Good morning. This is the Webuild Conference operator. Welcome, and thank you for joining the Webuild first half 2024 financial results conference call. Our call today is hosted by Pietro Salini, Chief Executive Officer, together with Massimo Ferrari, General Manager, Corporate and Finance. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Pietro Salini. Please go ahead, sir.
Good morning, everyone, and welcome to our conference call on the Webuild first half 2024 results. I am Pietro Salini, Chief Executive of the Group, and with me is Massimo Ferrari, our General Manager. Let us start with slide 5. Before diving into the first half results, allow me to take a moment to thank all the people who work with us. I've said that in the past, and I'll keep saying it. Our achievements are due to the day-by-day efforts of our team. I'm talking about 90,000 individuals working together, representing over 115 nationalities, with nearly 40% ages under 13... 35, sorry. I wanted to extend my thanks to all the strategic shareholders, including CDP Equity, Intesa Sanpaolo, and Delfin, who supported us through crucial moments in the history of the group, as well as our minority stakeholders.
I would also like to renew my gratitude to those who collaborate with us and believe in our values, especially the Italian International Financial Institutions, and last but not least, our partners, clients, and the nearly 20,000 companies of our supply chain. Now, let's talk about our first half results. The results achieved in these first months of 2024 speak for themselves. A year ago, we started a path that led us to where the group is today. Since Progetto Italia, we have delivered on many fronts. With the risk in our business, we deleverage our financial structure and seize opportunity in a growing market, all thanks to our strong expertise and capabilities. We have managed to achieve strong results, semester after semester, notwithstanding the challenges that we face in recent years.
I don't need to remind you of the global pandemic, supply chain bottlenecks, geopolitical tensions, and macroeconomic headwinds, such as inflation and respective monetary policies. Since the beginning of this year, we won more than EUR 7.5 billion worth of new orders. This translates in a new record backlog of EUR 65 billion. Of the total, EUR 56 billion are related to construction projects and fully cover our 2023, 2025 revenue and EBITDA targets. The next business plan, we start with a more than comfortable new backlogs. At an operational level, we closed the first half of the year with double-digit growth. Revenues grew by 20% to EUR 5.5 billion. That is more than what we registered for an entire 12-month period, just 5 years ago. Meanwhile, EBITDA grew by 41% to EUR 407 million.
The net income is 3 times as much as the amount registered in the first semester of the last year, at EUR 82 million. On the financial side, we kept deleveraging while maintaining a solid financial position. We came out with a net cash position of EUR 1.4 billion, positive for the fourth semester in a row. The gross leverage met a level below 3 times, far better than the average among our peers. Turning to slide 6, we have consolidated our development, becoming bigger, stronger, and safer. The overall market is strong, with infrastructure investment programs being implemented in a number of countries. The industry is evolving, and so is the customer mindset. This is presenting us with significant opportunities. There is a sense of urgency to develop infrastructure in response to the global trend in energy and climate transitions.
Infrastructure will be a crucial investment when current geopolitical tensions will be solved, as well as they are now to improve people's lives. We are what clients need in dealing with the challenges posed by these trends. We are an undisputed global player in the construction of large, complex civil infrastructure. For more than 100 years, we have been exporting engineering excellence all over the world. We are global leader in the water infrastructure sector and rank among the top 10 players in sustainable mobility infrastructure. We continue to deliver on our consistent strategy, focusing on margins and cash generation. These targets are built on three pillars. Number one, focus on building highly complex and innovative infrastructure in order to remain a reference partner for our clients worldwide.
Number two, consolidate our leadership position in core markets such as Europe and Italy, Australia, United States, and Middle East. Number three, gain scale, so we can invest in different strategic projects. Scale allowed us to continue investing in innovation and safety of our people. As we have previously mentioned, health and safety is a priority for the group, also included in our targets. In 2023, we successfully managed to reduce the lost time injury frequency rate to 2, and we are continuing this trajectory also in 2024. This has been possible thanks to intensive programs, with more than 400,000 hours of training on health and safety only in the first months of 2024. There are also many other initiatives to engage both employees and subcontractors.
When comparing our injury rates to those of our main European peers, it is evident we are the best in class. But we will not be satisfied until the injury ratio is equal to 0. Today, we have the platform, the right governance, centralized processes, and effective procedures to seize the many opportunities ahead of us. We also have the possibility to expand in new segments, and the scope to continue improving margins and cash conversion rates. In slide 7, we want to show you our ability to deliver projects to our clients. We can proudly say that the record-breaking numbers that we continue to register are the results of years of commitment, innovation, and passion for what we do. This confirms us as a trusted and global player in the sector.
Since 2012, we have delivered more than 270 complex infrastructure projects worldwide. This is a key point for insurance and other financial players supporting our business, as it shows a low operational risk. In the last four years, we completed projects that improved the lives of present and future generation in many countries. These include metros, bridges, dams, and hydro plants. We are talking about the San Giorgio Bridge in Genoa, that has also become a model of efficiency and collaboration. In Italy, we delivered the new ENI Headquarters in Milan. Abroad, there is the Cityringen Metro in Denmark, the Forrestfield-Airport Link in Australia, the Al Bayt Stadium in the host of the FIFA World Cup in Qatar, and the Long Beach International Gateway in the United States.
In the first months of the year, works continued to progress with the excavation of the Grand Paris Express, Metro Line 16 tunnels, and the delivery of the first section of the railway between Bicocca and Catania Nuova stations in Sicily. In the last weeks, it has been inaugurated, the new art station for the Metro Line 6 in Naples. After this summer, we will deliver the entire Metro Line 4 in Milano. This confirms our commitment to complete the project responding to client needs, and this is a key attraction for clients. We feel people want to see infrastructure completed in time and serving people and community. Two weeks ago, we submitted a revolutionary project for restructuring Milano-San Siro Stadium.
