Ladies and gentlemen, welcome to our Capital Markets Day. I'm Ezequiel Nieto, Head of Investor Relations. Just before all, let me introduce the agenda for today. We'll start with the presentation of our Strategic Plan Leading the Future, which is going to be led by our Chairman, Marc Murtra, and also by our Chief Executive Officer, José Vicente de los Mozos. After this, we're going to have a Q&A session, and finally we will close the event with a cocktail with the management. So thank you very much, and now let me turn the call to Marc and José Vicente. Please, the floor is yours.
Good morning. We are delighted to welcome you to our Capital Markets Day. Today marks a significant milestone in our journey reflecting our collective commitment to growth, innovation, and excellence. This session is designed to offer a detailed look into our future, covering the essence of our purpose, the strategic pillars for 2024-2030, and the financial projections defining our goals. Our strategic plan unfolds across two horizons: a near-term focus up to 2026 and a vision that extends to 2030. Each phase is crafted with precise goals to ensure a strategic path towards our long-term objectives. This plan has been conceived in alignment with the Board of Directors, our stakeholders, and shareholders, underscoring a unified strategy to ensure our goals are both ambitious and within reach. The synergy between our vision and governance reflects our commitment to a transparent and achievable roadmap.
Our strategic plan will be executed under growth market conditions in two of the most relevant sectors for us: the defense and the technology sectors. In defense, particularly among European NATO member states, there is a more pronounced focus on increasing defense budgets to meet strategic commitments. Here, defense procurement spending is set to rise by 7%-8% annually until 2030, driven by the alliance's guideline to allocate budgets equivalent to 2% of GDP to defense. Spain stands at the forefront of this defense trend, with its spending projected to surge by 11%-12% annually to achieve that commitment. In technology, the global IT services market is expected to grow at a 4%-6% rate, driven by digital technologies that are expected to grow at a much faster rate of 15%-20% until 2030.
The expected growth in the defense and the technology sectors is underpinned by distinct drivers reflecting the current global landscape. The increase in international conflicts, such as an ongoing war in Ukraine and the Israeli-Palestine conflict, has highlighted concerns over surveillance and security, leading to an increase in military expenditure. Europe is entering a new major defense investment cycle after more than 30 years, characterized by a significant shift in focus towards technology, a greater share of defense systems, and the expansion of multi-domain capabilities, notably with integration of new space and cyberspace domains. The Future Combat Air System (FCAS) program serves as a major example of this shift. In parallel, the technological landscape is being transformed by a new wave of digitalization, spearheaded by advancements in artificial intelligence, cloud capabilities, and cybersecurity.
These advancements are set to revolutionize society and the economy, emphasizing the critical role of extended ecosystems in acquiring essential capabilities. These trends signal a pivotal moment for the defense and technology sectors, offering unique opportunities for strategic growth and innovation. With this context in mind, our purpose is to secure the future powering tech progress. Secure the future powering technological progress.
In pursuit of this purpose, we will focus on defense, aerospace, and advanced digital technologies, aspiring to embody four critical roles: a national defense and technology strategic autonomy guarantor, ensuring Spain's influence in both military and civilian domains at global scale, and guaranteeing our nation's strategic resilience and autonomy over communication, navigation, and positioning capabilities. A defense programs coordinator, assuming a pivotal role in safeguarding security and sovereignty. A technology ecosystems coordinator, driving innovation, stimulating economic growth, and enhancing competitiveness. And preferred employer for high-value technology talent as key for sustaining our strategic capabilities. Some of our NATO allies within Europe, such as the U.K., Italy, and France, have already made significant strides in consolidating defense and aerospace sectors, fostering integration under their own national champions through processes spanning over 10 years.
This process is crucial to achieve strategic autonomy in Spain and to guarantee its influence at the global scale. With our strong position and capabilities, we aspire to lead the Spanish national ecosystem in less than 10 years. To realize this endeavor, we will build on our solid foundations and proven track record. Our century-long history attests to our leadership in technological equipment, manufacturing assembly, and service delivery. With approximately 57,000 employees, including 15% with advanced digital skills, our workforce is a testament to our robust digital talent baseline. Our financial resilience is evident in our successful turnaround of our IT business, which has evolved from negative EBITDA margins to current 7% margin in a 10-year time frame. A healthy balance sheet with strong financials, with EUR 600 million in cash and low debt levels, maintain our net financial debt to EBITDA ratio below 0.3%.
Going forward, to fully align with our strategic objectives and ensure our leadership in Spain's defense and aerospace sector, we should: accelerate the adoption of an international mindset, enabling us to think globally and act locally. Increase client proximity to design needs-based solutions, enhancing client satisfaction. Embrace a more proactive commercial role with an ambitious and risk-taking mindset to stimulate our growth. Refocus our brand architecture to attract and retain talent and ensure a clear communication with our clients. In this context, the Board of Directors has given the mandate to launch Leading the Future, our new strategic plan with five clear long-term strategic guidelines. First, to accelerate the transition to a multi-domain national reference in defense, aiming to increase our relevance as a global systems integrator as well as a domestic coordinator of the ecosystem in Spain, in air and land programs.
This transition also contemplates a strong push to develop the space domain by creating a European Tier 1 business with end-to-end capabilities. Second, to develop and keep pushing our strong position in air traffic management to achieve a global leadership in the sector, scaling up strategic geographies such as North America and Asia-Pacific and expanding in key segments of the sector like unmanned traffic management. Third, to become the advanced technology and services ecosystem coordinator across industries in Europe and Latin America, fostering the development of the most advanced digital technologies and capabilities in artificial intelligence, cloud, and cybersecurity. Fourth, to divest non-core assets and proactively boost acquisitions, partnerships, and alliances that will help us achieve the ambition of our businesses. Finally, to reinforce Indra's brand to keep our current status of preferred employee for high-value technological talent in priority geographies, ensuring our strong critical capabilities.
