massimo, do you? No, maybe the point, Max, is that we are restructuring Europe and not because we see a downturn in the market in Europe. You need to be aware that we had few plants worldwide supporting the strong demand in North America. The reason why we are restructuring Europe is that because now we see with this pause in demand the opportunity to implement some cost rationalization that we thought of already a few years ago but we were not able to implement it due to the strong demand in the market. So there will be a couple of plants, reduction, restructure in Europe, one also in North America to rebalance the capacity to the demand but also to set us in terms of cost base in a better position to leverage the growth of the market that we expect to see coming in the second half of 2024 once the subsidies from the North America, USA government to support the rural broadband will come to fruition for many projects in the United States. Okay. And just my follow-up question is just on the Free Cash Flow guidance. So you said kind of this year in, well, 2023, the Free Cash Flow was very good, because you had some good prepayments, which I guess we see on the contracts. You're saying you can stay at that Free Cash Flow level in 2024. So what I'm trying to understand is, do you see Free Cash Flow staying at that level because you have a lot more orders that and you're expecting a lot more prepayments, or is it that actually some of the big orders that we had, things like Eastern Grid, things like the EUR 5 billion order that you took—have you received any prepayments for those, or are those still to come? Just trying to understand kind of where we are in the prepayment process on those contracts. Oh, prepayments, let me say, are above the level that we expected, when we set the targets at the CMD. Not dramatically above, but above, certainly above. And that's the reason of the overperformance in 2023. And it's also the main reason of the overperformance that we expect for 2024 because we are anticipating more than one year, because the 2024 is above the 2025 target. So, basically, we expect prepayments to be even slightly higher in 2024 than in 2023, not dramatically higher, but let me say, growing gradually at a very high level. That's the main reason. The rest, I think, is more or less evolving in line with all the assumptions of the CMD. Let me also add that 2023 was a bit supported by the slowdown of some reduction in the metal prices, which always help. That's it. Volume, as you saw, didn't grow that much in 2023. So also this was not too bad for the working capital. You know, when you have stable volumes and very high level of margins is a perfect combination. And by the way, strong order intaking projects is the perfect combination to generate a lot of cash. And this is what's happening, Max. Sure. Understood. Very, very quick final follow-up. Just on M&A priorities, I don't well, at least in my mind, I'm not kind of entirely clear on what your priorities would be in terms of kind of adding businesses. It's been a while since you've done an acquisition. So maybe you could just briefly talk through kind of what, what are your priorities, and where do you really see kind of opportunities, or, or what areas of the business at least would you try and add, through M&A? Thank you. Okay. Max, thank you very much. I leave the floor for the potential acquisition to Massimo Battaini. But then you buy it. It will it will be his job and not anymore mine. Yeah. Max, thank you. So priority-wise, I think we confirm that we will not pursue the transformational deal that we had you've seen us perform in the past for obvious reasons. The targets are not available with the same features in terms of complementarity. We will pursue deal, deals where the, commercial synergies so to strengthen our portfolio or market share or share of wallet in geographies is the priorities. In terms of geographical footprint, we give priority one to North America. Of course, we also look at some European opportunities. We also consider the Middle East as an area where we might resort to M&A to grow our footprint there. On the contrary, we rule out, for the time being, Asia-Pac for obvious reason of no priority, complicated areas to deal with, and no great no great energy transition or digital transformation projects going on in that area of business. Understood. Yeah, that's helpful. Good luck, Valerio, in the future. Thank you very much. Thank you. We will take our next question. Please stand by. Your next question comes from the line of Akash Gupta from JP Morgan. Please go ahead. Your line is open. Yes. Hi. Good morning, everyone. Thanks for taking the questions. This feels like the end of an era or maybe also start of a new era as well. I would like to start with paying my tribute to Valerio. Thank you very much for maintaining a very consistent and open dialogue with the entire investor community. Okay. Thank you. Starting with my questions, the first one I have is on capital allocation. Your dividend for 2023 is ahead of the targets