Good day, and thank you for standing by. Welcome to the Prysmian First Quarter 2024 Integrated Results Conference Call and Webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you 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 note that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Massimo Battaini, CEO. Please go ahead. Morning and good afternoon to everyone, and welcome to the quarter one earnings call. Let me take you through the first major KPIs of quarter one. We had a very good start of the year, very solid performance. The EBITDA confirmed at EUR 412 million, with an outstanding 11.2% EBITDA margin, which is an unprecedented level, never hit before in the past, and a strong generation of cash in the last twelve months, EUR 827 million. We are particularly satisfied of the EUR 412 million EBITDA, because the comparison to last year is pretty, is pretty tough, is pretty challenging. Last year, you see from the bar chart on the right-hand side, we had one of the good month, one of the best months of industrial construction, performance in North America, since the end normalization has started. So you see that we notice a contraction in the electrification, but less and lower than what we had anticipated there as a result of this industrial construction normalization. On the contrary, you see a stronger performance and continuous performance of the transmission, with a increase in EBITDA, and you will see later an EBITDA margin over quarter one 2023, but more importantly, an outstanding, leap in result in Power Grid. Telecom is confirmed in line with what we were expecting. A significant contraction over quarter one last year, but much better than the exit speed of quarter four 2023. It is important to remind you that we are proceeding with our Encore Wire acquisition. We are in the period between signing and closing, where the two major events are expecting to happen, while the shareholder meeting of Encore, which will be held around the end of June, and the DOJ process for the antitrust, for the regulatory matters. We are proceeding well. We don't expect a major issue. We started already outlining and discussing with a counterpart, the major action to be undertaken the day one after the closing, to facilitate the integration, and more importantly, to capture the expected EUR 140 million synergies with a faster pace than what we anticipated, a couple, or one month ago, at the time of the signing. Remind you how creative is this combination. The Prysmian 2023 EBITDA, 10.6% EBITDA margin, is expected to gain almost a couple of points once the integration is performed and the synergies are captured. I mean, I'll tell you how we did perform in the transmission business. The organic growth is in line with the expectation. It's only 1%, because we will see the major wave of capacity increase in quarter 2 2025, when two new lines will come to fruition in terms of production and additional sales. But despite the limited organic growth, you've seen a significant surge in EBITDA margin, 13%. We are following our pattern to achieve the expected 16% in 2025 and beyond, even higher than 16%. 13% is a great performance in quarter one, and we anticipate a strengthening of this EBITDA margin in the coming quarters, ending up at the end of 2024 with 1-1.5 incremental EBITDA margin over this quarter one performance. On the right-hand side, you see how we are building up our solid backlog. In the last three months, from December 2023 through March 2024, we converted a significant chunk of the orders in hand that were committed, supported by strong commitment from customer, namely down payment. We converted them into backlog, so we received a notice to proceed, and we can now finally classify this EUR 8 billion worth of project as backlog. This EUR 8 billion, EUR 18 billion is taking us through 2028, with full saturation of the existing capacity and the future capacity. We're also thinking to make another step of capacity increase, which will probably kick in in 2027, late 2027, 2028, to further follow the market and ensure that we maintain in the current still dynamic market a strong presence, a strong market share, a market share in the region of 25%-35%. As I said, the mix of the EUR 18 billion is twisted towards the submarine business or submarine interconnectors, submarine offshore export cables, with a great participation of land HVDC.... and just for your reassurance, both businesses basically generate a similar EBITDA margin. Let me move to power grid. The organic growth is 1.5%, in line with expectation, and solid growth, especially in North America, but also in other regions. But the most important relevant factor is the surge in EBITDA from EUR 73 million to EUR 115 million, and the EBITDA margin increased to a record level of 13.5%. This EUR 115 million includes benefit coming from pricing and volume. I told you last time that we would benefit from quarter one in 2024 of some first capacity ramp-up of capacity in the United States. This has come to fruition. A second round will happen in quarter two/quarter three. You see on the right-hand side, that not only is this EUR 150 million extremely higher than quarter one of 2023, it's also much higher than the exit speed of 2023, quarter three and quarter four. Confirming a solid demand in the market, a continuous benefit coming from our strong relationship with our utilities partner, customer. Of course, big chunk of this profitability comes from the the good performance, the good service level, the good relationship that we have in the United States, in the North America environment. Electrification, it is probably the first time that you see the split of the EBITDA margin, EBITDA of the two sub-segments, industrial construction and specialties. You notice that there is a EUR 40 million price effect, price normalization in industrial construction from quarter one last year to quarter one this year. It is important to note that the industrial construction quarter one speed is similar to a certain extent, in terms of pricing, is better than that of quarter four, 2023. In quarter four, 2023, we reported EUR 115 million EBITDA, and we start in 2024 with a great EUR 114 million level, which considering that quarter one is normally low seasonality, it is wintertime, and so on, has to be seen as an upside or as a great performance over the exit speed of last year. Specialties are continuing their constant growth, EUR 78 million quarter four, quarter one last year, EUR 85 million quarter one this year. Even more important is the EBITDA margin improvement. We consider this 11% sustainable through the remaining quarters, as we consider the 9.5% industrial construction quarter one, kind of confirming two factors. One is that the normalization has almost come to an end. If anything, we're seeing some price rebound in quarter one through April, actually, vis-a-vis November, December last year. So pricing are not only holding up in some segment of family products, are