Good afternoon ladies and gentlemen, and welcome to our strategy presentation and full year 2022 financial results review. I'm Chiara Locati, Head of Investor Relations at De Nora, and with me on the call today there are Paolo Dellachà, CEO of the group, and Matteo Lodrini, CFO of the group. The agenda of this event includes an overview of 2022 main achievements and financial results. Paolo and Matteo will drive you through our strategy update and financial targets for 2023/2025. After a quick update on our ESG journey, we will open up a Q&A session. With that, I would like to leave the floor to Paolo. Paolo?
Thank you Chiara. Good afternoon, everyone. 2022 was an exceptional year in which we successfully listed the company on Euronext Milan, despite the volatility that had affected the international markets in the first half. In addition, we achieved strong financial results with sales growth above 30% in all divisions, accompanied by increased profitability and sound cash generation. 2022 also marked the start up and ramp up of our division dedicated to green hydrogen. This division was born in 2022 as a natural evolution of the electrode business after many years of research and development and preparation. Last year, it reported 4.5 times the turnover of 2021, with distinctively positive EBITDA margins in its reference market, ahead of what we expected. These results make our energy transition project concrete and immediately tangible.
The strong positioning in all our target markets, our solid global footprint, and the technological competitiveness of our products have enabled us to build up a backlog that reached a record level at the end of 2022. The backlog provides good visibility for our growth in the following years, with full coverage of planned 2023 production in the energy transition business. This year, we have also prepared our first corporate sustainability report, which will be published in April. It has inspired us to continue and accelerate our path in sustainability, which is deeply integrated into our industrial business model. Finally, solid financial results enable us to create value for our shareholders. The board of directors will propose a dividend of EUR 24.2 million at the April shareholder meeting.
In this slide, you can appreciate some of the KPIs of our 2022 performance that Matteo will comment later today. De Nora has been the leader in providing innovative responses to its customers for a century. The legacy of mastering electrochemical technologies for all major industrial applications and water treatment needs and its worldwide presence make De Nora the partner of choice. Electrochemistry has been the backbone of De Nora business for a century. Adopting De Nora electrodes and related technologies ensures maximum performance and durability, from critical industrial processes in basic chemistry to water treatment and disinfection applications. The green hydrogen space is a physiological evolution of our legacy as electrochemistry remains the soul behind our three business divisions. This make us a unique player globally with unparalleled expertise and a worldwide leadership position in all our target markets.
In 2022, our energy transition division recorded an impressive performance in terms of execution, with 300 MW of products built for green hydrogen generation and in terms of profitability and revenues. Leveraging our strategic partnerships, we have accumulated a backlog of 2.2 GW, providing solid revenue visibility for 2023 and beyond. We have grown our pipeline to about 3 GW of concrete projects with a high probability of contracting. The size of our backlog and completed project position us as a leader in our target markets. We estimate a very high market share of green hydrogen under construction and operational project worldwide. Indeed, our portfolio includes the most significant project under execution at the global level, the NEOM project, which is the project aimed at production of green hydrogen and consequently green ammonia in Saudi Arabia.
We are working also on other large scale project with several off-takers, such as for example, the contract with Shell in Europe, which is the largest hydrogen project in this region for synthetic fuels production. In 2022, we completed the 40-megawatt project for Air Products for low carbon mobility in Arizona and two other 20-megawatt project that our JV, thyssenkrupp nucera, will install and start up in the near future. Finally, in March, we received the PO for our joint venture, TK Nucera, for Brazil first industrial scale green hydrogen project to produce green fertilizers. In addition, TK Nucera announced a memorandum of understanding with the same customer to expand capacity from 60 megawatt to 240 megawatt, adding visibility to our already rich pipeline.
Our best-in-class production capacity and track record of execution in the electrode industry make us confident of the continual solid growth path in the coming years. The electrode and water technology division exploited the strong momentum in their target market in 2022, with revenues growth of more than 30%. Our operational excellence and strong project execution drove significant growth in financial results in both business, favored by continuous improvement in process efficiency and cost control. Regarding the electrode technologies, the growth of the business benefited from the replacement and upgrade of electrodes aimed at reducing the energy intensity of our clients, and was mainly driven by the Asian market and some special projects for hydrochloric acid.
On the water technology side, we reported a notable increase in pools in 2022 with the due to significant market growth related post-COVID staycation phenomena and a shortage of certain chemicals in the specific geographic areas. We expect the growth rate to normalize in 2023, as in the last two quarters of 2022. Water systems performance relied on the increased success of our after-sales service offering and remarkable contracts in the Middle East and in the liquid natural gas and municipal wastewater recycling industries. Finally, the solid competitive positioning of both divisions has enabled us to build a record backlog that give us comfort for the growth in the coming years. Now I hand over to Matteo, who will give you more colors in the 2022 financial targets.
Thank you Paolo. As Paolo anticipated, 2022 has been a year of exceptional growth, with all divisions performing over 30% in revenues. Electrode and water technology businesses have successfully ridden the momentum in their reference market, also featured by inflated noble metal cost, mainly in the year's first two quarters. The price increase for indexation to noble metals accounted for about 40% of the total revenues increase, with high incidence, up to 75%, in the pool business. We have managed this effect positively and favorably, keeping our profitability solid, thanks to our leading position and the premium price of our clients that recognize us. The volume increase in the electrode division was due to projects in chloralkali and in electronics, mainly in Asia. New maintenance projects also reflected the need for some customers to improve their energy efficiency.