that you have given at the Capital Markets Day. Then this morning, there was a Bloomberg interview of Massimo where you mentioned EUR 1 dividend by 2027, which would imply more than 40% growth over next three years. So, the question is that, is this because you are changing the allocation between higher, like, to pay higher dividend over share buyback, or is this reflective of you being more bullish on the long-term demand based on last four months since the Capital Markets Day? So that's the first one to start with. Yeah. Ciao, Akash. Francesco. I think the EUR 1 dividend per share by 2027, I totally share Massimo's point. It's totally realistic, I think. And you are right. Implies a bit more than the 10% DPS growth. It's simply based on the fact that we are generating, for the time being, more cash than we thought. And we are overdelivering in terms of cash. This was the case in 2023. Will be the case in 2024. I think that also in the following years, we will be at least in line with the CMD targets. But this means that the cumulated cash flow of the five years, which was set at EUR 3.2 billion, maybe EUR 3.5 billion, for instance, EUR 3.4 billion, EUR 3.5 billion, and keeping the same allocation, exactly the same allocation in terms of M&A and buyback, you remember, in terms of dividends and in terms of the leverage, of course, the absolute numbers ends up being higher. And we can afford to increase dividend a bit more and to have a growth which is not 10%, but it is 13%, 14%, 15%. We will see going on, of course. That's the main reason. But there is no change in terms of capital allocation structure, conceptually, compared to what we were discussing in Naples. And then maybe a follow-up on share buyback. So that was also planned for capital allocation policy. When are we going to hear about, how much and when you are going to start a share buyback program? Yeah. As we anticipated in Naples, share buyback is important, but it is a kind of residual, of course, to M&A, which is the priority. We were very clear in Naples. This doesn't mean that the share buyback is not important, of course. But we are very keen on finalizing our ideas and our opportunities on the M&A. That's why maybe it's taking some more months than we but frankly speaking, I expected this to take some more months to have very clear ideas on the M&A capital allocation. And then depending on this first chapter, M&A, we will definitely resort on a decision regarding share buyback. Hello? Thank you. My final one is on EBITDA adjustments. So when we look at 2023, we had EUR 143 million EBITDA adjustments. Francesco, can you comment on what shall we expect as a base case for 2024? And also when it comes to cash flow bridge, you had a big IFRS 16 increase in lease debt in 2023. What shall we expect for 2024? Thank you. Good points. In 2024, we will have some restructuring. We were saying this, especially in Telecom. So I think adjustments, restructuring charges in principle will be a bit lower than this 140 but not dramatically lower, because we have in Europe, particularly in Europe and in the Telecom business, a, let me say, proactive restructuring that we think it's important to have a good positioning in terms of competitiveness for a recovery of the market. In the IFRS 16 impact on the debt in 2023 is mainly due to a specific reason which is not repeatable going on which is a decision that we took to renew and prolong a lease agreement for a very important installation asset that we have which is leased still falls under the chapter of IFRS 16 treatment. So this provoked or triggered this higher-than-usual growth of the IFRS 16 related debt. It will be certainly lower this increase in the coming years starting from 2024. Thank you. Thank you. We will take our next question. Please stand by. Your next question comes from the line of Monica Bosio from Intesa Sanpaolo. Please go ahead. Your line is open. Good morning, everyone. I hope you can hear me. Good morning, Valerio. I have three questions. Good morning. can hear you very well. Good morning. Ciao, Valerio. My first question is on the Power Grid. Can you give us a flavor on the expected trend in Power Grid between USA and Europe? A general question, do you see a risk from political election in the United States? My second question is on the inter-array business, which, a bit penalized, 2023. Can you remind me, please, the amount of the inter-array contracts and when the contracts will be fully deployed? The third question is, asking some CapEx indication, please, on 2024 as you accelerated in 2023. And I was wondering if for the Telecom restructuring in 2024, if we can assume a net cash impact still in the range of EUR 140 or if it is a different number. Thank you very much. Thank you, Monica. Valerio speaking. First of all, the Power Grid. The Power Grid is going very well. You have seen the numbers. And is expected to keep that trend. The trend is very positive mostly because of the price change due to the inflation rate. There are risks from the election? I don't think so because