Mario Batista speaking. Let's start with the first half of twenty twenty one highlights. Page 3. Key highlights of the first half. Very good recovery of the trend in telecom and energy business, thanks to mostly to the of the business, T and I, OEM, Renewables and Automotive.
On the other side, cost efficiency and price management to balance the raw material price increase that we have seen since the end of last year. Last but not least, the order income in projects that has been very wide, EUR 1,200,000,000 of new orders, which we have to add the EUR 60,000,000 we have announced today for the intra rate projects with Orsted on the basis of contracts that we signed sometime ago few times ago. Let's flip the page to Page 4. What about the EUR 1,200,000,000 of new orders in ALF 1? The first one is the biggest single project AVer awarded to Greece.
In fact, speaking, there are other projects that have a similar size, but that is at the end, the biggest. Dollars 900,000,000 for the saw green, the connection the land interconnection in U. S. Along the railway that is going to connect the Midwest, where green power is generated,
to Chicago area.
440 kilometer of HVDC 525, And that's a very good project because I believe that is one of the first interconnection projects in the USA. The second one is Sofia. Sorry, it was Sofia with 4 40 kilometers of HVDC. Just in case, The So Green is a project that is going to be realized with the same table of German Coronos, the 525 BC extruded. Sofia, 440 kilometers of HVGC, submarine export cable, to connect a very big offshore wind farm to the main grid in U.
K. Then Turkish crossing, the 2 submarine link power link in connecting Europe, Asia and the other one across the East Mid Gulf. And last but not least, the EBITDA for Monterra, other than, as I said, the EUR 60,000,000 order today to us, signed by us today of inter array projects with Orsted. Okay, let's move to Page 5, The financial highlights of the first half. Sales at €6,000,000,000 with an organic growth of 10.5 percent, Notably, 15.5% has been the telecom support.
Consequently, telecom is confirmed to be able to come back and is coming back. 10% vice versa on ENI, driven by a very strong in Q2 and 9.3% Industrial Network Components with a very good performance in term of organic growth. The adjusted EBITDA, dollars 4.70,000,000 Reasonably good, my opinion, higher than the pre COVID level for Energy Business. The margins at the end, if you look at the percentage are slightly lower then the same course the same period of last year. But you have to consider the effect of inflation coming from the copper metal increase.
So the turnover has grew. It grew a lot, but net of the copper pricings is obviously the increase the growth has been Sorry, a little bit lower. Finally, the free cash flow, EUR 2 EUR 47,000,000 with a net debt of EUR 2,387,000,000. The Last 12 months, free cash flow has reached a very high amount. Obviously, it's expected to scaled down a little bit during the rest of the year as usual.
Let's flip to Page 6. Page 6 is showing the performance by segment. Projects. Projects is still the slow part of our activity. Why?
Because the order income is rebounding now, And consequently, we are going to see the growth of the market for projects,
the growth of the market, the growth
of the results in the next quarter. Starting from Siltrete, I believe that the projects will deliver higher results than the past the same quarter last year, really all the previous The recovery has started. The acceleration is expected in the second half, driven mostly by submarine and the German corridor Just for you to know, tomorrow morning, if I'm not wrong, we are going to start the mass production of German corridors in our plans. We completed all the evaluation and also all the tests that we were planning to do in order to be comfortable with a mass production of thousands of kilometers of this cable, and we succeeded consequently. Now we start.
The energy side. The energy side grew 9.5% in term of organic growth from 3.58 €1,000,000,000 to €4,550,000,000 out of which, more or less, Both ENI and Industrial Network Components moved on the same direction with the same speed, 10% organic growth for ENI and 9.3% for industrial network component. The organic growth of T and I has been very strong. And as usual, the T and I market is the fastest. Thank you.
It's the first one to recover. It's the first one to stay down. On the industrial network component, We have seen a very strong growth in OEM, automotive and network components. On the E and I, as I said, the T and I mostly, whereas the PD has not been able to replicate the performance of the Q2 last year. Why?
Because in U. S, last year, the incentives were pushed for a very strong volume growth that this year is not has not happened and was already planned not to happen. Telecom, finally. The telecom business has increased the sales with an organic growth of 15.5%. On the other side, the performance of the business that counts, the EBITDA, moved up from $101,000,000 to $129,000,000 As you can see, the contribution of The share of net income coming mostly from YOC has increased a little bit, but because of the carry of the last quarter of the previous year.
We see reasonably good telecom activity, especially in certain markets. Overall, the total sales of the group has counted for $6,0.34 versus the EUR 4,900,000,000 of the first half twenty twenty with an organic growth of 8.5%. Let's have a look of the following Page 7 about the volume recovery. The volume recovery has been pretty strong, pretty strong. And you can see that the energy volume has been in June higher than the June 2019.
That's a very good indicator because it means that In the second half, we hope that this trend will go ahead, will continue. And by June has reached a higher level than 2019, not very much, but higher. On the telephone side, vice versa, the growth of the volume, 5 kilometers, I'll be talking here, has been good, but not enoughly good to reach the 2019 record because 2019, as you may remember, has been an extremely good first half because of the shortage of fiber. And consequently, the volume were very high. Now we see are significant recovery of the volume, but not at the level of 2019.
In the second half, we expect The telecom in term of volumes at least to be able to surpass the 2019 volume of the second half of the year. Let's move to Page 8. If you look at the white boxes, what we lost first half twenty nineteen, 20 versus 2019 is the same that we recovered this first half versus 2020, minus 10.6% for ENI, plus 10% for ENI this year. So the scale down of this volume of 2020 has been completely recovered in the first half of twenty twenty one. The same more or less, even a little bit more for industrial network components that moved to $1,349,000,000 coming from $1,122,000,000 in the first half twenty twenty.
But if we consider the first half of twenty nineteen, It was EUR 1,248,000,000. So overall, the total energy scaled down almost of 9.6% the first half last year, and this year, healthy recovery by 73 more or
less this year.
If we look at the profitability or better EBITDA margin, is even more. Why? Because if you consider the value of the metals that obviously we do not contribute in in terms of results. €159,000,000 it was the in E and I, the EBITDA 1 year ago, last year was 147 and this year is closed at $169,000,000 So the $169,000,000 is 5.5 percent of the sales. But the reality, if we utilize the capital of 2020, the same marginality would have been 6.9%, so higher than the 2 correspondent periods of 2019 2020.