As you already heard, the water division benefited from exceptional market momentum in pools due to the staycation phenomenon, with a normalization of the growth in the last two quarters. The increase in water system highlight a 30% growth in aftermarket revenues, which accounted for 40% of the business line volumes. The energy transition division reported 4.5 folders higher than in 2021, mainly driven by NEOM project execution. This project is expected to lead the revenue growth also in 2023. 2022 saw a significant growth in the backlog, which reached all-time high. Electrode division reported a 19% backlog increase, mainly driven by orders in electrowinning and electronics, also benefit from multiyear contract and recurring aftermarket. The evolution of the water technology backlog is a combination of two factors.
On one side, we have an over 30% increase in order for the water system line, across the line, ensuring a higher than historical average coverage for 2023 revenues. On the other hand, a decrease in pools due to the extraordinary demand in 2022 and the consequence, the stocking effect. The most robust increase in the backlog is attributable to the energy transition division, which reached EUR 193 million or 2.2 gigawatt electrode equivalent, providing 100% visibility on our production schedule in 2023. Our focus on tight cost control also paid off in 2022. COGS were in line with 2021 despite the hike in some noble metal price, testifying to our 100% pass-through capacity. SG&A cost is in increase in absolute to cope with business development, but with a lower incidence on revenues compared with 2021.
Finally, corporate cost will continue to adjust to cope with the group structure and expected growth. Due to solid revenue growth and successful cost management, the EBITDA adjusted improved more than proportionally compared with 21, posting a 50% increase in absolute value with a 180 basis point improvement in profitability. All division saw an enhancement in EBITDA margin, with Water Technology benefit mainly from pools revenues increase. The Energy Transition division also reached a positive EBITDA earlier than expected due to operating leverage and cost efficiency. Let me give you some color on quarter four performance before analyzing net working capital and our net financial position. As far as the Electrode Technology division, revenue slight increase versus quarter three , while the EBITDA margin decrease due to mainly production mix.
In addition, we must consider that quarter four usually has a lower EBITDA margin than the other quarter due to some cost line that are not accruable during the year. For the next quarter, we expect a recovery in profitability towards quarter three 2022 levels. Concerning water technology, after a solid first half, the pools division highlighted a normalization of growth in quarter three and quarter four . In quarter four , the volume decrease in the pools has been offset by large execution at the end of the year of the WT system project. Regarding profitability, the division EBITDA margins has suffered from pools volume decrease, whereas overall marginalities are remained good and in line with quarter three. We expect the pool trend continue to normalize in the next quarter, with the division profitability brought in line with quarter four , 2022. Energy transition.
Ramp-up in revenues has been driven by project execution, mainly involved the NEOM project, which will continue contributing in the following quarter. The division reported 21% EBITDA margin, thanks to volume and solid operating efficiency due to the legacy with the electrode business. This makes us confident about solid perspective for 2023. At the end of 2022, the net working capital was EUR 280 million, with an incidence of revenues of 33%, well below the 41.3% in 2021. The positive performance was due mainly to an improvement in the inventory ratio, which was below 35% compared with 37.8% of one year ago. The trend is also confirmed this year, with an inventory ratio expected to reach around 30%.
Net working capital evolution benefit from some advanced payment from client, which will serve in project execution also in quarter one, 2023. Cash. Net cash position at the end of 2022 was about EUR 51 million. The operating cash flow in 2022 was strong and positive by EUR 115 million, mainly driven by the following factor: solid project advancement, net working capital management, as I explained in the previous slide, and the delay of some investment carry out in quarter one, 2023. Compared with the end of 2021, the improvement in the net financial position benefit from the IPO capital increase of about EUR 200 million. The guidance. Considering our solid backlog and expected market demand, we provide the guidance for 2023.
Consolidated revenues are expected to grow between EUR 900 million and EUR 950 million, led by a further ramp-up in the energy transition, with under % of production already covered by the backlog. After solid growth in the last two years, the electrode and the Water Technology division will consolidate on 2022 revenues level. Slowdown in noble metal price trend is expected to continue, even though margin will remain solid, thanks to our proven pass-through capacity. Concerning profitability, we expect a consolidated EBITDA margin of about 19%, considering energy transition contribution. The profitability trend reflect the combination of the following: the electrode product mix, the normalization of pool business that will reduce its contribution to the segment profitability. The EBITDA margin for both water system and pools product line will align with the 2021 figures, representing a more sustainable level compared to 2022.
Concerning the energy transition division, we expect growth in 2023 compared to 2022 due to cost efficiency, technological leadership, and improved pass-through capacity. In conclusion, we foresee an acceleration of the energy transition division and the consolidation of the water and electro business after the 2022 peak. I leave the floor to Paolo for our strategy update.