The realization of the project we will have incorporated into the contractors means for the two football clubs and for the city, having one of the best stadiums that holds its own in respect of the international high-quality standards stage. On slide 8, you can see how scale is allowing us to better phase admins, and successfully manage the labor shortage and supply bottlenecks. This was made possible through the industry realization of the entire value chain. Together with more than 19,000 companies, we have adapted advanced technologies and automation to reduce costs and improve the quality of our work. When clients come to the market looking for an infrastructure player, our ability to mobilize large workforce is a plus to them.
We almost reached the threshold of 90,000 people globally, and we expect further 36,000 people to be hired by 2026, of course, with some people leaving our job sites. In Italy, the increased investment in infrastructure have resulted in a search for enough skilled labor to do the project. As a consequence of this, we created training schools under the Cantiere Lavoro Italia program, which is designed to attract and train people. We expect to hire 10,000 people within 2026 in the country. The program is expanding, especially in the southern region. As part of the Cantiere Lavoro Italia, we made the first training course for upskilling tunnel boring machine pilots, with the aid of a TBM simulator. As you know, the group is a global leader when it comes to tunneling, and we are also among the leading operators of TBM.
In accordance with the principle of a circular economy perspective, we set up a new company, called Webuild Equipment & Machinery, that will renew used tunnel boring machines so that they can deploy again on new projects. Thanks to our centralized management of the supply chain, we have been highly effective in addressing bottlenecks. We invested in various innovative solutions, like a new robotic precast segment plant inaugurated in 2024. It was the first of its kind in France, aimed at boosting productivity while ensuring safety at construction site. Today, innovation is a crucial strategic element for delivering large complex infrastructure, and at the same time, ensuring safety of the workers. Among the innovative solution we implemented, there is a need, for instance, the hyperbaric excavation, a pioneering sustainable technique introduced for the first time in Italy.
It involves using compressed air for excavation in the presence of water, ensuring the highest standard in health and safety. Turning to slide nine, let me show you how we are leveraging our competitive capacity, consistently benefiting from the continuously expanding infrastructure market. I want to remind you that we came from a very strong order intake since 2021. We are talking about a total worth EUR 57 billion. In the first half of 2024, we are confirming this positive trend with EUR 7.5 billion of new orders already secured. This means more than 65% of those expected for the full year 2024, with over 95% of it coming from key markets with low risk profiles. The order intake includes around EUR 500 million of contracts, for which we have been identified as preferred bidder.
Most new orders come from outside Italy, such as Trojena project in Saudi Arabia, and the western section of the Line 15 of the Grand Paris Express in France. We have also been selected in joint venture as preferred bidder for contract on massive rail projects in Melbourne. The high backlog we have piled up fully covers current business plan, giving room for further order intake selectivity. The geographic distribution of the order backlog enhances our reliance against temporary shock that may affect one region or another. More than 85% of the amount comes from low-risk markets. Italy takes the biggest share at 44%, followed by Australia, with 17%. As described in the last call, we are experiencing a paradigm shift into the sector. The change in the attitude in delivering the project, de-risking as well as, our backlog.
First, price is no longer the main criteria for winning bids. Competition on technical solution and health and safety standards is increasing in Europe, including Italy and Australia. Indeed, most new orders in the last few years have been acquired because of a better technical offer, leading to better marginality at project level. Second, most of our order backlog has price revision formula to mitigate inflation risk. In Italy, the new procurement code, Codice degli Appalti, in Italian, introduced some key topics for the relaunch of the sector. For instance, the obligation to include price review process, the acceleration of payment methods, and the provision for contractual advances up to 30%. In addition, it has been introduced a collegial body, so-called Collegio Consultivo Tecnico, for the prompt resolution of disputes that otherwise may slow down the regular work execution on public project.
Third, in the last years, we have successfully adopted new contract standards, which imply lower operational risk. For example, the progressive design and build, used mainly in North America, is a contract based on a strong collaboration between the client, the contractor, and the designer. All parties are involved early in the design and planning process, in defining the budget for the project, meaning lower execution risk in construction phases. I now leave the floor to Massimo for the financial details.
Thank you, Pietro, and good morning to everybody. Let's start from slide 11. Here, we want to give you an overview of the infrastructure market. The construction and engineering sector will remain strong for many years to come, with its expansion driven by public and private investments. It will be at a rate that is far greater than GDP growth. It is undeniable how much infrastructure investment acts as a catalyst for GDP growth, therefore is essential for the public debt sustainability. The world is changing rapidly, and governments need to face challenges in an effective way. Their investment in infrastructure is helping to face mega trend, such as population growth, water and resource scarcity, climate change, and energy transition.
We have a wide range of solutions to help them, from railways and metro lines, to bridges, to connect people, from desalination and water treatment plants, to hydro energy storage schemes. What we do improves the lives of millions. Digitalization is also an opportunity we are following closely, in particular, with data centers expansions. Before I go through the result, let me remind you that as it is customary, we are presenting adjusted figures to represent the recurring performance of the business. You can find details of the adjustment we made in the appendix. Now, let's move to slide 12, where you can see how strong our operating results are in the first half of 2024. We generated revenues of EUR 5.5 billion, an increase of 20% versus the previous year.
