Earnings Call: H1 2021

Jul 30, 2021

Good morning. This is the Chorus Call conference operator. Welcome and thank you for joining the WeBuild First Half twenty twenty one Financial Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Mr. Pietro Salini, Chief Executive Officer. Please go ahead, sir. Good morning and good evening everyone and welcome to our conference call dedicated to WeBuild First half results. I'm Pietro Salini, Chief Executive at the group And I will give a few words about our performance during the 1st 6 months of the year before letting Massimo Ferrari, our General Manager, Go into further details. Let's start with some highlights on Slide 3. In these 1st 6 months, WeBuild achieved markedly Positive results despite the persistence of global uncertainties linked to the pandemic. We accelerated our derisking process Following 3 main pillars. 1st, we acquired a record on new orders. We are talking about €9,600,000,000 We focus on low risk markets such as the European, U. S. And Australian market. Linked to new orders, we significantly increased the overall backlog in low risk In low risk areas. Finally, we reduced risk on the financial side. Our net and gross debt We're better than historical trends and beat market expectation. We resolved some important claims and improved the quality of our assets. After a year of disruption, inefficiencies, slowdown and site closures, we can now have a more positive view on the future of the construction sector. For most of the developed countries when we operate, the recovery post pandemic will pass through great investment in infrastructure. Our revenues and margins grew in this month, not only thanks to Astarte acquisition, But also for the reorganization of the operations that allow us to have less impact due to the COVID-nineteen. Looking at the 2021 targets, Based on the current situation related to the pandemic, we can confirm we are on track to achieve them. Obviously, this target might Subject to changes as a result of the predictable nature of the COVID-nineteen pandemic. As you remember, in November 2020, We completed the acquisition of 66 percent of Astaldi. Now the integration is accomplished. Astrally going concern is merged in WeBuild by the 1st August, tomorrow. When it comes to sustainable development and the innovation behind it, Our numbers show how committed we are to it. More than 90% of our construction order backlog now comes From projects dedicated to reaching sustainable development goals. We also launched our ESG plan for 2021, 2023, setting targets that Tied to the reduction of greenhouse gas emissions, safety, gender diversity and innovation. The graphic on Slide 4 will give you a good idea of how much We have accomplished in the 1st 6 months of the year. In January, we issued a top bond for €200,000,000 It was the last of series, Bringing the total amount raised to €750,000,000 which we used to refinance our debt, increasing the duration with limited impact On the total cost of the debt, as Massimo will explain more in details later. As I said, the governments in many countries, Italy in particular investing in infrastructure to help the respective economies recover from the pandemic, we have been well positioned to seize a number of important contracts. In Italy, we won contracts to improve the railway between Messina and Catania in Sicily to develop Section of the high speed railway between Naples and Bahrain and to work on the high speed railway between Verona and Branderon. Outside Italy, our biggest accomplishment was the signing of the final contract for the Texas High Speed Railway. In Australia, Our consortium was selected best bidder for the tunneling package of the Northeast Link project in Melbourne. In April, we launched an easy plan. What is more, we were listed among Europe Climate Leaders in a ranking published by the Financial Times. So our efforts are being recognized. During the same month, shareholders of both WeBuild and Astaldi approved the plan to combine the 2 companies. The results achieved also led to Tutor, the leading rating agency, confirming the rating on our debt and improving the outlook for our group. Let us now move to Slide 5 that presents our new orders in greater details. The EUR 9,600,000,000 Worth of orders in the 1st 6 months is a record. These are orders that have been acquired are in the process of being finalized for which we have been identified as best of The first front is Italy, where the government is making major investment in infrastructure to support the economy. The second front is the group of countries with low risk profiles where we are expanding, United States, Australia and Europe. Brief report, over 95% of the new orders come from low list countries. Italy is responsible for order worth about EUR 5,000,000,000 This is more than half of the total value of the orders we have won so far this year. The strong order intake was partly thanks to the attention given to the technical aspects of our offer, which we in some cases developed with Italian partners. On projects like the Naples Bari High Speed Railway, we were able to win contracts to build more than one section of the same railway, thanks to the We already have people and machinery on the ground there. Also worth to note that the country's government has made effort to reduce the time it takes to get a project Started from the signing of the contract to the start of the construction. As for the other markets, in Australia, We