Good afternoon, everybody, and welcome to the presentation about Dominion.
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Before starting, I would like to remind you that once the presentation is over, and as usual, we will move on to the Q&A session. So you can leave your questions in writing in the section of questions of Zoom, or you can intervene via the telephone, or raise your hand in the lower menu. Let's start with the presentation. We have Roberto Tobillas, who's the Director General, and Patricia Berjón, who's the Director for Corporate Development.
Hola, todos.
Hello, everybody, and thank you for joining this presentation, the first nine months of the year 2023. But before moving on to the specific figures, there are several elements that define the context in which these events have taken place, and I think that have to be taken into account. Elements that, in most instances, apply to all companies and to society, and that each company manages and addresses in a different manner. We're living in a complex environment from many points of view, and this complexity does not only continue, but is increasing. For instance, with the recent outbreak of the conflict between Israel and Hamas on October the 7th. And all events are never isolated, but rather they have lots of interdependencies that transfer the effects to whatever is geopolitical, demographic, social, or economic.
For several quarters, our attention has focused on the high level of inflation, and therefore the increase in interest rates. This is going to produce a recession, which seems to be the most announced of history and which is arriving very late. This has effect on the psychology of consumers, on access to funding, on investment decisions, and this also has an effect on our accounts, with an increase in financial expenses that I will talk about later on. So therefore, we think that it's important to consider that in this context, our activity should have sales growth of nearly 10% and profitability growth of double digit, and as well as a pipeline that is to be developed in the future years that is going to grow. This is possible thanks to the solidity and resilience of our different businesses.
And what is very crucial, we have to consider our continuous management of each one of these items, which allows us to adapt continuously to market realities. But how do we do this? What is this management all about? By focusing on activities with more added value, and therefore, those that generate bigger margins, vis-à-vis those activities that are less profitable. In other words, by using our resources, our staff, our commercial activity, organic and inorganic investment decisions, by dedicating them to these activities, however, having divestitures in others. And, these activities that have, better behavior in terms of profitability and sales, are those that are related to sustainability. We want to be a company that is 100% sustainable, and we're getting closer and closer to that goal.
The other element that we have to use to make sure that in the future we do maintain or improve the current levels of profitability, is based on restructuring the business units themselves. One of these restructuring actions has taken place in this first quarter of the year, with the downsizing of the Phone House company, as we already mentioned in the previous circle. And this restructuring has extraordinary costs, like indemnities, severance payments, that have an impact on the service contribution margin by subtracting EUR 6.5 million. So therefore, we have to bear in mind that the figures that we're going to be analyzing now, we've already included this non-recurrent cost.
When in the strategic plan, we spoke about, sustainability and about simplification, it wasn't just a slogan, but rather it, was a reality that will materialize, throughout the next four years. Through restructuring actions, investments and divestitures, that we will share with you as they are put into force. And all of this is, for the purpose to become, the project, that is sustainable. We want to be, company that is 100% taxonomic. But now I'm going to move on to the figures. You've already seen the documentation, and we've closed the first nine months with a business figure of EUR 851 million, which means that it's 8% more compared to the previous year.
I would like to remind you that we are comparing ourselves with a pro forma figure of nine months in 2022, of EUR 788 million. What it does is subtract from the consolidated figure, the sales of electricity of Alterna, because this business stopped its operations after agreement with Repsol last year. And if you have any doubts about this pro forma, you can find an attachment in the documentation. But, this increasing sales of 8%, 6.5% has to do with organic growth. In other words, this is above our strategic commitment, which was 5%.
Forex has subtracted minus 0.8%, and inorganic growth adds 2.3%, mainly because of the integration of Zeta Arte e Ingenieros in Colombia, Gesthidro in Spain, and the renewable farms that we own 100%. As you can see, these are three elements in the area of sustainability. That is the management of industrial waste, the processing of water, circular economy, and the generation of renewables. As regards EBITDA, we stand in excess of EUR 100 million, and that means 40%, 14% growth, including the one-off. If we pay attention to our recurrent business, it wouldn't be 14%, but rather would be growth of 21%. So we maintain strong operational margins, as we already explained in previous quarters, and the central structure of the company is still stable.