This was driven mainly by projects in Italy and Australia. As Pietro mentioned earlier, these results are even more exceptional when compared to 5 years ago. The revenues and margins we have recorded in the last 6 months are higher than the results achieved for the entire 2019. EBITDA increased by 41% versus last year to EUR 407 million, reaching a margin of 7.5%. This is primarily thanks to the execution of the group's high quality order backlog and higher absorption of corporate costs. It is also because of the renegotiation of contracts in the second half of 2023 and the implementation of efficiency initiatives. Other factors include contract management with new formulas for less operational risk, and clauses covering inflation risk helped our marginality as well. EBIT rose by 63% to reach two hundred and twenty-six million euros.
Results are on track with our guidance, with sustained growth in terms of revenues and margin. Going to slide 13, let's take a look at revenue distribution. Our activity is well-balanced, with more than 90% of revenues coming from low-risk countries. Italy represents our main market, with 35% of revenues. The main contributors to this increase are the high-speed railways that we are building across the country. Italy has changed a lot in recent years. Many investments in infrastructure have been launched, and clients have adopted a more collaborative approach. Let me remind you that about, about 80% of the revenues comes from project not related to Italian funds linked to next generation EU programs. As Pietro will tell you later, there are many opportunity in Italy, even after the PNRR. But Italy is only one part of our business, which is truly global.
We still generate 65% of our revenues outside Italy. Australia is our second biggest market, with 24% of revenues coming from the continent. In North America, where we operate mainly through Lane, our subsidiary, we generated 13% of our revenue, and in Europe, we get 9%. Activity in this region was focused on France, Norway, Romania, and Switzerland. Middle East contribution to the total is around 9%. When it comes to revenue distribution by activity, more than 85% is related to project that contribute to achieving sustainable development goals defined by the United Nations. We have been confirmed as the global leader in the water sector, and we rank among the top 10 for the construction of sustainable mobility project. On slide 14, we have the P&L below the EBIT line. We posted a net income of EUR 82 million.
It's more than three times the level reached in the first half of 2023, at EUR 23 million. Net financial costs decreased by EUR 21 million. The positive effect is linked to the increase in financial income at EUR 81 million, up by about EUR 50 million, mainly thanks to bank interest on cash stock. Financial expenses are EUR 134 million, an increase of EUR 23 million versus 2023. The rise in net financing costs is mostly due to the higher cost of debt on bonds. This has been partially compensated by lower bank charges, thanks to a better management of RCF lines in first half of 2024. At the bottom of the slide, you can see the reconciliation from reported net profit that amounted to EUR 54 million to the adjusted one. The adjustment refers to accounting non-monetary items, such as EUR 20 million-...
for the amortization of the positive bargain we registered in 2020 relating to Astaldi's acquisition, and EUR 7 million relating to the Clough acquisition. Moving on the next slide, we would like to show Webuild's positive credit trajectory, highlighting the main balance sheet items. As we have said, said many times, cash generation is a key part of our business plan. We ended up with a historical net cash position in December 2021 for the first time. We have then managed to maintain it positive. We have currently a strong net cash position at EUR 1.4 billion, which is a EUR 1 billion improvement versus our previous net cash balance at June 2023. Working capital management continued to play a key role in the first months of 2024, serving as one of our levers for cash generation.
This comes thanks to our strong commercial activity, but also several measures put in place to manage efficiently working capital. The good results have also been reflected in the improved credit metrics, as evidenced by the constant downward path of gross leverage, down to 2.8 times in June 2024. This is net of a temporary effect linked to the liability management we will discuss in the next slide. This is a result that has come from an almost stable gross debt in recent years, while group grew exponentially. On slide 16, we show the main numbers of our corporate debt and the liquidity profile. With the new bond issued in June, we successfully refinanced the bond expired in October 2024, and partially the 2025 one.
The liability management consisted in the issue of a bond for EUR 500 million, and a tender offer, which came out with EUR 71 million repurchased on the 2024 notes, and EUR 271 million on the 2025. The remaining cash raised from the new bond will be used to repay the residual 2024 notes at maturity. We ended June 2024 with a comfortable, exceptional liquidity position of more than EUR 4 billion, including EUR 970 million of undrawn RCF lines. Almost all of our corporate debt is at fixed rates, with an average cost of about 5%, and a duration higher than 3 years. In the last two months, our rating outlook has been improved by both Fitch and S&P.
As Pietro told before, if there is one thing that comes out of these rating reviews, it's that our growth and the trajectory remains positive and very visible. Both rating agency revised our outlook to positive from stable, affirming that the rating at BB. According to S&P Global Ratings, the revision of the outlook reflects the view that it could raise the long-term rating to BB+ over the next 12 months, if the group sustains resilient EBITDA margin and free operating cash flow to debt. This would be supported by continued order intake and further improved cash flow generation. Fitch Ratings also valued well our solid business profile, defining it as being in line with an investment-grade engineering and construction company. It also cited our strong order book and healthy pipeline and project opportunities.
I will now leave the floor to Pietro for a look at the market dynamics and some closing remarks.
Thank you, Massimo. Let's start with an overview of our commercial pipeline. What we are seeing is a very promising market with many opportunities. As you can see on slide 18, our commercial pipeline remains strong at more than EUR 90 billion. Compared to the global market estimate at more than EUR 30 trillion for the next four years, it seems like a very small share of it. It makes us confident in the soundness and durability of the market for the coming years. Given the role of infrastructure as a catalyst for growth, various government in key countries have launched multiple investment plans.... Investment will be driven not only by traditional infrastructure, like rail and roads and so on, but also by energy and smart building sectors. Based on our strong positioning in our key countries, our commercial momentum is running very well this year.