also increasing. The real good news is that the order intake in this industrial construction space has been extremely positive and buoyant in quarter one. We sit today, at the end of quarter one, at the end of March, with almost EUR 500 million worth of backlog, vis-a-vis EUR 350 million same time last year, end of March last year. Strong demand in the market generated by data center, increased reshoring activity, very, very dynamic industrial project and all the rest. You notice that the electrification as a whole reported at EUR 203 million, well ahead of what we reported in quarter four 2023, and not far from what we had in quarter one 2023. Telecom digital solution, again, another difficult quarter, but of course, the comparison to quarter one last year is obviously tough. In quarter one and quarter two last year, we benefited from all backlog that we executed in 2023, but was, again, and earned in 2022. Now, we live on what we, we were achieving in terms of order intake on a daily, on a weekly, on a monthly basis. EUR 32 million is bringing us at the level of 10%, 10.4% in terms of EBITDA margin, so far from the famous historical 14%, but we see our pattern through an increase of EBITDA margin and EBITDA in the coming quarters. We expect, again, second half, United States, to see rebounds in the market in light of the end of the destocking and in light of the subsidies awarded and granted to some of the carriers for the broadband connection to rural area. So the the exit speed was very negative last year, of course, compounded by a lot of restructuring cost and one-off cost. So it's it's a good start, good signs of order intake growing in the coming months, and we are confirming the expectation for the full year. Very very great performance here in sustainability. As you know, sustainability for us is an important objective in terms of internal action to reduce the Scope 1 and 2 of our footprint factories and distribution center. You'll see that we made another step towards the CO2 reduction of our Scope 1 and 2, towards 33, what we achieved in 2023 versus the 2029 baseline. We gain another couple of points just in Q1 2024, and, you know that our famous target for 2027 is 45%. Our target for 2030 is a 55%-60% reduction in Scope 1 and 2. We are well placed to achieve and possibly beat this target. Even even more outstanding is the business side. The revenue linked to sustainable product has risen to 41% of total revenue, and the recycled content of copper, metal, and plastic polyethylene in our products has gained another couple of points, hitting 14.7. This is remarkable because sustainability for us is a way to engage the customer, to satisfy customer expectation of CO2 emissions. So to link us, to lock up us closer to customer and of course, turn this into higher share of wallet or price upside. Also, on social ambition, we are proceeding in line with our progress. And I hand this over now to Francesco for the financial performance distinction. Thank you, Massimo, and good morning to everybody. Let's wrap up all the numbers with the profit and loss statement. Organic growth was negative for 5.6%, as Massimo anticipated. This is mainly due to the drop of the telecom, of the digital solution business, specifically in North America. Very robust performance on the EBITDA, pretty close to the very high level of Q1 2023, at EUR 412 million, with an unprecedented level of margin at 11.2%. And this notwithstanding, and you see this on the right part of the chart, the significant drop in the digital solution business, so including also the share of net income coming from YOFC compared to Q1 2023, a drop of EUR 35 million. The other businesses performed really, really well. Transmission in line with the growth, which is expected and which is set in our targets. Power grid definitely exceeding this level of targets that we have set, with a very high level of margin at over 13%. Despite the negative deviation versus the record level of Q1 2023, also electrification performed very well, with a strong margin expansion in the specialties and a very good trend also in the industrial and construction. Massimo anticipated very solid drivers from the North America market, both in terms of volumes and in terms of margins, and also European and LATAM, which are further progressing from the margins of of last year. Moving down the profit and loss, I like also to mention a relatively stable level of financial charges. This is thanks to our largely hedged interest rates on the total of our gross debts, which has mitigated the impact of the growing interest rates, an improving tax rate at 28.3%, and as a result, a group net profit, which even exceeded the very good level of Q1 2023 at EUR 185 million. Let's move to the cash flow. As anticipated, the last twelve-month free cash flow has been really great, really strong, exceeding the level of EUR 800 million. The contribution coming from the working capital has been very strong. You see close to EUR 350 million, and this is mainly due to the strong dynamic of the transmission business and also the down payments that we have collected in the last few quarters, and all from the first quarter of this year. And I like also to mention that this very high level of LTM free cash flow, EUR 827 million, is absorbing a very high level of capital expenditure, EUR 626 million. So it is very a high quality number, let me, let me remark. Excellent. Back to you, Massimo, for the conclusion. Thank you, Francesco. So in conclusion, we confirm great confidence resulting from quarter one result, and also great confidence on what we see in our backlog, which covers, of course, apart from transmission, which covers years. The rest of the business, we see at least three, four, five months of visibility. In light of this strong start, and what we see in our backlog, we like, we are happy to confirm that we will end up in the upper part of the guidance, so in terms of EBITDA, they range between EUR 1,625-EUR 1,675. In terms of free cash flow, within EUR 725-EUR 775. We are extremely positive. We are following our partner that we disclosed at the capital market day towards our goals. The first appointment for our goals, public goals, is of course, 2025. I remind you that we submitted, an ambition to reach EUR 1.775 billion for 2025, and, with this, guidance and the position in the upper part, we of course, are working towards, the 1,775, gaining more confidence as time, goes by. It will be, very important to continue in this, in this journey. It will be very important for us to conclude, the Encore Wire acquisition. As said before, we are also strong confidence that, this will happen, in a, in a, in a few months and definitely before the end of quarter four. The end of 2024, quarter four. So thank you, and I leave the floor to your questions. Ask a question, please 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. Once again, please 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. Thank