Now, our CEO, José Vicente de los Mozos, will explain in detail our new strategic plan.
Thank you, Marc. Ladies and gentlemen, good morning and welcome today with us. As you have explained, this plan shows our ambition for our future and for the strategic autonomy of Spain. This is why Leading the Future was conceived from our core, leveraging our best talent and involving more than 200 people across multiple layers and areas of the organization, as well as key external stakeholders. This methodology guarantees that the plan is deeply rooted in our organization and enriched by multiple perspectives and insights. Next, we will show the video of our plan.
Leading the Future is the result of a detailed work of analysis, reflection, definition, and approach, driven and carried out from within to transform our company and lead the future.
When I joined Indra as CEO last May 2023, as Marc has summarized, I found a company with a solid foundation, but with clear areas to evolve to the Indra that I believe we can all build together. I envision an Indra with a recognized and shared culture, with a closer collaboration highlighted by a commitment to full accountability over processes and products, ensuring that every aspect of our business operates with integrity and transparency. We will foster an agile decision-maker and shared leadership model to adapt swiftly to market changes and drive innovation. A diverse multinational and multi-business culture that values our differences will also be one of our priorities, enriching our perspective and promoting inclusiveness. Our culture will nurture a sense of belonging, empowering individuals to become brand ambassadors who embody and promote our value.
Collaboration will be seamless with external partners and within our organization, encouraging unity and strengthening our responsiveness to challenges and opportunities. To support our ambition, strong program management capabilities will be essential, ensuring that our projects are delivered with quality, on time, and cost competitiveness. Excellence in risk return management will underpin our action, guiding us to make informed decisions that balance potential rewards with appropriate risks. The pursuit of standardized and scalable product design and production will be at the core of our operation. Our product offering will be simplified and focused, directly aligned with client needs and market demand. Finally, our commitment to innovation will be evident through significant self-funding, earning investment in cutting-edge technology, ensuring that we remain at the forefront of our industry and continue to break new ground. Now, Marc, communicate our vision.
To guide our evolution, we have decided to launch this long-term plan with the ultimate goal of becoming the Spanish multinational of reference in defense and aerospace and advanced digital technologies. Let me repeat that again. Become the Spanish multinational of reference in defense and aerospace and advanced digital technologies.
Our long-term plan, Leading the Future, is structured around three phases: Focus, Scale -up, and Lead. By 2026, during the Focus phase of the plan, our goal is to achieve EUR 6 billion in sales, with over 12% EBITDA margin and 10% EBIT margin, generating EUR 900 million in cumulative free cash flow. After 2026, during the Scale-up phase, we expect to create a EUR 10 billion company, with over 14% in EBITDA margin and 12% in EBIT margin, which should generate over EUR 2 billion in the period. That ambition shows allowing us to generate over EUR 3 billion in accumulative free cash flow by 2030.
To articulate this transformation, we will evolve towards a more flexible group structure, featuring first, reinforced defense and aerospace businesses. Second, a new space division. Space is a segment that is becoming more and more relevant in Europe to guarantee its strategic autonomy and sovereignty over communications. The satellite communications are becoming mission-critical for governments in both defense and non-defense applications. Third, the incorporation of mobility as one of Minsait's market segments to leverage Minsait's technological capabilities and commercial reach. Fourth, the entry of a new strategic shareholder or shareholders in Minsait to boost its strategic plan. Finally, a lean corporate center to enable a more flexible operating model in order to allow the inclusion of potential new industrial businesses. José Vicente will now explain our strategic lines.
Leading the Future pivots around seven strategic lines. One, we will focus on defense and aerospace, where we will complement our existing technological capabilities to become a European reference in defense, and we will expand our current European leadership and alliance in air traffic management into North America, the Middle East, and Asia-Pacific , India. Two, we will boost growth in the Spain domain by building an end-to-end dual civil-military value proposition through a NEUCO, partnering with a long-term minority shareholder. Three, we will increase Minsait's autonomy inside the group to support its ambitious growth plan, partnering with strategic shareholders. Four, we will strengthen presence in new home markets to boost local positioning and increase proximity to our clients in key regions. Five, we will activate portfolio rotation, including the diversity of non-core assets, and expand our ecosystem to consolidate our footprint in Western Europe, the Middle East, and North America.
Six, we will increase investment in technological R&D, securing core critical capabilities within our portfolio. As such, we plan to invest more than EUR 3 billion up to 2030. Lastly, we will double down efforts on critical talent, implementing the Indra way, culture, and revamping our employee value proposition. Now, we will deep dive on the business strategic lines. Let's start with defense, where Marc will explain our vision for this business.
Gracias. The vision for our defense business is to evolve into a land, air, and cyberspace Spanish coordinator in European programs, to become a defense system integrator of reference, to transform the Indra defense business from national to international.
As such, the Leading the Future plan will transform our defense business from a product supplier to a defense ecosystem, coordinators such as in the FCAS program, with an expanded international ecosystem leveraging alliance and M&A, from a mostly scattered non-coercive portfolio to a company focused on high-value and client-focused solutions built around key technology categories, from an industrial average value proposition to a forerunner in cutting-edge technology, incorporating them across all our products and maintenance services, from tailor-made and project-based engineering and operations to a platform that standardizes more modern focus on excellence and scalability. Within the defense domain, in air, we aim to consolidate our position as a national coordinator in European programs and to be an international defense system integrator. In land, we aspire to be a national coordinator in European programs and an assistant integrator of reference at the European and international level.
In sea, our ambition is to become an integrator of specific naval systems at national and European level. In cyberspace, our vision is to consolidate our servers as a national and European cooperation program coordinator. With regard to space, we aspire to be a national leader and European Tier 1 company. However, we will deep dive later on this specific domain. To achieve our vision, we will leverage the ecosystem, planning to carry out acquisitions in Europe and key strategy alliances in Europe, the Middle East, and the U.S. Regarding our organic growth, we already have 50% of our 2020 [defense] organic sales committed, with over 70% of them originating from eight key programs.