the grid in the U.S. is really very weak. The demand of electricity is growing. U.S., one way or another, have to deal with it. Consequently, I don't see any big risk even from the election. Of course, if Trump will go to be the president, maybe a slight reduction of the speed but not a reversal of the trend. That's my opinion. I don't know if Massimo has a different opinion. Oh, maybe he wanted also to know if you see a difference between North America and Europe. I think the strong demand remains, more solid in North America than Europe. There is a significant difference in profitability between the American business and the European one. That's why we are, as a first wave, expanding capacity in North America. Also, Europe is following suit. Yes, I don't see risk at all, because in North America due to the election because the grid is, what Valerio said, is in so poor condition. And the Electrification demand is so strong in North America that without continuing at an accelerated pace investment in Power Grid, our customer will not be able to serve their customers. So I see no issue there, whatsoever. Okay. Can I ask what? Yes, please. Can I ask just a follow-up on the gap in profitability between USA and Europe? What is more or less? Yeah. North America is some 30%, 35% higher than the European profitability. Thank you. Mostly for a matter of competition. Inter-array for the inter-array matter, I would like to leave the floor to Hakan. And Hakan should or could tell you what about the situation of the contract for inter-array, how much contracts we have in hand, and which are the foreseeable effects on the 2024 budget. Thank you. Thank you, Valerio. The inter-array business, I mean, we have to, if you look analytically, to the matter, we have two, different, criteria that affect the inter-array profitability. The one is, the, timing of the order intake, because we went through an inflationary, period that had an effect. The second one is with installation or without installation. These two criteria, actually deep, make the profitability, more evident in inter-array. So this year, we had majority of our inter-array including also installation. And the range of our inter-array business is in the range of EUR 200 million. So that had an effect, let me say, to deteriorate our percentage margin for this year, including, as Valerio and also Massimo were saying about the installation portion, which has hit us negatively, because it's outsourced. And the market demand on, in let me say, installation is completely a different market than it was a few years ago. So if we look forward, of course, we have a backlog of inter-array. We are reducing our exposure significantly on the installation portion. So we still have some, let me say, projects that we are going to complete in 2024 which have installation as part of the contract. But this is going to be also less than 2023. Therefore, we also committed to have a higher percentage margin in the overall, let me say, project business, let me say, Transmission business, for 2024. And going forward, we are offering only, as Valerio was stating, inter-array cables and delivery with termination and testing without any installation. That definitely is not going to be in the same level of margins what we do in interconnectors or in export cables, but is also not as damaging as included with the turnkey approach. And maybe, Monica, you need to know a number. We had, as Hakan said, delivered EUR 200 million worth of revenue in 2023. We have only EUR 300 million worth of backlog in inter-array left from 2023. In the next 18 months, we will deliver this EUR 100 million, hopefully in better condition because we have less installation exposure than we had in the last 2023 result. Thank you, Massimo. And thank you, Hakan. Very clear. And now, there's a question about the CapEx of 2024. CapEx 2024 level is pretty much in line with our assumption of the Capital Markets Day. So it remains in the neighborhood of EUR 650 million. Of course, there are some shifts in the overall picture CapEx-wise because we have less investment to promote for Telecom and a certain degree of acceleration for project because this backlog has required some additional investment to underpin the execution of this EUR 18 billion, dollars euros, sorry. So EUR 650 million is more or less the level of 2024 in line with 2023. And, Monica, that was your last question on the cash flow impact of the restructuring. I would say in line with 2023, maybe slightly higher, differently from the P&L charges because, of course, some of this restructuring just been initiated and will be mainly paid in 2024. But, of course, it's everything is included in our EUR 725 midpoint guidance. Yes, for sure. Thank you. Thank you all. Thank you, Monica. Thank you, Monica. Ciao, Monica. Thank you. We will take our next question. Your next question comes from the line of Sean McLoughlin from HSBC. Please go ahead. Your line is open. Thank you. Good morning. Firstly, Valerio, congratulations on a job well done. You leave a business in