you. We are now going to proceed with our first question. The questions come from the line of Vivek Midha from Citi. Please ask your question. Your line is open. Thanks very much, everyone, and good morning. I have a couple of questions on power grids. I'll ask them together. The first is just to check, is it right to interpret this margin improvement in power grids as structural? It sounds like this is quite well-supported, but is there anything you see which will reduce this margin in the mid to long term? And secondly, within the organic growth you had of 1.5%, could you give us some more color on price versus volume? You highlighted that both were there, but is there some sort of mix effect we should be aware of that meant that you weren't more like a mid-single digit organic growth? Thank you. So the first question is the margin improvement is structural. We we think so. Of course, here we have a great visibility, but not necessarily of the backlog, because this is a frame agreement business, but of the frame agreement, the margin. So we have fixed prices with cost price, cost plus, cost price adjustment clauses. It is probably worth saying that the high profitability, which ended up with a 13.5%, come from a stronger performance on North America. So we have also a regional mix influencing a lot this level of EBITDA margin. We have visibility of the coming quarters, and we think that we'll end up in the range of this 13% through the next quarter. So confirming the structural reason behind this high profitability. The 1.5% came, I say, two-thirds of it from price. We had still seen some price improvement due to the clauses that I mentioned before coming to fruition. But of course, there is a, y ou remember that we mentioned there are 20,000 tons that we're gonna implement in terms of extra capacity in the United States footprint, in the American footprint, and a big first chunk of this, namely 10,000 tons, has also benefited the quarter one. So in the rest of the incremental volume will come in at the end of quarter two, beginning of quarter three. So all in all, EBITDA-wise, in absolute value, we see this growing, and in terms of profitability, the 13.5% is confirmed also for the coming months. Thank you, Vivek. Question. The questions come from the line of Akash Gupta from J.P. Morgan. Please ask your question. Yes, hi, good morning, and thanks for your time. I have a couple as well. The first one is on T&I, North America price normalization. So, Massimo, if I hear correctly, you said you think that this price normalization is over. The question I had was: Are you talking more the sequential price development or year-on-year price development? Because I think, if we have end to normalization sequentially, then we might still see some negative effect versus second quarter of last year. And also because when we hear from some of your distributor customers like Rexel, I mean, they are still indicating that Q2 year-on-year will still be impacted by price normalization. So, your first one on that? Yes, I'm talking sequentially, of course. The comparison through to quarter one last year or quarter two is still tough, as I mentioned. But if I take a quarter three and quarter four last year, in quarter one this year, we outperform the last quarters. I think there is a new momentum in the market. Now, while in 2021, 2022, you you witnessed this price improvement coming from the supply chain disruption, which has created an imbalance between the capacity that was constrained and the demand that was stable. Now, this supply chain imbalance has come to an end, but we have a new, a new phenomenon. We have the capacity fully available, but a growing demand. So now the imbalance is not coming from constraints, it's coming from market demand, so driven by by the use cases that I mentioned before. So what make me think that the normalization is mostly come to an end is that, first of all, in quarter one, we are seeing some price rebound in some segment of business. Second, there is additional demand is gonna crystallize the current level of margin, hopefully, and put an end to this price normalization. Of course, when I talk sequentially and not when we compare to quarter one last year, or quarter two last year. So in absolute value, in 2024, you will see still a reduction of absolute EBITDA versus last year due to this normalization effect happened in 2023. Margin-wise, on a daily basis, we are in line with quarter three, quarter four last year. Price normalization, you previously mentioned EUR 100 million each in 2023 and 2024, and if price normalization will be not that significant after second quarter on a year-on-year comparison, could there be some upside to this EUR 100 million normalization number for 2024? 2023, lower than EUR 100 million impact. And and in light of what I mentioned before, there will be a lower than EUR 100 million impact also in 2024, thanks to this softening of the normalization pattern. The new capacity comment you talked about, for transmission business. And so again, it looks like it's in the early stage, and you are alluding to potentially this new capacity coming online in late 2027, early 2028. When it comes to this investment, and given the timeline, is it fair to think this is more going to be a brownfield expansion in your existing, alongside your existing, production units and not something, greenfield? And then if you can also comment about, what could be the rough amount of CapEx that might be required for, for this expansion, if you decide to go ahead. Thank you. We confirm the original plan of capacity expansion in the brownfields, namely in Pikkala, Finland, in Naples, in France, Gron, and in Abbeville, United States. We also confirmed the greenfield expansion, the greenfield build-up in North America with Brayton Point. What I mentioned before is a possible expansion that we are designing as we speak for an existing site. Again, it is our finished plant. We have two type of expansion. One is a capability increase using one existing line and turning it into submarine production, full, full-fledged submarine production, and the other one is a real increase in capacity. So it's a brownfield expansion of two lines. One will add more capability, one will add same capacity, more, more voltage, let's say higher voltage. The other one will add volume. The investment involved are, more or less, EUR 50-60 million for the first action, the capability improvement, and EUR 70-80 million for the capacity increase of the second line. You're welcome, Akash. Proceed with our next question. The questions come from the line of Monica Bosio from Intesa Sanpaolo. Please ask your question. Yes, good morning, and thanks for taking my question. Coming back to the electrification and, to in particular, in the industrial and construction business, could you give any color on the group's margins in U.S. as for industrial and construction, and maybe if you can, split between volumes and prices in the third