have been identified as best bidder for the tunneling package of the Northeast Link in Melbourne. This is not only the largest road project in the state of Victoria, But also the largest private public partnership for an infrastructure project in Australia. We also had good order intake through our subsidiary in Switzerland, CFC. In the United States, we have the Texas Mega Rail project worth €13,100,000,000 This conference is not working not only for the size, but also because it will offer the first true high speed rail service in the country. Our book to bill reached 1.7 times, 7.8 times when including Texas and the contract for which we have been identified as Slide 6 shows how substantial our backlog is at €43,000,000,000 What is more important is how diversified these projects are. More than 70% of our portfolio is in countries like the United States, Australia, Europe and of course, Italy. Of the total, €35,000,000,000 are for construction projects. That gives us visibility for the next 5 years based on expected 2021 revenues. If we include the Texas contract and tenders for which we have been identified as best bidders, the total backlog comes to €52,000,000,000 That would be more than double in respect to 2020 year end backlog. The impact that this Texas contract will have on our group is so transformational that it would add between €700,000,000 €800,000,000 to our equity value. Italy make up the biggest part of the backlog. Part of it will be developed under the National Infrastructure Plan, the so called Piano Nacionale di Dipresia Epesileesa, Next Generation New. In Slide 7, you can see a geographical breakdown of our revenues. In light of the major investment being made by the Italian government, Our own market has surpassed North America as our primary market with 31% of total revenues for the first half of the year. What is important to note here is how much Italy's contribution to total revenues is increasing in recent years. In 2018, represented only a 10%. The United States is our 2nd biggest market. You will see that euros results are becoming important at 19% of the total as we And mainly in France and Switzerland. We've been successful in steadily reducing our reliance on our 10 biggest product As part of our diversification strategy, they have become responsible for 40% of revenues. At the end of 2018, They represented nearly 50%. The revenue figures also emphasize how much we remain committed to our goal to promote sustainable development. The pie chart indicates sustainable mobility projects like ISP Trail make up 68% of total revenues. Our operating performance, of course, has been impacted by restrictions that government has implemented to stop the spread of COVID-nineteen. Some production inefficiency persist at some construction sites, mainly in the Middle East and Australia. We are also doing our plan to protect workers from getting infected. In the Q2, we started vaccination campaigns at construction sites. On Slide 8, we want to remind you the last Starting with regarding the integration of Astarte and WeBuild. As you know, in March, we started the process for the partial and proportional demerger of Astarte in favor of WeBuild. As part of the plan, Astaldi shareholders, we received WeBuild ordinary share in a number of 203 every 1,000 Astaldi shares. The effectiveness of the demerger was primarily subject to the court of raw emissions of a provision certifying the execution of the study composition with creditors. As communicated to the market, it was published in these days. Before the process could be considered as accomplished and the effective date of the demerger is on the 1st August. As a result of the demerger, I've started the operation in the building, infrastructure, construction, engineering, design, maintenance and management, which are included in the going concern perimeter, will be transferred to WeBuild. Astaldi will only keep the assets and legal relations Transfer to the separate business, Patrimonio Destinato, for the creditors set up by it on 24 May 2020. In the meantime, we continue to work with alignment of the core process, information technologies, building, procurement, operation and so on. Going to Slide 9. In the 1st month of 2021, we kept investing in our commercial activity. Indeed, infrastructure investment is going to be the model of economic growth and social development in the post pandemic world. The huge sums that government plan to invest convinces us of that. The U. S, Europe, Australia and other developed economies should keep providing strong demand for our services. We have in our commercial pipeline more than 34 €1,000,000,000 of which around €7,000,000,000 of tenders for which we are awaiting an outcome. In line with our de risking strategy, Most of our tenders are concentrated in United States, Australia, Italy and other European countries. Slide 10 will confirm our optimism for the Italian market. The total value of the high speed railway network included in PNRR is around €24,000,000,000 of which €15,000,000,000 finances directly by PNRR. The map shows the railway included in the plan. The one in which WeBuild is already involved, includes Fostizza Verona, Milano Geno, Naples Barrie and Palermo Catania Messina for around €10,000,000,000 over 70% of the project awarded year to date. Other EUR 10,000,000,000 are still to be tenders such as Orte Falcone, RASAVERO, REDROCALABRI, TARANTO, Batipaya and Roma Pescara. On top of this, the