very good health. Best wishes for the future. Thank you very much, Sean. It's a pleasure. So my first question is just coming back, Massimo, to your comments around your change in confidence in October. I mean, it sounds like this has been largely driven by U.S. Power Grid. You're now talking about also softer landing, potentially, in, in, in the building cable segment. I mean, is, is, is it correct to say that, that it is the U.S. that's driven the, the key change in confidence? Could, could you maybe comment on how you've seen improvements in U.S. versus Europe and, and, and other regions versus your, your, your October comments? Thank you, Sean. So yes, the change in confidence, comes, essentially from, U.S., or at least, let's say, comes from Power Grid, which is more than the U.S. It's Europe also. It's LATAM and also U.S. It change it comes also from what you said, the soft, softer landing in the Industrial Construction pricing normalization in North America. But there is also another segment, which is the Telecom performance, which was not completely visible at the time of the Capital Markets Day. So despite the Telecom performance has worsened in the last four or five months vis-à-vis what we thought it would be happening in Telecom, the other two businesses had made us change confidence on the 2024 EBITDA midpoints and guidance. Very, very clear. Thank you. The second question, if, I guess your lower involvement in the offshore wind industry, and focus on Transmission operators, you know, given what we've seen in the offshore wind industry over the last year looks to have been very sensible. You're now talking about ultimately reducing exposure to inter-array as well. I mean, is it, I mean, how are you thinking longer term about offshore wind? I mean, clearly, the growth opportunity is there. But it does sound like, you've more or less definitively moved away or certainly have deprioritized offshore wind over, let's say, power links for, well, to Transmission and grid. Any comments there? Sean, in reality, we do not intend to reduce our exposure to the offshore wind, especially U.S. As you know, the first industrial-scale offshore wind farm, we did. And we think to stay. But we think to stay on a different way, not taking charge of the installation because the installation of an offshore wind farm is a very complicated and mixed activity between us, who produce the cable, who produce the towers, who install the cable. Frankly speaking, the risks are so high, having a number of actors running around this execution that is easy for the main contractor to have losses. Valerio, let me clarify. I think there is a misunderstanding, Sean, here. We wanted to stay away from the developer business in the offshore space. We are totally committed to supporting TSOs and utilities in the offshore space. So this is probably one misunderstanding. I think we clarified this point during the Capital Markets Day by saying that our exposure in the backlog to developers' business was virtually marginal. So we are fully involved in the offshore business with other customers than developers because we like the solidity and the commitment of the other customers. The offshore business is made of two segments: the medium-voltage cable for inter-array connecting poles of towers and the export cable connecting the wind park to the shore. We stay strongly committed in the export cable business, manufacturing, and installation because it's a very, crucial, business for us and very similar to the submarine interconnector cable. On the contrary, as we said, on the inter-array medium-voltage, which is a commodity, segment of the offshore space, we would like to play the role, all, only of supply cables and not performing the turnkey installation. I hope this has clarified this offshore position in our company, Sean. Yeah. And, and I would like to add one more thing. The offshore wind space is also changing. It is merging with the interconnectors, especially if you look to, the North Sea and, Germany. All the tenders have now a longer, land tail, which is actually comprising an interconnect. So the market is actually, let me say, playing in our favor. And we are also positively involved in all these projects that are not only offshore wind of export but also a huge, land tail that which gives us an additional advantage. We have no intentions to leave the offshore wind, let me say, market. And we will be continuously developing products and services for that. Very, very clear. Thank you. And if I may just to follow on the Brayton Point facility, I think I remember in the last call, you said that you would go ahead with that. Does that remain still your base case? Yes. Confirmed. Thank you. All right. Thank you, Sean. Thank you. We will take our next question. Your next question comes from the line of Alessandro Tortora from Mediobanca. Please go ahead. Your line is open. Yes. Thanks. I have three questions for me. But clearly, first, thanks, thanks, Valerio, for all the time spent in these meetings. And I hope we may survive many