quarter? My second question is on the telecom business. We're expecting a sequential improvement across the quarters. The second part of the year will be stronger in the USA. What kind of overall final organic decrease can we imagine for a digital solution by year-end? And the very last is on the tax rate for Francesco. Can we take the 28% as an indication for the full year? Thank you very much. First question, the industrial construction profitability. You know, the one at the group level is around 10% in the industrial construction space. And of course, this is a weighted average between Europe, other regions, and North America. In North America, it's still pretty high. It's in the range of 18%-19% EBITDA margin on the industrial construction business. And of course, in the high season, namely 2022 or 2021 second half, it was about 30% EBITDA margin. But important to note that this current 18% or 19% is well ahead of what we had prior to this spike. It is at least 7 or 8 points higher than what was the starting point before all the journey started. Volume, there is a volume demand in the United States. There is stability of volume in the other regions. And to follow the volume demand in the United States, we have, we have launched a CapEx last year that are coming already this year to fruition, and we want to follow the the aluminum building wire market demand. While in terms of copper building wire, the nice opportunity will be represented by the same opportunity I mentioned before, Encore. The combination of us with Encore will give us access to large capacity, available capacity in the copper building wire space. So not only we will benefit, will we benefit from cross-selling opportunity, we would be able to sell more of copper building wire through the legacy Prysmian channel. I hope I answered the question, and I move to digital solution, Monica. So yeah, the the the sequential improvement is of a few percentage points in terms of volume quarter over quarters. Of course, we expect the second half to see a stronger presence of United States and North America in general, in our sequential increase. So I, I probably struggle to give you a number for the organic decrease by year-end, so I am seeking support from my colleagues. I think it will be maybe in the region of 15% negative based on what we have in our full year forecast and in comparison to last year. Thank you, Massimo. Hi, Monica. Let me take the one on the tax rate. Yes, by, by design, this 28% is our best estimate of the full year tax rate. Thank you very much. Going to proceed with our next question, and the questions come from the line of Alexander Virgo from Bank of America. Please ask your question. Yeah, thanks. Morning, Massimo. Appreciate the chance to ask a question. I was just coming back to your comments on on transmission. I think you said margins well above 13% through the balance of the year, and I could have sworn you said 16, but I want to make sure I didn't mishear that, because I appreciate that that's a big number. So just really to think about the the margin progression here, and where could we get to, if it's not 16? Let me clarify this point. 13 was the quarter one, as mentioned. We expect to see 15, 11% in some of the quarters of 2024, bringing the full average EBITDA margin of this year around 14.5. From 13 quarter one, the full year will look like 14.5. We are heading for a 16% in 2025. In 2025, not only we will have the benefit of incremental capacity, which will be serving our backlog, which comes with a better margin, but we will have flushed out a lot of the old projects, which were taken at a lower margin. That's why the 14.5 will make another leap in 2025, heading for the 16%. Then you might remember that our ambition for 2027 capital market day goal was 16.5%, and so we are well on track to meet with the 16% on this year, also the goal for 2027. I hope I'm clear this time. Thank you, Alex. We're now going to proceed with our next question, and the questions come from the line of Max Yates from Morgan Stanley. Please ask your question. Thank you. Just very quickly, one clarification, because, because you've confused me now. Transmission margins in 2025. Earlier in the call, you said 15, you just said 16 then. Could I just clarify, which is it? 6.25. Yes. Good. Okay. Hi, good morning. My next question is just around the power grids business. I mean, clearly, we can see that the business is tracking quite comfortably well above your 2027 target. There's obviously a lot of moving parts here around sustainability of margin, the new capacity bringing on, which I would imagine is maybe kind of more than you would have originally thought. Just wondering if you could give us with your kind of best guess internally, when you look at the capacity additions, the pricing environment, and what we're seeing from all of this grid spending, is there any way you could frame kind of how you're thinking about that 2027 number today, perhaps sort of relative to that EUR 390? We will definitely answer properly to this question at the next Capital Market day. Of course, as you noticed, we already went, sorry, and ended up very close to the 2027 target in 2023, where we reported EUR 390 million. In 2024, we are heading for a number that starts with four, of course, and finishes, let's say, with EUR 440 million-EUR 450 million. 2024 will be a good EUR 40 million-EUR 50 million ahead of 2027. Of course, we will need to review 2027. How do we see now 2027? We see the demand is is there. We we had plenty of customers approaching us and wanting to book some additional demand, additional capacity for the coming years. So we we launched another wave of CapEx increase, another wave of capacity increase in another plant in North America to respond to this additional demand. So allow us to gain more visibility of the market, more understanding our time to market with the new CapEx. And in few months, of course, after the closing of Encore, we will satisfy the desire to understand what 2027 will look like in the revised view in terms of organic growth, taking advantage of this stronger trend in power grid, but also in light of the new acquisition, Encore Wire. I hope you can bear with me for a few few months for final view of 2027. Just, just a quick follow-up on data centers. I, I know obviously you've got some sort of data center exposure via your kind of industrial and construction business, but what, what I really want to understand is within the telecom business, how, how much do, I don't know whether it's kind of optical fibers, MMS cables going into data centers, how, how much do they account for today of your sales? And any context on kind of how fast that business is growing, how big a business that could be in three or four years relative to your kind of total telecom revenues. Any color there would be great. Well, what this business use case will look like in terms of revenue in the future, definitely we are investing a lot of efforts in, refining our go-to market, in making sure that we capture, intercept all the data center opportunities. I would say that as far as today, the global involvement of the company in data center accounts for some EUR 800 million, specifically in the digital solution. I think we are talking something around EUR 150 million. With the, with the, with the involvement, with the engagement of both, segment of business, optical cables, because we produce a very innovative cables with high density of fiber, which is what the data center needs. They want to have many hundreds of fiber in the same cables to convey as many data as possible. It will, it will involve also, involves also our MMS, multimedia solution capability for inside sales plan. So the optical cables are high density, are the ones connecting the building inside a campus, hyperscale data center, or connecting the hyperscale data center to the standard network. The MMS application solution that goes inside, inside the specific buildings. 