Infrastructure Ministry has added another €10,000,000,000 mainly to complete the Cielo Regio Calabria high speed rail line. Our group is prepared. The same strategic thinking behind Projet Italia has seen us dedicate resources and expertise to the domestic market also by creating a new entity dedicated to the Italian market. To respond quickly to the need to improve the country infrastructure, Especially in sustainable mobility as evidenced in the national plan of recovery and resilience and to optimize indirect and overhead cost by centralizing it in a shared service center and using back office automation. In this way, the head office is Thank you, Pietro, and good morning to everybody. Before I go through the numbers, So let me remind you that as is customary, we are presenting adjusted figures that include The effects from work under management, which are the JVs of our U. S. Subsidiary Lane Construction. In addition, the figures for the first half of twenty twenty exclude the effect on the P and L Of the settlement agreement with Condotad Aqua concerning the transfer of ownership at Kochi, the consortium responsible for the Finally, our first half figures for 2020 do not include Astaldi, which was acquired by WeBuild in November of this year. We can start from Slide 12. Revenues amounted to EUR 3,100,000,000 Against EUR 2,200,000,000 for the same period last year, this 42% increase It's the result of the Staldi acquisition as well as a resumption of activity on our construction site. As Pietro explained to you, notwithstanding a great recovery compared with the same period last year, Our business has been still affected by some government restrictions aimed at Fighting the spread of COVID-nineteen, these restrictions remain and could have an impact on our business. As things stand now, we are on track to achieve our targets. EBITDA jumped to €198,000,000 EBIT was about €99,000,000 It excludes amortization and depreciation of EUR 38,000,000 from the PPA Process carried out following the acquisition of Astaldi. Both EBITDA and EBIT margins widened by more than 1 basis points, although they are still affected by Suboptimal efficiency on some sites due to COVID-nineteen restrictions With an impact of around 10%, 15% on EBITDA, front loaded restructuring cost of approximately EUR 15,000,000 related to Astaldi's integration to create future synergies already starting from 2022. Marginal short term squeeze to the raw material cost inflation. On this point, let me remind you that most of our international contracts include clauses To pass through to clients any price increases. In Italy, the government is working on a new decree That would increase safeguards for general contractors against strong rises in raw materials prices. This decree would likely be retroactive so as to include the cost incurred by builders in the first half of the year. On Slide 13, we have the P and L below EBIT line. Net financial costs were at €54,000,000 against €49,000,000 the prior year. This include the bond charges for EUR 5,600,000 mainly related to the Temporary overlap of the 2021 2025 notes. In June, We repaid the 2021 notes, so we will not Double this cost in our full year figures. We have also to take into account that we are consolidating Gastaldi's Financial expenses, which are mainly bank debt charges, financial cost on guarantees And the devaluation of some financial assets with additional cost for around EUR 20,000,000. Taxes amounted to €54,000,000 compared to €27,000,000 The tax burden was determined by the positive resolution of a claim in Ethiopia. This claim recognized to WeBuild some EUR 400,000,000 in extra cost, Resolving all the disputes on the matter known that far. In any case, these taxes based on current legislation could be potentially deductible in the coming year for taxes to be paid in Italy. Meanwhile, adjusted net income, which excludes some one off items, which discussed earlier in the call, Like the front loaded restructuring cost related to installed integration, the amortization from the PPA process And the tax effect of claim settlement was positive for €41,000,000 And better than the one for the same period last year for about €90,000,000 On the next slide, we have reported that the cash flow from for the first half of twenty twenty one, And you will see the positive results registered in terms of net and gross debt. We beat all the expectation from the market, and let me say also our own expectations. So many thanks To all the people that achieved this extraordinary target for the first half of the year. Our operating free cash flow is around €70,000,000 As evident, the main contributor are the Higher EBITDA and the cash ins from working capital. We greatly succeeded in managing The seasonality of our working capital, which in the last years affected our first part of the year with around €300,000,000 to €350,000,000 according our estimates. The record number of new orders in the first half of the year allows us to collect more than €500,000,000 of advanced payment on new contracts and project backlog. But at the same time, we had to pay back to clients and partners some €200,000,000 a day, euros 80,000,000 €1,000,000 So the net effect of the advance payment on the working capital, the improvement was around EUR 220,000,000 net. Not all advanced payments have been cashed in. We are still waiting for approximately EUR 1,500,000,000 of advanced payments, of which some EUR 400,000,000, EUR 500,000,000 