Fincantieri S.p.A. (FCT) Earnings Call Transcript & Summary

[Presentation] Good morning, everyone. I hope that the video is setting properly your expectation for today's meeting. Thank you for taking the time, thank you for joining us -- to the attendees here in the place, but also to the other one that are connected. So thank you, first of all. And today, we will take you through our new strategic plan. I want, first of all, to introduce the team. So we will have obviously an in-depth presentation of numbers with Giuseppe, but we will have also an in-depth presentation of strategy with Claudio. And most importantly, I would like to introduce Bent Erik that is coming to Italy all the way through from Norway, from Alesund. He will give you a specific -- we will switch on a spotlight on what we are doing today in the technology in the shipbuilding. So we don't want to sell the equity story of technology only, but we want to touch what is today Fincantieri. So today's meeting will be successful. If we tell you how much our roots are deep in the industry. But today, meeting will be successful if we convince you how much technology we have inside. So I joined this group 1 year ago, and I was in first person surprised of the degree of technology that is inside the company, and it is unknown. So no deviation from our core business. We are shipbuilders, hands on, but we have a lot of technology. So Bent Erik will be the translator of our traditional business into a technology-driven business. So maybe we can go through the agenda. As I told you, these are the main topics that each speaker will develop. There will be an opening on the quarter because it's a matter of fact. We have approved yesterday our quarterly result. Myself will give you a simple presentation of the highlights, Giuseppe will give you a little bit more color. And then the real body of the presentation will take place. So we can start because the content is a lot. Highlights on 2023. Basically, we are -- once the presentation is there -- do you have the thing to -- yes, thank you. So we -- as we have announced in our press release, revenues are up vis-a-vis the first quarter of last year, 5%. So volumes are picking up. EBITDA, again, is picking up. You know last year was a year of strategic review of projects so it's not an ordinary year. It was an extraordinary year because we went through a strategic review of projects, given the overall situation of the market, raw materials and other one-off phenomena. But at the end of the day, the first quarter is demonstrating that the profitability is gradually back, 5% or 4.9% is not satisfactory to us, but it's a good sign of restart. Order intake, most importantly, is more or less the double vis-a-vis last year, and again, even more, what we have been seeing, telling in the last 1 year, i.e., that the offshore business is going to fly is giving encouraging evidences. So it is not dreaming, it is not selling. The future for the sake of the future, but it's real business. So that is the what we call "secret weapon" in our business model. Net financial position. You know what I believe, cash is the king, profit is the queen. We will be absolutely concentrated on deleveraging. This quarter has a pickup in the net financial position, but it is mechanically due to the typical working capital ups and downs of this business. So when you are paid 80% when you deliver the ship and then you deliver 2 ships in April, in March, you have a different financial position. So let me say something obvious. We need to report quarterly by the quarter in a business like ours is meaningless. When your projects are 3 years, when you look at the quarter, you look at the photogram of a movie, of an adventure movie, I would say. So everyone is concentrated in watching the quarters but the quarters in a business like ours is not necessarily very meaningful. So I will leave the floor to Giuseppe for some additional color on the quarter, and then I will be back for the strategic presentation. Thank you.

Yes. Good morning, ladies and gentlemen, and thank you for being here today. We can -- so first of all, as you have seen in the press release we released yesterday, we restated our segment information. What we basically did is we allocated the after-sales services, the ship repair and conversion and the complete accommodation business, the cabins, into the Shipbuilding business, so where it belongs to. This is in light of more disclosure of what's left in the Systems and Components business where we have the Electronics Systems and Software business, the mechanical components and the infrastructure business. For those who have read the press release, and you will see through the presentation today, you will appreciate that within the Equipment Systems and Services, also we disclosed EBITDA and revenues for the 3 components of the same business. This would allow let me say, new approaches also in the evaluation of the company or the group. On -- back on order intake and total backlog. As Pierroberto said before, we almost doubled the orders of the first quarter vis-a-vis the first quarter of last year with a substantial contribution from the offshore business and offshore business means wind offshore business at this point in time. We signed 4 new -- an order for 4 new construction operation vessels for Edda wind engaged in the offshore business. 1 SOV for CREST Wind as well in the offshore and the wind offshore business. We reached a total backlog roughly 4.6x 2022 revenues. Revenues are slightly up vis-a-vis first quarter of last year, almost 5% with a very important contribution, again, from the offshore and specialized vessel business. This is thanks to the older acquisition and the wind offshore that's starting to flow into revenues, you will see in the slides of the business plan that we expect a very important growth in this business. Cruise accounts for almost 50% of the total revenues of the group, still stable vis-a-vis last year. We don't foresee any substantial increase vis-a-vis last year because we are working at full production capacity in this business. As well in the new equipment Systems and Services, revenues grew more than 30%, and this is mainly due to the increase in the activity in the infrastructure business. EBITDA stands at 4.9%. Of course, comparison with the first quarter of last year is somehow meaningless as in the first quarter of last year, we were not experiencing the substantial cost inflation that we started to see after the start of the conflict between Russia and Ukraine, notably in the steel and in the energy costs. Of course, the improvement is substantial vis-a-vis, the 3% EBITDA we closed with in fiscal year 2022. Net working capital and net financial position. As you can clearly see in this slide, net financial position mirrors almost exactly the increase in net working capital as of the end of the first quarter. As Pierroberto mentioned before, we delivered 2 ships in April 2, so 2 days after financial closing. And of course, net working capital in total value in its components and net financial position, both reflect the fact that we cashed in 80% of the contract price 2 days after March 31. As of the end of April, net financial position was back to the levels of year-end. Now, Pierroberto? [Presentation]