It weighs 2.4% relative to sales, and in spite of the fact that the business has grown, and in spite of the inflation, the rigorous management of this cost has maintained these levels. But now moving on to EBIT. The growth has been absorbed, thanks to amortization items that are higher than what we reported in the nine months of 2022. These, fixed asset amortizations total something like another EUR 8 million more, because of the amortization of the renewable farms we own, and also because of the devices of the Rentik renting activity, and because of the reductions in fixed assets. But as we mentioned in previous quarters, in the year, we've had an increase in funding costs, which at nine months are EUR 15 million higher compared to the same period of 2022.
However, here they are set back by a good evolution of the exchange rate, and this means that we have a net financial result of EUR 10 million, which is EUR 10 million higher than what we reported last year. So with this, we have an attributable net income of EUR 27.3 million, which is 19% more compared to the previous year, and we have reached this figure even in spite of the impact caused by the one-off restructuring action. But to understand the origin of this growth, let's move on now to the segments themselves. In sustainable services, we reached EUR 596 million in business. The business figure, which is a growth of 8.1% in comparable terms compared to the previous nine months.
The sustainable transition we've been talking about is like a driver for growth, with excellent behavior of the area of environmental services, and also with an evolution in the already existing service contracts that is being very good. We've incorporated new contracts, like, for instance, sustainability services for industrial customers in Germany. As regards geographies in Latin America, we are still extending contracts in the area that has to do with technologies and telecommunications. This segment maintains an important weight as regards to the business figure, 71%, and contributes 50% of the margin. We feel comfortable with this proportion of weights, because as we've already mentioned on previous occasion, this is a defensive segment that provides current recurrence and resilience to the account.
As regards to the contribution margin and with the impact of the EUR 6.5 million, growth is 4%. In other words, even though—even if we do bear in mind the impact produced by the restructuring, the margin is still, still has a positive trend. But what this means is that the sustainable service model, wouldn't take into account the one-off, it has had a very good quarter. We would have observed a growth of margins of 14% in spite of the inflationist situation. So in other words, we're maintaining a margin that in recurrence, totals 11.9%, and that's the environment of 12% that we've always been talking about, and which are over and above those of the sector, which, as you know, are only one digit.
As regards to the 360 project segment, the business figure is EUR 243 million. So there's been a growth of 3% compared to the same period of the previous year, and this growth is lower than that reported in services and lower than what we've seen, what we'd seen in previous quarters. Although the execution of some of the projects has been slowed down without any big consequences, there's an important impact on forecasts, because the organic growth behind that 3% at constant exchange would have been 5.1%. So as you can see in the documentation, you see that our pipeline has grown significantly and has reached EUR 641 million.
And recently, we've signed a new hospital contract, supported by the Export Credit Agency of the United Kingdom, and we're working now on the first photovoltaic project with batteries in the Dominican Republic. As regards to the contribution margin of project, we've reached 20% over sales. We still have exceptionally high margins, or at least most of them can be justified, thanks to the fact that we're present throughout the entire value chain. It's this 360 vision, as we already mentioned in the strategic plan. As we can see, every quarter, we can see that these margins are improving. Moving on now to our stakes in infrastructures.
In these nine months, it's EUR 11 million in business figure and nearly EUR 7 million in EBITDA, added onto the traditional business of projects and services, which is associated with the farms, where we have majority stake, and which are also in the area of generation. Then this last quarter, we have connected, and therefore, we have to add on these assets in generation. We have the Valdecarretas farm with 38 MW, which is the first that we connected in Spain. As regards to the rest of the infrastructures and renewable projects, we are still building. We haven't yet initiated any new construction since the previous quarter, and we are developing projects that are joining our pipeline. And this pipeline, that you can see here, something like two-thirds would be located in Europe and one-third in Latin America.