More or less similarly is the industrial network component. What does it mean? That the copper price effect, the metal effect has increased, inflated the sales and the margins have been a little bit diluted by this effect. Overall, the total energy went up for 3,000,000,000 from $3,500,000,000 in the first half twenty twenty that has reduced 9.6% organically. And the first half twenty twenty one recovered in completely this level with an organic growth of 9.5%, more or less the same, even better, is at the level of EBITDA.
Let's have a look at geographical trend. The geographical trend has something different because whereas Europe, EMEA, let's say, has improved significantly, 11.3 percent organic growth from 2.46000000000 to 2.584 The EBITDA went up very good, very well from €99,000,000 to €150,000,000 In North America, unfortunately, there has been the trend driving the game in the last 3 years. Unfortunately, due to the slowdown of the power distribution investments, we have seen Reduction of the EBITDA from €199,000,000 last year to 166 this year have to be noted anyway that the exchange rate affect the result of 2021 versus the 2020 by €15,000,000 So 50% of the decline comes from the exchange rate. Latin America and Asia Pacific have been able to rise the performance currently for Latin America from $25,000,000 to $46,000,000 with an organic growth of 32.5 percent and Asia Pac from $16,000,000 to $32,000,000 with organic growth of 11.3%. Overall, the total performance of the group moved from $419,000,000 to $470,000,000 with an organic growth of 10.5 percent despite projects did not contribute particularly in the first half.
We expect projects that is still the missing upside coming into life in the second half. So we are going to see in the second half, finally, the acceleration of the projects. The outlook. The outlook was 870, 940. We decided to rise this outlook to 920, 970.
So a significant upgrade of the guidance, reflecting more or less what the market we have seen. And are we able to perform. The free cash flow will last untouched. And that's maybe something that sounds unusual because Technically, we should have increased the figure 4. I understand perfect.
But why we didn't do it. Basically, later Francesco will be more detailed, but basically because There are a number of projects and the related advance payments going to come in the last quarter. And It's pretty easy to see 1 or some of those projects shifting in term of award and in term of cash income, advanced payment cash income from one year to the other. And that's the reason why prudently we took the decision to leave the guidance as it was. I'm quite sure that as usual, we are going to close on the upper side of the guidance.
The last chart,
Page 11
is to explain you why we are pretty Happy to be in all the segments and all the region of the cable market. Why? Because have a look at the trend of the last 5 years. The trend of the last 5 years explains that whilst energy and projects sorry, telecom and projects have been not particularly exciting in terms of performance in the last 3 years, now are going to increase. But in the last 3 years has been energy that has helped us to keep the performance round about €951,000,000,000 Let's keep on aside the 2020 that is obviously the year touched heavily by the COVID.
And the same concerns comes from the geography. The geography, as you can see, is Europe is the ones that EMEA has scaled it down in the last 2 years, now is going to increase. And the North America has been able to compensate this reduction growing. Now that North America appears to be ready for a little reduction, Europe is recovering. And not only Europe, LATAM 2 and APAC, okay?
APAC is so little so thin that doesn't reach the depth of the company. Overall, in the 5 years, we have seen these segments, the 3 segments, generating a significant cash. And the cash is different because you can see energy has a very high cash conversion, whereas projects and telecom for 2 different reasons are segments that need of Heavy significant investments in order to keep the position in the market continue to properly run. You see that the cash conversion of energy is 82% versus projects and telecom 65%, 66%. Anyway, in 5 years, the overall free cash flow of company has been EUR 1,300,000,000 sorry, in 4 years, EUR 1,338,000,000 with dividend for €407,000,000 to the shareholders.
Thank you very much for your time. And now I'm going to leave refer to Francesco Facchini for the details of the economics, the financials.
Thank you, Vallejo, and good evening to everybody. As usual, let me start with the profit and loss wrap up. As Valerio said, sales grew very significantly from the lows of 2020, strengthened by COVID, of course. Total sales were driven up also by a very strong copper price effect in 6 months 2021 compared to the 6 months 2020, the total effect of copper price was above 800,000,000 Europe. This also explains the effect that Valerio was already mentioning in terms of margins dilution.
Organic growth reached 8.5%,
Ex projects
10.5 percent with very strong in the second quarter, almost 17% growth. I would say strong across all the segments, in particular in the entire installer business, but also in industrial and OEM business and of course even more in the telecom business. The only business which scaled down a bit from the previous year is the yogurt headlines and our distribution business specifically in North America. And Valerio already mentioned that last year in Q2 we reached the PV North America very high peak also thanks to the incentive simplification. EBITDA, dollars 470,000,000 plus $51,000,000 from the previous year, a very solid Q2, An excellent base, in my opinion, to deliver on our new guidance.
Despite a $22,000,000 currency effect in the first half, negative of course, which will become quite neutral in the second half. We expect Due to the dynamics of ForEx this year and last year, this EUR 22,000,000 to remain pretty stable in the second half because the dollar has already weakened significantly in the second half last year. Margins, EBITDA margins reached 7.8%. However, it's important to say that Restating sales for the above €800,000,000 copper effect that I was mentioning before, The 7.8% would exceed 9%, and that's a very high EBITDA margin in absolute terms. I think we are still capitalizing a lot on the excellent job on the costs, both fixed costs and also operations cost, the plans that we have done also last year under the pressure of the COVID impacted results in the COVID season.
In the box top right. You see the dynamics quarter by quarter for each segment. First of all, you see how projects are starting to recover and actually posted the second quarter slightly above the previous year. That's just an anticipation to a much stronger recovery that we expect starting from Q3 based on the very strong order intake that we have commented. Energy is also accelerating, of course, compared to pretty low level in Q2 2020.
But it's also correct to mention that in Q2 2020, The Power Distribution business in North America was reaching the real peak. So this flat $20,000,000 in the Energy business EBITDA that we see in Q2 is particularly remarkable if we think of the negative impact that we had in this specific segment, FPB North America. Telecom is accelerating as well from Q1 plus €12,000,000 in Q2 specifically compared to the previous year, driven by very strong volumes across the board, across all the regions and driven also by 3 year Brazilian margins, so the narrow effect. And all in all, the €257,000,000 EBITDA of the second quarter, as I was saying, is an excellent base to deliver on the new guidance. Our net income improved also very significantly, €162,000,000 group net income in the first half, more than doubling compared to last year.
And other than the operating results and EBITDA, it was also driven by very positive dynamics below the operating result line. Specifically, we had no impact coming on any impairment this year differently from last year. We had a very low level of financial charges also thanks to a positive impact, which followed the issuance of a new convertible bond. We had an improved tax rate, 31% despite a very negative impact coming from the U. K.