So we are setting again expectations. I hope it's not that much. Again, let me start from this. And again, this is my perception joining the group 1 year ago. For the first time, you are talking with a company that is #1 in the world. So it's not common for Italian companies. There are companies that are smart, are agile, but are not necessarily the biggest. So let me start from the end saying that if you take out Chinese and Korean shipbuilders, which is another ecosystem, but we are the biggest shipbuilder in the world. And we are not only big, but we are regionalized, and we will go more and more into this concept of regionalization and localization because in the market of the future, all the markets of the future will be geopolitical markets. So the capability, ability to be regionalized and localized will be a distinctive factor for the way forward. We are biggest in volumes. So you know [ Santillana ], you know Naval Group, you know [indiscernible], 1/3 of us. but we are not looking at the back. We are looking at the future. We have a lot of backlog with us. And we are in 4 continents with 18 shipyards. So we know what does it mean technology transfer, localization, supply chains, regionalization, Inflation Reduction Act stories. 20,000 employees, but if we consider all the people that are every day and every night working in our shipyards is more or less 5x. So it's a big animal, 100,000 people. So for the first time, there is an Italian company that can be a market maker because it is the biggest with economy of scale and economy of scope, but I will take you through. This is the business model. So we are -- as Giuseppe told you, we are in the process of clarifying our sectors. I believe it's time to be more transparent, give more attention to the investors and to the analysts, the business model of Fincantieri has to be simple. We are a shipbuilder with a technology ambition that we are a shipbuilder. Our core business is to build cruise ship, defense ship and offshore ships in a moment in which you need to change the paradigm. So in a moment in which manage them together creates value. Why? Because we have in-house digital technologies and in-house electromechanical propulsion system, generation system, competencies. So our third sector, that is called -- what we call ESS is at the end of the day, kind of vertical integration of our 3 core businesses, no more complicated than that. Today, in the ESS, we have also infrastructure. I will take you through later on what is the infrastructure business in Fincantieri, what is going to be -- what is the strategic intention behind our Infrastructure business. But let's concentrate on our core business. We want to become market leader because we are big, we have economy of scale, economy of scope, we know 3 businesses, and then we have in-house competencies that the market doesn't realize we have. So today, we will want to take you inside the Fincantieri garden and showing up what we can do. Then obviously, there is the reporting. So our reporting, as I told you, is ESS with infrastructure inside and with the electromechanical propulsion system, automation system, generation system, in-house competencies that works mainly for the core business and there's some external exposure, no [ capital ] exposure, which is good because it means that you can verify and certify that what you do internally is benchmarked with market, with technologies, with pricing. Then there are the numbers, obviously, as we report, but it's very important that we understand that these revenues are also [indiscernible] to the group. A clear understanding of what is making Fincantieri distinctive because, yes, shipbuilding is the tradition of every country. But to be future proof, you need to understand what is your uniqueness, what is your distinctiveness. The distinctiveness of Fincantieri I have already introduced. So to be -- we are the only one in the world that can be at the same time military and other. Let me give you an example. Why Fincantieri is successful in the export of the naval business. Because we are the only naval shipbuilder that is also working in the cruise sector. And you know what does it mean? That you are religious about schedule, you're accustomed to turn every stone in your costs. When you work with Miki Arison from Miami, no jokes. You have to deliver on time. And if you can take away EUR 10 for you, $10 for you, he will take. If you're in delay, you're going to pay penalties. When you take this discipline and if you put it in the naval, you are like, you know, a genius because whatever is, with all the respect for Admiral, I hope there is no Admiral in the room, but their discipline is not the discipline of the private market as simple as that. Just to give you the flavor. Then I've already introduced what I believe. I believe that in a moment in which the paradigm is shifting, the fact to be vertically integrated is unique. We can build turbines. We build our own propellers. We know exactly what does it mean a battery management system. We have people very good in automation. We have our own control and automation systems. So when you have to do something differently, the fact that you have it in-house, it's a source of uniqueness. And then the third unique sense of Fincantieri already introduced is the fact that we are already accustomed to localize. Saudi, for example, is going to be one of the biggest markets. Saudi is building its own shipyard and is not demanding military ships. It's demanding someone, they will be, along with Saudi people in their own shipyard building military ships. So if you are accustomed to go abroad, duplicate yourself in a region, transferring technology, getting along with the supply chain, you will have a big say in the future of the market. So this is the distinctiveness of Fincantieri. We will take you through more and more, I don't want to occupy all the time. Again, let me take you our reading of the macro trends. So yes, we are big, we have economy of scale, we have economy of scope. We have distinctiveness but what the market is going to demand. The cruise I will take you through is back. There are some very healthy macro trends in this industry. I will take you through, but it's back after COVID. The military, I gave you some anticipation. The expenditure is growing, by the way. And the Navy, it's a special defense budget for a number of reasons. The other macro trend is that if the energy transition will be there, it means that wind firms -- wind farms will be there. So if we truly want to go for the second wave of energy transition, renewable energy, it has to be at sea, and it has to be in deep waters. That's why there is a big demand for our supply offshore vessels. The rest of the macro trend is volatility. So it's clear to everybody that we have to cope with instability in the supply chains. And it's a fact of life. So it's a macro trend that we are coping with and we are even taking advantage of it. And then there is obviously the macro trend of rethinking all the solutions in order to smash and abate emissions, smash consumptions and therefore, have a kind of non-monetary cost to be managed because they are going to become monetary. So shipbuilders have to find solutions for ship owners that very soon are going to pay emissions, cash. So it's not sustainability for the sake of sustainability but it's industrial sustainability. That's how we call it. If you don't find solution, you're going to pay your white certificates, full stop. Real money. Some more color about what is happening in the cruise. Every business like that, it's a business of undercapacity and overcapacity. Our expectation is that 2026, there will be a mismatch. Mismatch, meaning that smart and