There are EUR 18 billion of bids that we have already submitted, and they are awaiting an outcome. We are focused mainly on Europe, North America, Australia, and Middle East, where we are expanding our activities in segments such as hydro, ports, and water treatment plants. Turning to slide 19, let's have a look at how we see the Italian market. Our group generates 35% of its revenue from Italy. This is in line with what is held by competitors in their own market home markets. Here, we are committed to deliver the relevant amount of orders we have acquired in the last years, but many other opportunities are on the horizon. In the coming years, there will be more projects to complete railways, such as the Salerno-Reggio Calabria, and the Adriatic Line.
In late June, the European Parliament updated the Trans-European Transport Network guidelines, including many new rail lines. With this update, will come more funding. We are also expecting investment in metro lines, ports, stadium, hospitals, and the hydroelectric plant. We are committed to supporting the energy transition. We recently signed an agreement with Edison to develop pumped hydro energy storage projects in southern Italy. We are also working to help communities deal with drought. We see opportunities in the water sector. Our subsidiary, Fisia, recently won the largest water treatment project in Italy in a decade. Fisia has a long-standing experience in the sector, with more than 95 years in the business, and is among the most competitive global contractors in wastewater treatment and desalination, particularly in the Middle East. Meanwhile, the data center market is expected to grow steadily in the coming years.
Looking at Italy, total investment in 2024-2028 is seen rising to about EUR 7 billion. After 2028, an exponential growth is expected, linked to the spread of artificial intelligence systems, and we can leverage on the know-how of our Swiss sub-subsidiary, CSC, which entered the data center market since 2021. There is, of course, the Messina Bridge, which is not included in our targets, nor in our order backlog. Slide 20 gives you another view of our second market by size, Australia. With integration of Clough, we are now working as a single company. Our backlog in the country is EUR 10 billion, with mainly cost-plus type of contracts. Our projects include the construction of the biggest renewable energy project in Australia, Snowy 2.0, and the largest urea plant in the country to produce fertilizer. We...
Just to name a few others, we are upgrading the largest wastewater treatment plant in Western Australia, and developing part of the Sydney Metro Airport rail line. Thanks to our expertise and know-how, the group is ready to seize a market value that are almost EUR 400 billion, including new business segments such as energy, which is providing a great boost in the medium term. The government Powering Australia plan foresees AUD billions of investment in energy transition, with the aim to make the country a leader in clean energy production. In addition to this, we are further looking at new opportunities in hospitals, transmission lines, ports, desalination plants, and water treatment facilities. On slide 21, we show the other two key markets of the group.
In North America, we are working on a new hub for an integrated approach towards the American and the Canadian market, which total almost EUR 5 trillion of investment in construction. The key driver will remain investment in rail, roads, and industrial and energy infrastructure. We recently launched at the main U.S. media channel, a campaign called We Build What America Needs. We want to raise awareness of our global leadership into the infrastructure sector and our historical experience in the country, which dates back to the nineteenth century. Having already built more than 1,000 kilometers of bridges and viaducts globally, we are ready to put our experience to serve the U.S. authorities for the reconstruction of the collapsed bridge in Baltimore. In May, together with our U.S. subsidiary, Lane, we presented a concept design for a safer and more innovative bridge.
Our proposal aim at speeding up reconstruction of the bridge, which is crucial for regional mobility. We did the same thing in 2018, when we offered our expertise to build a bridge to replace the one that collapsed in Genoa. We completed that project in just 15 months. In the Middle East, the construction market is expected to reach nearly EUR 800 billion in the coming years. Thanks to our local expertise and historical presence, we are benefiting from significant investment in infrastructure, mainly in Saudi Arabia. Let me clarify that the news that you may have heard about the potential scaling back of the NEOM project are mainly related to the residential part of the job.
The Saudi market remains strong, with many investments being made in the capital city, Riyadh, linked to the World Exposition and FIFA World Cup, to be held in 2030 and 2034 respectively. In the Emirates, Qatar, and Bahrain, major infrastructure projects are expected to kick off, particularly metro lines in the respective capitals, as well as high-speed rail lines. We continue to monitor opportunities outside our key markets. With our local expertise and technical skills development on projects throughout the world, we are able to select projects with an excellent risk-return profile. On slide 22, there are some key factors that are helping as a sustainable growth. We now have a group that has a scale, a sizable, and high-quality backdrop, sound financial discipline and risk management, and a more efficient organization. Our backdrop fully covers our current business plan, allowing us to focus on the next one.
We are continuing effort on one of our strategic priorities, which is de-risking. We are revising our contract department to strengthen the monitoring process, to ensure the timely identification of issues that could impede the progress of the work or imply additional costs. It will allow us to act promptly and execute plans early. As I said before, clients choose our capability and experience because we accept, we excel at delivering large projects, providing efficient solutions to complex challenges. Thanks to this capability, we are proud to be unmatched and unique in this regard. As we navigate through the new paradigm of client relationship, our trajectory is clear. We are set to remain a global infrastructure leader, unlocking opportunity in new markets and sectors. We are making progress on the cost efficiency plan.
At the exact midpoint of the current business plan, we have already surpassed more than half of the scheduled initiatives. Of the EUR 180 million in cost savings targeted by 2025, we have already identified initiatives for more than EUR 110 million. Our scale enables us to increase our profitability and cash flow generation. We are able to invest more in innovation and health and safety, and we can afford to be more selective in terms of clients and suppliers. Scale is allowing us to successfully invest in processes to optimize working capital, one of our levers for cash generations. We have implemented numerous initiatives to expedite conversion of margins into cash. On slide 23, we confirm our commitment to sustainability with the ambitious targets set up in our ESG plan until 2025.