And we are also continuing with liquidity generation operations in line with what our plan says. So that would be a divestiture in Cerritos, and you know that we have received several offers, and we are now making progress on that front. And then we have an agreement for the European pipeline in a due diligence process and the reduction of stakes in the American pipeline. There's not much information that we can share in this respect, although we know that they are key elements, but we can say that we are making progress in all of these areas. Now, I'm going to finish here. I would like to give you a very brief summary of what I think are the fundamental ideas behind these ideas. So firstly, the business, in any case... Well, what is fundamental?
In recurrent terms, the business is growing, and it is doing so significantly. There's a slight slowdown of the growth of sales that is associated with the scope of the projects, but we know that these projects are never linear, and then profitability remains strong, and it's growing, and there are extraordinary costs that are totally in line with the strategic focus we shared with you through our 2023-2026 strategic plan. As we understand that the evolution of the stock prices represent a concern for us, I would like to make a comment, and I would tell you not to look into the fundamentals of the company as a reason to explain the behavior of the market, because the results that we are presenting are very good.
If what we believe is that this behavior is related to the lack of materializing certain operations, of course, they are very relevant, but my message is that all of them are making progress according to the program, and that they will happen in the midterm. But bear in mind that it's only been five months that have gone by since we submitted the current strategic plan. And I'm finished with this. Thank you very much for your attention, and now we're going to move on to your questions. And I would like to remind you, by the way, that you can ask by the chat, and you can also do so directly on the phone.
Okay, to start with the questions, and if you're connected through the Zoom app, you can send your questions in writing through the section on questions and answers, or you can raise your hand by clicking on the lower menu, and we'll give you the floor. So if you're following the presentation via the telephone, please, press asterisk nine to ask a question, and we'll give you the floor. So let's start off with the Q&A session. I'm going to give the floor to the people that have raised their hands. All right, so, well, please make sure that your microphone is not muted. Firstly, it's Miguel González from JB Capital.
Hello, good afternoon. Can you hear me?
Yes, you can. We can hear you loud and clear.
Thank you very much. Well, thank you very much for giving me the floor.
I have three questions, and the first has to do with your guidance for the year, because you've been talking about EUR 150 million in the EBITDA, so that would mean something like EUR 50 million for Q4, and I think that this would account for somewhat more than 40% of growth compared to the previous year. And as I assumed, that this would include the capital gains that you could also have because of the agreement that you've signed with CMI in the Dominican Republic. Could you please say something about the components behind this growth for Q4? And then my second question has to do with Valdecarretas, and you've already mentioned this because you've commissioned Valdecarretas. You have 80% of the stakes there, but have any partners joined this project?
I think, did you have this 80% from the very beginning? Something I can't remember. And I would also like to know what's going on in the search for a new partner like CMI in Europe. And then the typical question now, could you give us the debt figure, excluding projects or with project as of September? Or could you give us an idea of how CapEx has evolved in the infra projects? Thank you.
Sorry, I'm in Madrid. I'm sorry, I didn't hear that third question. My name is Roberto, by the way. I'm sorry, could you repeat that third question, please?
Yes, of course, Robert. Well, no, this, it's about debt. Could you please say something about debt with and without projects, or how the CapEx has evolved with these projects?
Valdecarretas, we have 80%, so this is funding that we carried out with Santander and with the Banco Sabadell, and they have a formal stake of 99.9, because they were also lenders. But let's say that they also own 20%. So we still have 80/20. Valdecarretas has been in operation since July. I'd say that, well, since our infrastructure plan was established, we want to hand these projects over to OTP, and this is what CMI wants to do with our permission, and we want to carry out a complete divestiture or end up as a minority stake out of that. That is as regards Valdecarretas. What about the debt with and without projects?