entrepreneurial shipowner has to decide 3, 4 years before because it's not that you push a button and you have a ship. So there is a lead time to position yourself. So if you want to gain this market share, you have to decide today. So that's why you see a pickup in the orders because [ market ] and entrepreneurial ship owner are reading the future, embedding in the story, the lead time. This is the first fact. What is the nature of the demand. First of all, there is substitution. So the fleet is being a little bit old and you need even without looking at the incremental market share, you need to change your own ships. You have to change your old ships in an accelerated way because you have the pressure of the emissions, of the regulations about emissions of the propulsion system. So first of all, substitution. Second macro trend is the segmentation of the market. As you are experiencing, the new demand is not a ship, but the market has been very segmented and new segments are coming out. The perfect example is our acquisition of Four Seasons Yacht. Four Seasons is building with us a ship with 90 cabins. The price of the cabin is not important because there is a family office that is going to pay for it. So no one will wonder what is the price of it. And the passengers will be by invitation only. So Four Seasons will, in a sense, give like a Ferrari option to the Ferrari collectors. You know what I mean. So the market will be segmented. Therefore, it's very important to be flexible enough to build a large ship, all you can eat, ship week and the Four Seasons ship, which means to be super luxurious and very unique. The third macro trend of the industry is that our ship owners are realizing that there is a big gap between the cost of holidays, onshore and the equivalent cost of the same holiday, the same entertainment onboard. So if you think of the -- where the cost of tickets, flight tickets is going, where the cost of hotels is going. And then you compare it with the same offer on board, the gap is very big. So in the mindset of shipowners, they have to address with a segmented offer, the part of the market that is not experiencing cruise. And this remaining addressable market is big. It's a matter of having an offer that is convincing people like you to go on cruise. So that's the [ normality ]. And the bigger is the gap between onshore holidays and vacation and onboard holiday vacation, the more this theory makes sense. And today, this is like this. So those are the macro trends. Those are the macro trends. And obviously, this is delevered. So you have to be flexible to manage all the different segments, but most importantly, you have to be good in finding solutions for emissions, for example. And then at the end of the day, the level of the levels in the cruise business is that it's driven by your ability to support financially with export credit instruments, the investment of your clients. Defense, some more color about what's happening in defense. First of all, there is a pickup in the demand. It's a direct mechanical, logical consequence of the world, as simple as that. The Navy, it's a special defense expenditure in my view because Navy is versatile. Navy can be useful for humanitarian missions. Navy is good to patrol the infrastructure at sea, the pipelines at sea. It's also energy security or business security of a country. So the expenditure is Navy is easier to sell to taxpayers simply because it's not like a tank. You need tank in these times, you need tanks in these times but when you spend in Navy, you're spending something that is dual as we say, that is versatile. It is not only work, it is not only defense, it's security, it's security of commerce and security of infrastructures. That's why the naval, to me, will be a macro trend in the macro trend in the defense sector. So the market is there, numbers are big. We are giving numbers. You will have plenty of access to numbers. What the market is demanding in terms of products. It is not only big Navy like U.S. one, which is our domestic market, like Italian one, that is probably one of the best in the world, but it's also new navies. They want to spend and invest in the naval security, and they want surface vessels, versatile, which is the top core project of Fincantieri. Fincantieri is very good with corvette and frigates. And this is the most demanded entry ship for any navy in the world. So there is a big opportunity for Fincantieri because not only we have a fantastic frigate, but it's the frigate that was chosen by United States. So can you imagine that the market is demanding something that you're doing for United States. It's like you have the most important certification on earth and be a very good credential, and then you are Fincantieri also. So you know that you can deliver. You know what you're talking about. So it's a market for surface vessels exactly at the core of our offering and with the certification of U.S. And then there is the story of submarines. What is going to happen, for example, in the Mediterranean Sea. The future will be about patrolling our Mediterranean Sea in a moment in which U.S. will shift more to Asia Pacific. Europe will have to take care of itself. So there is a big demand for submarines, and we are obviously there. We are one of the few in the world that can build submarines. So we are also working on the underwater offering because the other demand on top of frigate and corvettes will be about summaries. So new -- let me say, new navies in the world will demand surface vessel, versatile and submarines, which are the 2 products we can build. We are very referenced that we can localize. So that's why in our business plan, the naval business will grow a lot. Let me switch on the spot on our most important strategic partner, which is the Italian Navy. We have already what is written in the naval law, the [ diritto navale ] which is a program that is being implemented. And then there are also expectations to accelerate this program and to add some more programs. So in this slide, we are mentioning what is already in the pipeline, what is being studied. So once again, the Italian Navy is one of the best in the world. Once again, Italy will have to take care of the south part of European Union which is the enlarged Mediterranean. And to do it, you need ships. And Fincantieri is the partner of choice. And if there will be no control in the Mediterranean Sea, there will be no control on a global level. So the Mediterranean Sea is a small sea, but it's the most geopolitical one. Enlarged Mediterranean including Middle East, Saudi, Qatar on top of North Africa. Offshore. What's the market trend on the offshore. I was anticipating you before. So it's the moment for the curve to pick up. It is there. It is there. And it is there with the need not only of new supply offshore vessels, but of technology-driven supply offshore vessels. Technology, meaning unmanned or with limited crew and technology meeting -- meaning with low emissions. Vard has been preparing itself in the recent years to take this wave because not only have credentials, deriving from the oil and gas track record, the same identical ships, but they've been preparing themselves in front of this wave to new -- with new technological -- can you hear me -- new technological solutions, again, technology-driven business. Bent Erik will take you through. Let's speed up. What is the ship of the future in order for us to get more and more into what do we mean by technology. Let me make another small