Innovation, clean technologies, health and safety, circular economy, digitalization, and inclusivity define the necessary framework for pursuing our ESG strategy and reaching the goals included in the plan. This plan is based on the same three main pillars that guided us successfully in the last years: green, safety and inclusion, innovation. Let's start with green. We want to further reduce our carbon intensity by 10% by 2025 to level registered in 2022. This is achievable thanks to investment in clean technologies, such as Green TBMs, machines capable of reducing energy and water consumption, and increasing safety. On health and safety, as already discussed, we are already the best in class compared to our main European peers, but we will not be satisfied until the injury ratio is equal to zero.
We are convinced that we can further reduce the ratio by 6% by 2025, also thanks to our educational and training programs. On gender inclusion and diversity, we have set targets to increase the presence of women leading to the group. By 2025, we want 20% of managers to be female. On innovation, besides being a critical strategic element to ensure safety of workers, is key to remain competitive on the market. We are committed to investing in clean tech projects for no less than EUR 450 million. The principle of sustainable development are fully integrated into the group, and we strongly believe they should be shared across the entire supply chain. For this reason, in July, we launched 15 environmental rules that will cover all our suppliers and partners.
We want to raise awareness and create a common vision on the issue. This dedication continues to receive recognition from the market. In the first half of 2024, we were confirmed as sustainability leader by CDP's Climate Change 2023 program, with an A- rating. It is higher compared to the regional European average and global construction sector. Moving to slide 24, we are confirming our guidance for 2024. Order intake started well in 2024, thanks to an important contract in Saudi Arabia. To date, almost two-thirds of the new orders expected for the year have been received. As a reminder, for 2024, a book-to-bill ratio exceeding one is expected, along with revenues surpassing EUR 1.1 billion and EBITDA exceeding EUR 900 million. Our target for net cash position stands at more than EUR 400 million.
We remain committed to our gross debt reduction target for EUR 200 million -EUR 250 million within 2025, and distributing a stable dividend to our shareholders for accumulated amount of EUR 160 million-EUR 170 million for 2023-2025. Consistency is our must. With the commitment taken with all the clients to deliver very large and strategic infrastructure and with the capabilities to generate cash year after year, as we already demonstrated. Obviously, after the first half of 2024, we are very optimistic on the full year result. I thank you for your attention. We are now ready for the Q&A session. So, as not to slow things down, we encourage you to focus on the group's strategy and other broad initiatives that underline its current and future financial performance.
For any further questions you may have on figures or some other details found on the table, some technical details mentioned during the presentation, the investor relations team will be available to answer them after the call. Thank you to all of you.
This is the calls conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. To remove yourself from the question queue, please press star and two. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and one at this time. We will pause a few minutes as callers join the queue.
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Yes, sorry. The first question is from Emanuele Gallazzi of Equita. Please go ahead.
Everybody, thank you for the presentation. Hi. I will start with two questions, one on net working capital and the second one on profitability. Starting from the net working capital, basically, you posted a sound beat at the cash flow level in the first half with, let me say, a still solid contribution from the net working capital. As you confirm the guidance on the net financial position, can you help us understand the evolution that you expect on the net working capital in the second half, and which are the main moving parts there? The second one is on the profitability. Given the, even in this case, the solid margin expansion in the first half, can you give us some color on the performance of the Australian market and the U.S. market in terms of profitability in the first half?
On the U.S. market, do you still targeting to reach the break even, at the EBITDA level by year-end? Thank you.
Okay. Yes, just to, just to go back, I start with the second question about-
Mm-hmm.
The profitability on the market. Of course, we are on our plan in going to break even on Lane by in the coming future. The main negative contribution in the last years is due to some past projects, which have been generated EUR 350 million in losses over the last five years. To date, these have all been completed, and the collection of the contract amendments is expected by 2026. So the turnaround plan is proceeding on track. For the Australian market, we are of course doing our best in putting together Clough.
We have integrated Clough with Webuild, and we are now one of the very large player in Australia, and I think that the conversion of most of the contract type that was before on a remeasurement and now is on incentivized cost plus or other forms, as we were explaining, of collaboration contracts, of course, have a significant impact also in marginality. For the cash flow, Massimo, you go.
Yeah. Let me add on the marginality. You got, the Australia as the main contributor for the first half, but, we expect, it will remain for the second half, but we expect a better business mix in terms of, margins in the second half, starting some very important project, in Middle East and continuing, the profitable activity in Italy. Regarding the, the working capital, we still expect some, improvement, some release of cash. We got what we expected and probably discussed, in previous meetings and the conference call, regarding the balance, between, new advance payment and, the, restitution, the give back of the, advance payment we got in 2023 and 2022.
So we expect to maintain this balance for the second half and to keep the same path in terms of CapEx. So some improvements will come from the receivable and payable management and the working progress, the WIP, that gave a very positive contribution in the first half, and this come from the centralization that we mentioned many times with you and with the investors.
The next question is from Matteo Bonizzoni of Kepler. Please go ahead.
Yes, thank you, everybody. My first question really is a follow-up on this point, which you were making, Massimo, on the cash recycle for the second half of the year. Because if you look at our guidance, your guidance, you're guiding generically more than EUR 500 million on net cash, no? And you are more than EUR 1 billion better than that at the end of June. So we need a little bit to reconcile, also even because you have just said in the call that in terms of the delta between counter tasks and the counter viabilities, you are not expecting a worsening in the second half, which, by the way, according to typical seasonality, is generally narrative.