Well, there are no major variations with respect to what we had as of June, because the company is business as usual, so we are still investing in development in Italy and Spain, but all of this is being funded with the usual resources of the company and not with specific funding. And it's true that in Valdecarretas, we have a project finance loan, but this is not very relevant, and we also have some involvement in La Victoria project in the Dominican Republic. So this, let's say, runs along these lines. As regards to the guidance, well, in line with what Patricia pointed out before, in the first nine months, well, we've exceeded EUR 100 million, and it's true that we have those EUR 6.5 million from a restructuring of the simplification of the company.
And what we want to do is put all of our business into B2B. We want it to be—want them to be under this discipline. We think that this is going to contribute value in the future and is contributing value now. One never knows what's going to happen in the future, of course, and I'm not sure if it was Galbraith who said there were two kinds of forecasters, those that know that they don't know and those that know that they don't know. Well, we don't know what's going to happen in this next two or three months, but it's clear that the company has to be resilient. And compared to the previous year, thanks to this resilience, we have to feel optimistic.
And this quarter, with these 150 in recurrences, we should stand between, I don't know, EUR 40-something million in the last quarter, but one can never tell, because we don't have an absolute certainty. And projects, in projects, things can appear somewhat early or somewhat late, and there could be specific operations, as you pointed out before, with CMI or with Valdecarretas when it's sold... that it could have some additional capital gains that will compensate some of the recurrences. But in any case, our idea, and I think that I mentioned this in June, I think that there are no impediments to reach the levels that the guidance have set and what we pointed out in the capital markets day by the end of the year, in other words, in these levels of recurrence.
But anyway, you know that prospectively speaking, giving figures is always a complex business, and it's always as difficult. So this is what I can say.
Thank you very much, Robert. These EUR 40 million for Q4 would be organic without taking into account projects. So the other figure perhaps would include a sale?
Well, yes, but we have decided to bring this restructuring forward within the strategic plan, and as usual, many times we're not looking into each quarter separately, but we're looking into the strategic plan and the type of company that we want to have. So what I would say is that we were, let's say, managing a company that in terms of recurrences and normality, was equal to EUR 150 million in EBITDA. We're running along these lines. However, with this restructuring here, that could make adjustments.
So we will be following those lines of action.
Thank you very much.
We're going to continue with Juan Peña now from GVC Gaesco .
Hello, good afternoon, everybody. I wanted to ask you a couple of questions very quickly. Firstly, regarding the pro forma, and just to understand things properly, in 2022, did you eliminate what I've had to do with the energy business? That's what I think I understood. And my question is, if in 2023, are you including the commission that you charge from Repsol in energy customers? Because I'd like to know what you're including under each item.
And then as regards to the pipeline, as you say, it has grown a lot, but one of the fears that we have in this context, as Patricia pointed out, something that makes us feel very uncomfortable is that these project pipelines are not executed in full, because sometimes they postpone projects or cancel them. So how confident are you with this pipeline, project pipeline? What feeling do you have from the customers? What do you think there are going to be any delays? Any problems in the implementation or commissioning of these projects? Thank you very much.
Hello, Juan. Good afternoon.
Regarding the pipeline, you know that we are very cautious, and we're very conservative when we include projects in that pipeline, and that when we include them, it's because they have already reached the execution phase or because we know that the execution is going to be carried out. So we don't really think that there should be any risks with regard to the projects we've been reporting on with these EUR 641 million. We know that they're going to be executed, and it's rather the opposite. This is giving lots of visibility to our project pipeline for the next few months and for the next few years, even. As regards to the pro forma. Yes, in the pro forma. Well, this pro forma figure that we presented for 2022, what it does is subtract from the consolidated figure, the energy business.
As regards to the commissions we received, because of all the new contracts that we acquire over 2023, they have been included. And let's say that part of these commissions, because of the contracts that were transferred, were already advanced. Initially, you have them in the accounts of 2022. And as I say, those had already been included in the 2022 accounts, and the last or the most recent contracts that have already been included under the organic and normal activity. Well, Juan, and, for the pro forma, I would like you to know that last year we had, a residential commercializing firm, and all of those energy sales for pro forma purposes, we've have transformed this into B2B, and, we've eliminated that for there to be a homogeneous comparison.