Tax rate increase due to a reform a tax reform in U. K. And all this contributed to driving up our group net income very, very significantly to a very satisfactory level. Let me now move to the balance sheet on the following page. To comment the stronger and solid dynamic of the working capital, Operated net working capital.
Compared to the June 2020, the equivalent period last year, It went down by €160,000,000 despite a huge negative impact coming from the metal effect, more than €200,000,000 EUR 230,000,000 to be exact. We were able to more than offset this huge effect, Thanks to a very strong trend of working capital, a downtrend of working capital in the project business, which generated a very significant cash flow over the last 12 months. Of course, it will change a bit in the second half, but for very positive reasons because as we said activities in projects is going to speed up significantly German corridors, the execution of the newly taken orders in the summary business. And this, of course, will not allow the same level of positive dynamics of working capital as the one that we had last year. This explains why the as Valerio anticipated, the free cash flow For the full year, we'll move down from the current $447,000,000 last 12 months to a level that we think will be still consistent with the guidance, even if certain in the upper part of the guidance.
The net debt as a consequence leverage down significantly, €130,000,000 compared to June 2020. We have to consider that Within this decrease, we were absorbing $130,000,000 of dividends distribution, $85,000,000 of EHC acquisition and also more than $100,000,000 of antitrust penalties and settlements. So Of course, it's not as nice as the free cash flow, but we were also distributing cash to Our shareholders and acquiring even if not a huge acquisition, still not insignificant acquisition, and all these delivered with a debt reduction. Let me move to The final page before opening the Q and A, the cash flow €335,000,000 last 12 months, which bridges with the €447,000,000 if we consider The antitrust cash out penalties and settlements for $112,000,000 that you see highlighting one of these boxes. The Reason of the scale down on a full year base, let me say $300,000,000 plus potentially in the higher part of the guidance is the contribution of working capital, which was still positive $121,000,000 generating cash in the last 12 months as of June, but most likely will become pretty neutral for the full year 2021.
So losing these positive €120,000,000 despite the growth, the improvement of the full year EBITDA in line with our guidance will be difficult, of course, to stabilize a level of free cash flow above the $400,000,000 like the one that we are seeing now as of June. Of course, we will try to deliver the best we can on top Some of course uncertainty, which is always there regarding the operating date of projects and more than the operating date, I would say, The exact timing of the down payment related to the new potential order, which may fall in December rather than in January and it's very difficult to predict. But unfortunately or fortunately better, These amounts of down payments are very significant. So can move the cash flow of the single year very significantly With no real change because what we do not cash in December, we will cash in January. So I don't really see any Meaningful difference for the company in that sense.
I think I'm finished with my presentation. We can go ahead with the Q
and A session.
Thank you very much, The first question today is from Max Yates from Credit Suisse. Please go ahead.
Thank you very much. Good afternoon, everyone. Just my first question was on the Soodlink project because we're hearing quite mixed messages on the permitting potential delays to the project. So I just wanted to understand, firstly, could you give us an update on how the permitting process Going and conversations with the customer on the time line. And then also, obviously, if it's a EUR 1,800,000,000 Combined projects, it's about EUR 360,000,000 per year over 5 years.
I just wanted to understand if you think you'll be At that run rate of revenues in 2022 or because of these delays, it might take a bit longer get to that kind of EUR 360,000,000 run rate. That was my first question.
Okay. Thank you, Max, for the question. Let me note only that the delay for German corridors at risk for the time being, but I don't see any other reason to change it is only on the installation side. Consequently, that's the reason why we are going to start the mass production tomorrow morning. But for more details, I leave the floor to Akan that is here with us and can better detail the situation.
Thank you, Aurelia. Thank you for the question, Max. The 2Q or we can say all the 3Q projects had some delays, yes. Definitely, the installation is the one that is affected by the delays because of performance, as Valerio said. In our program, we see some reduction in our projections, but not that is going to affect our internal and also,
let's say,
Projections, internal projections. And when we look to the EUR 360,000,000 that you were mentioning, Of course, you can dilute that at the back end with the 2 years of expected delay On the 2 projects of the German corridors because one of the projects has not yet announced a delay that can happen. The reason is a positive reason, the delays of the permits, which is actually the customer, the TSOs, they want to have one permit for the second tranche of investments as well. So the 2nd joint corridors, they want to have the permit together with the first at the same time, which the authorities have requested. And we see that as a positive news actually to enable and open up for the second tranche of the investment.
So from that perspective, we are planning and at the beginning of the speech, Valerio We are industrializing and we have completed our industrialization. So we are starting the production for one of the projects as foreseen. And for this year, we are on track with our expectations on the production.
Okay. So just so I understand that correctly, so it might be more prudent To spread out the SEK 1,800,000,000 over 6 or 7 years rather than over the SEK 5,000,000,000. Is that the right interpretation?
Yes. What I would do, I would spread it to 7 years, and I would spread the last, Let's say tranche, which is the installation for to the additional 2 years rather than to spread the whole project into 7 years. Does it make sense?
Yes. Yes, that makes sense. And just my second question was On the telecom business, it feels like as we've gone through the year, you've become kind of more Constructive on that business than when we started. And I guess I just wanted to understand sort of maybe From a high level, what had really changed? Is it that you've done better on your internal cost actions?
Is it that the pricing discussions have maybe been less severe than we thought or maybe from the initial kind of or the most recent tenders On the ground in China, we've actually seen improvements there. I'd just love to hear a little bit about kind of what's going for your perspective.
I'll leave the floor to Philippe Vanille to give an answer to you.
Hi, Max.
I guess your question is about the margin more than the volume because we expected that growth of volume, especially in North America. So the answer is made of 2 things. First, the mix. We have very strong growth in North America. That's one effect.
And you know North America has a different price pressure compared to the Europe. That's one. The second element is that we were able to keep on maintaining some contracts Longer than the others and longer than even we expected for a certain while because The newcomers with low prices might need a little more time to get into it after qualification of their products, setting up the supply chain, etcetera. That was part of the possible time differences we could See, and that was part of the uncertainty. It went in the right direction for Q2 clearly.
So These are the two main explanations, high level, I would say.