In the fixed-wing air platform category, this includes the Eurofighter, the A400M, and the FCAS, where we are a national coordinator for the Next Generation Weapon System program and an international leader for the sensor pillar. In the rotary-wing air platform category, we will mainly integrate mission and electronic defense systems for the NH90, Tiger, and Chinook. In land domain, we will integrate mission and situational awareness systems in around 350 8x8 VCR vehicles. Lastly, we will integrate electronic defense systems and next-generation sensors in the F-110 frigate. We aim to have increased control over the entire value chain. However, our existing portfolio of over 100 customized products hinders this objective. To address this, we will strengthen and simplify our offering into 11 client-focused solutions built around six technology categories: this being radar, electrical optics, command control, computational and intelligence, communication, electronic defense, and simulation.
To materialize this transformation, we will leverage our ecosystem to complete our portfolio of client-focused solutions, developing key alliances. Let's see how innovation can positively impact our portfolio, for example, through AESA technology. Here, you can see how our final simplified portfolio will look like with our 11 client-focused solutions within the five defense domains. Let's move now to our traffic management vision, which Marc will explain.
In the realm of air traffic management, our vision is to maintain leadership in air traffic management in Europe, the Middle East, and Latin America, to reach the number one position globally by strengthening our core presence in North America and Asia-Pacific, and to extend the automation technological solutions to the Middle East, Latin America, and Asia.
To materialize this vision, we will consolidate our leadership in Europe, our key recurrent geography, pushing for a new automation solution within the iTEC Alliance and capturing surveillance system renewal programs. In North America, and more specifically in the U.S., we will work on the integration of our recent acquisition, that is, Selex, and the scale-up of our business through alliances and bolt-ons to strengthen our position for our future infra renewal programs. In Asia-Pacific, we plan to capture large system renewal opportunities and to develop single sky program and technology partner-like alliances. Additionally, we will expand our managed traffic management business through the development of the platform and new opportunities. As far as our 2026 organized ambition is concerned, we expect around 80% of the revenue to come from backlog and high-probability pipelines.
As part of our strategic focus on defense and aerospace, our operation will undergo a comprehensive transformation aimed at enhancing efficiencies. This transformation will be structured around five master lines. Firstly, the standardization and modernization of our production model and footprint will be a priority. This includes a sharper focus on production planning and control, along with the establishment of flexible multi-product stations designed to adapt to the varying demands of our project. Secondly, our advanced engineering model and processes will emphasize security by design principle, ensuring robust verification and validation. We will also improve fast-track prototyping and standardized design to streamline the development cycle. Thirdly, we will foster an agile and resilient supply chain by embracing a closer integration coupled with the adoption of lean agile methodologies to respond swiftly to market demands and supply chain dynamics.
Fourthly, our approach to effective quality management will entail the development of more efficient processes, better quality control, and refined category management to uphold the higher standard of excellence. Finally, the digitalization and securing of our operation will reinforce our evolution toward Indra 4.0. With initiatives like the implementation of a digital thread in design and strategic planning, this will be focused on PLM, test automation, maintenance 4.0, and digital twin technology to secure our position at the vanguard of our industry innovation. The culmination of this transformation will be our new Indra Technology Hub expected by 2026, which will be focused on the R&D of cutting-edge technology for our defense and aerospace businesses. Its corresponding global vision will be developed along with key stakeholders as social agents from tomorrow. The following video will illustrate how our new industrial flagship, the Indra Technology Hub, will look like.
Indra Technology Hub, an innovative center of excellence born to respond to the challenges of the future of the new Indra, geared primarily towards improving customer service at all stages, from engineering to delivery. It boosts a much more efficient, digital, agile, and secure technological ecosystem committed to sustainability and talent. A model that assures absolute supply chain traceability and comprehensive integration of a network of highly specialized strategic suppliers. All based on fully digitized processes, industrial IoT, cybersecurity, and cloud-based intelligent information management. The incorporation of cutting-edge eco-design methods together with the implementation of digital twins will serve as a key starting point. The prototyping stage with additive manufacturing involving a vast range of materials will also prove decisive. This will trigger a flexible and automated integration process using synchronized manufacturing strategies and collaborative robots.
Artificial intelligence and machine learning will play a strategic role in facilitating continuous improvement and the use of predictive models. Finally, implementing cutting-edge simulation techniques and virtualized testing environments will secure the utmost reliability of our end product. These are just a few of the key points to boost Indra's greater production capabilities, shorter lead times, and improved quality of products, all of which will impact their entire lifecycle and will reinforce our absolute commitment to customer satisfaction. Indra Technology Hub is at the heart of our transformation, where efficiency, innovation, and talent meet.
Let us show you how this transformation translates into real impact in one of our six defense technology categories. Example, the radars. We will more than triple our volume of annual units in production before 2030. We will focus on increasing standardization, targeting more than 60% of commodities between markets for the main radar families before 2030, which will also enable us to simplify the portfolio from 18 to 13 radar families starting in 2025. For each of these families, we will reduce 30% design time reduction, 50% production lifetime reduction, and 20% cost reduction. You can see it's a big transformation in manufacturing in our operation to become a real competitive level. Let's proceed now with something new. Space, back to you, Marc.
We have an ambitious vision for our space business, aspiring to become a Tier 1 European player with a global footprint and presence in main European programs, to develop a dual civil-military offering with end-to-end capabilities alongside the value chain, to leverage an international ecosystem of shareholders and partners to accelerate growth.
As Marc has already explained, space is a segment that is becoming more and more relevant with the development of key space programs in Europe aiming to guarantee its strategic autonomy and sovereignty over communication, with impact in both military and civil applications. This dual role positions satellite communication as an indispensable technology bridging both defense and civilian sectors. Those space impacts extend across all our businesses, making it a must-focus for us in order to become a leading defense and aerospace company. The domain's importance is also evident among our international peers as they establish a relevant dedicated space division reinforced by strong M&A activity. With this vision of becoming a European defense and aerospace company of reference and ensuring space sovereignty over communication, our space business will be the cornerstone of a new core with end-to-end capabilities.