quarters ahead, okay? Now yes. Thanks. Now, coming to the questions, three questions, okay? The first one is on clearly an update on the U.S. wind offshore, because we see some retendering activity there. So I would like to understand what is happening, okay, in in that market because we saw also cancellation, no, for for you. That's the first question. I don't know if you want to go one by one or with all my questions. Yes. Answer the first one. Yes. Okay. If I may answer, Hakan speaking. Thank you for the question. The offshore wind in the US is, yes, there are some changes due to the inflation, as you also know. The tendering activity that has been done before was targeting PPAs, which was relatively low. If I may just say a few numbers, which are average in the $70 per megawatt range. Now, if you look to the last tenders after retendering, you see that it's beyond $120 up to $170 per megawatt, which is, I think, confirming the level of today, because today's investment with the interest rates and also with the inflation on the logistics and the materials, the level is quite okay after the tender. So there was, due to the inflation and I have to say also due to a completely new environment, which was, you know, built, for tendering activity, where there was no experience. And in this way, this has created also some, let me say, lack, of, conclusions in the first tendering. I think currently, the market is quite good. It is proceeding. It is not proceeding as we would like to in, in terms of time. But it is proceeding in terms of stable, let me say, foundations, especially the PPAs and, and also, let me say, the intentions of the different states. So you see, we, there is a delay. But there is not a collapse. There is not, let me say, a doomsday. It's, it's like, just adjusting and then, continuing the journey, of the energy transition also in, in the U.S. Okay. Thanks. Thanks, Hakan, for the answer. Then the second question is on the Telecom business. I would like to understand which kind of EBITDA recovery, excluding, I would say, YOFC, we may assume this year, also considering the restructuring action you mentioned before but also some recovery expected in the U.S. in the second part of the year? For the Telecom question, I would like to leave the floor to Frederic Perron, just in case he joined the team to manage and to revamp, hopefully, the Telecom business. Yeah. I, I think for this year, it is realistic to think that we can stay more or less on the level we were at 2023, yeah? If we can make sure that we stop the downturn and start to see the first signs of the market coming back, I think that's a realistic target for this year. Okay. Thanks, Freddie. Just to follow up on this, considering that clearly restructuring, let's say, the production footprint takes time, is there any target we may have on at least a regime at full speed in terms of cost savings you may have in mind? Yeah. We have—I mean, the—yes, there are sizable savings, of course, which will come to fruition in second half 2024 once all the restructuring will be completed and carry over in 2025. I mean, you need to consider that a factory carries some EUR 2, 3, 4 million worth of fixed costs. So this is a sort of save that we can achieve, from a factory rationalization. And I told you that we have at least three, three plants in scope. Okay. Thanks. And the last, the last, question is for Pier Facchini. It's just one boring question on level of tax rate for 2024 but also net financial charges for 2024. Thanks. The tax rate, I would say I, I would expect it to remain pretty stable at 28%, huh? The financial charges, cash-wise, very stable. We may have some increase at a non-cash level. But what is most important cash-wise, I would say, basically stable because we have almost fully hedged our rate exposure. So it's very well protected. Okay. So sorry, Pier Facchini, on this point, on a P&L basis, let's say, net financial charges should be therefore overall stable compared to the level I, I, I saw last year? A bit higher at profit and loss level, huh? Some EUR 20 million higher. Okay. Thanks. Thank you. We will take our next question. Your next question comes from the line of Roberto Campani from Amundi Limited. Please go ahead. Your line is open. Yeah. Good morning, everyone. I would like to start and thanks to Valerio for all the great job done and, and the great value creation for us as a shareholder. And, and, and all the best for next adventure. And my question is related to the, trending orders and, and backlog. I mean, the, the great numbers that we saw since the Capital Markets Day of, orders which passed from the state of, solid commitment to the, the, the proper backlog with the Notice to Proceed. I would like to ask, what do you expect in terms of dynamic for the total, backlog including both for, for this year? Thank you, Roberto. And, thank you for, so many years of, fruitful cooperation. For the backlog, I leave the floor to Hakan. Okay. Thank you, Valerio. The backlog, of course, as we were discussing before, we solidified