introduction. We are not denying that we are welders, we are not denying that we are working people, blue collars, still have welding, no doubt. I don't want to give you the impression that we are becoming software people or expressing, writing codes. What I want to say is that, that legacy, which is overwhelming, which is fantastic, which is distinctive, will have to be evolved. So it is not that we will stop welding. We will have to weld more than in the past. But in order to attach distinctiveness to this heavy industry business model, we need to continue to work on what is on top, the [ still ] how and now we can procure that what we put on top is creating distinctiveness. So we want blue collar, we had blue collar. We are going to have blue collars but in order for them to be with us, we need to continue to be different from [ far east ] players. You know what I mean. So we need to pioneer the new technologies on the ship. What is going to be in the new technology of the ship, sensors. We are accustomed to managed sensors because we do it in the naval business. So in the Naval business, it's all about sensor and effectors. So if you are in more businesses, you can accelerate the use of sensors, for example, in the cruise ships. So that's a good example. There will be new automation, new energy management, new fuels, new propulsion systems. There will be a lot of distinctiveness in what is happening in the engine room. And what is the consequences of what is happening in the engine room on the rest of the ship, where we are end-to-end design authority, propulsion and critical systems. Blockchain, again, on top of automation systems, you have data, which are unexploited, for example, in the cruise sector. So the domain of Fincantieri today is how, Claudio will take you through a lot of systems and automation systems. So command and control systems. There is something on top of this layer that is where you have data, you transform data into information and then you manage even with machine-to-machine, new pattern of use of the ship. You can smash the consumption of the ship, simply realizing that they're not in summer tan in the Caribbean Sea, but you are in Norway. Today, cruise ships has the same management of heat, whatever it is, whatever the ship is. It is not rocket science. Nobody is doing. Nobody is doing. Navigation system, onward ship onshore connectivity. There is a big importance we will talk about unmanned. There is no unmanned vessels if there is no connectivity, obviously, if it is not secure connectivity. So that is another very important new technology on board. And then all in all, will be key, the ownership of the digital platform that is physically on top of the automation system. So are those competencies already with us? Yes. So there is more technology in Fincantieri than what you think. I told you what I believe are the sorts of distinctiveness historically of Fincantieri. This is what we believe will add on additional distinctiveness and additional competitive advantage. Again, to become market maker, partner of choice, life cycle partner of ship owners. So not being the constructor of the ship, but being the partner of choice on the management of the data ownership. You know what I mean? So evolve from a simple shipbuilder to one able to integrate solutions. From one able to integrate systems of systems to a technology partner. So we can do it, first of all, because we have enough entrepreneurship and enough experience in-house today to do it. But yes, you have to be distinctive, but nobody will be indulgent with you if you're not competitive. So that's the first dilemma. If I'm distinctive, then I can be more expensive, no. So the old book of strategy doesn't apply. You have to be distinctive and cheap. That's the rule of the jungle today. So we have to turn every stone to find every euro wherever it is, whatever it is, okay? So digitalize the shipyards, review the construction sequences, get into an impeccable execution. First of all, being manufacturer with state-of-the-art shipyards. In order to be cheap, you have to take advantage of technologies. We are collaborating with Comau and we have already a robot welder in Liguria because not necessarily welding has to be manual. Not necessarily welding has to be manual people from Bangladesh coming to Italy to do low added activity. So there is a lot to do in our future strategy to procure that we are cheap, but not because we downsell or because we are reckless in the pricing. But because being the biggest in the world, being the only 1 in 18 shipyards, we have to be a leader in the technology inside the shipyard. Procurement. When you have EUR 8 billion of revenues, it means that you have EUR 5 billion of procurement. When you have a cost base of EUR 5 million, EUR 5 billion, can you say 1%? 1% is EUR 50 million. In a company that never distributed dividend, EUR 50 million is a fortune. 2% is 100, 3% is 150. So in our strategic plan, Claudio will tell you, we want to turn every stone to find every single penny in the procurement. And it's not rocket science. There is the category management in certain category of procurement, you can go for scale in other category of procurement, you can unbundle the supply, in other category of procurement, you can rethink, you can enlarge the vendor list. There are a number of mature technologies, I would say, to look for each and every euro. When you have EUR 5 billion to address, I don't feel worry to find 3% optimization. 3% optimization, in Fincantieri is EUR 150 million. G&A. G&A, it's an exercise of torture but for the sake of the future, we can torture our G&A baseline and find euros also there. So this is the -- where we believe we can be more productive, also managing procurement and SG&A in a different way. And then again, let me -- every slide, let me put the spell on the people, in a business that is execution of complex project, project management skills, impeccable execution schemes, the hands of the project can make the difference. That's my experience in my long career in the engineering and construction business as my project management can change the profitability of a project from 3% to 5%. So at the end of the day, you are a project manager and a contract manager. And to gain money, you need to be like a killer when you manage projects like a perfect machine, like a war machine. Let me, therefore, arrive to the third point that is, yes, you are in the industry since 250 years, yes, you have very good, very noble DNA, very blue blood. [indiscernible] is giving you EUR 1 because you have blue blood, forget. So how we can translate our deep roots in the industry into value. And then it's a design to cost exercise. We are digital authority or whatever is on ship every day from the garbage bin to the data management. So let's design the ship to cost, taking advantage of the new engineering systems available. So engineering is totally changing with new tools. I don't know if you heard about the name of the new engineering tools, but there are plenty of designed to digital. If you are digital authority, you have to think digital when you go for the first drawing, from the basic engineering, from the conceptual engineering, you have to think the ship embedding already the digital solution. It is not that you build the ship and then you wonder about the digital platform I can put up. And then design to build, designed to build is, when you are an engineer, but you are also be the construction guy, you need to think the