We have already started the identification of national and international targets to integrate capabilities along the value chain and cover our gap, capturing value in both a string and those string segments. The key point is to control the value chains. We have laid out a path to boost growth in Spain through the creation of this new core. We will start by aggregating Indra's current capabilities in Spain under this new core and then incorporate long-term global partners to integrate our financial capacity and help us accelerate through inorganic growth in Europe, with the ultimate goal of becoming a Tier 1 European player with global presence, reaching more than EUR 1 billion revenue by 2030. With this ambition in mind, we can wrap up space, and Marc will continue with Minsait.
Our vision for Minsait is to become one of the main European and Latin America IT services players, to aggressively rebalance the portfolio towards the most advanced digital business lines, to accelerate expansion into higher value geographies. There are five key actions surrounding Minsait's futures. We will give Minsait higher operating autonomy inside the group with dedicated governance. We will partner with strategic shareholders to boost the ambitious growth plan set out for Minsait. We will incorporate mobility as a new business to leverage Minsait's capabilities. We will divest non-core business. And lastly, we will reinforce group-wide digital capabilities to provide services to other Indra businesses. José Vicente de los Mozos will now provide details on Minsait's plan.
Minsait's ambitious plan will be materialized through a four-part plan.
This plan will be supported by a partner to help fund acquisition, accelerating the shift toward a digital offering and strategic region, and excel in business and tech talent management. The plan sets out to capture efficiencies through Gen AI rollout and optimize unitary cost of production pyramids, deploy a proactive commercial model around priority offering and target clients, and develop joint sale plans with Large Tech, evolve toward a digitally focused portfolio, integrating capabilities in artificial intelligence, cloud, cybersecurity, and other high-potential technology to establish an industry-leading offering, consolidate presence in high-value geographies such as Europe and the Middle East, and scale up Latin America operation. In order to maximize the value of this offering, Minsait is set to evolve into a digital-focused portfolio. We are targeting 55% of 2026 organic sales to come from high-value digital segments compared to our current 40%.
Looking ahead, we're embedding sophisticated artificial intelligence into our business, developing and implementing the most transformative use case. Our cloud strategy will go beyond migration with a focus on modernizing traditional applications with cutting-edge architecture and technology. And cybersecurity, we want to set the standard with advanced services and next-generation solutions. As we solidify these pillars, we also plan to extend our growth into other promising fields and other high-potential technologies, reinforcing our position as coordinators of the digital ecosystem in our priority regions. We are approaching the final parts of the presentation, framing the vision of our four businesses. And as previously explained, our strategy plan also encompasses cross-growth strategy initiatives. I will not provide details on this. In order to accelerate evolution toward a multinational company, we will roll out three new clusters of home markets.
This Spain, North America and North Europe, Middle East and North Africa, and Latin America and South Europe. This cluster will strengthen local positioning and proximity to customers in the focus region. The rest of the world will, however, operate under a spoke model. This internationalization will be supported by a portfolio rotation strategy as well as by the expansion of our ecosystem through key alliances. All acquisitions will be accretive for shareholders, and our focus will be on defense and aerospace, as we have already explained. In defense, M&A will help us reinforce capabilities in land domain, expand our footprint in Western Europe, and strengthen our sensor, edge avionics, and counter-UAS capabilities. In air traffic management, we plan to formalize bolt-on to develop the North America market and to reinforce the tower business capabilities.
In space, M&A will help us scale up the new core to global scale as well as help us integrate capabilities through the value chain to develop an end-to-end offering. In Minsait, we will leverage new strategic partners to increase our M&A firepower to rebalance our portfolio toward a digital offering and to expand our business in high-value geographies. Lastly, we have already identified non-core assets to be best at the group level. Regarding our ecosystem, we will maintain our momentum in establishing collaboration agreements and fostering alliances in defense, building on existing partnerships with Navantia, Escribano, Tecnobit, Thales, and Lockheed Martin to cultivate next-generation capabilities alongside our alliances. This last Monday, we have included a new strategic alliance. We have signed an MOU to create a joint venture with EDGE Group for the development and manufacturing of next-generation radar to be marketed in non-NATO territories.
In real air traffic management, we aim to force key alliances in the U.S. and with air navigation service providers in the Middle East. For Minsait, we have a structure and management and improvement process for our relationship with our top partners. With hyperscalers, we aim to deepen and leverage our collaboration to develop joint business plans and evolve our digital offering. Furthermore, with SAP and Salesforce, we aim to build upon our status as a top partner to continue implementing software solutions in multiple business areas. But we won't limit our cash spending to M&A purposes. As part of our commitment to R&D, we plan to invest more than EUR 3 billion in technology app development for 2030, including the new state-of-the-art Indra Technology Hub. Out of these EUR 3 billion , approximately EUR 1 billion will be self-funded.
Our R&D spending will be focused on digital technologies to expand and improve our current offering and in cutting-edge technology with the ultimate goal of becoming forerunners in new technological development. We must not forget about our most important asset, our people. The talent at Indra is central to materialize our purpose. For this, we will double down our efforts on critical talent by deploying a truly differential Indra Way culture, pivoting around five major pillars: a culture of diversity, multinational and multi-business. We preserve and value our differences. A culture with a recognized and shared leadership style with embedded agile decision-making. A culture of commercial and operational excellence that conveys our imprint and fosters accountability. A culture of development where we can grow professionally and personally and feel encouraged to push forward our ambition.
A culture that translates into a pride of belonging that we convey as ambassadors of our brands. As part of this plan, we will create more than 5,000 high-value technology and digital worldwide by 2026. From tomorrow on, we will begin discussing with the World Council this project and globally the implementation of Leading the Future for our employees. With regard to ESG, we will reaffirm our service as a market reference for ESG. We have set out a comprehensive ESG plan to materialize our 2024-2026 ESG commitment. In this vein, for example, accelerating the decarbonization roadmap, targeting net zero across all value chains by 2040, adopting eco-design criteria in all new products, increasing diversity at leadership and management levels. Lastly, we will now provide details into how our strategy transforms into tangible financial outcomes.