the backlog by having NTPs, let me say, in the total range of EUR 18 billion. Of course, we will continue to solidify. But there are also new tenders that are out. And we are also participating. The market is not, let me say, slowing down. So the market is going to be, I think, in the next three years, in the similar level. But of course, the capacity is going to be the deciding factor of, you know, these tenders to be allocated to suppliers. So, we think that we will further grow the backlog. It will be very difficult to say a number currently. But I can say that we will keep our market share, in the, at least for this year, because then, we have to check, if the orders that are going to be required are going to be executed beyond the five, six years of, execution time, that we have already saturated. So, but also, this is changing. We have discussions with the customers. They know the market that there is no capacity in the market in the short term. Therefore, they are also, delaying their projects, beyond five years. So therefore, we will continue. We will continue to grow the backlog. And the market is not, as of today, we don't see any signs of, reduction. Very clear. Thank you. Thank you. We will take our next question. Please stand by. Your next question comes from the line of Gabriele Gambarova from Banca Akros. Please go ahead. Your line is open. Yes. Good morning to everybody. Good morning, Valerio. Just a couple of questions on Transmission/Projects. I was wondering if you could comment a little bit the very recent Amprion and EGL, let's say, successes, contracts. I mean, does this mega contract have any advantage in terms of, of margin, of, of pricing, or lower, complexity? Anything that, I mean, could, could help me to understand to better understand if they make any difference, in terms of, of, of margin. The second one is on, an explanation clarification on the 2025 production ramp-up, in the cable business. If you can provide me any kind of, let's say, order of magnitude of this acceleration, it would be very, very useful. Thanks. Okay. Thank you very much. First of all, what about the giga projects, the ones the giga contracts, Amprion and EGL2? Better margins, I would say yes because the appetite of our customers have let us drive up the margins. Not rocket science. But step by step, better margins. Lower risk, I would say no. The risk remains more or less the same. Not very different risks in terms of project execution. But a risk that we have been able to manage properly in the last years after Western Link cancellation. I believe that it will be the same way. Ramp-up in 2025, that depends on the capacity increase, the order of magnitude. We are adding two extra voltage lines in Pikkala, another in Naples. And later on, we'll come Brayton Point. So for 2025, I don't see significant risks. It's an execution risk, of course. I don't know if Hakan has something more to be added, But no, Valerio. You made it very, very clear. The only thing, also, installation capacity is coming on. So it's not only the production capacity. You have seen also our press release about Monna Lisa. This will be also effective. Having a very, let me say, good success with Leonardo da Vinci, we improved also Monna Lisa further. And this will also add value. So we have to look all in all in terms of production capacity plus also installation capacity that is coming on. The tower, the new tower in Pikkala is up and not yet filled because, of course, the needs of time. But is on time on the schedule that we planned for the expansion capacity in Finland. Massimo. Maybe to quantify the impact in 2025 and 2026, out of these lines. So there will be half of the incremental capacity coming to fruition in 2025 thanks to additional volume in Naples and in France. And half of the incremental capacity will come to fruition in 2026. In 2027, late, we will see the, Brayt on Point, factory coming on stream. So this will give you the, the sense of that incremental, step by step, increasing capacity, hence in, related EBITDA and contribution margin. Gabriele, let me also add one point, on the mega contracts. If we refer to the frame contracts, there is one additional point that, to me, is important, which is the cash profile of these frame contracts. Being the time between the award and the execution longer and, and being the down payments, at the time of the award, this means definitely an improvement of the cash profile. And this is significant for the entire group at a group level? For instance, the implications is larger cash flow but also better return on capital employed, just to mention one. Because, these large down payments are funding some of the larger CapEx that we are doing to extend capacity. And this is improving the return on capital employed. It's a very important point. The net present value of these projects is better. You can read this in a number of ways which are all true. Okay. Very, very interesting. Thank you very much. Welcome. Thank you. Thank you. We will take our next question. Your next question