Thank you Matteo. We confirm our 2023-2025 business strategy already presented during the IPO process. We confirm our strategic goals to pursue profitable growth and long-term value creation for our stakeholders. Let me drive you through the four pillars of our strategy, which is electrochemistry, water, and energy at its core to grow and contribute to a cleaner world. The pillars are the growth and market positioning, which includes exploiting energy transition opportunities and accelerating growth as a natural evolution of the electrodes domain. Evolving our green hydrogen technologies portfolio, targeting levelized cost of hydrogen reduction. Expanding water business by pursuing regulatory and safety concerns-driven solutions. Pursue profitable growth in electrode and water, consolidating our leadership at the global level. Second pillar is product leadership. We safeguard the leadership position across industries and geographies, leveraging electrochemical unparalleled value proposition, and continuously improve the service level.
The third pillar is manufacturing expansion. We aim to set the pace of the manufacturing footprint expansion to capture the explosive growth of green hydrogen demand, enhance efficiency and flexibility to gain more competitive edges. Fourth and last pillar, organization development. We plan to respond to business transformation by developing an agile organization supported by lean processes and digitalization. We also aim to strengthen our sustainability commitment by establishing a goal plan on ESG issues. We offer a set of critical mission products in different industries, and our technologies are the enabling factor for the sustainable growth of our customers. Our business model is supported by the secular growth of global mega trends such as urbanization, digitalization, broader access to clean water, enhanced water infrastructure, and climate change, which drive our divisions' development.
Regulatory developments at the international level and the action of governments also support the growth of our business. On one end, imposing increasingly stringent requirements for sustainability, as in the water segment, for example, and on the other hand, evolving to support investments aimed at the energy transition. In the electrode technology business, the growth relies on, first of all, new capacity expected and already announced to cope with the final demand, after-market services linked to the maintenance activities and to life cycle of the products. In addition, replacement aimed at the technological upgrade to cope with regulations and energy efficiency needs. These levers will support our growth expectations, smoothing any adverse effect of the economic cycle. In water, De Nora boasts the technology portfolio that allows playing in growing water areas.
Given the environmental and supply chain benefits, electrochemical solution for water disinfection are expected to enjoy the fastest growth. While emerging regulations are likely to lead to new opportunities for filtration and disinfection technologies. Our energy transition division is positioned at the core of the green hydrogen supply chain. In this space, we face an unprecedented market opportunity with green hydrogen expected to achieve the highest share of the supply mix by 2030. There is a strong need of exponential growth in electrolyzer capacity with more than 100 gigawatt realistically foreseeable for 2030, with a market share of more than 50% for alkaline water electrolysis. The hydrogen market is supported by the tailwinds provided by government regulation and incentives such as the Inflation Reduction Act in the USA, Fit for 55, and REPowerEU in Europe, where the rules to develop the green hydrogen supply chain is still evolving.
In the following slides, we will briefly overview De Nora positioning. We have a unique positioning in growing markets. Our undisputed leadership across all businesses is rooted in a cutting-edge portfolio of proprietary solutions with continuous improvements driven by 100 years of research and development efforts. Our solid international footprint and evolving organization allow us to be ready and cope with global mega market trends with high flexibility. Last but not least, our long-lasting customer relationship make us the partner of choice for foremost industrial market leaders, supporting them through a distinctive value proposition from research and development to after-market services. Our unique positioning allow us to be resilient in different macroeconomic scenarios and, at the same time, exploit unprecedented green e-energy opportunities. De Nora is ideally positioned to capture the hydrogen hockey stick expected growth, thanks to its technology leadership, manufacturing capabilities, strategic partnerships, and best-in-class backlog.
We're a global leader in electrode manufacturing for industrial applications with a proven, well-established portfolio of products and services built on the experience made serving international chemical players and delivering large-scale projects worldwide. The portfolio of products shown in the slide is fit to serve all the green hydrogen market needs at its best. The DNA of our electrodes is to provide long-lasting, high performance, thus ensuring a highly competitive levelized cost of hydrogen being the OpEx, the largest portion of such cost. Among the technologies already in the market, our primary focus is on electrodes and electrode packages, customized in any form and shape to fit any configuration our customers are developing for all the different off-takers in the market. The same applies to the electrodes for different fuel cell technologies like alkaline fuel cell or high-temperature PEM fuel cells.
Finally, we supply our JV, thyssenkrupp nucera, with much more than customized electrodes, extending our scope, for instance, to the cell fabrication and the services of installed electrodes. This is a unique distinctive offering on which we are building our commercial pipeline described in the next slide. Before moving to our pipeline review, let me give you a brief description of the products and solutions we are developing for years to come still under development. Small size containerized electrolyzer systems targeting the enlargement of our offer. Electrodes and system for AEM, anion exchange membrane electrolysis, being a promising technology for the future. A proprietary technology for toluene electrolysis allowing the shipment and storage of hydrogen, liquid organic hydrogen carrier, so-called. CO2 reutilization via electrochemical routes. This is the distinctive offering of which we are building our commercial pipeline described in the next slides.
First, let me recall that our solid backlog, which at the end of 2022 was 2.2 gigawatt, has to be increased today by an additional 60 megawatt relating to the phase one of Unigel project in Brazil for a green fertilizer plant. During these days, the second phase started with the signature of a memorandum of understanding between Unigel and our joint venture, thyssenkrupp nucera, to supply an additional 180 megawatt. Our solid, fast-growing pipeline as of today is built as follows: 3 gigawatt, which majority is made of large-scale projects with a high probability of award in the near future. 8 gigawatt built on pursuing project where our partners and customers, especially those with whom we are closely operating, are having interactions and positive feedbacks from the off-takers. 33 gigawatt made of projects identified by our partners after their first interactions.