of contractual advance payment expected to be cashed in the 2nd part of 2021 related to the contracts awarded in 2021. The remaining amount is coming from the Italian government's relaunch decree, The 30% target that we already commented. In this month, we also reduced by around €330,000,000 the total amount of outstanding claims For additional consideration, the one on Gerd dam and the one on Perth Airport Link have been cashed in. They were in our balance for many years. All this comes to net debt reaching €540,000,000 a decrease of €560,000,000 versus the previous year that is a reduction of more than half. The negative effect with respect To December 2020 is mainly due to Panama Litigation cash out. Looking at gross debt, we reduced it by more than €590,000,000 around €600,000,000 In addition, we have EUR 300,000,000 revolving credit facilities that remain undrawn That could be used in case of an extraordinary shock as happened last year with the COVID-nineteen outbreak. Moving to Slide 15, we see the maturities of our corporate debt. In June, we completed the repayment of the 2021 note for €237,000,000 Now We Have No Long Term Debt Maturity Until the Second Half of 2022. In January, we issued a top bond for EUR 200,000,000, which was consolidated in the 2025 bond issued a month earlier in December 2020. This was used to refinance some bank debt. The January issue also helped lower the Average cost of the entire 2025 bond. The average cost of the medium To long term corporate debt is around 3.5 percent and the duration is much higher than before. It's around 3.5 years. At the end of June, the last year, the duration was around 3 years. Let me say that we could profit from the favorable situation Now I will leave the floor again to Pietro for some closing remarks. Thank you, Massimo. On Slide 17, I would like to go over our strategy with you. As discussed earlier in the call, We are consolidating our presence in Italy, our own market. We are quickening the pace on projects that were part of our backlog, Such as the Verona Padua High Speed Railway. On this project, we signed 5 months ahead of time the agreement with the client to start work It is valued at €1,600,000,000 The outlook for the Italian infrastructure sector is positive. We are riding a wave of investment that the government is putting in place. As we have mentioned in previous occasion, There is also a new line of business that we are looking at developing. It is Roadman 10s. Through our subsidiary, Cosi and the integrated business of We are awaiting the outcome from approximately €800,000,000 standards in this segment. Discussions are also ongoing To introduce a model where WeBuild could be involved in the role of general contractor throughout the whole maintenance When it comes to strengthening the value chain or in other words increasing our in house expertise, We could consider a small tactic acquisition in areas such as FoundationWorks. The first point on the slide refer to our program EUR 120,000,000 by 2023. We continue to implement our cost efficiency program, which was begun in 2020. As of today, we completed the 1st tranche of measure, the so called crash program launched in 2020 during the pandemic. Further measure include reducing and reorganizing costs at the head office and external branches, reducing and reorganizing the indirect cost of our construction and Consortia in Italy, so as to improve the margins on our projects. Lastly, we started generating synergies from Astaldi acquisition. We're on a good way to increase our cash generation, thanks to a number of factors. As discussed earlier, more and more of our project comes from low risk markets, Which provide better payment certainty and visibility. We are obtaining greater operational efficiencies, thanks to our cost savings program. The terms of payments for our project in Italy are improving, and we still have great opportunities coming from our balance sheet to cash in outstanding receivables and monetize our Going to Slide 18, we have the targets that we set in March. As we all know, the virus has grown exponentially in some areas of the world. In some areas Appraisal, that lead to no presence. In other like the Middle East, we do have a presence and our activities might be impacted. At a constant exchange rate between the euro and the U. S. Dollars, we foresee revenues ranging between €6,500,000,000 and €7,000,000,000 in 2021. The current backlog covers more than 90% of combined 2021, 2020 3 revenues excluding the Texas rail contract. A rebound in profit margin in the second half leading to an EBITDA margin of about 8% for the full year, Improved net debt between €500,000,000 €300,000,000 These targets for the situation of uncertainty Still caused by the unpredictable nature of COVID-nineteen pandemic in the countries where the group operates may be subject to changes. On Slide 20, you can see how our sustainability strategy, practice and performance have been recognized by the major ESG rating agencies. We keep being ranked among the best performers in the construction industry by international agencies such as Morgan Stanley, Capital International, ESG, Vgeo and CDP Climate. In the last few months, we received 3 important sustainability awards: the Europe Climate Leaders 2021, the Italian Sustainability Leaders 2021 and the Royal Society for Prevention of The Gold Award 2021 for the construction of the new Genoa Bridge. The Financial Times ranked us The company is on