'Cause it's a bit early to size, but you definitely have the right products, that there is no reason why you, Corning would be ahead of you in the U.S. market. I, I mean, obviously, appreciate they're larger in the U.S., but fundamentally, you have the right products for this, and let's see how it evolves. Let me give you some more color. We have the right product range because not only do we have optical cables in MMS, but we also have energy cables, and you know that this use—this is one use case, suits well our footprint of product energy, low voltage, special cables, medium voltage, and telecom. We are strong in optical cables in data center. We are not as strong as Corning or Cisco, CommScope in the inside building solution. Of course, we don't have all the exposure to connectivity, involvement, connectivity, all the internal devices, and also the software that CommScope can perform for data center, the automation, the software solution they can perform for data center. So, but our strength lies in the breadth of the product range. Thank you. We are now going to proceed with our next question. The questions come from the line of Lucas Ferhani from Jefferies. Please ask your question. Thank you. I was just wondering if I can push you a bit more on the EBITDA normalization from the U.S. market in electrification. You know, you gave that a EUR 100 million impact at the start of the year. Now, at the end of Q2, you're seeing almost the end of that normalization. You had a EUR 30 million headwind in Q1. I guess that's mostly priced. If you were to give another number now, where would that number be, roughly? Could it be 50, or could it be even just that 30 in Q1? Thank you. Here, I'm a bit cautious because we see what we see, and we see rebounding prices in quarter one. We have, as said before, a solid backlog in industrial construction with good margin. But of course, we still don't cover the full year, and things might change. But on the positive side, there is the additional demand. There is the copper surge in price, which is helping us pass additional price to the market. So I I I don't know yet what the number will look like. I have an idea. It will be less than EUR 100. It would be probably higher than EUR 50. We will fall probably close to the low part of this range between EUR 50 and EUR 100. And regarding, obviously, the update on the guidance towards the higher end and the end of the year that normalization, the trends you're seeing also in Power Grids, does that give you also more confidence in the 2025 guidance of hitting maybe the upper end of that as well? Bold statement. We we have gained confidence for 2025 to achieve the EUR 1,775 million on the back of this performance in 2024. So, the fact that we see us at, let's put a number there, at 1,650 million this year, as opposed to 1,625 or even less than 1,600, 1,625, makes us confident that the EUR 1,775 million for 2025 is within reach. Of course, there are a few elements that will bring there is the, is the growth in transmission, which is expected to be massive in terms of EBITDA, resulting from pricing improvement, due to the nice backlog in terms of capacity, more importantly, more in terms of capacity improvement due to the additional kilometers available in terms of production. Also, due to the new vessel in quarter one next year, we will host receive the new Monna Lisa. So I have confidence for 2025. Transmission will have to deliver a massive leap in result. Power Grid is navigating well in 2024, and so we will see some additional upside in 2027, 2025, sorry. What we we have on the negative side, on the other side, is the Telecom. The Telecom was certainly not planned to be in the 2025 target, in line with what we see in 2024. So we have a larger gap between 2024 result and 2025 target in Telecom, which of course, we will neutralize, hopefully, with the upside of transmission and the upside of Power Grid and the lower reduction slowdown on electrification. So at this time, I'd like to confirm EUR 1,775. Just on Power Grids again, clearly very strong margin, high utilization. How do you see the risk of increased competition, especially in the U.S.? Obviously, there's high demand, and many players are adding capacity. So, how do you strike the right balance, when you're adding more capacity not to potentially add too much, which could impact pricing, with some of the competitor potentially, you know, happy to make lower margins in that business? Thank you. We tend to gauge carefully the commitment of customer when we invest in capacity to serve this demand. And when I say we tend, we tend to gauge carefully, is that we like support our confidence with the down payment. So we don't expand capacity beyond what comes from the demand secure through down payment. So this give us a confidence that once we have the capacity up and running, we will have the customer buying the volume that they, they told us they will need in the future. Second second element, second factor to consider that we are very close to some of utilities, namely IOUs in the United States. We know that, our strength in the market lies in this strong relationship with this customer, and the strong relationships with this customer is strong because we provide them, an impeccable service. So we, we have, multi-plant footprint to serve the same customer. We, we engage in innovation, technological innovation with the same customer partners. So it's not that easy. Well, not that easy for other players, already present in the United States, to add capacity, enter, and increase our, their share of work in this space. So the answer is twofold: we want to increase in capacity—we commit to increasing capacity only when there is a strong commitment from the customer, and our strong relationship with customer is what make us confident that we can retain our share in the market, and stem the pressure from additional capacity coming on stream from other players. And by the way, there are players that have