Okay. And maybe just a very final one on the same topic. Do you feel like the margins that are being generated now fully reflect the challenges in the market and the challenges with pricing? Or do you have any concern that maybe we've kind of pushed some of the margin pressure sort of to the right, and that's something that still needs to feed through into the business. I just want to get an understanding of whether the margins today really reflect kind of what you see outside in the markets in terms of price competition?
Yes, yes. I understand very well the question. The point is that We are going to see in the second half The new prices more than in the first half. That's clear. For the contracts that we have recently signed, We have lower prices than before.
So when I say we had the positive kind of news that we were able to keep these prices longer, At some point, these prices will kick in. So we will see them and the price pressure will be there and is going to be there in particular in Europe as it is a market, as you know, where we are quite low prices, in particular, from Asian suppliers. So I'm very confident about the volumes. I'm Then on the margin, if you look at our Q1, a number that you have, and our Q2, Excluding Y UFC, you see between these two quarters a difference of a few points of margin, let's say, from 13% to 15%. Q1, the last Q1 was without YOFC, somewhere in the range of 13 point something percent.
This Q2 is around 15. And this is the range in which we play, because it depends. We have contracts with no Fixed volume. So depending on how much of the volume our customers will ask us, it will change our mix. And this is the range we are playing with.
It's I'm not expecting anything dramatic. It can go slightly better. It and go slightly worse. And this is the uncertainty of telecom that we have been describing for a while. What is clear is that the prices are not shrinking anymore.
There is a stabilization of prices even in Europe now, which is something positive I want to mention because it's what I see on
the market.
Great. Thank you very much, Philippe, for the answer. I'll go back in the queue. Thanks, everyone.
Thank you. Our next question is from Lucie Carrier from Morgan Stanley. Please go ahead.
Good afternoon, gentlemen, and thanks for taking my question. I have a few and I will go one at a time. I wanted to come back to the contract awarding of Sogren in the U. S. And generally speaking, I was hoping you could discuss maybe with us The prospects you are seeing in high voltage in the U.
S. On the land side. And also how does that compare in terms of Investment that we are seeing on the offshore side because there's a lot of emphasis on offshore wind in the U. S. And maybe a bit less On the land side, but the soybean is obviously quite sizable.
So just wanted to get your take on that.
Okay. Eitan is going to give you a handover.
Okay. I mean, First of all, the offshore wind is really departing in the U. S, and we see the Activities are significantly, let's say, increasing and also the permitting process and the involvement of the local government is going into the right direction. And we had already announced the vineyard, as you know, that the permits are on the way, and it will be at the last quarter, it will happen, the production and the installation. So Of course, all these offshore wind, let's say, systems that are going to be put in place It's not going to be able to survive on its own because when you Change the source of energy generation, then you have to also build the backbone to transfer this energy into the right location.
What is actually happening is the so green because in the Midwest, as you know, there are lots of solar farms and also Wind farms, which are onshore wind farms, and the energy is there, but you have to transfer the energy safely, which safety is becoming a bigger concern in the U. S, meaning underground table. So In that respect, Solgreen is going to be one of the first that is going to secure the energy transfer safely from the new technological energy generation, which is the renewable energy. The same is going to happen with the offshore wind part because you are going to carry the energy to the shore, but you need the infrastructure to deliver the cable deliver the energy with the cable to the destination where the energy is needed. So there are lots of activities that we are seeing and planning is happening, but I think it will be the 2nd step after the investments are going to be solid on the offshore wind, the utilities, which are, let's say, going to complete that planning.
And as you know, the Biden administration is also supporting that. So it is in the plan. There are some plans that we are also part. There are some links and, let's say, connections in offshore and also onshore. And I think Sogren is going to be the first one that is really significant as a milestone in the industrial transmission.
And just as a follow-up to that maybe, can you help To understand the position you have now in land high voltage in the U. S. Security authority is quite a small business for you And also kind of the profitability profile, because we tend to see your North American business being more profitable than your businesses in the rest of the world.
Sure. I mean, our business so far is restricted to AC cables in the HV, high voltage arena in the United States. As you know, we are about 30% of the market requirements is performed by our Abigail facility and our team in the North American organization. So what we are talking about is the DC technology, which A differentiation to the AC for long distance energy transfer. So from that perspective, the HV environment is changing.
AC in the United States was only short distances and for critical areas, all the rest is the DC Technologies overhead, as you know. And therefore, this landscape is changing. And we With the Edible investments, which we are also now planning to improve to make it available for the C technology, which is going to support the so green is going to be, let's say, creating additional exposure because we have 2 vertical lines, as you know. We have 2 vertical lines and one line we were not using for the High voltage, which we are unlocking now to use for the high voltage. We are expecting that there is going to be a growth overall.
Okay. My second question is also a little bit more long So you're getting increasingly a lot of investor question around the need to invest in power distribution, notably on the back of a faster Penetration of electric vehicle. What is your take on that? And can you maybe highlight your position also in this area On a global basis, maybe if it's a bit more relevant for Europe and North America.
Lucie, Francesco speaking. Can I ask you to speak closer to your mic because we hardly Hear you, frankly speaking?
Yes, sure. Can you hear me better now?
Or to speak louder in some way.
Can you hear me better?
Not very much.
Try again, maybe speaking a bit more slowly because we The volume is very low. I don't know why.
Can you hear me better now?
Let's try. Let's try.
All right. What I was asking was about the need potentially for increased investment in Power distribution to accommodate the increased penetration in electric vehicles. I was just curious to have your take on that, whether you see Something accelerating there and what is your offering to accommodate potentially the increase in EV penetration?
Okay, Lucie. I think that you have been able to catch your question, Mario speaking. Yes, the answer is yes, because we are seeing a Definitely strong demand of power distribution, even substituting, especially in California, the overhead lines with underground. So we are investing, just in case today we have authorized Significant investment to increase the capacity for Power Distribution of America and High Voltage 2. Because we believe that the market is continuing to grow.
Did I answer to your question, Lucie?
Yes, yes. And maybe if I can ask one last question, which is a bit more short term oriented, It's around the metal prices and the dilution on profitability. I mean, historically, you have been able to pass These raw materials impact relatively well. Are we just seeing now a bit of a delay or you feel the market or industry Structural different now than what they used to be?
I think we are our margins, Lucie, and our results are clearly showing that Testing to the market and managing price in regard of the raw material spike or the raw material increase that we are seeing Has never been and is not a big issue. Of course, we had some maybe temporary impacts coming from raw material increase, but they quickly faded out in our profit and loss because we were able to quickly adjust our level of pricing. Copper, this is for the non metal raw materials. For the metal raw material, for the copper and I would say that it is even less the case because we are proving to be able to Fully pass the copper price increases to the market, which has always been the case. Also in this case, of course, there can be some Very short debate, but not really affecting the big picture.