the forefront of effort to fight climate change designating us as Europe Climate Leaders for 2021. We've been able to reduce the intensity of our direct greenhouse gas emissions relative to revenues by 9% year on year between 2014 2019. I thank you for your attention and now leave open the floor for your questions. Excuse me, this is the Chorus Call conference operator. We will now begin the question and answer session. We finally ask you to use the handsets when asking questions. The first question is from Matteo Bonizoni with Kepler. Please go ahead. Yes, thank you. Good morning. I have some questions. The first one is related to the guidance, which you have confirmed both on the P and L and on the net debt. Looking at the trend in the first half, it seems that on the P and L side, the guidance on the margin particularly could be probably Little bit, let's say, aggressive or in any case having posted a 6.3% EBITDA margin in the first half to get to 8% in Full year could be a good beginning, not a joke. So can you elaborate on that? On the contrary, on the net Financial position, can you a little bit elaborate on the working capital trend, which you expect in the second half because the first half was Totally different from the usual seasonality I've already commented. So starting from a net debt, slightly more than €500,000,000 it seems that you could even potentially Actually exceed your debt guidance to deliver better. So I just want some color on that. The second question Yes. Just let me go through this one. Maybe you put the second question a little bit later when we finish. Is it okay, Matteo? Yes, yes. So let's say that the second half for us, it will be the starting of a number of contracts, either in Italy than abroad. It will develop a lot Of revenues, let's say, 30% more than what this envisaged in the first half. This is due To the condition of acceleration we had and the acceleration we are putting on all of that. So you will have An increase in revenues coming from the second half. And of course, we will not double the upfront cost that we paid on for the reorganization of Astaldi and then some other extraordinary cost and nonrecurring cost that you see into the first half. So I think that you cannot have simply doubled the figures for the second half taking into account what happened in the first. Of course, all of that is, as I say, conditional to the fact that we do not see any other, Let's say, effect of the pandemic because this is a word we cannot control on that respect. Still, As I say, there are some effects spread everywhere. So we have an impact on our revenues Even for the condition of the pandemic that we sustained in the first half, and we foresee that we will have and continue to have an effect also in the second half. But of course, This will not take into account any other burst of expanding of pandemic that someone Yes, maybe thinking will happen, but we don't see it at the moment. So let's say this is the first thing. The second thing you have to consider is On the cash aspect, when we talk about the advance payment and the Advanced payment law that in Italy gives the ability to get up to 30% Into the new contract, especially the one on the included in the next generation new plan, they are not All factor in inside our estimates for the guidance. We took a very prudent assumption On that respect. So this is the 2 first answers to your questions. Please go on Sorry, Matteo, let me add on the first point. As you remind, we new order 12 months later. According the various PNRR around the world, there is an acceleration, a strong acceleration made by the client. So we are very confident to start Much earlier than our old assumption considered. So second question from you. Yes, very quick financial charges in the first half including associates were minus EUR 72,000,000. I just want to have if you can provide An indication for the full year. Then as regards, if I may, the raw material. So you said, if I understood correctly, that the Issue is in Italy, because abroad you have several cases in the cities. So how where we are? Because it seems that the government now is speaking about EUR 100,000,000 to cover all the sector, which is the low amount, clearly Compared to the amount of jobs and the extent of the demand for the I mean, what is your sensitivity on that? Last very quick question. I have understood correctly that you can assess consider, let's say, acquisition in special foundation. And in this case, I wonder, is Revi? Not only acquisition, we put acquisition, but also Could be strategic partnership with them. We are also considering some Potential acquisition in some very important continent where we are, but For a small amount of money employed by us. So coming back to raw materials, you are right. The first initiatives coming from the government is not Sufficient not only for us, but mainly for the hundreds of company That work as suppliers or subcontractors. So we need a Very different approach in terms of legislation that could be retroactive and could consider, Of course, like in other market, just the raw materials included in the project that we are working on. So we believe it is possible because The interest of the government is to realize in time as promised to the European Commission The infrastructure that are in the list. Okay. On the financial targets for the full year? Okay. Let me ask to my colleagues that I See in the video, because I remind that we put