comes from the line of Luigi De Bellis from Equita SIM. Please go ahead. Your line is open. Yes. Thank you. Good morning. And, congratulations to Valerio for this long and brilliant journey. Thank you for your support during this year. I wish you all, all the best. So I have three, three questions. The first one on the Power Distribution in U.S. So very good trend, in particular in margins. You mentioned it. There's lower competition in U.S. than Europe. Can you elaborate a little bit on this? If you think this situation will persist and your competitive advantages in PD in U.S. and sustainability of prices and margin going, going forward for the PD? The second question on the industrial, just a little bit more color on which are the segments where you are seeing the highest increase in volume and, and margins? And the last one on, on the outlook, so very solid considering the environment. Regarding the phasing, do you expect a first half very similar to the second half or a better second half than first half considering the Telecom recovery? Thank you. Thank you, Luigi. Power Distribution in U.S. Power Distribution in the U.S. has suffered the previous year because of the contract price that we renegotiated. With the renegotiation, the margins went up. And that is more consistent with the demand for the network reinforcement. Lower competition. Will this situation continue? I think so because there are not many actors in the U.S. market for Power Distribution. We are probably the biggest or almost the big. And, there is a definitely strict relationship between customers and suppliers. It's different from Europe. In Europe, it's, it's À la gurre comme à la guerre every time. But in the U.S., it's much better. So consequently, the situation I see still going on. I don't know if Massimo has different. No, no. You repeated properly. It's a structural situation. There are less competitors in the USA than there are in Europe. And we have a stronger relationship with customer because also customer are more consolidated than they are in Europe. So that is bringing us a unique value. And because newcomers have to, I mean, struggle to position themselves within the utility space. The sole risk I see is that there are many lines coming into execution in U.S. And consequently, the demand will be better satisfied than last year. When they come, our lines will come in the second half of 2024. The other competitors, we don't know exactly. But more or less, it will be a chain, a successive chain of capacity growth. As I usually say, players have not to think to grow too much one shot because otherwise, the market may react negatively. The excess of the excess of availability do not help the price. Outlook. Sorry. Industrial. I leave the floor to Massimo for this chapter. Yeah. So, I mean, there are many use cases that are driving the demand in Industrial and Construction segment. I can name a few of them. For sure, the data center, well known. In that, in that segment, also, we serve the solar park and the wind offshore park with low voltage and medium voltage cables which are, in many cases, classified into the Industrial and Construction space. There were all the industrial buildings associated to the infrastructural investment in the United States. So all those use cases are boostering the Industrial Construction demand and helping us hold the price high in, in that space. Phasing Main Plan sorry, the outlook phasing is, I mean, kind of balanced, slightly twisted a little bit more towards second half but not very much. So there is probably little EUR 20 million-EUR 30 million EBITDA difference between the sum of the first half and the sum of the second half in terms of outlook phasing. Thank you very much. Thank you, Luigi. You're welcome. Thank you. We will take our next question. Your next question comes from the line of Miguel Borrega from BNP Paribas Exane. Please go ahead. Your line is open. Hi. Good morning, everyone. And, thanks for taking my questions. I've got three. The first one on T&I, maybe some color between the margin of PD and the construction cable business. I just want to understand how you see the sustainability of these margins. So since the start of the price and volume normalization, where are we now in terms of the construction cable margin? You mentioned the EUR 100 million coming off. But just in terms of the margin, how much has it reversed, if any? And then in PD, can you describe exactly what is driving that margin? You talked about pricing. But are you doing something differently, internally and in terms of the service that can justify the margin going forward apart from pricing? Yeah. Okay. Thank you, Miguel. So PD, Power Distribution—yes, we consider the margin in Power Distribution as extremely sustainable, not because there's been a tendency to a spot pricing opportunity but because we have frame agreements with utilities, and we have stable contracts. And we reflect in these contracts all the possible cost adjustment clauses to realign price to the inflations. Thanks to this effort