Reflecting on our previous strategic cycle, we can proudly say that we have surpassed our 2023 guidance. Last year's remarkable outcomes featured double-digit growth in net order intake, revenue, EBIT, and EBITDA. We generated more than EUR 800 million in free cash flow and maintained a low debt level within the 2021-2023 period. Looking ahead, we aim to boost this growth trajectory. By 2026, our goal is to hit EUR 6 billion in sales, exceed it at a 12% EBITDA margin, reach a 10% EBIT margin, and generate EUR 900 million in cumulative free cash flow. Before we move into the organic aspects of our plan, let's look at the broader picture. On the one hand, surpassing EUR 6 billion in sales by 2026 means keeping our current high yearly growth rate.
On the other hand, achieving EUR 700 million in EBITDA and reaching EUR 600 million in EBIT marks a significant acceleration in our efficiency metric compared to the previous cycle. Turning to organic growth, we expect a robust double-digit revenue increase in our defense and aerospace businesses, bringing the gross revenue from EUR 4.3 billion- EUR 5.3 billion at a 7% compound annual growth rate. EBITDA and EBIT are expected to grow at 13% and 13% per annum, twice the revenue growth rate, achieving EUR 650 million and EUR 525 million, respectively, highlighting significant efficiency gains. Minsait aims to improve both EBITDA and EBIT margin by two percentage points, aligning with industry pair, while defense and ATM will continue to lead with better-class margins. Finally, we expect to generate EUR 800 million in organic free cash flow in the period.
Our capital allocation will prioritize first accelerating M&A, dedicating over 75% to defense and aerospace, with Minsait's firepower increasing upon the entry of a new partner. Our M&A focus will be on Spain, Western Europe, the Middle East, and North America. All M&A operations will be aligned with the strategy and growth story and accretive for shareholders. Second, boosting technology investment to EUR 1.2 billion by 2026, comprising EUR 0.7 billion from program-funded R&D, EUR 0.4 billion from self-funded R&D, and EUR 0.1 billion from our new Indra Technology Hub. Third, ensuring financial stability and generating shareholder returns with a 2026 net financial debt to EBITDA ratio of 1, better than industry peers, and maintaining a dividend payout ratio around 20%, aligning with current level and consistent with company strategy. As we unfold leading the future, we'll focus on responsible growth and financial health.
Despite significant investment, we expect in 2026 a similar cash level to those at the end of 2023 while maintaining reasonable debt levels. Starting with a current cash base of EUR 600 million, our strong organic growth and a careful increase of our debt leverage ratio allow us to have over EUR 1.5 billion in firepower while keeping a stable dividend flow. This firepower will expand further through the diversity of non-core assets and will help us finance transformational M&A transactions to catalyze shifting our growth profile. We anticipate, however, that this transaction will maintain a net financial debt to EBITDA ratio of one, demonstrating our commitment to sustainable growth and financial stability.
Organic EBITDA is expected to reach EUR 650 million primarily through engineering and operation efficiencies, offsetting negative inflation impacts on salaries and supply chains, with Minsait focusing on technology development efficiencies and defense and aerospace on industrial efficiencies. Sales growth and strategic shift toward high-value segments and geographies. G&A costs over revenue rate improvement, particularly through indirect and structural cost optimization. Beyond organic growth, we anticipate an additional EUR 100 million in EBITDA from inorganic activities, including diversity and acquisition. Additional asset rotation will only be considered at similar or better 2026 EBITDA levels. By 2026, defense and aerospace contributions to EBITDA will significantly increase, accounting for 2/3 to 3/4 of the total, highlighting our growth profile shifting toward defense and aerospace.
To summarize our finance outlook, our 2026 guidance project is an EBITDA of over EUR 750 million and an EBIT of EUR 600 million, with margins exceeding 12% and 10%, respectively. Additionally, we aim for a cumulative free cash flow generation of EUR 900 million, diversity of assets on top of non-core ones already considered. We'll only be executive if guidance targets are met.
In addition, all top management mid-term incentive schemes will be linked to this guidance. We hope we have been able to convey our vision and ambition for Indra with our plan Leading the Future. We will now move on to the Q&A. Thank you very much.
Welcome to IFEMA today. Well, premier capitulum.
Thank you. We'll start the Q&A session right now. We will start with the audience here on the floor. Instructions. Please raise your hand first. Wait for the microphone. Please limit yourself to three questions. We will give the opportunity for a follow-up later. Okay? So we have the first question here. Is microphone number one? Yes, it's Beatriz.
Hi. Beatriz from Bestinver. Thank you for your presentation and for taking my question. Two on my side. According to the 2026 organic guidance, you expect Minsait to reach an EBIT margin of 7%. Would it make sense to estimate an EBIT margin excluding mobility of 7.5% in the medium term? So far, you were aiming for an EBIT margin of 7% in the medium term. Which levels will lead you to this target? And the other one, as for the space division, press/media continues to place Hispasat as a possible company to be acquired. Do you have any information on this? Thank you.
Well, about Minsait. Okay. That's the direction. Integrate Minsait. I think the most adequate Luis Abril, the responsible for Minsait, can answer you the first question. I come back for the second question. Okay.
Thank you, Beatriz. On Minsait, on the margin, I wouldn't say 7.5%. That's probably too aggressive. We have plans for mobility that also consider increasing the margin. I would say that taking out mobility probably in Minsait would be in 7.1%, 7.2%. Okay? The different levels that we'll pull for achieving that increase in margins, you know, are the typical ones that we've been discussing with you recently. You know, they have to do with increasing efficiencies, rotating pyramids, automation, AI. There are things also on the commercial side, things on commercial effectiveness, pricing. I mean, of course, AI. We bet on AI for improving margins very significantly in the future.