Alessandro or Amarilda In a range of 110, 120 total financial charges. Okay. Thank you. Thank you. The next question is from Alessandro Tortora with Mediobanca. Please go ahead. Yes, hi. Good morning to everybody. I have three questions, if I may. The first one is on the initial part of your speech and the presentation talking About Ethiopia, if I understood well, probably you mentioned, let's say, a claim that you solved. So if you can I'll pass to understand, I guess, the impact because in a certain way, you unlocked probably a receivable or a Credit, you had on that project. The second question is on the Texan Central contract. Clearly, now we are a step ahead and before the financial closing. So I would like to understand if you can share with us some Thoughts on the economics of the project or at least some qualitative indication on margin, but also very simply also you are How can I say? Back that you put into this contract because I read some article where you also gave some indication on some NPV for the project considering the long duration. And the third question is on the integration cost of Astaldi. If you can give us, let's say, some sort of guidance For the integration cost for this year, but also for the next 2 years. Thanks. Well, let me start and then I'll leave the floor to Maximo Factoring inside our portfolio because we wait for the financial closure of it. Of course, this Project will give a very high quality backlog. It will add a very high quality backlog in that specific country, Will give us substantial revenues and cash and liquidity coming from The contract for the considerable number of years, so it's very transformational. That's why we wait to put these things And for, let's say, for schematic reasons until the financial closure will take effect. We expect the financial closure To take effect quite soon. And of course, the positive conclusion of the Biden Boost of the economy infrastructure rates are going to the right way for U. S. To start Serious program of improvement of the infrastructure and especially For the sustainability of the mobility, that infrastructure is particularly interesting. This is the first For the Texas, what was the other question, sorry? Ethiopia claim. The Ethiopia claim. We made a settlement of this claim recognizing us EUR It was part of our request, let's say, that was inside our request. And of course, we had to pay the taxes for that In Ethiopia, because they do not charge on cost to cost basis, but the cost they charge it on the invoicing, which is different from the system we adopt, as you know, for the cost to cost in terms of revenues accounting. So let's say that we have this amount paid already for what it is Fully invoiced to the client. And due to the low in Italy, we can offset these amounts Using it for tax purposes only if we have a net profit of, let's say, a A substantial ratio between the external and the internal. I will not go into details for that. So let's say this amount paid In foreign countries, you can utilize it when the ratio of net profit done in Italy It's higher than the one we have actually. So we can recover that amount in the future having That boost in our profit done in Italy. This is what is there. And if If I'm not wrong, we cashed in some amount in 20 2021, some amount We were cash in in 2022. 2020, yes. Okay. So let me add that you will not Disclosed the figures and the numbers, but we made our own calculation on Texas. If we are able together with the other partner and the sponsor to close the financial side, The cash generation added to WeBuild will be in a range of Many 100 of €1,000,000 in the high range of many 100 of €1,000,000 Of course, we just started to work with them. We will work also in August. Happily, We are the only one that make we make some vacation in Texas. They Will work, so we hope we can have some news by the end of 2021, Not in terms of closure, but in terms of processes, Financial institution involved, the role of the federal government and so on. Okay. And then there is the last question on integration cost and then I have a follow-up on another topic. Thanks. The question was the total amount of saving that we expect from the integration, right? No, it's on the Vasimo, it's on the cost in order to achieve it. As you mentioned before, in the first half, there are some, Let's say, one off cost related to Astaglia integration. So just to understand, what's your view on the 3 year, let's say, plan Cost, okay. We expect it to be in line or better for some 1,000,000 in 2021 and then the full deployment of these Initiatives will be on 2023. Okay. Okay. And the last point was on the maintenance business. Can you help us understand how is the, Let's say competitive environment because I don't know if there are some, let's say, non Italian players potentially interested in offering these services or It's just, let's say, a sort of a competitive position in the company as in Italy and you are the main Counterpart in order to provide this maintenance service across Italy. Thanks. Of course, as I mentioned and the rule of WeBuild in It's now very important, I think, for the country as I released this interview this morning. We are at the service of the country for boosting the capacity, let's say, of Production into those projects, which is huge. You should remember that in Italy, in the last Yes, the level of the investment has been reduced a lot. So this means also that The industrial capacity has