In comparison with the last pipeline shown during our investor presentations, we reported a three-fold increase of identified actively pursued projects, indicating our growing market penetration. On the revenue side, you may probably notice a reduction of the average value per gigawatt compared to our previous pipeline representations that reflect a decrease in noble metal price and the expected introduction of a breakthrough innovative coating solutions. Let's look at our capacity in place and evolution to serve this promising pipeline. We are executing our strategy, scaling up our manufacturing capacity as per our identified roadmap and market enlargement. While advancing strategic partnerships and consolidating existing collaborations, we pursue scalable expansion investments worldwide in brown and green fields. We have already 2 gigawatt capacity in place, and we plan to expand it up to 6 gigawatt by 2025, with a flexible approach to market trends.
The investments in the energy transition division are planned to be about EUR 200 million in the period between 2023 and 2025. Part of these investments will be supported by the IPCEI grant of European Union. We have been assigned for about EUR 60 million concerning our Italian Gigafactory project. Let's now look at electrodes and water business strategic guidelines. Our strategy in electrode technology is confirmed. We continuously safeguard our leadership position by leveraging large offers, global footprint, and relationship with the key stakeholders. We aim to continuously expand the services, exploiting all opportunities from a large install base. Operational excellence remains a crucial driver of our growth, and we pursue it by strengthening manufacturing setup and improving supply chain management. Finally, we will continue to invest in technology innovation and performance upgrades.
Regarding the water technology business, our goal is positioning De Nora for profitable growth through value additions and efficiency enhancements. We aim to improve our market penetration by leveraging leading positions in pools, expanding our product portfolio and services, and improving the aftermarket contribution. In this division, continuous improvement in the project execution is critical to grow along with the nurturing of agile, development-friendly organization. I now leave the microphone back to Matteo for 2025 financial targets.
Thank you Paolo. This table show a quick overview of the financial target for 2025 compared with the previous plan. Very briefly, new targets embed an improvement of the estimate relating to the consolidated profitability, mainly driven by the energy transition and electrode technology business. For the electrode and water technology division, we broadly confirm previous target in term of revenues and margins. The profitability for the energy transition business has been upgraded, while revenues adjust to noble metal cost indexation and benefit from breakthrough coating solutions. Let's have a look at our 2025 energy transition guidance. Revenues are estimated to reach between EUR 500 million and EUR 600 million.
The drivers of such further ramp-up expected in our eid-hydrogen division are: the strong market demand, a solid and high quality realistic pipeline of 3 gigawatt of hot deals and about 40 gigawatt of project in which our partners are having positive or at least first interaction, our current solid market positioning. Our revenues forecast for 2025 versus the previous estimate have been lowered to reflect the normalization trend in noble metal price. These will reduce the average value for gigawatt, impacting the top line, but not the division profitability, thanks to our proven 100% pass-through capacity. In addition, we expect to employ breakthrough innovative coating solution with more efficient utilization of noble metals in term of content and improved process productivity. This latest guidance is backed up by more select yet concrete order book and project pipeline unique to the industry.
On the profitability side, we expect a 16%-17% EBITDA margin by 2025 due to operating efficiency, technological leadership, and legacy with the electrode technology business, with whom the energy transition division shares most of the cost base. The strong Q4 2022 result also make us confidence of achieving this profitability target. Let's now have a look at our constrained financial guidance for 2025. On the top line, forecast for the electrode and water technology business have no significant changes. Total revenues is expected to reach about EUR 1.4 billion. The difference with the previous guidance is mainly attributable to the energy transition. Looking at the average annual growth for 2021-2025, we still expect a sound increase for electrode and water division, approximately between 9% and 11%.
Profitability at the group level is expect between 18% and 20%, about 200 basis points above the previous plan. The improvement is attributable to the energy transition and electrode technology business based on operating efficiency, lower cost of noble metals, thanks to our pass-through capacity and the product mix. Total CapEx for 2025 is planned to be EUR 330 million, of which EUR 200 million mainly in the energy transition division for the manufacturing expansion. We expect that part of this investment will be supported by the IPCEI grant we have been assigned for about EUR 60 million in relation to our Italian Gigafactory project. We expect a slightly positive net financial position, broadly in line with 2022, excluding M&A activities. We also confirm our 25% payout dividend policy.
Overall, at the group level, we continue to expect good revenues growth driven by energy transition with solid profitability in the area of 20%. I want to leave the floor to Chiara to give you a brief overview and update about our ESG journey.
Thank you Matteo. This year, we have realized our first corporate sustainability report, starting up formally our journey in the ESG space. Sustainability is not something new for De Nora. The group has been on an improvement path focused on sustainable development for many years, confirmed by its adherence to the UN Global Compact principles and its commitment to contribute to the SDGs, especially concerning those you can see in the slide. With a century of experience in technological innovation and more than 100 people involved in R&D, our offerings respond to 3 socio-environmental trends: clean water, concerning water purification technologies, energy transition through green hydrogen technologies, and energy efficiency through better performing and longer lasting electrodes. Meanwhile, we take care of our people and local communities in the geographies in which we operate, guided by our strong governance in line with best practices of the market.