ship at engineering stage in a way that is constructable so it's a constructability engineering. And again, if the construction is properly assisted by design, the execution is smoother and you deliver as a project manager. So all in all, we don't want to go for a revolution of Fincantieri. We want to procure that our competencies, our deep root in the industry will be a sort of evolution from heavy industry guys exploiting all the options that the market is giving and the capability we have in-house to a technology-driven shipbuilder. Let me take you more and more closer to Claudio that will take you through the 10 strategic projects we are one by one implementing. We are dividing them into 5 pillars. So our business plan is not a helicopter view for the sake of presenting it. It's a bottom-up project. So our strategic plan is made of single projects, bottom up, divided into 5 clusters. There are projects that are implementing the focus on core business. Here, you will see what we think to believe, for example, with infrastructure. Here, you will see what we think we can do in order to optimize our shipyards, digitalize our shipyards. Here you will see all the actions we are undertaking in order to procure that our core business is impeccable. Life cycle management. As I told you, we don't want to be simply the constructor of the ship. We want to be the constructor of the ship, but also the partner during the life cycle of the project. And this is exactly what we did in the military business. So in the military business, it's not that we sell a ship and then we say goodbye. We stay with the client throughout the life of the ship. So when we go to ship owners in the cruise with such proposition, we have a model to propose them. And the idea is to move from a CapEx kind of competition to a CapEx plus OpEx kind of competition. So we want our clients to NPV what we can add do in construction or what we cannot do in the life of the project. And so it's what we call total cost of ownership. So the client has to decide with an NPV or what does it mean Fincantieri in the CapEx, but also what does it mean in Fincantieri in the OpEx. That's to me the competition model of the future. We will never compete with Chinese shipbuilder because we are a cost leader. But we can procure that we construct a ship that does more things and doing more things, we can induce savings in the OpEx of the client and NPV those OpEx in our ship, you know what I mean. System integration. We don't build ship, we build a system of systems. The ship is not a hull, made of steel. A ship is a system of systems. And we have to master the complexity of integrating system of systems, including the new systems that are the digital systems, and there are actions in this direction and not actions, projects in this direction with number attached, financial discipline. I told you before, it is not that you will be distinct in that you will win the race. You have to be distinctive, but you have to be cheap. No indulgence, no sympathy, no empathy. We are living a world that is cutting your throat for EUR 50,000, correct? Those are our old friends in the industry. So financial discipline, working capital discipline, cost governance, cut -- governing costs, not cutting cost is the name of the game. So you will win the race if you will be the most distinctive and the cheapest at the same time. It's difficult, yes, but who else can do it, if not the biggest, with economy of scale and economy of scope, having inside all the vertical capabilities you need. And then industrial sustainability. Industrial sustainability, let's take advantage of the discomfort of our ship owners at the moment of implementing and applying EU regulation, IMO regulation. That is procuring that if you are emitting beyond a certain threshold, you have to stop your ship, full stop. unless you want to pay the white certificates. So you want to pay every ton of CO2 you emit, cash. So when you have clients like this, do you want to be passive or you want to be proactive if you have the competencies. If you have the size, if you have the routes in the industry, first net zero vessels in 2025. Claudio, I don't want to spoil the presentation of Claudio, who is the new manager in charge for these kind of projects. But I want to tell you that this is not journalism. With all the respect for the journalists in this room. This is not a convention. This is heavy industry business. You can modify the hull of the ship in order to procure that you don't have turbulence and you save X knots of speed. You can build a bubble, a machine that is producing bubbles under the hull and it's facilitating the speed of the ship. So it's heavy industry. It's not a philosophy. We want to give you a little bit more color or with just the macro numbers of the business plan. In our business plan, we are assuming that in the cruise business, we continue to absorb all the production capacity of our shipyards. So in our business plan, we are not envisaging growth in the volumes, revenues in the cruise. Why? Because we believe that our duty is to achieve the full capacity -- productive capacity, no idleness in the existing shipyards. So that's the mission we have. What we want to do in the cruise business? We want to improve margins. So the cruise business for us is not necessarily a business of increasing the exposure. It's a business of delivering margins. Difficult? Yes. Clear ideas? Yes. Let me give you one number. 80% of what we have in our cruise business backlog is sister ships. You know that in this business, the most delicate information is, it's a prototype or it's not a prototype because if it is a prototype, will be tears and blood. If it is a sister company, could be because this business is not easy, but at least you are replicating the same ships. So we don't believe that we will grow in terms of revenues necessarily. What we want to do is to control marginality because we have the right backlog to achieve increased profitability in the cruise business. Is naval going to grow? Yes. Is naval going to grow a lot? Yes. What's the option? To get along with Italian Navy that is going to be the strongest navy in Europe. To get along with U.S. Navy and I will tell you a couple of words and then to export more, our 2 core products, versatile surface ships and when the market will be ready, submarines. I will give you a small joke. I went to Washington to familiarize with our business there, to present myself with the Chief of Navy, to present myself with the secretary of Navy and they understood U.S. It was fantastic. We are building the Constellation-class frigate, which is the most beautiful frigate on Earth because there's the Italian frame with a lot of attributes, specific of U.S. So it's a kind of the perfect ship. And I was discussing with this 2 very important gentlemen separately, and I understood U.S. because the guy told me, "The second ship has been ordered, the third ship is being ordered. And soon, you will have the fourth ship. But you know what? If it works, I will give you 50." and I told him, "15?", "No, no, no, 50". So when they move, they move as the biggest navy in the world. So only our U.S. arm is in the opportunity -- is in the position to acquire 50 sister ships. So growth will be there. Italian Navy, U.S. Navy and then export of our surface ships and submarines. That's why in our business plan, you'll see growth in the naval business. That's the managerial target we are targeting, obviously. And you know better than me that