Of course, when you have in one half In 6 months, almost $900,000,000 copper price effect on the sales. We have to be very careful to look at the percentage, To look at EBITDA margin as a percentage of sales because it really means nothing in the sense that it is very clear that our margins have improved, by the way, have improved even significantly. This happened in energy business across more or less all the segments. It's pretty stable the margin in the telecom business even if maybe in the second half we'll Suffered a little bit, but I believe we remain at a very good level. And the scale of the projects, which is going to increase significantly from the Second half will definitely deliver margin improvement.
So I think that restating these margins With the last year of 2019 copper levels, we'll end up already this year with some of the highest margin that we have ever realized there under the new perimeter combining also general cable.
Thank you.
Welcome.
Our next question for today is from Akash Gupta from JPMorgan.
I have a few questions as well. The first one is clarification to Lucie's question, because my understanding on raw materials, particularly copper, is that at a time when Copper prices go up, your margins mechanically come down because your EBITDA or your value add will going to remain the same, But your revenues number will go up, which will mechanically reduce the margins. And on the other way around, when copper price is going down, It will improve your margins because your sales figure will go down and value add will remain same. Can you confirm if that is the case or my understanding is not correct?
No, no. It's exactly Akash, Francisco, it's exactly what I was trying to explain that this year specifically in the 1st 6 months, the sales have been inflated by €870,000,000 if you want to add the exact Number in terms of copper price with very material effect in terms of EBITDA. Therefore, restating therefore, the margins decreased very much, but it's a fake decrease. It doesn't mean anything. As a matter of fact, if you calculate the margins at a stable copper price, you have a very material 3 of the margins.
And it's very important that we give this message very clearly here that our margins Also due to the very good job done last year under the pressure under the huge pressure of the volume drop of the COVID season, Our margins have improved, and we are preserving outlet level of margins. That's the reality.
Thank you, Francesco. And the next one I have is on this SUE GREEN project in the U. S. I believe this is not in your backlog, given your backlog isn't both quarter on quarter. So maybe if you can clarify on that.
And then the question I have is that given on one side, you have some delays in SuitLink and particularly on installation side, We may have to take into consideration a couple of years of delays. Can we say that some of these delays on revenues may be offset by Execution of Sucrein and if you can also say when do you expect to start this project in terms of revenue recognition?
Hakan speaking. Thank you for your question. Regarding the so green in our backlog, it's not in our backlog because we are waiting for the markets to proceed, as you know. We never take projects which has no NTP into our backlog. The second question was the German cargo delay, is it going to be compensated by the Sol Green?
No. There are 2 different projects running differently, and we have not foreseeing 1 or the 2 to compensate each other. Therefore, we are investing into the capacity in the U. S. To be able to produced So Green majority of So Green in the U.
S. So the delay in the German corridors, I would not be able to say more than what I told before. It's on the installation, which is are going to dilute the, let's say, the yearly sales and margins at the back end. So in our projections, so far, we are fine. But I cannot say that Everything is going to be certified with the permits with this delay.
There may be Shortening or there may be also further delays, but we will see in the future. Currently, We are starting the production, and we are and we will continue the production. And therefore, from that perspective, there is no, let's say, correlation or any compensation possibility with the SoCream. It's an additional project on top of the existing capacity utilization we have, and it's a complete different path and unlocking capacity in the U. S.
We were using that capacity for medium voltage. We were using that capacity for AC high voltage. And as Valerio explained, we are investing. And today, there was a decision to invest a little bit further to unlock some of the high voltage capacity and also the medium voltage capacity that is going to be affected due to the Sogren project.
Just for you, Valerio speaking, Rajesh, just for you to know, We have presented and debated with the Board a number of investments because we need to invest definitely for the growth of the market. The investments will touch North America will touch Aco Felice and will touch probably also ticker. We need to increase the capacity to follow the market and to increase our capacity following the demand of the market. After having seen that the market is really expected to grow. Our estimation is that the submarine market is going to be 2.5 times the previous average 5 years consumption, we have decided to invest, not to lose the trade.
So in the next 2, 3 years, you will see not minor increase of the CapEx. Partly, obviously, we are going to try to reduce Other CapEx in order to compensate, we expect our CapEx to ramp up around about 300,350,000,000 instead of the 250, 300 of today. That's why because we need to increase the capacity of the high voltage to follow the market, the medium voltage market in U. S. And the submarine especially.
So if the market ask, we are going to follow the market. That's it.
Thank you. And maybe Hakan, just a follow-up. I mean, my question was more in regards to the total Project revenues, I'm aware that for 1 project, you will produce cable in Europe and 1 for you will be producing in North America. But when I look at the project segment revenues, If you have any impact from some push out of German corridors in Europe, can you offset it to this project in the U. S.
In terms of the revenues for the land high voltage segment or that is not going
to be possible? So that was the question you said.
Listen, Akash. First of all, the German corridors. I don't believe that the German corridors will be delayed significantly. There will be a partial delay, 1 or 2 years, of the installation only. Consequently, that will impact moderately our prospecting of the sales.
On the other side, there are many other projects, interconnectors on land and by Iasi that are coming that will more than compensate the potential delay of German corridors. Fino?
Thank you very much.
You're welcome.
Your next question for today is from Vivek Middaugh from Citi. Please go ahead.
Hi, everyone. Good afternoon. Thanks very much for taking my question. I had a couple, one short term, one longer term. So firstly, if I could follow-up in terms of the monthly sequential trends you've been talking about.
What have you seen so far in July? And if you're able to share that? And secondly, another question on the SUGREEN project. Could you maybe give us any color on what sort of competitive dynamics for bidding you're seeing on these kinds of contracts to the U. S, how it sort of compares to the bidding you see in the European market?
Thank you.
The trend in July for the business is Pretty positive. The demand, especially for ENI, is still strong. No news, that's my opinion, but obviously my colleagues may take other positions, if any. I believe that Massimo Battaini wants to give some color to the to your question.
Yes. Hi, Vivek. So I confirm that we're seeing not only in July, but the 1st 6 months of stronger surge of the China demand, which will definitely sign signal a stronger demand of our distribution. We will probably follow in second half of this year. So we'll have the whole of E and I business very strong, volume wise and performance wise in 2021 relative to 2020, but also relative to 2019.