As Patricia said, these commissions have been included, and they don't have a relevant impact. That means that we—let's say that we have something like more than 1,000 every month in our partnership with Repsol, but this has no relevant effect because it's a 100% margin. As far as the pipeline is concerned, it's somewhat tricky. In that pipeline, let's say that the weight of renewables is relative, and that is, on the one hand, we're talking about all of the developments we have, but we are very careful about including in the pipeline. I know that what we are going to do is going to be carried out.
As regards to security, well, this really has more to do with the timing, although it is true that in the next operations, according to what we said at the capital markets days, they, you know that there are operations totaling EUR 3 billion or EUR 4 billion if we were to consider the entire future scenario, and our idea is to be pretty active in this process. So I think that we, this pipeline has to grow. Later on, there could be issues like hospitals in Chile or whatever, and we know that this could happen in a period of five or six years, and we'd have to look into the maturities. But we feel comfortable, and we feel at ease, so with our current levels of pipeline, and we also feel very optimistic with the future pipeline.
Well, thank you very much for the answer.
Well, before we continue with the people that have raised your hands, we're going to review the chat. Daniel Mendes is asking us if we could explain our priorities in terms of capital allocation. And with interest rates, are we going to try to reduce the debt? Are you going to have more growth in terms of infrastructure debt? Thank you. Hello, David. Well, wait a minute. Well, as regards our priorities with regard to capital allocation, we've mentioned this in the strategic plan, the issue of reducing debt, considering the current interest rates, is something that we could give some thought to, and as regards to the buyback of shares, but it's something that we've had up and running until the last plan that we closed at the end of July.
What we're going to do, we're going to wait for a while. We're going to wait so that we can take certain decisions along these lines, because what you do know is that we are looking into these different options, and as we are also looking into investments, as you point out, with regard to infrastructures and other kinds of inorganic investments, many of them have to be specified to a greater extent, but in any case, we'll take decisions as the time goes by or when the right time comes to do so. I would just like to point out that we are analyzing each of the marginal costs and the opportunity costs of the investment.
And of course, we find that the price of the shares is very attractive, and we've looked into other options, and I think that we have to send a message that is focused on reducing debt. And then infrastructures will, of course, this—we have this vocation that we pointed at, is that once we had obtained some very interesting owners in our 360 business, with return targets of two digits in something like 10%. These are the alternatives that the company is generating with owners, where we were talking about something like 20%. This makes us think that, yes, we should work along these lines, and at a given point in time, obtain additional liquidity in terms of infrastructures and choose a level of capital allocation for those surpluses.
We're gonna continue with Carlos Treviño from Santander.
Hello, good afternoon. I have several questions for you. Firstly, could you please say a little bit more about what's going on with regard to your search for a partner in Europe? How are things evolving, because have you got several offers? Are you looking into these offers, or have you chosen anybody, or are you open to receiving new proposals? And I would also like to ask you, why is it you haven't closed the operation in Mexico? Because you said that you had binding offers. But is there any kind of restriction, or is there any kind of problem there to close the operation? And the very, very easy question now, are there restructuring costs that have to be applied, or did you apply them all in Q3?
And finally, could you give us a little bit more information on the new contracts, new hospital contracts that you pointed out?
Thank you. Carlos, this is Roberto speaking. I'll answer the question. Partners. Shortlist and nearly ready to choose one. I'm just going to say that, and yesterday, we held a board meeting, and in Mexico, well, we've received expressions of interest, and people want this project to be connected. We are, we think that we're now in the final stage of the situation, and we... Well, there's a slight delay there, but right now, this project in Mexico is going to be postponed just a little bit. But I'm not worried because I think that we're working around the right lines. It's gonna take us a little longer.