Our goal is to strengthen our commitment further by establishing a goal plan on ESG issues. In 2022, our dedication to sustainability continued to be fruitful. This slide shows some of our achievements. We have reduced the number of injuries with a 40% decrease in injury rate on worked hours thanks to the company's commitment to engaging its people to become health and safety champions. We increased the number of women among executive by 57%. We started engaging more than 700 suppliers on ESG issues. Following the IPO, we also strengthened some governance safeguards by launching the internal audit function and adopting the whistleblowing policy. By 2023, we plan to adopt an anti-corruption policy. On the environmental front, our carbon intensity and energy intensity have decreased, mainly related to revenue growth. We are working on several initiatives to reduce our impact.
These include launching a project to produce solar renewable energy at our production sites. In February 2023, we installed a renewable energy plant at our site in Germany with a generation capacity of 1.3 gigawatt hours, representing about 17% of the plant's annual energy needs. We are pursuing project to reach 8 gigawatt hours in 2025 at 12 sites. From 2023, including ESG targets in our CEO and chief officers' MBOs will further reflect De Nora's commitment to successfully continuing its sustainable journey. I will leave the floor to Paolo for the final remarks.
Thank you Chiara. Finally, to wrap up around final remarks, we had a record set of results in 2022 in line with guidance driven by leading position of the group in all divisions and strong market momentum. Solid financial structure, thanks to cash flow generation from operations. Ramp up of Energy Transition division with earlier than expected positive EBITDA and strong backlog covering 100% of 2023 production. Building up a robust pipeline. Best in class manufacturing capacity in place to be exploited three times by 2025 with a focus on readiness and flexibility to market demand. 2025 targets are growth driven by Energy Transition, confirmed growth for Electrode and Water Technologies, Energy Transition, improve profitability, and develop the solid and realistic pipeline to grow.
We are ready for the Q&A session.
Thank you. This is the corporate call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone with a question may press star and one at this time. The first question is from Matteo Bonizzoni of Kepler Cheuvreux. Please go ahead.
Thank you. Good afternoon. I have some question. The first one is related to the energy transition division. You have basically cut your sales indication for 2015 by around 20% from EUR 650 million-EUR 750 million to a range EUR 500 million-EUR 600 million. If I have understood correctly, this cut comes mainly from a lower assumption on noble metal price and the new technological solution which you are adopting. Can you confirm that this cut is not related to a lower gigawatt backlog assumption for the end 2024 or basically the year before 2025? This is the first question. The second question is just to make calculation on your revenue evolution in energy transition.
Can you confirm that to get to your target in terms of revenues, we should assume that your backlog in terms of gigawatts at the end of 2024 should basically triple compared to the or more than triple compared to the level which we had at the end of 2022, which was 2.2 gigawatts. We should get, in other words, to round about 7 gigawatts of backlog in energy transition at the end of 2024 in order to meet your revenue or target. The third question is, can you clarify the reason for this very large improvement in the profitability in energy transition vis-a-vis lower revenue? You were previously expecting 10%+, you are now expecting 16%-17%, which is well above. Why is that despite you have lower revenues?
The last question is as regards CapEx. If I remember correctly, in the IPO, you indicated EUR 300 million accumulated CapEx in four years, 2022 to 2025. Now, the CapEx in 2022 was pretty low, EUR 46 million, if I'm correct, but you have increased significantly the CapEx in the remaining three years to EUR 330 million. Can you elaborate on that? Thanks.
Thank you, Matteo. I will respond together with Paolo to your questions. first question, if I recall correctly, we confirm our target 25 and the reason that we already explained because of the change in the assumption of noble metals and the introduction of a new coating solution which improve the efficiency and utilization of the coating itself. That's providing the reason of the new target of 500 up to 600 million EUR in term of revenues. For the Giga, Paolo, I will like-
Yeah. Hi Matteo. For the backlog, actually it is not so linear, so we cannot simply say that we should end up by 2024 in tripling the backlog because already now there are projects in negotiations that are expected to be produced in 2024 and 2025. The evolution of the backlog depends not just in absolute terms of this linear growth, but depends on what is the expected delivery schedule for each project related to our scope of supply.
The third question was about?
EBITDA margin. Energy transition.
Well, Matteo, first of all, the upgrade of our expectation in the energy transition EBITDA margin is based on the evidence of our cost structure and profitability that even in 2022, and I will underline the quarter four, which was particularly positive, but which give us strong confidence that will continue. We have upgrade. Our target is achievable, and we can also confirm our target of EBITDA margin for 2023, which even strengthening our view on the profitability of energy transition, which I think it's a uniqueness in the market of energy transition as far as we know. For CapEx, I would like to recap the difference between the CapEx that we gave during IPO last year with the new CapEx plan for the plan 2023-2025.