which was massive in 2023, we have now a stable and structural situation by which, if cost inflation hit again this business, we can pass it on to the market immediately and automatically. So that's why I believe that 10%, 10-plus% EBITDA margin on the Power Grid, Power Distribution business within Power Grid is a stable, stable condition, stable, scenario. At the same time, today, we have a kind of Industrial and Construction EBITDA margin similar to 10 to that of Power Distribution, so 9%-10%. It will not remain at that high because we said that there is a slight further normalization in prices in North America. But as said before, there is a soft, soft landing. So there will be a slight reduction to this margin but not a massive one, maybe a one percentage point. But at the same time, there is a growing demand in light of what I said before. Data center, renewable business, investment for industrial buildings are pushing the demand up, hence helping, helping price to remain solidly, solid and high. Very clear. Thank you. And then just on the guidance, just want to understand the moving parts. You talked about EUR 60 million improvement in projects, Telecom, about flat. Now you just said, construction cables slightly down but then PD stable. So how do we get to a flat EBITDA if most of your, segments are going to be either stable or higher? So what offsets these improvements? We have stability in Telecom, as you said. The EUR 60 million, EBITDA margin in EBITDA margin in Transmission is the upside. We have some Electrification normalization or Industrial Construction normalization which basically offsets the Transmission business. So it's very simple, the matter. You have one is very stable, and the other two offset each other. And Power Grid, there will be a slight increase. So it's this how we built this stable EUR 1,625 in 2024 guidance. Miguel, think that although the landing of the former T&I margins, now Industrial and Construction margins, as Massimo said, is softer than expected and it's actually holding up better than expected, still we compare to 2023 to 2024 compares with the first part of 2023 which still had exceptionally high margins. So it's certainly a better holding up. It's certainly a softer landing. But it's still material, the normalization impact of normalization. It was assumed to be EUR 100 million. Maybe it's not EUR 100 million, but it's not. It's still very material. And as Massimo is saying, it's offsetting the progress of the projects in principle, the projects and the Power Grid as well. And maybe, Miguel, to, to explain why we are also confident that we might end up in the top part of the range, we see that project—sorry, Transmission—will overdeliver because it's about execution, and we have all the orders in hand. Telecom will rebound in the second half. We think it will rebound stronger. And the Industrial Construction normalization, as we said, is going to be softer than what we thought, realized, a few months ago. So there are chances that we'll end up where we said we will end up in the guidance. That's great. Thank you. And then just one last question. Can you give us some color on the CapEx? You mentioned EUR 650 million. Can you give us the breakdown between maintenance CapEx and how much of that is expansion CapEx for 2024 and 2025, please? Maintenance CapEx is not actually a definition that we normally have. I think in that cluster, we can consider the normal investment for IT, for sustainability, for Scope 1, Scope 2, and all the rest. In reality, all of the rest is basically for capacity expansion. Don't forget there is investment for the vessel. Monna Lisa is going to come on stream in January 2025. There are significant investments in the Transmission space and significant investment in capacity expansion in Power Grid and also in overhead lines and also in the Industrial and Construction space. So let me say that 80% of this CapEx is driven by capacity expansion goals. Okay. We do not. Thank you very much. Miguel, we do not have maintenance CapEx, except very few. The maintenance go in the P&L. Finito. So does that mean after 2026, your CapEx reduces materially to maybe, I don't know, EUR 200 million? Yes. Maybe yes or maybe no. We hope not because it means that the demand is beyond 2027 is even stronger than what we see today. So we, we are open to all cases. In case the demand reduces in Power Grid or Transmission, there will be an adjustment downwards of the budget for the CapEx. But frankly speaking, we think it will be the opposite case. Okay. Thank you very much, Valerio. All the best in the future. Thank you again for the excellent track record. You're welcome, Miguel. All the best. There seems to be no further questions. I would like to hand back for closing remarks. What kind of closing remarks I can do? It's my last conference call. It's a pleasure. I hope that the shareholders will let me to stay in the board. I wish you all the best. Thank you. Bye-bye. This concludes today's conference call. Thank you for participating. You may now disconnect.