So I just wanted to reconcile your generic more than EUR 400 million guidance with the point in which you are now, which is EUR 1.4 billion. Can you a little bit elaborate on that point? The second question is on the gross debt. So I'm telling you something of which you are probably perfectly aware of. In this very bright set of figure and positive outlook, the only, let's say, remark which we receive from sometimes from investor, is the gross debt. So market is seeing that the gross cash is piling up, is now much more than EUR 3 billion. You have a target to reduce gross debt over your plan by EUR 250 million.
The market clearly would greatly appreciate, I think, also in terms of potential raising of the shares, to see, let's say, gross debt trending rapidly down towards EUR 2 billion, no? So the question is, how much of this huge gross cash pile you are expecting to be able to use in order to gradually repay gross debt? Clearly, gross debt ratio is very much in line with many other companies, 2.8. You have said that the rating agencies are, have improved the outlook, so not concerned about that. But just to tell you, in absolute figure, when we should expect some improvement, also in this very billion set of figure, also on the gross debt. Last question, which is just a follow-up, is on CapEx.
I think we don't see the capital statement in the press release or in the, also in the presentation CapEx. So I would think that the gross assets were up EUR 3,300 million, sorry, from December to June, so in 6 months. So I infer that from that figure that your CapEx in the first half was pretty relevant figure. So can you provide a figure? And also I expect, I would expect that also for the full year CapEx, so your cash generation will be strong, despite very high CapEx compared to ... So can you provide some update on that? Thanks.
Sorry. Thank you, Matteo. Remind me the, the second question, because I was focusing on, on the third one. The second was?
No, the second is clearly something which you are perfectly aware of. It's a question which relates to gross debt, no?
Ah, okay. Great. Got it. Got it.
Yeah. Yeah, yeah.
Okay. We, this is very important because we keep and we maintain the target to reduce the gross debt. Something could happen in 2024 and something more in 2025. But more than that, because the total cost of interest charges coming from the gross debt is around EUR 90 million, the rest come from the use of the RCF line. We are working to optimize these exercise, and we got some improvement in the first half, and we can get some other improvement in the second half. Then we, as you probably remember, in 2023, we had some non-recurrent and non-monetary items that we do not expect for the second half.
So we expect to keep the line of the cost of debt under control and much better than the 2023. We are still working, you didn't ask, but, it's important to mention also on the tax line, and, we, we launched the program that will have some effect in 2024 and some other effect in 2025. We expect some material effect in terms of some EUR 10 million of saving. Then regarding the, the CapEx, we, we spent around EUR 360 million in the first half. We expect to spend around EUR 390 million-EUR 400 million in the second half. Of course, we started to buy CapEx already in 2023. So we...
We have been able to split the cash out in three different years, 2023, 2024, and next, the last, 2025. And then we have all the optimization in terms of refurbishment and so on. Regarding the, what, what you call the some elaboration, some bridge from the net financial position of the first half, and the target that, that we keep, we know that the average consensus, consensus is already higher than, our target. There are, of course, some, the balance between the new advance payment, and the, the one that we have to employ for the production, but we expect, to beat the, the target. We still don't know, if, in, a so large way than the one that we got for the first half, 2024.
I don't know if Pietro has some other news. Pietro, on the-
No, nothing special, just the fact that, of course, the result in the first half of 2024 are very significant. So I mean that, even being very positive today on achieving those results, I was anticipating a few days ago that we were very positive about not only the semester, but also the guidance of full year. We have always delivered and over-delivered, and not overpromised on what we have done in the past. So I think that keeping our guidance is a value, because this is a plan that we made carefully for the entire budget.
I think that, given some, let's say, very, very positive result in first half, could also signify that we can be more positive on the guidance at the end of the year. But I would not change the guidance for that. Let's say, let's be optimistic. I think that this is the best thing we can do to be serious and to stick to our plan and to deliver.
Then, regarding the claims, we do not have a new claim material increase. We have just the increase coming from the advance of production for the some projects. Let me say that we are aim to achieve the consensus in the p -- for the TFN, and to beat it.
Clear. Thank you.
Thank you, Matteo.
The next question is from Alessandro Tortora of Mediobanca. Please go ahead.
Yes, thanks. Thanks. Good morning to everyone. I have, let's say, three questions. The first one is related to the projects under execution. Can you, let's say, give us an idea if there are any major contracts this year where you are negotiating with the client to change or some changes in the contract formula, as basically we did, you did last year? That's the first question. The second one is just a follow-up on your net cash level. Can you... You explained previously on the major driver behind this, this, let's say, higher level of cash.
But what we'd like to understand is, can you tell us, basically, the major reason behind this constant level of liquidity? Is it a matter of a successful or a timely claim management you're doing, even better compared to the past? So just understand the role played, for instance, by the level of claims or the stock of claims, compared to the past in this, let's say, high level of liquidity. And the last question is on the level of cash, is pretty high. Is there the possibility to see, for instance, an acceleration on the buyback side, in terms of size of buyback program for you? Thanks.
Let me start from the last question. It should be possible to accelerate on the buyback, mainly due to the fact that we got a significant increase in the liquidity of the shares, because we have a free float that is around 45%. So the shares is more liquid, and respecting all the rules, we can do something more, but just in a tactical way, in order to help the market to maintain a high level of liquidity on the shares.
Mm-hmm.
Regarding the high level of cash, most of that comes from the successful bidding and commercial activity. So the liquidity that we got in 2022 and 2023, but we are still raising in 2024 for the new contracts, and some cash come also from the renegotiation of some large projects made in 2023, because it was split in the coming years. So the total effects it will be split and divided in different years. We are not renegotiating major contracts.
We are in a very good relation with the main clients, in particular in Italy, with our RFI, in order to maintain the milestone and to speed up all the projects where we are facing normal and usual difficulties.