As you remember, last year, we gave EUR 300 million of CapEx, out of which EUR 160 million were dedicated to energy transition. In the year 2022, we did not invest the full expected amount of CapEx. At the end of the year, we invested EUR 38 million of CapEx. Today, we provide a new guidance for CapEx 2023-2025 of about EUR 330 million. The difference between the previous plan, which was EUR 300 million, and the new plan, which is EUR 370 million, is about EUR 70 million, roughly, of difference. I just first of all to remind that this additional EUR 70 million is almost fully back up by the IPCEI grant, which is expected to be just above EUR 60 million. On a cash base, this increase in CapEx is almost neutral.
Now going back to the difference between the previous plan and the current plan, the great majority of the difference reside in the Gigafactory cost, in CapEx that we plan, because this was, in the previous plan, expected to be much less in term of scope. In the Gigafactory new investment, we also include the land, the building, the infrastructure, and we take advantage of this new facility to also rationalize all the industrial manufacturing set up in Italy. That is the reason that explain the great majority of these EUR 70 million. Also, we have to consider that we have planned to invest almost EUR 10 million in solar panel, which were not part of the previous CapEx plan. Also there is a.
an expansion of the headquarter that in 2022 we didn't foresee and we put in the new CapEx plan. Those are the main contributor for the additional CapEx plan that we provide with the new guidance.
Thank you.
Welcome.
The next question is from Michele Della Vigna of Goldman Sachs. Please go ahead.
Thank you very much Matteo and Paolo, and congratulations on the strong EBITDA margins. There were really two questions which are partially related I wanted to ask you, mostly related to volumes. My first question is: Could you give us an idea of what an upside, a blue sky scenario could mean in terms of volumes for your energy transition business? i.e., by 2025, if the market evolves much quicker and to a larger scale than what you're currently expecting, given your production capabilities? How much larger could your energy transition be in terms of volumes and revenues? The second question, I was wondering if you could help us think about utilization in your plants.
Out of your 2 gigawatt equivalent in 2022, is there a way to get an idea of how much your utilization was and what you are assuming in 2025 in terms of broader utilization out of the 6 gigawatt that you are targeting? Thank you.
Michele, thank you for the questions. For the first question, you have to imagine that we have always started since the beginning in anticipating the demand. That's the only way we have been able to satisfy this kind of requests, even in this large amount. Our journey in increasing the production capacity is continuing. Every year, we have a detailed plan for every company we have in the world of an increase of capacity dedicated mainly to the energy transition, and that's something that is happening every day. 2023 will see a progressive increase. In 2024, we will have already a quite an impressive increase that will also continue in 2025 and beyond.
Of course, there are activities that will not be finished by 2025 that will put us in the condition to continuously grow our capacity, also in the years beyond. So, there is the limit to some extent, right? So, we have declared that we will exceed the 6 gigawatt of capacity by 2025. That is what is our plans, and is involving our Japanese factories, China, Europe, with also including the Greenfield gigafactory for Italy, of course, Germany. That has been the starting point in our energy transition roadmap, and of course, last but not least, the United States. So that's what we can answer in terms of what is the limit. The limit will be our capacity. So we will be able to satisfy up to that level.
Of course, that give us already a very strong position when dealing with the current projects and customers because they know that we can deliver within the expected time. The second question is the utilization. The utilization, we have a unique advantage Michele, which is the fact that by growing our capacity, that capacity is not necessarily fully dedicated to the energy transition. There is versatility in our production facilities, there is versatility in our production technologies. When we deal with electrodes, we can do many kind of electrodes also related to different segments and different configurations within the same segment. Same with the manufacturing processes that we have in place.
The utilization in 2022 has been very high because we've been going through a ramp up. That's why we saw a very impressive increase of revenues in the last months of 2022, which was coherent with our ramp up of production. We envisage also a very good saturation level for 2023 with the current backlog that we are executing.
Thank you.
Welcome.
The next question is from Chris Leonard of Credit Suisse.
Hi guys. Thank you for taking some questions. If I could stay on the energy transition segment and just think about your pathway to getting rid of iridium content in the electrolyzers by 2027. Obviously, at the moment, that's helping reduce the average price alongside noble group metals getting cheaper to maybe EUR 9 million-5 million per gigawatts. How far through are you on that journey of reducing iridium? If you have a percentage or similar, that would be helpful.
Stepping away as a, as a second question, can you just speak about the Water Technology segment and what sort of opportunity you think there is on the water system side outside of swimming pools to look to improve margins here, given that you have a very good backlog, I believe in that division. That would be helpful if you could describe the situation there going into 2023. The last question, when you look at the Electrode Technology segment, you've given it a nice margin guidance for the market out to 2025, you know, 24%-26% EBITDA margin. How many more years of sort of electrode upgrades do you think you will see as you change from the diaphragm technology into membrane?
You noted there had been some progress in 2022. Just wondering if that's helping, if that continues in 2023 and 2024, and if that's helping the margin, guidance? Any color you could give that'd be helpful. Thank you.
Can you repeat the first question, please?
Yeah. The first question is on the iridium content within the electrolyzers. By 2027, you're trying to phase that out. Obviously, that new technology that you're developing there has been helping reduce the price for your customers. I just wondered how far through you are on that development journey to completely get rid of it.