been reduced. So the welcome point is that WeBuild is coming back To be the backbone of this new plan based on infrastructure in for the past, which is based on infrastructure. So we do not see competition as an issue because we think there is work sufficient for Let's say, of the industry in Italy, there is a boost in the economy that passes through The organization of this model of economy, which is, as you remember, we disclosed that figures, we had more than 7,000 Companies working with us in Italy now and 15,000 companies, mostly Italian companies working with us all over the world. So I think that this system, this Italian industrial system We'll receive a large benefit from this investment plan. And of course, WeBuild can be a strong Organizer and partner, especially in the role of general contractor as is foreseen by the new decree that Govermograggi has done And contraiente generale, as it's called in Italian, which means exactly this role of organizing And putting all the industry at work. So this, I think, is a positive issue. We will find this thing everywhere in the world Because of course, we do not have to forget that this thing of relaunching the economy is not an Italian issue, it's a worldwide issue. So we will have a strong demand On the sector of construction, we will see a lot of investment done all over the world Large dimension because this is easier to launch larger projects than thousands of smaller projects. So this is exactly the market That we are looking for, that is exactly the market that we want. And we are able, we have capacity to organize and to put So the entire Figueres, they call in Italy, at work. This is also why we want to be local, As we said, in the main continent where infrastructure are booming. Okay. Alessandro, if there are no other questions, otherwise we are always available. As you know, are there any other questions? The next question is from Henrico Coco with Intermonte. Please go ahead. Yes, good morning. Just one question from my side It's about the cost inflation on raw materials. I would like to know if you could Some color on the impact on the isolated impact, if you want, of the raw material Price increase and if this was partially offset by the, for example, release of provisions on some contracts? Thank you. Well, it's very recent the approval of this law was in the past 2 weeks And it takes into account specifically the sharp increase in some materials like Steel and cement, due to the extraordinary situation worldwide for demand of these So this is a particular law that takes into account only a specific situation. What is needed in Italy and what it is now Under examination by the ministry is more specific revision price formula, which is more similar to the one that is used worldwide instead of taking into account Actualization of prices based on the cost for family and for workers, that is the Eastat That is like they call it a big one enterprise with Pepsi, which is different. So this will bring the sector to more close to what is used in Europe and worldwide. In Italy, you know that Please think of price revision has been very sensitive in the past for the excess In some case of the use of this division of prices, but now of course they are going back to what is Simply the rationale of the price of the vehicle used worldwide. So this is it. Of course, this will benefit a lot. This sector as a whole will make things easier. It is very easy to understand that no one can obtain at 100 for the If the price, the current price of the same material is $250,000 so trying to obtain it is only a waste of time because at the end, Either the sector collapses or you do not get the infrastructure done. So this is very significant on the fact that we have To complete the part of the next generation new in financed by those funds In less than 6 years, so we have to be very pragmatic and realistic. And I think This feeling is now well understood into this government. Thank you. Thank you, Rico. The next question is from Carlo Delgrosso with Swiss Re. Please go ahead. Hi. Thank you very much for this opportunity. So I have two questions. The first one is probably to Mr. Ferrari and is about The inflation. And just I would like to understand if WeBuild has hedging strategy in addition to The closest about inflationary events in order to mitigate this increase in raw material prices? No, we don't have it. Just because as explained by Pietro, We have the natural and the contractual edge in all the countries And we expect to have the same kind of protection also in Italy. All right. Thank you very much. And the second question is about the P and L. So because despite the clearly Strongly improved results in revenues and EBITDA. The bottom line is still reporting a negative sign. And my question is about 2021 Yes, Rand. So do you believe that with this operational efficiency program you mentioned worth about EUR 120,000,000 by 2023, This program will already help the 2021 fiscal year end results avoiding a negative sign? The program has just started. As you know, this is a program over the 3 years. You know We had just received the ongoing concern of Astaldi. It would be delivered to us tomorrow. Sure. Let's say this program is already effective. We already obtained some of the savings that was related to our own organization. And we are of course working also on the Astar, the organization which will be us tomorrow, but of course this is the start of a process. So we