There are things also on the mixed change, on the offering mix, you know, these kinds of things. Okay?
Thank you, Luis. To finish this question, you know, I came from mobility war. And when I study Minsait, I think together we can go we have the same customer, and we can go for some business higher and more complete. That's number one. And number two, there are the synergies. That's the best way is to work together and accelerate the synergy. About Hispasat. We know this question will be come today. Okay? But for us, the important is you understand the concept of the new core. In the world, all invest $360 billion. Okay? Spain invests $400 million. We are the niche around the value chain, but Spain, we don't control the value chain of the space.
The idea of this new core is to create the control of the value chain from Spain. In this value chain, of course, Hispasat can be a candidate. But it's not the only one. We are targeting when we look at the satellite manufacturing, the payload, the communication ground floor, the application side with military. There are too many possibilities. Of course, Hispasat will be an opportunity. But it's not the only one. Okay? Let's ask create what will be the ecosystem. The important is that Spain can have a Tier 1 that we control the value chain to go to European and international programs.
Thank you, Beatriz. Next question. Microphone number one. Laurent. Yes. Good morning. It's Laurent Daure, Kepler Cheuvreux.
Three questions for me. The first one is you alluded to partnership for Minsait. Are you looking more at an industrial partner or PE? Have you already started negotiations? The second one is on margin efficiency. I mean, you focused on better productivity in your factories. And still, your defense margin long-term is quite stable. So do you expect to pass on most of the efficiency gain to the customer? And my final one is on Minsait. I understand some of the productivity gains. But when I look at the last two years, you had very strong growth. And the margin stabilized at around 5%. So what will be different in the next two or three years versus the last two years with your growth decelerating from the current levels? Thank you.
Thanks, Laurent, for your questions. Regarding the first question, our priority is the strategy we have set. And we would be looking for a partner that helps boost Minsait's business plan. In that aspect, we are open to considering different types of partners. It could be an industrial partner, or it could be a private equity partner. What we would look is for a partner that helps boost, that means accelerate, the growth of Minsait.
Well, about productivity. Everybody knows I was born in a plant, okay, in the car industry. When I visit the plant in defense and space, frankly, we are far from the car industry. To give you one example, last year, we have produced 30% more, rather, than the past. And I arrived in May. Okay? That's we have potential. It's for that when we study quality, we need to control the traceability, the agile supply chain, the geolocalization. We need to have a very clear process, standardized, digital, and efficiency. And that is not complicated. Frankly speaking, the workstations in defense and industry are easier.
You know, I need to manufacture a car by minute. Here, I have a little more time. The key point in defense is reliability and quality at time delivery. Of course, cost is important. But frankly, it's less important than car industry. But reliability, quality, and delivery time are the key drivers to become excellent in manufacturing defense system. Yeah. About Minsait detail. [Foreign language]
Can you hear me? Yeah. Yes. The answer to that question is probably that margins look stable, but they are not stable.
Mainly because if you take a look at the last three years and you eliminate the effect of the one-offs coming from electoral processes, and here bear in mind that in 2022, the results are heavily affected by the Angola project, if we take out that effect, the truth is in the last two, three years, the evolution of margins has really been very positive. And we are starting to see the impact of all these levers that we are pulling for improving margins in general, that they have to do with efficiencies, operational efficiencies, commercial effectiveness, the mix change. You know, not that far away, you know, three, four years ago, the offering, the mix of products that we were selling were like 30% digital and the rest were traditional services. Now we are in 40% digital. You know, the aim is to achieve 55%.
You know, that's a path that we are working on, and that is already having an effect. So it's just an appearance. Margins are not stable. If you take out elections, margins are actually not stable. They are improving.
Thank you, Laurent. Next question on this side. Microphone number two. Carlos Treviño here.
Good morning. Carlos Treviño, from Santander. Thanks for taking my questions. Two from my side. You have been very clear with your target on net debt over EBITDA for M&A. Do you consider any kind of capital increase to finance M&A? And my second question in defense. Are you expecting significant new contracts of the eight strategic projects for 2026? Or all the main contracts that you are expecting from those projects have been now signed? Thank you.
So thanks. While we are always open to flexibility going forward, with regards to the plan we have presented, we haven't considered a capital increase.
Yeah. About the defense, today the visibility is 50% of the sales, okay, with seven main programs. There are some programs that are not signed. I have explained we have seven that are signed, but the other are in the pipeline. And in some cases, we think we have high probability to be taken by ourselves. Thanks, Carlos.
Thank you, Carlos. Now on the other side, Mohamad. Microphone number one.
Great. Thank you. I had two questions. First, on Minsait, I think you alluded to 40% of the portfolio being digital. Could you expand a bit on where the kind of current capabilities are? And then as you think about expanding the mix, which are the key kind of priority growth areas? And related to that, I don't know if you've disclosed gross margin within Minsait. As we think of those margin levers, how much more headroom is there on the gross margin? Secondly, on M&A, which clearly is a key part of the plan going forward, how do you look at kind of the valuation of M&A? Can you talk us through the kind of three criteria from a kind of financial and operational perspective? Thank you.
Luis, maybe he knows in detail Minsait. He can answer you. And later, Marc will answer you about M&A criteria.
Yeah. I mean, thank you for the question. On digital, you know, the areas of capabilities that we are creating, and this comes again from two, three years ago, it's a journey. They have to do with what we call acceleration vectors, which are basically four. Okay? One is data cloud.
And this vector, we are evolving it towards AI, which we think is going to have a huge impact, both in our customers because we are developing use cases which are very interesting and that we will sell our customers based on AI, but also internally because through AI, we will transform our internal processes of developing software. Okay? So this is one acceleration vector: data cloud and AI. There is a second area of capabilities which we will push that basically has to do with cybersecurity. Then the third one has to do with payments. This is very specific. It's just vertical. It does not affect all customers. But margins are very good. And we want to keep on pushing on that as well.