tried for many years to enter into the utilities, namely IOU space, and they have failed thus far. Because what matters is innovation, the technological leadership, and the security of supply with the service level. Thank you. Welcome, Lucas. Question. The questions come from analyst Alessandro Tortora from Mediobanca. Please ask your question. Yes, I. Good morning to everybody. I I have three questions, okay, if I may. The first one is on the telecom business. If you can give us an update on the restructuring action you put in place. If you also comment on the recent decision of the Italian government, if it is confirmed, to set a minimum requirement for fiber quality. Then the second question is just a follow-up on Power Grid. So considering basically the message you gave on the importance of the service model in the U.S., or let's say North America, can you give us a sense of how much today in Power Grid, how much North America accounts in terms of, let's say, EBITDA? Is it fair at all to assume something around two-thirds North America for your EBIT in this segment? And the last question is, so for Francesco on the financial side, considering the, the pretty low level of financial charges in Q1, if you can give us an indication of, let's say, the full year level for financial charges. Thanks. Let me answer your four questions. The main restructuring action that we have in place is the shutdown of FOS that we announced back in February, mid-February. We are now working with the government to try to find a solution to maintain the employment of these 280 people, either with someone who can take over the site and continue the fiber production, of course, with different setup, with different solution or alternative solution. We offer to 50% of these people an alternative occupation within the Prysmian factory adjacent to the FOS area. FOS is in the south of Italy, in Campania region. And so we are confident that by working together with the government, we will find a solution to accommodate continuity of employment for these people. The minimum requirements, this is referring to the attempt of the government to try to force the telecom operator in Italy to raise the level of performance, features or quality of the fiber. This will not per se make a significant or provide a significant benefit to whoever will take over this plant to continue the fiber production. The problem that we suffer from in, in FOS, in Italy, as well in larger part of Europe, is that there are players offering the standard fiber or the enhanced fiber to European cable maker at a very cheap price, and those are Asian players. The way to to solve this, to stem this pressure of price pressure coming from this player, is to work with the European Commission to establish another, another robust level of anti-dumping import duties. Moving to. Thank you, Alessandro. Move to the second question, if you are happy with the first one. The second question is about power distribution, relevance of America out of the total group EBITDA. We must admit that two-thirds of this EBITDA is generated in North America, which is also great results of the positive integration between Prysmian and General Cable, where we combined the two footprints, and we added synergies, cross-selling, and value. The EBITDA margin of North America, I don't like to tell you, is extremely high. Higher than the 13.5, of course, that we see in the weighted average. I, I hope I'm, you are good with this answer, okay? Yeah. Alessandro, on the financial charges, I think for the full year we'll have a level a bit higher than EUR 100 million, I would say, for the full financial charges. The particularly low financial charges in Q1 are also driven by a pretty high remuneration of our available cash. Now, of course, we know that interest rates are, are decreasing because the gross debt is basically hedged on the passive side. On the active side, now we are enjoying a very high level of remuneration. This is projected, of course, to decline. Hopefully, I would say, because this would mean that interest rates will will normalize a bit. So I, I'm looking at EUR 100 million plus for the full year. The questions come from the line of Sean McLoughlin from HSBC. Please ask your question. Good morning, and thank you. Just a couple of questions around digital solutions. I mean, this, this is now your, it looks like your lowest margin business, and it once was your among the highest. I mean, how how should we think about how to get back to 15%? Is this market volume driven, or are there maybe potential adjustments to your cost level and further restructuring around the current footprint? And, and particularly, how should we think regionally about pickup in Europe versus U.S., and also how you're thinking strategically around your stake on Yangtze Optical? Thank you. Yeah, it would be a challenging goal to go back to the 15 level of margin. The only way to achieve that 15 is to resolve the European situation through the anti-dumping duties, which, of course, will not be happening overnight. But as we achieved the same approach with the cables in producing supply to cables coming from Chinese player, I'm confident that with the help of the other European fiber producer, and while in the past there was just us, now we have also Corning. We will be successful in the anti-dumping duties for fiber imports in Europe from all players, not only Chinese. The other way to go back to the 15%. The other element that will help us go back to the 15% level is to see a stronger rebound and a strong alignment of the American market to the drivers that we've seen in 2022. Of course, the structural drivers behind the telecom business are there. So I said we are suffering from a transitory hiccup in the market due to the destocking, due to the excess of buying cables in 2022, the destocking and the lack of subsidies. The restructuring will also have a play in this journey from the 10% to, let me say, 14% more than 15%. We will improve the cost effectiveness of the fiber production, focusing our cost-saving actions in two plants, one in France, Douvrin, the one in Clermont-Ferrand. And we will also benefit from the consolidation of some optical cables. We have reduced basically by two units, the number of plants producing optical cable, concentrating their relevant volume in the other plants. So the good combination of these three, of those three contributors, the fiber footprint, optical cable footprint, and the anti-dumping duties in Europe, are the key factors to helping us resuming the 14% EBITDA margin. And Sean, I'd add one point, that the margin is the 10% is not satisfactory. The 14% will be certainly more satisfactory. But what makes the difference here is the cross benefit between energy and telecom. We do sell all the transmission cables, which are equipped with the fiber cables. If you were, if you were to buy those cables from the market, not only will we suffer from margin contraction, we also won't have the