I'm not very clear in my mind that with this, well, there are only two months for the year to end. Well, perhaps if we have to move into the first Q of last year, that's no problem. And as regards to the restructuring, or most of it, and after what Patricia pointed out, and after the all the work has been done, this capillarity has worked out well. And there might be some very specific surgery to be performed in these two months, but it's not very relevant, and I don't really think that it's going to be more than EUR 1 million, to give you a figure. And there should be no problem there. And then you were asking about new hospitals. Well, there's one in Central America with the Export Credit Agency.
So in other words, we are about to close the funding, and let's see if we can implement this. But in any case, we have the deadline by the end of the year. But as you know, in Chile, some of these awards are being renegotiated right now, and the conclusion that we've made is that we're perhaps we are the most eligible and the favorite candidate in the entire universe of all the people that have tried to become involved in that Chilean hospital. So it's a favorable situation, but it's still pending more negotiations, and it has to be awarded, and we need to have more so visibility. Well, thank you very much for all that. Just one minor point. This operation in Central America, would that mean that you'd have to invest in equity? No, it's a hospital.
It's not a farm. It's not a wind farm, sorry. No, it's a hospital. Okay, but let's say that the, this, it's a three sixty, without, having to use any equity, it's, one hundred percent connected. Thank you.... Okay, we're going to now review the questions that, still have to be answered in the chat. And if you want to leave any more questions, so this would be the moment to do so before we finish the connection. Ignacio Ortiz de Mendíbil says, "Has the Angola contract had a negative impact on EBITDA and, in the quarter, year on year?" Hello, Ignacio. Well, I understand that you were asking if this has contributed more in Q3 of last year compared to this Q3. Well, yes, because it was more active than this year.
The truth is, I'm not sure about the Q3, but in the first nine months, it did contribute more than it has contributed this year. I would say that the Q3 or that this quarter, compared with the previous one, it has contributed somewhat less. Angola was in the final stage, in the conclusion stage, and there's a very short way to go. So we are undergoing new negotiations for other projects, but I would say that this one has happily been ended, and everything is running smoothly. We're going to continue with another question that comes from David Dominic: "It seems that with a pipeline of more than EUR 600 million, there is no problem as regards to the demand for 360 projects.
But do you think that there's a certain degree of caution, or do you think that customer service customers are stopping their projects? No, no, David. No, no, Patricia, go ahead, please. No. Well, as regards to our projects, we already have the visibility with the pipeline, and as you can see, it's very healthy. And this allows us to have growth forecasts for projects, and as regards services, you can see the data here. Certainly not. The services are very strong, and there's not only a significant amount of growth. Because I had some information somewhere that when we spoke about the growth of services, if I'm not mistaken, I was saying that growth was 8.1% in comparable terms. But of this figure of 8.1%, that is inorganic, 7.6% is organic.
So organically speaking, they're very strong, and they grow in services with high levels of profitability and sustainability in environmental services, and these are the areas that we want to focus on and where we can see that we have a very big commercial success and an execution with healthy margins. Okay, let's move on to the last question. I would just like to remind you that if you have any further questions, please go ahead before we close the call. Virginia Pérez from Intermoney says, "The guidance of EUR 100 million of EBITDA, is it with or without the one-off of EUR 6.5 million from the redundancy scheme of Phone House, or?
I think that this was answered by Robert before, but in any case, I would just like to remind you that it's clear that right now we have this one-off at nine months because these are costs that have occurred in Q3, and we always try to balance out the negative one-offs with the positive one-offs that we could have during the year, in such a manner that we always show a figure that is as recurrent as possible, because what we want to do is grow in that recurrence. In... Marta talks about the history of the company and also points out the future forecasts. In other words, it's telling us what the company is going to be like, and as Robert pointed out before, it's very difficult to establish an exact forecast.
But in principle, our guidance is referring to something like EUR 150 million, and for the time being, we have no reason whatsoever to change this guidance.
There are no further questions, so therefore, with this, we'll be closing the call. Thank you very much, everybody, for listening. Thank you very much, and I hope that you enjoy the rest of the afternoon. Thank you. Bye-bye.