And then the fourth one has to do with everything which is in the link between the digital and the physical worlds, what we call phygital. Okay? Everything that has to do with IoT, IT, OT, edge computing, 5G, 6G, all that kind of things. Okay? And that's the idea. The idea is to keep on pushing that to improve margins significantly. And we firmly believe that the 7% EBIT, you know, is reachable.
Yeah. With regards to your second question. So any potential M&A operation has to have, of course, a strategic fit and needs to add financial value for our shareholders and our company. So we will analyze it step by step, opportunity by opportunity, but by strict financial valuation that makes sense strategically and adds financial value to our shareholders.
Thank you. Next question. Microphone number two here at the center. Nicolas.
Yes. Thank you, Nicolas David from Oddo BHF. I have three questions from my side. The first one is regarding non-core asset disposals. Could you elaborate a bit on the discussion you may have already and the timing for those kind of asset disposals and the volumes of revenue and cash-in you expect? My second question is also a question around phasing and timing. What is your view regarding the most important strategic moves regarding Minsait, finding a partner, creating the new core space? What will come first? And my last question is regarding the free cash flow. Your guidance is solid, but it implies an EBIT to free cash flow conversion of 60% while the company has been generating more than 70% in the recent past. So what should we consider here? Is it an increase in CapEx or some working cap needs? Thank you.
Okay. About the non-core. Of course, we have identified what is the impact in the turnover and EBIT. But you can imagine we cannot disclose with you today because we have customer and we have employee. The assets are identified, and now we will start the processes in the short term.
With regards to timing, we have a plan and we have ideas, but we want to maintain some flexibility because not everything depends on us. So it will have to do with the opportunity, the options on our decisions when we bring things into details. But we have wanted to put it within the specific time frame of the strategic plan. With regards to the cash flow, as we are setting guidelines, we wanted to make sure that these guidelines are going to be specific. And you know, transformation from EBITDA to cash flow has to do a lot also with working capital, and it has to do with the portfolio of products, which will be different in three years' time to today. So the conversion has to do with those two factors. Thank you.
Thank you, Nicolas. Yes. Álvaro.
Hi. Álvaro Lenze from Alantra Equities. Thanks for taking my questions and congrats on the presentation. I think it's ambitious and very clear. My first question would be regarding the execution of the plan. It seems that you have a lot of food on the table in defense. You are optimizing the product offering, executing a large backlog, capturing new clients, then in ATM, expanding into North America and Asia in Minsait on top of this M&A. It seems like quite a lot to chew.
I don't know if you are concerned about being able to execute on so many different fronts. My second question would be on consolidation. You are taking the example of BAE Systems, Thales, and Leonardo, and expect to consolidate the Spanish defense industry as well. But when I look at the Spanish industry, it seems like you already have a partnership with almost all the main players, and there are not many significant players to consolidate. So maybe you could turn these partnerships into full-on acquisitions. How do you think what consolidating the Spanish defense industry means? Thank you.
Thank you, Álvaro. And thank you for congratulating us. You know, my professional career, the key point has been execution. I'm an industrial guy. If you can imagine what the team has done in these nine months, it's huge. When you analyze this plan, it's 360 degrees. Okay?
We have analyzed the talent, the product, the technology, the process, the region. Only this plan is 5% of Leading the Future. 95%, we need to start tomorrow with the key leaders, with the clear roadmap. I no worry about this. Now we have the mountain. The mountain is identified. Now we are going with the team and with the Chairman’s support to conquer the mountain. Of course, when you conquer something, there will be successful and not successful moments. But that's life. Today, I'm very happy because the mountain is identified. Now we are going to conquer. I think this plan, and now, Luis, Marc, this plan we have so today is the more ambitious plan never explained in Spain about industrial defense. And that is done for Indra. And that is the beginning.
Regarding the second question, and thanks, Álvaro, for the congratulations. I've taken note. But there are many ways to develop the term consolidate. And we have used specifically leadership to lead the defense industry market in Spain. So our priorities have to do with our technological path, clients, and our programs. That is the priority. And what we aim is to help rearrange the defense sector so that it is most efficient to give service to those clients, to those projects, and to that technological development. And that will and may include M&A, and we've been clear about this, within Spain and maybe outside of Spain, partnerships and alliances. But we can't be more specific at this time because this, of course, takes you to tango. So we have different options and different scenarios. Thanks.
Okay. I have another question here.
Hi Thank you very much. This is Javier from Santander Asset Management. Also, congratulations for the ambitious targets. I know that currently you are very focused on the 2024-2026 plan. But I would like to spend a minute on the next step, the Scale-up phase, because it was quite interesting to see that sales growth even was showing some acceleration versus the previous years with additional EBIT margin improvement. So you were aiming to, I think it's like multiply by 4, the EBIT figure, from now to 2030. I don't know if you can give any detail there if you see more organic growth on that phase. Is it more driven by M&A, in which areas really the growth and the operating margin efficiency come, looking more beyond the 2030 period? Thank you.
Well, for the plan, first, the priority is to focus. For that, not only for the plan, also for the budget, this year we have made initiative with the year and rollout three years. For me, 2024-2025 is 80% execution. That is the key point. Okay? But we cannot forget that at the same time, we need to look about the future because technology maturation, big program, we need time to mature. It's for that today we can know and build today, but also we know what is the roadmap that you can imagine with the continue growth. You can imagine until where we are going to grow in organic, and you can identify the gaps. And in this gap, we are working in M&A that Marc will explain a little more, how to achieve more than EUR 10 billion .
Yeah. Thanks, Javier, for your comments also. So one of the characteristics of the defense and the air traffic management sector is that a lot of its programs are very long-term and have different phases. And that's including FCAS or many of the projects and programs we've shared with you where there is a part of developing technology and then there is a part of production. So whilst we can't go into the specifics, we don't imagine within the plan a sharp difference in the new phase. It's not over-leveraged on M&A. It has a strategic continuity and logic, also with regards to the specifics and the visibility we see with regards to sales and commercial opportunities. Thanks.