same type of innovation in these optical cables that are needed to grid monitor, to monitor the grid, to monitor the performance of the submarine cables, the performance of the HVDC cable, and so on. So we see even growing synergies in commercial sense, by keeping our footprint, in terms of product range, as wide as it is today. Thank you, Massimo. Thank you. We are now going to proceed with our next question, and the questions come from the line of Daniela Costa from Goldman Sachs. Please ask your question. Hi, good morning. Thank you for taking my questions. I have three quick follow-ups. First, I think you helpfully mentioned the backlog in electrification, and obviously we know in transmission. Can you also talk through exactly the extent of the backlog at the moment on power distribution? And is the type of advances that you get there similar to what you get in transmission? That's the first question. And the second one is related to free cash flow path throughout the year. Obviously, we are seeing this 1Q seems to be like normal seasonality, 1Q lower, and I guess in most years, you have a Q4 that is much higher. With the changes in the business mix more towards distribution and the other areas also going stronger, and even with distribution with higher margin than transmission, does that change how the free cash flow profile through the year will work, or? That's those are my questions. Thank you. In the backlog, industrial construction was referring namely to the USA and North America space. Just to give you a sense of the rebound in demand that we've seen in the market, there is a larger backlog in industrial construction where we consider the whole world, and there is also backlog in specialties cables when we account for the total exposure to all geographies. In power distribution business, per se, we don't have backlog because we work on these contracts. We receive call-offs on a monthly basis from the utilities. So the size of the volume is provided by our share of wallet, our participation to this frame agreement with the different utilities. But of course, we don't have a great visibility or a large, long, long visibility, so they were no longer than the next 2-3 months of forecast call-offs from utilities. Interesting, I guess. But with demand increasing there so significantly and capacity constraints, why would there not be a backlog? Sorry if I'm confused here. We consider backlog when you receive a firm order, and we receive firm order from the utilities on a daily basis. What give us the visibility and the confidence that they will buy what they told us they will buy through the year is the participation to our share of wallet to the business, which is defined at the time of the acquisition of the frame agreement itself. What is, on the contrary, giving us confidence that they will buy more is that most of these customer provided us with down payment to support the capacity expansion. So our visibility is provided by two things: the forecast, the yearly forecast, which is more refined, on a rolling basis, month after month, and the volume that they committed to buy from us in 2026 and 2027, once the capacity increase will have, would be implemented. I hope I have helped clarify the situation, Daniela. So, profile to the year, so we should expect a normal seasonality? Yeah, Francesco speaking. I think, as you correctly said, our current business profile is pretty optimal from the cash flow generation point of view, because the growing transmission business provides strong profile in terms of down payments, and tends to cover some of the sizable CapEx that we need, which are ongoing to expand the capacity. At the same time, the high margins in businesses, which are relatively low intensity in terms of working capital, such as, for instance, the the power grid, but also the electrification, provides a very strong cash flow generation. So I think that this will not change significantly through the year. The only thing is that compared to last year, we have, I believe, a more equally distributed profile in terms of down payments. Last year were mainly loaded on the second half. This year, also as a result of the conversion of the order intake into, into backlog, are more equally distributed through the year. We had an impact in the second half of the year, already starting from the second quarter, which is definitely the much higher level of metal prices that we are seeing now. This will impact potentially even EUR 150 million, we think, as a negative impact, but fortunately, I believe we have a very good possibility to recover this impact, further improving our working capital, for instance, in receivables and, for instance, also in inventory management and the DPO. So we are very confident on the, as Massimo said, on the upper end of the, of the, of the guidance, and this first quarter gives us further confidence. One of the comments from Massimo right at the beginning on the transmission business, on the big step up in capacity in 2025. So is it, shall we then think that we're not gonna see much organic sales growth progression for the rest of 2024? Maybe a bit from pricing only. And then how large is the capacity expansion for 2025? Lines coming to to production. So namely, if you want to translate this in value, is well value, at least in metrics, in a KPI, is 800 kilometers of incremental capacity. Bear in mind that our total goal in capacity increase is to double the existing capacity, so that would be 800 kilometers out of 2,000 increase, 2,000 kilometers increase, which is what the total plan is about. And in 2024, yes, you're right, there will be no organic growth apart from that coming from better margin, better price of the new projects that are in our, in our portfolio for 2024 execution. Question. The question comes from the line of Gabriele Gambarova from Banca Akros. Please ask your question. Yes, good morning, to everyone, and thanks for taking my question. The first one is a general one, if you want. If I understood well, I see that the European stance towards China in the geopolitical, let's say, landscape, is is becoming somehow more, let's say, tougher. So I was wondering if, let's say, this trend is confirmed, could benefit you, in which business? I understood that telecom may benefit. I was wondering if there are other areas that could benefit from this. I mean, Europe is trying to, I mean, defend the course and the value and and prize the local players. And this will be very explicit in digital solution with the anti-dumping duty for fiber introduction importation in Europe. Not only this will not only impact Chinese, but also Indians. I don't see other areas also because, I mean, Chinese are not coming to Europe with energy products. We have to bear in mind that the transportation cost for an optical cable for fiber is very, very low, very contained. While to transport cables from China, power cable from China or India into Europe is very expensive, and not to mention the