T and I today is more performance than what it was in 2019 pre COVID. We see also in the industrial segment. So special cables are stronger demand because all projects that were put on hold last year are gradually resuming pace And order intake has started to ramp up quite significantly. And so I think this cover, well, the energy space I've also been already commented by Khan and we see similar trend. As you know, in the business, ST and I picks up With 3, 6 month delay, all the other segments will follow through, so PD and Evol.
In Telecom, I think Philippe has already for this. We've seen a stronger demand comparison in relative to last year in optical cables. We've also seen MMS. And we see this trend continuing in second half, and July is confirming this trend continuing in second half. I don't know whether we answer the question or I'll be there.
Yes. Thank you very much.
There is a second question that you asked, I think we've asked about the bidding process in the U. S. Versus Europe. Is that correct? Do you want me to comment on this?
Yes, that'd be great. Thank you.
Okay. I mean, first of all, when it's high-tech, Like 525 kilobytes the bidding process is similar. The only distinction which comes from the bidding process is, is it a TSO or a developer? So the developers are different looking from a different perspective because of their financing agreement and financing requirement versus a TSO, which is already financed partially by themselves, partially by the government. So from that perspective, there are some particularities on both, but the high-tech investment like the 525 kilobytes DC dictates the bid.
So I can say that even the process may be a little bit different, but the result is the same. So if you are able to produce and develop a cable that is high-tech, then you have more, let's say, opportunities as we have seen versus the German corridors and also so green.
Your next question is from Miguel Borrega from Exane BNP. Please go ahead.
Hi, good afternoon, everyone. Thank you for taking my questions. I've got 3, please. The first one on projects And just coming back on what you said last quarter about more capacity in the market maybe impacting pricing and margins. Can you comment on what you have seen over the last few orders in the first half in terms of the implied margin?
Is that Kind of higher than what you've had historically. And then I can just ask the other 2. 1, free cash flow, Your guidance basically implies around
€580,000,000 in
the second half. Can you walk us through What you're thinking about working capital, you mentioned a few down payment in Q4. Am I right in assuming that you're expecting a broadly Neutral working capital position on your cash flow for the full year, so reversing the EUR 500,000,000 From the first half. And if you could also quantify the impact from copper on your working capital. And the last one on energy.
You mentioned during the presentation that the cash conversion is 83%. Can you maybe break it down between Infrastructure and Industrial? Because I imagine there would be a significant difference there as well.
Thank you.
Okay. Thank you very much for all your questions. Let me start with the first one, the capacity increase. Yes, we needed to increase the capacity, And we have been the last to run for it because we were having already a bigger capacity with our competitors. Now that we see the capacity filled, we are thinking to follow the trend of the market and not to miss opportunity in the for the customers.
We have seen not for the time being a significant price pressure. The prices are almost stable. And I believe that the demand, if it's true as it is that is going to grow so much, probably There will not be opportunity to price reduction in the next quarters. I don't know if Faten has a different vision.
No, I agree completely, Valerio. The price The capacity had an effect that we spoke about last time that the Pricing has come down, and we have pressure. But as Valerio said, it has stabilized. And we are seeing for the high-tech projects, Let's say, the bigger projects, less pressure on the price. But the smaller projects is always depending on the competition level and the offering of multiple players is always under pressure.
But we don't see that in the big ones.
Then there was a second question. I leave to Francesco for the Yes.
Thank you, Miguel. The free cash flow for the second half. Of course, as usual, due to seasonality, working capital will decrease in the second half. No doubt about that. The reality is that it will decrease a little bit less than it decreased last year.
That's the point. And therefore, the 4 €50,000,000 say free cash flow last 12 months, I would say as of June, will decrease towards the level indicated in the guidance. Again, I'm pretty confident that we will manage to keep it above €300,000,000 and maybe also in the very high part of the guidance. We have one specific reason for that, the dynamic of working capital in the project business. Last year, due also to the lower level of activity and order intake in the previous quarter previous years, we didn't have this very high level of activity in terms of project execution, I mean, in the second quarter.
And therefore, the level of the working Capital was dropping dramatically, was in the positive sense, was improving, was decreasing very significantly. This year, and I say this very positively, of course, with the start of the German corridor and with the execution of the summary orders, which have been newly taken like Turkish Crossing, just to give you an example of the Sofia, which are pretty much which are projects with a pretty much shorter time to market. So whose execution will already fall in the second half, Yes, maybe the working capital of the submarine will also decrease, but not certainly in line with And this explains again why the $450,000,000 last 12 months free cash flow of the As of June, we'll drop down to the level indicated in the guidance. The second point was related to The copper impact on working capital. I think I was mentioning this during my presentation With the total impact in the last 12 months as of June of €230,000,000 So it's huge.
It's huge. This impact will decrease a bit on a full year base 2021 for the simple reason that The copper price increase started already in 2020 in the Q4 to me. In fact, so I could estimate that it could go down from $230,000,000 to $180,000,000 $190,000,000 I'm giving you rough estimation, but I think are pretty much correct. This on a full year basis, meaning from December 2020 to December 2021. Still $180,000,000 is still a huge effect that we are, of course, doing our best to offset In terms of free cash flow delivery, thanks to inventory management, overview management and the Good work done by the project division in executing, reaching milestones and collecting cash at the relevant milestones.
Then the third question was on cash conversion. I would say that The cash conversion of the Energy business is very similar in its different components. E and I, Industrial Business, I wouldn't I believe it's not very much different. Let me highlight and emphasize How important this cash conversion is to stabilize our cash generation in a period of time, and I believe Valerio was Mentioning this, I mean, the next few years when we will certainly go into a higher level of CapEx specifically for the project business. So This means if we take this cash conversion rate and we project them over the next 2, 3 years, definitely The cash conversion rate on the project will drop even more, will not remain at 60%, will certainly drop.
And I say this once again positively because we have very good investment opportunities. Whereas I believe that the Level of cash conversion of energy will remain stable, and I hope that also the level of cash conversion in telecom may remain Stable or even increased because the bulk of investments in telecom and in fiber specifically, we have already done over the last few years. So Telecom has always been a pretty good cash generative business. I think it will keep being a very good cash generation. So I'm but this once again to explain the complementarity and the fit of our businesses, not only in terms of different cycles, some megatrends, which needs to be stabilized by a more to a stable business like the energy, but also in terms of financial balance because a company only Pause to one of these businesses, take the Trojan business, well, when the business change direction, it's not an easy company to sustain or to stabilize.