vis-a-vis the cruise business, you have higher margin. So when you -- in our blended marginality on the business plan, at the end of the business plan, we believe we can increase marginality is because the mix of products will be different. There will be more revenues like this with higher margin and then a continuation of revenues with a focus on profitability there. And then offshore, yes, the rest of the growth in revenues in our business plan is driven by offshore, simply. We believe that, I would say, obviously, we believe that Vard can go back to the volumes of the oil and gas times. Vard was a company able to build 150 -- to produce EUR 1.5 billion, EUR 1.6 billion of revenues. They did it. They did it in the oil and gas times. So in our business plan, we believe that with the offshore, we can go back to those volumes because we have the ship, we have the demand, and most importantly, we have the technology. And that's when where Bent Erik will have to convince you that we have the technology. So this chart is a little bit oldish, but it's full of [ torch ]. There is a lot of reasoning behind it. Some more color of how we believe that being in the 3 businesses, we can accelerate and enable the digitalization of the ship, let me say, the energy transition in the ship. First of all, we are creating our own road map, and Claudio will take you through. And the road map is made of milestones in which we will validate solutions in association with clients. So how we are building our road map? We are already cherry picking key ship owners, and we are developing with them specific solution. And once the solution will be validated, it means that the client is paying for it and the client is using it. So again, it's a road map, which is not research and development. It's industrialization and commercialization of new solutions in association with key clients, and we are already there. So I can tell you already of the digital solution we are selling today while we speak to clients to go for the energy management of the ship. I was mentioning sensors to manage the heat. If you are in Norway or if you are in Caribbean Sea, we are doing it. But you will go through it later on. These ideas will procure us to be life cycle of choice of the client because once we will implement with them those solutions, we will remain with them for the rest of the fleet. We will help them in the refitting of the ships, which is another interesting trend for the way forward in the cruise sector. So Claudio will take the leadership in this reasoning, but the economy of scale and economy of scope, new propulsion systems, new fuels, the [ metalloid ] economy, the hydrogen economy, digital ships, system integration, cybersecurity will not be slogans but will be industrial application with customers. I told you that we have these internal capabilities that today are ESS, which is a kind of black box. I want to give you more color on what we have in our ESS and now, what we have in our ESS represents internal capabilities to go in the direction of digitalization, to go in the direction of green ships. So as I told you, the meeting of today will be successful if you are convinced that when we talk about digital and green, we are not telling a story. We have already our own capabilities in propulsion and electrical grid in communication. We have it in Vard Electro, which is a company of Vard. We have it in Fincantieri SI, that is a company that is owned by the Fincantieri, and we have [indiscernible]. So in our business plan, we are cherry-picking these spots. We are connecting those spots, this repository of know-how, to procure that they become a new entity that is delivering digital solutions. And again, it is not that we need to buy on the market. Maybe we will associate with partners, but we have a lot inside already. We have our own people writing the code of the energy management system today while we speak. The same is in the other domain. This is domain of the digital, this is the domain of the green, of the new propulsions. Today, while we speak, we produce our own stabilizers, our own thrusters in Muggiano, in our division that is producing this kind of, I would say, mechanical -- electromechanical components and propulsion components. Low mid-power marine engines, believe it or not, we build engines in Isotta Fraschini. So the legacy of the past is no more a legacy, it's a source of distinctiveness. We know exactly what is happening inside the engine because we produce our own engines. And if you want to test the [ first ] hydrogen combustion [ engine ], we own company that can do it. Cranes, winches, gangways, the top side of supply offshore vessels, we have our own company that is building it. So when I talk about energy transition, when I talk about digital transition, it is not that I'm selling the moon. I'm selling colleagues that are already working. Today, they are not working with a single vision, with a single road map, with a single partnership or client. They are not in the position to deliver our road map. The business plan is, let's pick up those competencies and let's transform it into new products. Cybersecurity, simulation and digital twin, digital life cycle services, maritime IoT solutions, platform automation and integration. There is a lot we already do with the military system we want to replicate in the cruise sector. And the ships of the future in the Naval domain will need to integrate the ship management system and the combat management system. So not only we want to serve our digital cruise business, but we want to serve also different products, also the Navy business and the military system. But again, Claudio will take you through. Before achieving the end of the presentation with 2.5 minutes missing, let me touch very quickly on the ESG. You know that the ESG, it's a kind of very important message to deliver in order to qualify our number [ properties ]. Our ESG strategy is based on technology, it's based on people and it's based on the supply chain. So for us, the way we can impact -- the way we can create impact is managing technologies, so being innovators and to enablers of these very important macro trends; put our people in the middle, so how to procure that our most important asset that is our human capital is in the middle of the organization; and how to interface with our supply chain, which is integral part of the story in a way that is impeccable. One minute on infrastructure. So I believe I gave you a lot of, hopefully, a lot of content on what we are going to do on the core business. Let me tell you more about infrastructure because I understand that the infrastructure is a source of concern from time to time. First of all, what we did is that we went from lesson learned. When you lose money, you have to stop and coach, as I like to say, stop and coach before continuing to do the same. So what we understood, no more Miami Terminal Project-like projects. We don't believe that we can export our capability in building the infrastructure. I don't believe we will have to take EPC lump sum risks, construction risks by the other side of the world. It's not our job. It's a mistake. Never again. Other part of the lesson learned is that we are losing money in infrastructure because we are taking the legacy of a company that was distressed. So the minimum that can happen when you take a company that used to be distressed is that you have distressed projects. And if you have distressed projects, what do you do? You pay. It's unpleasant, it's