lead time, which is a particularly relevant factor to to grant us participation to the share of wallet, to high share of wallet to our customer. Of course, there is a possible entrance in European business, in the transmission business, given the strong imbalance between the capacity available through the European players and the, and the strong demand. This has had some mild volumes, a mild example in some of the tenders of 2023, actually only one so far, where a portion of the standard was awarded to a Korean player. But as I said, the imbalance is so strong, and that no one is coming with intention to slash prices to kill the profitability of the business. And so far is certainly not disturbing our ambition to expand the volume and to expand the profitability and to grow towards the 2027 goals. Very clear. Thank you. And if I may, second question on the expected organic growth for this year, 2024, for industrial and construction and specialties. I mean, what do you see, possibly also on volumes and pricing? As a speaker number for the organic growth for the full year, but we will see a significant rebounding volume in the range of 5%-10%. I am talking United States here, in the range of 5%-10% over last year. This is what we've seen already in quarter one, and the current backlog sits exactly in this direction. Price-wise, as I said, there is stability over the exit speed of 2023. We're confident to maintain the stability through the rest of the year. So there are segments of the business, for example, industrial product, where the demand is very strong, medium voltage, low voltage cable to serve reshoring business and so on, where the profitability is even higher than that of quarter three, quarter four last year. In other niches, like, some segment of copper building wire, where the price pressure is more stronger. But all in all, there will be organic growth in industrial construction, specialties in 2024 over sequentially quarter or last quarter of last year. Thank you very much, Massimo. Is our next question? The questions come from the line of Xin Wang from Barclays. Please ask your question. Oh, hi there, Xingzhou Wang from Barclays. I hope you can hear me well. Okay, perfect. Thanks for taking my questions. So I want... My first question is on industrial and construction. I think a lot of people asked on the US normalization already, but you also commented on margin improvement in EMEA. So that sounds very positive compared with what your peers are talking about. So can you maybe give a bit more color on that? And also, what are you seeing on the volume front in Europe? Thank you. Business, we see a stable volume demand over last year. Europe is not exposed or involved in the same structural trend as United States in terms of stronger build-up of data center or reshoring of activity and so on. In EMEA, we also have a larger exposure, and that's our United States to residential business, namely 30% of our EMEA industrial social business falls into the residential space. So volume-wise, stability, some, some price improvement here and there. I mean, Europe is not, as United States, is not, let's say, one single region as United States. So there are areas of the business in North Europe, where there are greater margin in the level of the one that we see in United States. There are less enthusiastic margins in some other countries, which I don't want to mention too much. Overall, there is a slight improvement in price, mainly due to the regional mix and the country mix than anything else. I hope I answered the question, Xin. Thank you. You're welcome. And so if I can ask another question on digital solutions, please. So I think Q1 margin at 10.4%, in my view, that's already very rapid recovery from the negative 7.4% level in Q4. I think the commentary was still a recovery from H2. So can you maybe give a bit more color on how destocking in the US is wrapping up? Do you change your expectations on when subsidy kicks in? What prevents you from getting more positive from here? Thanks. Yeah, we need to get to the end of quarter two, and this is what is preventing us from being more optimistic or aggressive on the second half. The destocking is probably coming to an end, so we see signs of order intake increasing already in quarter one, and we, we see this happening in the first weeks of quarter two. Subsidies will play a significant role in making this telecom demand, digital solution demand, rebound in the United States. And the first tranche of subsidy will be at the end of quarter two. So we will wait. We'll have to wait until July, at next earnings call, to be more explicit about second half. But overall, we see us heading for our goals in 2024, and we think also to be a bit positive in terms of beating our goals for 2024 in the digital solution space. Thank you very much. We are now going to proceed with our next question. The questions come from the line of Luigi De Bellis from Equita SIM. Please ask your question. Good morning. I have two question left on my side. The first one is on the FX. So can you guide on the forex impact, expected at EBITDA level for 2024 at the current FX levels? And the second question on the copper. You signed, an interesting agreement recently to secure copper raw materials. We are continuing to see a stronger price increase. So is there a level or a speed of increase that could create, in your view, some, let me say, issues for your clients on the projects, in your view? So can you elaborate on, on this? Thank you. So on the forex level, we don't expect to have a major impact versus 2023. As you saw, it's slightly negative for, in the first quarter. I think we'll remain within the... should remain within the EUR 10 million negativity for the entire year. Of course, it depends how the, in particular, the euro-dollar rate will evolve, but it's quite volatile, and it's not easy to predict. Thank you, Francesco. So copper is yes, we keep engaging our suppliers in long-term contracts to provide us security of supply in this copper space. We are not concerned. If anything, we are happy to see that there is a constant increase in price, in copper price. Because when the copper price increase steadily, all the whole industry thrives because we can pass on to the market the famous price increases. And, and we are not hitting a particularly high level of copper in the market. I also confirm no issue at all from any customer, neither transmission customer nor industrial customer or other business customer, in in the wake of this copper solid and strong copper price. Thank. We have no further questions at this time. I will now hand back to CEO, Mr. Massimo Battaini, for closing remarks. Thank you for attending this call. I hope we've been able to satisfy you with the clarification, your question, insights in the business. I look forward to meeting you again at the same occasion for the earnings calls of second half, second quarter at the end of July. Thank you all, and have a good day.