Okay. Well, I think we made impressive developments thanks to our research and development colleagues. We have already achieved and we are launching new coatings that have a significant lower content of iridium in their formulations, performing even better. The research, the technology roadmap for this is fully ongoing. We already achieved a great great satisfaction and great results, and that's why we had to, of course, adjust the expected revenues coming from that part at least. The journey will continue. We are very confident that we will get to our target in the next years. For the other questions, I think Matteo will answer.
Yes. Chris, I will take over the question about WTS system. By the way, thank you for it because it's an important focus. WTS is showing the highest backlog in the history of the company since De Nora. That is clearly a very supporting element for the growth that we expect in 2023. In term of profitability, I must say that at the EBITDA level, is where in the WTS system we see more leverage on the EBITDA margin because of the benefit that we can achieve by growing organically, keeping our organization that is already well established broadly across all continents. This will give us a net benefit in term of EBITDA impact leveraging on the fixed cost.
In an environment where the pool business has slowed down in the last quarter, WTS is clearly the business that in 2023 we expect to see more growth and more profit.
And then, um-
Electrodes.
The last question was on the electrode, yeah.
Yes.
On the margin durability.
You see in the margins, we decide to raise the guidance 25 for two reason. First of all, do not forget that, in the electro business we have a very strong position in term of market share. The shift in technology, as you said, from diaphragm to membrane, is not the reason of the increase in our profitability guidance. The reason are, first of all, the weight of product line which we see more profits to come. Secondly, the result that we have been achieving in term of profit in 2022 for the electrodes, we believe that this will continue despite the fact that some product mix, like in 2023, will slightly change the profitability. Overall is where De Nora is leader.
Where De Nora can gain traction in term of profitability also because of efficiency in the supply chain. We have, we have the two effect, the product line with more profitability and the expected efficiency gain across the supply chain and the manufacturing, which will give us great confidence in maintaining high level of profitability. Do not forget that this year we are posting 26% of EBITDA margin, and we gave the guidance to be between 2024 and 2026. It's a proven fact that we can do that.
Sorry, just to clarify, the product line, does that refer to the mix of different products shipping?
Sure.
Is that usual?
No.
The mix.
They refer to the mix.
Yep
... I want to be more precise. For example, we see a growth in the specialty, in the electrowinning, where we expect to see very good margins, in electronic as well. The combination of that will allow us to be very confident that we can reiterate our guidance on that range.
Perfect. Thank you.
Welcome.
All right.
The next question is from Isacco Brambilla of Mediobanca. Please go ahead.
Hi, Good afternoon everybody. A couple of questions from my side. The first one is a clarification on slide 24, the new representation of the energy transition pipeline. Is it fair to assume that the orders such as the latest one announced by thyssenkrupp, the extension of the one with Unigel or the production capacity reservation for an undisclosed client announced in February are falling into the hot deals...
piece of your uh pipeline in uh energy transition. Second question is uh on uh CapEx. Can you give us a sense uh of the say trajectory uh of CapEx? Is it going to be particularly uh front-loaded into the next uh couple years uh in group level? I mean, or should we assume an overall uh linear uh distribution over the next uh 3 years?
Okay, I can answer the first one.
Sure.
Yes. The answer is yes. These projects that, by the way, they've been already announced or semi-announced, they are part of the hot deals. Of course, in the hot deals, there are names and surnames of projects that have been quoted and they are already under deep discussion or even negotiation. We will see announcements in the near future of these projects. That will, of course, give us confidence that our backlog will continuously grow also in short terms. For the CapEx evolution, as I said before, we have a lower than expected CapEx in 22, which is a carryover in 23. Please do expect that in 2023 there will be a significant concentration of CapEx, and I would say beyond EUR 100 million, that is what we can say.
Then for the remaining couple of years, we return to the average that we declared during the IPO, which was more equal weight for the four years.
Okay. Many thanks.
Welcome.
The next question is from Marianne Bulot of Bank of America. Please go ahead.
Yes, thank you for taking my question. Good afternoon. Firstly, if I can just start on what you're seeing on the hydrogen space in terms of technology. Have your expectation of technology differences between, you know, AWE and PEM have changed over the last couple of months or are you still seeing a dominant for AWE?
The line is quite disturbed. I'm not sure to have understood every word, but I try. Correct me if I didn't understand in full your question. We don't only believe that alkaline water electrolysis is the winning technology, but also there are recent market studies that are also showing that the market share of this technology compared to all the others, including PEM, is continuously growing. Because you have to also combine the fact that the market is moving to larger and larger size of projects. The larger the project is, the highest, or I would say the only chance, is for alkaline water electrolysis to be able to execute this kind of project.
The market share is expected to grow, and that's why also, studies related to De Nora itself are showing that, our market shares are gonna be really very high.
Okay. Do you still have the intention of offering solutions for the PEM market?
We don't really understand. There is a bad line. Can you say it again, please?
Sorry, apologies for that. Do you still intend to enter the PEM market with some component solutions?
I didn't understand the question. I'm sorry.
Excuse me Ms. Bulot. If you can pick up the receiver.
Sorry. Let me just try to go outside. Is it better now?
Probably, yes.
Okay Sorry. Apologies for that. I was wondering, do you still intend to enter the PEM market with some of your components and solutions?