unfortunate, but it's like that. So you have to be pragmatic, but you have to understand what's happening. Third, another part of our infrastructure is that we acquired in the past a small steel factory. Believe it or not, we bought a small steel factory. Now, we need to manage this steel factory, achieving critical mass. Thanks to God, there will be a lot of demand for steel structures. Obviously, you have to be cheap. But if your factory is not a critical mass, you're going to lose money. So I don't want to make it simple, but there is a root case analysis that has been done and is very precise. What else we did? We derisked projects, anticipating future losses because if you have losses, you have to understand because you have to get ready to manage them, but it's done. Three, we created the guidance for the new Fincantieri infrastructure. And the new Fincantieri infrastructure is no more Miami-like projects, and I think it is vocal enough. Selective commercial approach, limiting appetite for construction risk. So yes, we have some competencies. Yes, you can be helpful in Italy, but we want to cherry-pick good projects with no appetite for EPC construction risk lump sum on our side. Three, partnering. You can do certain things, you want to do certain things, you need partners. So the guidance for the future is like that. So avoid the past, be selective and team up. Again, what we are doing to derisk? We are changing the management. We are changing the procedures because we have EUR 2 billion backlog to produce, which we want to valorize. More than half is construction, less than half is concession. What kind of business is that? It's [indiscernible], where we are in association with other partners, and it's hospitals that we build and then we manage. So that's why you have half of construction and half of [indiscernible], which is not -- or better. It's a kind of sweet spot in the infrastructures because it's a technical buildings like a hospital, and then you have the revenues, visibility on the revenues, because you have the services in concession to manage certain equipment and certain activity of the same hospital. Partnership and risk sharing. I already told you, maintain legal entities and ensure optionality for strategic activities. The company is not on sale. I've been bumped by people wanting to go for an arbitrage, no arbitrage in the market. We are there to reinforce the company, to stabilize the company, to set the business model, to derisk the projects. And when this work will be finished, it will be ready to evaluate all the optionalities, business combination and other kind of areas. But it's not too late because if we don't do for this exercise, whatever we do will be not in the direction of valorization. So at least, I want you to appreciate that we have clear ideas. Now we have to do it, obviously, yes? But the ideas are bullets -- bulletproof. The presentation is truly finished. I told you the reasoning behind numbers. Those are obviously, blending the phenomena I have already anticipated at the level of revenues and the level of margins, but at the end of the day, we want to become a EUR 10 billion company. We aim [indiscernible] EBITDA acceleration with a road map that is consistent with what we are delivering on the 10 strategic projects. So it's a journey, but the vision we have, it's a bigger company with more Naval and more Offshore with a [indiscernible] technology. So it is different. I told you on Slide #1, it's all about cash. So we can do fantastic in years, but we have to do fantastic things here. Today, the ratio is meaningless because what we are doing today is extraordinary, but we want to achieve that the business plan is full [Technical Difficulty] Capital increase is [Technical Difficulty]. This is intentional. So we believe that if we deliver our business plan, we can achieve a ratio that is eatable, that is possible, which is something in the region of [ 3% ]. At the end of the day, this is a capital-intensive business, so to me, that ratio makes sense. Obviously, it's a journey, it's a quarter-by-quarter journey we have to demonstrate quarter-by-quarter. So to be there, we have a lot of intermediate stops in which we need to behave in front of you. But I believe that if our ideas in the business plan are correct, we are fully funded, we can deleverage, we can show up that Fincantieri is not a big reality of the country, a big employer of the country, but it's also a company with financial attributes. So ability to translate EBITDA into cash to cover our own investments and even to pay dividends. So this is the challenge we are taking. Courageous, but this is what we are organized for. This is what we are training for, and this is what and how we believe you can evaluate us on. My contribution is that at least once I did it. Napoleon used to say, don't give me good generals, give me fortunate generals. Maybe I was fortunate, but once in my life, I did something, I would say, industrially courageous, and that's what I wanted you to present. Thank you very much.

Thank you. Thank you, Pierroberto, and good morning, again, to everybody. I will guide you through the section of the presentation where we want to let you see that behind the titles and the slides in the papers, there are real projects, real goals and real initiatives with all the management involved. So let's go through the slide where Pierroberto already presented the 5 pillars of our strategy. We conceptually divided the pillars in 2 batches. First batch are the pillars that are necessary and supporting the execution of our business plan. So focus on core business and financial discipline, in particular. The second batch, we have life cycle management and system integration capabilities announcement, are the group of the initiatives where we want to prepare the company for the next industrial cycle. In the middle, the ESG strategy, which is fully integrated in the plan in terms of initiatives, goals, and targets. So here, you see the detail of the 10 strategic projects that our CEO was mentioning just before. These are embracing all the key initiatives that the management team has identified. For each one, as I was saying before, we identified team of persons which are dedicated and committed to deliver the plan and the targets. So let's start a little bit from focus on core business. Focus on core business, the goal is to improve operations efficiency, modernize the shipyards, as Pierroberto was saying before. You will see later on concrete examples of what we are doing to do this. And also derisk noncore businesses, and in this respect, we have the 4 projects that I will describe in the following slides. I think on improving financial discipline, we said before the 2 big areas, purchasing excellence. Purchasing is the biggest cost batch in our company, and so we have defined a set of levels and actions that we will apply, and SG&A spending. On the sustainability plan, 2 main topics. The first one is defining the technological road map to achieve the goal to deliver our first large cruise vessel by 2035 at zero emissions. And the second one is our clients' ESG plan, which has a full set of commitments, initiatives and goals. Last 2 pillars. Life-cycle management, we were mentioning before the concept behind this initiative. The concept is we want to transition from a pure CapEx supplier to a CapEx plus OpEx supplier in the sense that for our customers, it will become, and I will explain you why later on, more and more important not only to