Okay. Okay, thanks, Massimo. Just if I may, a quick follow-up on your initiative you mentioned before on the tax rate side.
Yeah.
Could you give us an idea of which kind of action you are putting in place, and maybe, I guess this is probably focused on Italy? Thanks.
Yeah, we launched a program with five different initiatives. I cannot go in more details, but something will come from the reorganization of some activities, mainly in Italy, but not only in Italy. You have to consider that we pay, of course, a lot, most of the taxes in Italy, and we have many different companies, so we can optimize in terms of a group organization. And the same from the international part of the business, because we have both companies and branches. And, of course, observing all the rules in Italy and abroad, so we can manage better also the taxes line, in terms of cash out, of course.
Mm-hmm. Mm-hmm. Okay, thanks.
Thank you, Alessandro.
The next question is from Enrico Cocco of Intermonte. Please go ahead.
Yes, good morning. I have a question on Fisia, so the water treatment business. Today, the contribution is small. I saw it's 3% on the group revenues. Could you share some figures on this business, so the volume of production or profitability expected for this year? And if you might consider to get some investors in this business to accelerate the growth of water treatment, or you will maintain 100% of Fisia? This is the first question. Then, if I may, I have a question on the figures for the first half. I saw the contract liabilities are up around EUR 800 million compared to December. And contract, so this should be related to advanced payments.
If I take this year, year-to-date orders are around EUR 7.5 billion. Same period last year, orders were EUR 18 billion. So I'm trying to understand why you get a higher level of prepayments, even if the orders year to date are much lower than same period of last year. Is this related to the huge prepayments in the Middle East for the NEOM projects? Thank you.
Yes, starting from the last question.
Yeah, Fisia.
Okay.
To me, it's something which is important, because as we were saying before, the water and the water as a strategic solution for problem, the production of water, deposit, it means dams to have the possibility to have water available, the water treatment, and to reuse the water from water treatment. The maintenance of all the aqueduct and other lines, it is, I think in the future, one of the very crucial activity that we can exploit with our capability and competence, being number one in the world for water projects. So we will like to transform the activity as an EPC contractor.
This will be well explained into the new business plan, our activity from EPC contractor to investor, and also to operator into this field. We are now working on having with us strategic infrastructure fund, that can exploit with us and the leverage on the Fisia competence, capabilities, and experience. I think that the water market has high growth potential. It's estimated approximately $400 billion worldwide. Our subsidiary, Fisia, has a long history and a great track record in the construction of water treatment and desalination plants all over the world, and we want to bring this expertise to new markets, such as Italy.
Today, desalination water production in our domestic country represents only 4% of the total consumption, and you see that water scarcity has become something which is putting the entire population, I mean, physically, 55 million people is now, is now being hit by drought. The agriculture is another sector which had an enormous problem. So this is something that we can work on it and restructure the reorganization of Fisia, not only as, as I say, on doing it, but also on operating and investing in that sector. Massimo, the other questions were?
Yeah, regarding the mix of advanced payment and the good increase that we got for in the first half, of course, come from the mix of new orders. You mentioned the Middle East, and you are right. When we got a project of around EUR 5 billion equivalent, 10% of what advance payment means 500, 20% means EUR 1 billion, just to give you an idea. So we look also at the cash profile when we choose the bidding short list, and there are some contracts and some areas that gives a better contribution.
Regarding the contract asset, as I mentioned before, it's the increase comes just from the advancement of production of some project where we already have some claims that we are discussing with the client. But overall, we reduced the stock significantly, as Pietro mentioned before, in the past three years, in very material amount.
A follow-up on Fisia, if I may. Could you share some numbers about the company and maybe the evaluation of the asset you have in mind? Thank you.
Oh, right now, Fisia have around EUR 600 million of backlog, and we make around EUR 230 million of revenues for the entire year. But of course, all the initiatives that Pietro mentioned before, that we start in September, will give to Fisia a significant boost in terms of marginality and growth. We will keep always the majority of the company, of course, but we are in talks with some major private investors, both in order to participate to Fisia as shareholders and to participate as developer to some initiatives.
It will be a matter of the next business plan that we will draft late in 2025, and probably we will give some high-level guideline in the first months of 2025.
The next question is from Giuseppe Grimaldi of BNP Paribas. Please go ahead.
Good morning, everybody, and thanks for the presentation. I have actually one question around the order pipeline. It went further up, especially the short term, compared to what we saw in Q1. So there are EUR 18 billion of orders that are waiting for outcome. I was wondering, what's your confidence heading into the second half of the year to replicate the similar amount of order intake compared to what we saw in H1? And on that, if you could add color on the region in which basically these tenders are, if there is anyone that accounts for more, any color on that would be helpful. Thanks.
Well, the first thing I want to say that in this pipeline that you mentioned, there is now the Messina Bridge, for instance. And this alone means, six point five billion of pro quota revenues, order for Webuild. So if you put that on top of the eighteen point something of the pipeline, this gives a quite substantial number of it. We expect to fully cover not only the guidance that we gave in around one, but also we can be positive, having had, let's say, more than 65% of the order intake expected in the first half.
So, of course, these results in the first half means that we are more than positive on what is, the remaining part of the year, because, there have been some shifts and, some delays into the awards. The first half could have been even more positive if, those delays did not occur. So we are positive on the, on the, the order intake. I want to stress the fact that, on an order intake, on a portfolio of over EUR 56 billion of orders that we have already in hand, whatever it comes, do not have a significant impact in term of, turnover or, or revenue.