So we are very happy to be in this complementary framework.
That's very clear. Thank you.
Welcome.
Our next question today is from Monica Bosio from Intesa Sanpaolo. Please go ahead.
Good evening, everyone, and thanks for taking my question. I hope you can hear me. There are just a few questions left. As for USA, on the back of the total green project and of the statement from Can I was wondering if it's too early to give us an idea of the size Of the potential size of the underground cable market in the United States? And when do you expect this market Will be will ramp up.
I can imagine it could ramp up along with the infrastructure plan of Biden. But just your color on this. And from the financial side, I would like to ask Francesco, Just housekeeping, a projection for the tax rate for the full year And maybe an indication on the copper price on the net revenues over the full year. I can imagine that the 2nd part of the year will be definitely better in term of copper because there is a better comparison base. Thank you very much.
Thank you, Monica, for your question. While you're speaking, my opinion, obviously, I don't have the crystal ball, but there is not a transmission entity in U. S. So Green is one of the first interconnectors on land that is going to develop Our transmission network between regions from Midwest to the East Coast. It will not be This all, other will come for sure.
If U. S, The private companies will trigger other projects if possible because So Green has told us that they have the license to connect via the railroad whatever they want. Consequently, it may be that the railroad right, right of way, will become or could become, If so, Green is going to be successful as execution, and that's sure, a Decent way to realize a common infrastructure in the U. S. Territory.
That is an infrastructure that the U. S. Is going to need because all the power generated on the course, on the 2 costs within 10 years have to be distributed inside the company. That's not an option. It's something that has to come.
So I'm pretty optimistic on it. And that's the reason why today, We approved quite significant investments in our plant of AbbViele in USA.
Okay. But it's It's too early to define size of the potential market that we should see
Maybe. The size of the potential market is maybe bigger as you want,
billions, but
is really difficult to predict.
Okay. Thank you.
Monica, taking over your Additional questions. The tax rate, I believe, on a full year basis, we remain quite stable around 30%, 31%. Always remember that a quarterly tax rate is by definition the best estimate of the full year tax rate. So if our financial statements are correct as they are,
the 30%,
31% Should be an appropriate estimate of the full year.
Okay. It seems to me a little bit better
Go ahead.
It seems to me a little bit better than initially in anticipation. Maybe I'm wrong, but
No, no, it is you are right. It is better because our results are better. And normally when the profit before tax improves, Specifically, some geographies which are more on the borderline, some geographies with low profitability and which in terms of profit before tax on net income sometimes are at a loss like it happened in 2020. When these get into positive black figures, of course, the tax rate tends to improve Because when these are at a loss, you don't provide for deferred tax assets.
Yes, for sure.
Which is conservative, of course. It's prudential, but it is like this. So it's very normal when the results improve, the tax rate tends to go down. And I believe that it can further go down a bit over the next few years. Then the copper price and the sales.
I'm happy to say that I hope that we may be able to exceed slightly the €12,000,000,000 level in terms of sales on a full year basis.
Okay.
Of course, this is very much pushed by the copper price, Valerio said this. Our forecast is actually going slightly above the €12,000,000 Of course, this is based on the current level of copper price. If the copper Most significantly, the picture will change. And the copper effect on a full year basis is difficult to estimate. But what I can say is that in the first half was €864,000,000 just to give you the exact number.
In the second half, it will be much lower than this because the copper started to rise in the last quarter. I tend to believe that it may be estimated approximately at 50% of that. So my best estimation would be a full year copper price effect on sales of EUR 1,200,000,000, EUR 1,300,000. But I can be right or wrong, plusminus 100,000,000, easily.
Okay. Thank you very much. Thank you.
Welcome.
Our next question for today is from Renato Garguela from Stifel. Please go ahead.
Yes, good afternoon. Thanks for taking my questions. Well, the first one is about Eurasia. If you have Any update about the potential timing of the award of the project? The second one is a follow-up on CapEx.
Can we assume already some higher CapEx, some step up in the second half of this year compared to your previous plans? The third question is on submarine business. Considering also the recent orders, you were saying Tarcus Crossing, Sofia, etcetera. Do you have can you give us an indication about the expected utilization production capacity for the submarine in the second half of the year? Thank you.
Okay. Thank you, Renato, for your question. First question, what about Eurasia? We have been talking probably too much about Eurasia because We have started to talk about this project almost 1 year ago. And we are still in the middle of the sea.
That's my opinion. That's because the route is touching Cyprus. And Cyprus is a very sensitive location in the Mediterranean. That's the reason why there are also political problems to be overcome. I'm quite sure that sooner or later, Those problems will be over solved, but for the time being, it's a project that we have in our expectations, but not very quickly to be awarded.
The last expectations is for an award in the second half of the year, but I'll not be surprised to see the a further delay to the project. I don't know if I can want to comment on it,
but Yes. One additional I mean, you explained it very well. One additional news that is already public, the European Fund has approved EUR 100,000,000 to the project. So that makes this project more solid. That means the European community overall is expecting and putting that project as strategic.
The importance is, of course, the technical solution for Cyprus. And I'm not going to mention the difficulties, political difficulties, which Valeria has mentioned. But We are following the customers' time schedule. And so far, They are sticking to the time schedule. That's what I can say.
And we
see this
EUR 100,000,000 as a positive step forward for the project.
If Eurasia will be awarded, we expect it to be part, at least, of the award. Second question about the CapEx. The CapEx for 2021 will not be touched seriously. So consequently, the previous guidance on CapEx stays the same. What we are going to be obliged to touch is the CapEx of 2022 and 2023, especially if we are going to apply for the new submarine plant in U.
S. In that case, obviously, we have to dedicate a significant chunk of
CapEx
to this step up. I will give you the information when we are going to be sure to do it. The decision is already almost taken. But having not yet the location defined, I tend to be prudent. The third question is about the submarine business.
If it's expected the utilization to grow. Francis speaking, I have been talking to you telling that the utilization for the student Cable was not filled completely. Now with the Turkish crossing, with the SOPHIA. The capacity is filled onwards. Starting from last quarter, if I'm not wrong, can you correct me?
And obviously, the first half next year, the excluded capacity is piglet as well as the paper capacity. We are going to run at full capacity. And that's also the reason for the increase of CapEx and the investments I told you we are going to authorize or we have already authorized for the increase of capacity for San Bernardino.