will have the full effect into 2023. I remember that is 120,000,000 of savings that will, of course, will give a boost to the profitability. We can obtain some of those savings already in 2021, but of course not the full scale of it. Thank you. The next question is from Roland Fetzer with Praxis Partners. Please go ahead. Hello. Good morning, gentlemen. Sorry for coming back to the topic of material prices. We saw an article that quoted that in Italy, the law that they want to put in place that the 1st 8% increase still has to be bound by the contractors and that the total amount is limited to €100,000,000 for the country. Is this Correct? Or what are the details of the law? Up to now, it's correct. What you mentioned, It's not still a law because it was just approved by 1 of the 2 chamber. But for what we know, what we understand, The government is working to a different approach more similar to the one that is in place In other countries. So we expect to have the same approach Very quickly. Okay. And then abroad, like when you have big lump sum projects, Do you have a full automatic pass through of all the material prices? Or how are these contracts working? Because it should be given it's a lump sum, it's not so easy Parts from material prices, I would assume. So what is the mechanics of these contracts? I don't know if I got your question, Roland. I think that maybe there is a misunderstanding. The contract in Italy are already having a formula. What we intend is to boost that formula to neutralize all the It's all the effects. We already have a formula, which is less covering than what happens abroad, But there is still a formula inside the contracts in Italy. So what is our issue is the one that covers the full extent of this extraordinary cost, It is partly it's been approved by one part of the Parliament. It will be approved from the next before the holidays. So we expect to have that in place immediately. The second thing is Full revision of the contract in order to have our best metal covering revision price, but this is only, Let's say, technicality for the segment, it is not something that changes numbers inside The balance sheet. No, that's clear, Pietro. Thanks. And outside of Italy, like when you signed in other countries Lumpsum contracts. Do you have a full indexation to material prices in these contracts? Or is there some risk of some We have Full formula, which is based on the FEEDH contract. And this covers normally everything that It's inside the contract. Of course, it's specific for each contract because it's done on a parametric formula and covers The different materials which are inside that particular contract, the plant depreciation or whatever else. And sometimes it also cover The exchange rate, it has a neutralization for the exchange rate. So it's something more That covers more than what is simply the material prices. Okay. No, that's Positive. That's very clear. And the last question, if you don't mind. You had a very nice improvement in net debt. That's very positive. Can you tell us how much of the improvement is coming from advances of prepayments because it's a very big order intake, Which is excellent as I would expect. Massimo told you that before is 120,000,000. 120,000,000 net of the advance Payment, the cash had in and the ones that we gave back to the client. Okay. Thank you. This is something which is ordinary. Remember that, Ronald. What we are talking about the extraordinary part of it, it is when you collect the 30%. If you do not collect the 30%, this means ordinary business. So when it's a normal advance Payment, this is what you usually do when you take new orders and then you repay back that contract during the time of execution. Now this is Absolutely, Norma. What is extraordinary into this new law for offsetting the effect of the Pandemic and the slowdown of the economy was the low that put the advance payment to 30%. And this The net effect is EUR 120,000,000. Still to collect the large part of the amounts that are envisaged. So up To now, we only have the effect of ordinary business into our accounts. The ordinary part is foreseen to be obtained because it's Slow, but we have factored in, as I told before, only a part of it is not fully taken into Into the guidance and into our figures for the budget. Okay. So the EUR 120,000,000 is the ordinary and the extraordinary is still to come? Yes. Okay, wonderful. That's very clear. Thanks a lot, yes, for Massimo. I'm forced into the cash position And into the net financial position, if the government will release those funds accounting, for instance, For the next generation new accounts, because this would be financed a large part of those contracts that you that we got This year, when we talk about the 9.6 percent, large part of it are included inside The next generation EU or P and RR of financing, so it means that Those contracts will be financed by the EU and not by the Italian government. And so this means that those funds can be released In reality, without having a burden on the accounting of Italy apart from the debt. Okay. Excellent. Thank you so much. Really appreciate it. Thank you, Benoit. Thank you. Bye, Benoit. Gentlemen, there are no more questions registered at this time. Ladies and gentlemen, Happy holidays to all of you. Happy August. Of course, we are at your disposal for any questions. Any details we are always available. Thank you very much. Thank you very much. Bye bye. Bye bye. Have a good day.