Oh, yeah. Well, you know, technology-wise, we are very agnostic, so we pursue a very high diversification of our research and development activities. If we see opportunities to develop specific components that could help to some extent this technology, we will do, absolutely, at research and development level for sure.
Okay, but it's not something that you're planning to put to market in the next coming years?
No. No, no, absolutely not.
Okay. Thank you very much.
The next question is a follow-up from Chris Leonard of Credit Suisse.
Hi guys. Just coming back in again on the water division and looking at the margin into 2023 and just wondering how you guys think about the evolution there, looking at Q3 and Q4 EBITDA margins in 2022 and thinking, you know, can you sustain those or get above them with the potential destocking impact on the swimming pool side? Just if you can give some color there, that would be very helpful. Second question on Matteo just mentioning there on the CapEx side, sort of EUR 100 million maybe in 2023. How do we think about the grant coming in from the Italian government at EUR 63 million, that offsets this and obviously will be phased?
I just wondered if you could give us a timeframe on how you expect that to come into the cash flow statement. Thank you.
Sure Chris. First of all, let me give you some colors on the profitability of the WT. My direction for the profitability 2023 is to be close to 2021 level, because 2022 was very much inflated by noble metal effect, staycation. In the pool business, we already explained many times not only the exceptional growth, but also the very high profitability that especially we enjoyed in the quarter 1, quarter 2, 2022 were not sustainable in our opinion. It's an important point to underline that we don't see any structural change in the profitability of the two segment of the water division.
Of course, given the fact that we expect in 2023 the WT system division to grow because of the backlog and the pool business decline in volume because of the slowdown that we already have recorded in quarter three, quarter four, the overall profitability in 2023 of the WT division will reduce. But the 2021 level, and I'm referring to the percentage level, is what we should consider to be a more sustainable level for the WT division looking forward. Did I answer to your question?
Yeah. No, that's clear. Maybe as a, as a quick follow on, is there any view on what you guys would see on the swimming pool side in terms of potential volume and price, you know, for the revenue outlook in the swimming pool business within water?
Yeah. very good question as well, and I thank you because it's important to say. We have already declare and comment many times that the majority of the growth, organic growth that we experienced 2022 was driven by price. I think we gave also the reference that 75% was price, 25% was in volume.
In pools.
I'm referring in pools, of course. You consider the price effect will no longer be viable for 2023 because the noble metals are slowing down and consolidating, which by the way is positive for our procurement. On term of growth, that's clearly a sign that will not be again for 2023. The market has been slowing down in quarter three and quarter four, so we expect the business to maintain a slowdown in the course of 2023, at least in the short term. Overall, it's a business where we consider overall to be resilient because of a large presence of aftermarket and because the opportunity that we believe we have for expand the business outside U.S. in the new geographical area, which is Europe, which are South American and very recently Asia.
We believe that in the course of the next couple of years, pools will continue to show good momentum if you consider the trend line starting from 2021. Please consider, and that's the way we want to be viewed, the 2022 as an exceptional year that should be normalized in term of growth.
Okay Thank you.
The next question is a follow-up.
There was another question about CapEx, which I don't remember which was the question. Sorry.
They're from IPCEI.
Okay. The It's 2023, as I said, because of the carryover from 2022, we will expect to see a major ramp up in our CapEx. Also because we have to increase our capacity. That's important because of demand. It's CapEx to build additional capacity. That's important to underline. IPCEI funding, we expect to come at the late stage of our business plan. The great majority, at least.
Okay. Thank you.
All right.
The next question is a follow-up from Matteo Bonizzoni of Kepler Cheuvreux.
Yes Thank you, a quick follow-up. In your IPO, you disclosed the target to expand and diversify your customers base in energy transition business compared to the current one in which we have more than 90% of the backlog is channeled by in thyssenkrupp nucera. Basically your go-to market for now can be EPC contractor, thyssenkrupp nucera. Any progress or development in this direction? Thanks.
There are many progresses that of course we cannot disclose. Yes, there are progresses. There are many players that are discussing with us for specific supplies for their needs. Of course, we have to be very clear here that the majority is becoming from Nucera because Nucera is the one that is taking the majority of the project. What we will do in the future is to observe and to be ready to serve whoever is in needs. Of course, that depends. Who is gonna be the winner of the projects going on?
Okay Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone. The next question is a follow-up from Chris Leonard of Credit Suisse. Please go ahead.
Hi guys s orry again. Last question from my side. On the news flow from Snam discussing their potential holding in the business 25% stake, do you guys have any visibility on your side on potential decisions or timings here? I guess it could be very helpful for the free float in the market at the 20% currently to see that increased. Equally it maybe is in investors' minds having that situation sort of overhanging the stock currently. Any view on timing or potential decisions would be very helpful. Thanks.
This is a shareholder issue, as you can imagine. We are conscious of the needs to increase our free float, but this is in the hands of the shareholders, so I'm sorry to say that we cannot answer that.
Yeah understood. Thank you. Thanks for the time, guys.
Thank you.
Gentlemen, there are no more questions registered at this time.
All right. So thank you very much. We hope we've been clear enough to explain our numbers and our projections and our guidance. Of course, feel free to contact us for any further question you might have. Thank you very much, everybody.
Thank you.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.