Okay. Thank you. If I may, just a quick follow-up on Telecom, Just a confirmation. So based on your current visibility until year end, can we say that the geographical mix may remain approximately the same than the first half? Or you expect any material, anything you can share?
Yes, I would say yes. But Philippe can be more detailed. Yes, yes, I confirm.
Okay, perfect. Thank you. Thank you very much.
Thank you. Our next question for today is from Alessandro Toltoza from Mediobanca. Please go ahead.
Yes, thanks. I have 2 questions left from my side. The first one is on the telecom. I know it's Difficult, but I would like to understand if you have any feeling or sentiment on, let's call it, restocking or installation pace of your clients and If you have any feeling of level of stocks, okay, of your clients or from a distribution level? The second question is on the energy projects.
Considering everything we discussed in this call next year, Starting with the margin that we let's say, you are assuming for this year. Is it a year balance between production, installation? If we also think about Viking or let's say all the discussion we had. So just have an idea of what's your view on the overall margin for projects, let's say next year. Thanks.
Okay. I leave the floor to Philippe for the first question about the strong power of our telephone platform. That is a very difficult question.
Hello, Alessandro. Charlie.
From what we see after a stock building during the fiber shortage in 2018 essentially. We had a very slow destocking for that took Many quarters. And I would consider that the destocking must be more or less over now. I believe We are, from the stock perspective at customers, back to normal. If the demand grows, It will mean that there will be a growth for us.
We still need just to say because it's a very significant event for my business. We will see very soon, I think in August, the China mobile tender That is, as you know, very important and that will set the scene for the balance between offer and demand In China, but given the importance of China in the world in general. So we will know we'll have a better view On the demand after summer. But as far as stock is concerned, I would say destocking is over now.
Okay, okay. And if I understood well, you mentioned during the call that as of today, overall, prices bottomed, Not bottomed out, but bottomed. Is it right?
Yes. Let's say,
we see a stabilization of I see in the new tenders.
Okay. That's what we said. Okay.
The second question was related to energy projects. And in that case, I leave the floor to Akan to answer that.
Regarding the project, can you define again Quickly, I would like to be more specific to your question. Could you restate your question, please, so that I can give more details?
The margin expectation in 2022 in projects.
2022 versus 2021, this is the expectation? Okay. Let me answer in 2 ways. First of all, the effect of the capacity utilization. We are still working for the 2022 order backlog to be filled.
As Valerio was saying, the first 6 months are booked, and we are still working on some projects to be acquired for the second half. So depending on the, let's say, order book or order we are going to receive And if we are going to be able to sell, which we think that we are going to do, we are expecting an increase versus this year. But how much this increase is going to be, we are going to make these decisions and also based on our order book at the end of the year. But the expectation is, as Valerio was saying at the very beginning, that we are seeing improvements in our results and which we are going to solidify in the second half. And we hope that this is going to transfer itself also into the full year 'twenty two versus 'twenty one.
Okay. Thanks.
Our next question for today is from Daniela Costa from Goldman Sachs. Please go ahead.
Thank you very much. Good afternoon. Most of my things have been answered, but I would like to ask SKU, your competitors have talked increasingly a lot about like service business and repairs. Some of them even have specific divisions now for that. I was wondering if you could give some perspective on how big do you think the size of the market can be given some of interconnectors Those are getting quite old and there's a lot of them and whether that's something you're also has actively pursuing would be interested in perspectives there.
Thank you.
Okay. I assume that you're talking about the project business, service business. So I'm going to explain myself To explain only on the project business. And you're right, the service business is becoming a standard in our environment. We have 2 kinds of, let's say, markets that we are exploring.
1 is Majority of the new projects already foresee inside also a service agreement, which we are taking part of. So therefore, when you are talking about the big project, the customer is already asking us to supply our service contract. And the service contract is not comparable to the big contract. But if you are, let's say, comparing, we can say about it's about 3% to 5% of the total contract is a service contract, which you can then multiply with the years of, let's say, useful lifetime. And then there is another part of service that is requested from some customers that have already installed the cable for a long time, and they are now asking ready crew in case something happens to the in an emergent way to go and to take care of the repair.
So that business is, I can say, is a little bit slow because the customers are not really decisive on the fixed fees that they have to pay to have a standby crew. So therefore, this market is currently slowly growing, I can say, very slowly. And I cannot say that it's a significant market yet. The utilities have to and the TSOs have to make their minds around to do fixed fee agreements for the crews that are standby. But overall, I see a good trend, And the service business is a part of our business, and we are focusing on that.
And our focus is majority is in two ways. We do ad hoc repairs that we are doing for the last 10 years. Whenever our customer has a breakdown, we have crews that are not based on a service agreement, but On an ad hoc basis, we do that on an order basis. And then the other one, which is now becoming as a standard, is the attachment of service agreement on top of a full term key project. This is happening.
Thank you. And actually, if I may, just a follow-up. I think you commented on EuroAsia specifically, but I might have missed it. But What other large tenders are out there that we should be paying attention for the next 12 months?
Yes, but as I said before, we consider the project at least a little bit late.
I mean others.
There are Big projects in the horizon, yes. I mean, first of all, if you look to Tarna investment plan, one of the projects with the Chilean link. So that one is already announced by Tarna into the market that this project is going to happen. It's a big project. And then there are some projects that we are following, which is in the Middle East, As you may know, the ADNOC project is also in the market well commended by the investors and also contractors.
Apart from that, We are seeing big projects of the wind farms in the U. S. That are in the tendering phase. When we talk about a tender of a wind farm is in the depending on DC or AC, but it ranges in the EUR 300,000,000 level. So there are multiple ones which are currently under tendering.
So I can say that We are seeing significant activity on the Big Thunder, let's say, offering.
Thank you.
Thank you. Our final question for today is from Gabriel Gamborova from Banker Akros. Please go ahead.
Thank you for taking my question. A single one is again on the U. S. And on Interconnectors, I was wondering if the so green and other possible opportunities, I mean, do you expect Then to carry higher margins visavis European projects? Or
do you believe they
are balanced? I mean, they are In line with the European projects. I mean, this has
to be with a very simple update. Just a simple answer to you. We see the margins of the U. S. Projects interconnect of land very similar to the European's one.
Obviously, the information to the market related to the German corridors are well spread all over the world and consequently is already a reference. What I can tell you is that the margins in U. S. Are not going to be lower than the German cordless one, very strictly aligned.