Okay. So before opening the external line, we have one question here on the floor.
Yes. Good morning. Iván Sanfélix at Renta 4 Banco. And let me add myself to the congratulations for Indra on its strategic plan. You've got it towards the EUR 700 million revenue contribution from M&A by 2026. What about by 2030? Does that EUR 10 billion revenue number include further acquisitions? And if so, what would be the expected contribution from M&A by 2030? Thank you.
Well, we are not to elaborate today, but Marc will give more detail. The most important is focus. I don't want to start to think about 2030. If we don't achieve 2026, [Foreign language] . Okay? The first plan is focused 2024-2026. At the same time, we don't know, discover in 2026 that we have lost opportunity. It's not easy, but we implement this exercise for focusing materialization and to think from 2027- 2030. And thus, we have some criteria and some ideas.
Yeah. Iván, and thanks also for your remarks. We can't get into specifics, so we'd rather not get into specifics. But what I can say or what we can say is the same we said to Javier. With regards to this plan and how it is constructed bottom-up, with regards to the second phase, there is a strategic continuity. So there is no acceleration in M&A ambition or a sharp change after 2026. So what I can say, what we can share, is that there is strategic continuity within the logic and the orders of magnitude. Thanks.
Thank you. We are going to open the external line right now for a, no, wait a moment, please, for external question. No, wait, wait. We're going to have a question coming from the outside.
Hello. It's Michael Briest, UBS. Two questions. Firstly, on the linearity of the 2026 migration, will margins and growth progress linearly throughout? Secondly, on the Minsait's partnership search, can you explain why someone would take a minority stake in the business and why you would retain a minority stake in the business if someone owned over 50%? Surely, a full exit would be preferable to the second situation for you. Would you consider a full exit of Minsait? Thank you.
Three questions? Two questions. Yes. [Foreign language] Okay. I will start and later, Marc will fill in. Well, about margin evolution 2026, you know, clear that the evolution margin will continue because our portfolio also, we are to rotate. Today, when we look at the other pairs, today we are the basic class in defense about EBIT. But it's clear that now we are focused less than Eurofighter and FCAS to increase the quantity of the system and control. And that the margins are not the same. That we need to look in defense and aerospace margin integrating this mixed rotation product portfolio. About ATM, the idea is to continue in this way to become the best of the best in margin in air traffic management.
Thanks for the question. So with regards to the second question that has two parts, regarding why would anybody consider a minority investment? That would require for me to make an exercise on different potential investors, but we would need to see. But it might be interested as a financial investment or as a strategic partnership with a strong hold on the company, or we should see.
With regards to the second part of the question, we are in all cases considering, in all cases, we will keep a significant stake in Minsait because we believe there are strategic synergies to be had with regards to air traffic management and defense in all cases. There is a convergence with regards to digitalization. We are observing that in the defense industry, know-how and technological inputs are being created in the civil area, in digitalization that are being used and leveraged within defense. So we do see a strategic fit ultimately, and that is why we would always maintain a relevant investment in Minsait. Thank you.
Thank you. We have time for the last question here.
Hi. Thanks very much. It's Mark Hyde from Morgan Stanley. Thanks for taking my question. Most of them have already been answered, but just two final ones, please. Firstly, you said that the Spanish defense spending is set to double by 2030, according to your estimates. What's your assumptions around how much of that incremental spend is addressable, and what are you baking into that organic growth target that you've outlined to 2026? How much is Spain's defense spending contributing to that? And then finally, maybe this is one for Luis as well, just on Minsait. You mentioned around the AI efficiency benefit. What investments have you made there already, and what's the timeline between now and when you start to see tangible benefits from those investments? Thanks.
Yeah. So with regards to the first question, Mark, we haven't said specifically double. We've said there's a 2%, a public 2% GDP target that has been made, and we see ample consensus to reach that. And we see ample geostrategic pressure to make sure that happens.
We have a very clear understanding, we think, of what the breakdown will be with regards to procurement. What will the breakdown be with regards to existing assets and maintenance? But what we have done with regards to the organic growth is build a bottom-up approach with specific programs, which we know very well, and with what we believe are highly likely programs. So there is a top-down approach and a bottom-up approach. But with regards to the organic growth, the specific numbers, which include, of course, EBITDA margins, we have built that based on the programs we know I think we know very well. About artificial intelligence investment, Luis?
Yes. Thank you, Mark. We've been working already for probably more than one year in exploring what's the potential of AI. As I was saying before, in two fronts. On the one hand, we are investing something in creating use cases for customers. This is an investment that it's more co-investment, if you want, sometimes with customers. We have a set already, a diverse set of use cases, which are quite interesting. Basically, it is a set that reaches our portfolio.
Then most importantly, it is the second part, which is that we are initially, one year ago, testing, now starting to use heavily different tools, which are in the market, basically for increasing efficiency in software development, the usual ones. We work with Microsoft, our partners, and we are basically testing all the tools available. We are starting to use them significantly. We have thousands of licenses already that our developers are using for improving our internal processes. In that front, we are already starting impact. We believe that the next couple of years are going to be quite relevant in terms of keeping on achieving efficiencies from this level.
Thank you. Before closing remarks, I just recall that we will have an informal cocktail here when you can follow up with your questions. And now, Marc. Thank you.
We have an exciting, ambitious, and demanding plan ahead of us. We understand, of course, that this plan is not risk-free. We will manage, monitor, and ride these risks together now. These are our marching orders. We now know what to do. What we need to do is execute. Now it is time to focus on the implementation and execution of this plan. The board and the executive committee will supervise the plan closely and will report on its progress regularly to capital markets. Thank you all for being here. Thank you, José Vicente. Thank you to the board. Thank you to the executive team. And thank you for those that are making this plan reality. And thank you all for your quality time here.