So I wouldn't be so, so careful about these numbers, because, of course, having, being seated on such a big amount of orders to perform, we have a very careful approach to the new contracts, new clients, for two significant reasons. First of all, that starting all those contracts together, as we are doing now, it is a significant effort on the organization. And the second is the fact that we have already a lot of, of things to do. So when you see the growth also in term of people, we just mentioned to you that we have, we are going to hire, what, 10,000 people into the year. I mean, only, only, only to do the recruitment, not only to put that people into the organization, but only to do the recruitment is a significant effort, organizational effort.
So I would say that, that we have to, to keep our foot on the ground, and go carefully to reach those goals of growth, which are very significant. You've seen when we see that 20% of the, of the turnover growth into the semester, and you see 41% of growth into the EBITDA, well, let's say, this is a very positive, statement, very bold. So we do not want to say that there are, in the future, fantastic opportunity. We want to be very careful and, and, and follow steadily this, inflow of news. I do not say that the second half, will be a bad surprise. On the contrary, I say that, this will be a very positive, second half.
We can leverage, of course, on the position we reached in the first half, but I want to give the direction to the company to be a sustainable growth, even so, even so strong as it has been in the past five years. Imagine, in the past five years, we doubled the size of the company in the past five years, and it was not insignificant. It was doing a EUR 5 billion company, and it's now doing EUR 11 billion this year. So I mean, this is something that we have all to understand, that is a very significant growth for a company in five years' time, to double its size, such a magnitude, to enlarge the picture of the EBITDA.
At the time, we were doing one third of that, and so it's a, it's a very significant, the growth that we had had, so far. This is a, a long-term process and a long-term plan. We have established all the, all the processes that are good for the future. I am very confident that the company can grow significantly into the next coming years. If you make a 10% exercise of growth per year, it means that, in the business plan, we will close at EUR 15 billion. So this is something that is really significant for an infrastructure-only company.
So in the business plan, we have to, of course, as you say, as we were saying before, think about some other line of business, which means entering into sectors which are now outside our normal bread and butter, let's say, activity. And this is important because growth and size, sales, it has made a significant difference from before. So this is, I think, the most important statement, that this size changes completely the perspective, and the internal demand that we have can create value. You imagine that when we talk about an EUR 11 billion company, you can talk about EUR 500 million of engineering services inside the needs of the company per year. You talk about EUR 600 million of special foundations as a need inside the company.
When you talk about other line of business, you can see that any of these things has a significant dimension by itself... that can bring additional synergies and additional efficiency if we treat all those needs internally as a single company or a division specialized in those products that we need to perform our business plan.
Okay, thanks a lot for the clarification, controller.
Thank you very much. We have a time for the last question, if there is someone else.
The last question is from Mehmet Dere of Deutsche Bank. Please go ahead.
Hello, guys. Thanks for taking my questions. I have a question on the-- I have actually four questions. The renegotiations of the contracts, where you had some inflow from 2023, just do you expect anything more coming in from there going forward? And then another question on the net cash position. Obviously, there were so many already on this call, but since the range is pretty wide here between the current position and your target, is it possible that you guys give a kind of an indication if the year-end net cash position is going to be closer to the current position, or is it closer to the EUR 400 million? That would be very helpful.
And then, since you've mentioned, interest costs as well, and on the RCF, can you give us some specifics on the EUR 970 million RCF, about the maturity and the interest you're paying on that, and also other fees? Then on liability management, there are still some high coupon bonds in the capital structure, would you consider to tackle some of them before maturity? Obviously, the 2024 maturity is about to come due, and you will repay them from cash on balance sheet. But, any other plan for the rest of the bonds? And then last question on the credit rating, as you've mentioned, also, the positive outlook you are having from S&P and Fitch. What are your internal targets here?
Would you, or is there a targets to become investment grade, and if so, when is it? Thank you.
First of all, thank you for... I will try to respond to questions which are a little bit more strategic. I will ask you if you can ask those details to the investor relations group, because this will make things easier and also more detailed, that this conversation probably will not have the detail that you need for your models and questions. I would say that the rating, for instance, is a very important question. For us, being investment grade or quasi investment grade, it is a target since long. We pursue that target since the beginning. We think that the cost of our debt is one of the things that we need to tame.
This, of course, and also the fact of having the support of the financial institutions for our growth to obtain the guarantees which are needed to make our job, it is something that has an important boost from the fact of receiving a stronger credit rating. So we are pushing it with a lot of intention. We are not using the cash for other purpose. We have a very strict financial discipline because we want to obtain that rating and to maintain that rating for those reasons.
Another fact which is important, I think we didn't mention during the call, for it is important for everyone, is the fact that we can extract some value, and we are already obtaining it from the savings into the different processes. The centralization do not only mean control, means also savings, and this is also going to improve the quality of our, of our results and the marginality of our results. Site was very important, and it's very important, the growth in site, because, of course, decreases the footprint of the general expenses, maintaining the excellences and two processes, but also those, those activity of looking into details of the processes and extracting value is something that we have already done, and we want to continue.
I think that those are the most important things, financial disciplines and trying to put and streamline all the processes in order to obtain the advantages and the reduction in cost that we were expecting.
So let me just add, regarding the RCF lines, it's a rolling program with many different banks. We are going to renew every two years the different exposure with the different banks. It's a variable cost, so it's merely higher than the average of the bond fixed cost. We are not renegotiating any major contracts right now, but as I told you before, we are in good and talks and like a partnership with our main clients. Regarding the bonds, we are open to take any opportunity starting from September, also with the top with the previous bond or some new bonds, if the interest rates go down in the next future. So thank you very much.
I will leave all the other answers to the Investor Relations team. And thank you, everybody, for your participation.
Thank you very much. Thank you very much.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.