look at the course of the investment of the vessel and the program, but more importantly, to look at the -- thirdly our cost of operating that vessels. I will explain later on why, and this is mainly related with green transitioning and increased complexity of the product. And last, announcing the system integration capabilities where we have a specific focus on the Navy business, and the implementation of the whole warship capabilities. Now let's enter a little bit, let's dig in -- let's dig in the initiatives behind focus on core business. So operations excellence, we already started in the last year to apply technologies to modernize the shipyards. We want to accelerate this process, maximize efficiency, push on productivity. First thing we are doing is to implement more automation to reduce the low value-added activities. Pierroberto was saying before, we are welders at the end of the day, but we want to explain to you today how we want to weld in 5 years' time from now, which will be different from what we were doing in the past. The overall goal of this is to reduce the cost, reduce the lead times and improve the quality. In parallel, we are working also on digitalization of the shipyards. The concept behind this is the concept of the digital twin asset management. We think we have space to improve, increase asset utilization, use predictive maintenance and reduce overall the cost of producing our vessels. Clearly, through topic in this batch is design. Design is the base to obtain efficiency. Doing proper design means reducing manufacturing costs, and so adoption of new tools with integrated artificial intelligence as enabler to share and enhance our internal know-how is an important lever for us. Second project, competitive VARD business model. We have seen previously how the market in the wind offshore, in particular, is rebounding, so there is a big opportunity there. We are working -- we have already implemented actions to reposition VARD in order to have our Norwegian subsidiary being able to fully exploit that market opportunity. And specifically, we are to resize the organization focusing on that segment to streamline operations both in Norway and in Romania, and also to gain support from all local Norwegian VARD stakeholders. So initiatives that we need to have a subsidiary which is capable of getting the best from that market opportunity. Third project on infrastructure. I think in the previous slide, we already presented the actions, the lesson learned and what we want to do, so I will not spend much more time on this. Fourth project, last one in this section, is our accommodation business. We are talking about the business which includes our subsidiaries for producing and installing on both our cruise vessels, cabins, public rooms, glazings and catering. So everything which is connected with the hotel part, specifically the subsidiary Marine Interiors. Here, the volumes have grown a lot over the last 5 years, have grown a lot because they work for the Cruise business and the Cruise business ramped up volume significantly. So we have defined a full set even here of initiatives to strengthen the organization, to manage the growth of the volumes and potentially also to use these capabilities also to push on the refitting and also to enter in segments which are not captive like, for example, luxury on land. But in which we can leverage on our know-how and capacity to deliver on time and on budget, luxury accommodation stuff. So this -- we love a lot this slide because this slide represents, let's say, a picture of how we see the shipyard in the future. And you see here a little bit all the initiatives that specifically we have included in our operational excellence, all the areas of intervention. So you start from design to manufacturing and modularization. As I told you before, design is the first step to produce efficiently. So we will use new design tools and engineering tools, implementing digital manufacturing to our control towers to control the flows of the materials, to control the progress, to control the utilization of the assets in our shipyards. Other point which is very relevant is stabilization of the volumes in the workshops. The concept on which we are working is more and more to try to bring the outfitting volume, so bring work back to the workshops because inside the workshops, we can control and better use our workforce. So stabilizing the volumes, at the end of the day, is an enabler to increase efficiency and quality. And so at the end of day, control the logistics, so control the flow of materials, bring the materials in the shipyard where the materials are needed. And last and overall concept, reducing quay lead times and reducing final commissioning.

Can you hear me? Can you switch on the microphone? So this slide is technical, but it's not technical. The shipyard is about how you manage the dry dock. So the fastest you are in the dry dock, the more profitable is the shipyard, full stop. So the fastest you manage the dry dock, the more ships are managed inside. And the more they are managed inside, the more you distribute fixed costs. So to gain money, you need to minimize the occupation of the dry dock. Easy? No, but you have to do. What do you do? You do as much as possible activity out of the dry dock, so you divide these LEGO blocks, and you work on the LEGO blocks before occupying the dry dock. So our new sequences is all about this, so how to procure and anticipate as much as possible the outfitting of blocks before take every block inside the dry dock. You know what does it mean to work on a block not in the dry dock is that you work like this. If you are in the dry dock, you have to work like this. So what's the productivity of a worker working like Michelangelo, what's the productivity of a work that is in its own workshop. So this kind of Copernican revolution is very important. The reason why I wanted to jump in, it is because it is working. What we are doing, what we are representing here is what we do today in Monfalcone. So if you go to Monfalcone, you will see preassembling of blocks. Now, we want to do the same in the other shipyards, including the U.S. ones. So this is the way we believe we can increase profitability, by rethinking sequences. What is past is good, but it's not necessarily the best. So this team is rethinking sequences in Monfalcone, increasing the productivity in Monfalcone. Now in the business plan, that CapEx you see, our CapEx to do what we did in Monfalcone that we already start doing in Marghera and the rest of the shipyards. Not because we want to spend money, because we realized that we increase the productivity of the shipyard. We minimize the dry dock and we distribute fixed costs on more ships, which is margin to the bottom line. Sorry, Claudio. You are promoting there, so you are so -- no [ feelings ]. I call it Claudio, no [ feelings ], because he's the one that does the things.

No, no. Thank you, thank you. Now I think that the other big goal that is behind this initiative is that we do see the company going forward with the need to produce the same volumes with less workers. Because at the end of the day, increasing efficiency also means that you need less skilled workers to produce the same volumes. So we do expect these initiatives -- doing this also in Romania, not only in Italy and in U.S., as really an enabler to keep the production in Europe going forward. And let's say, avoiding to have the bottleneck of the number of skilled workers in the future. And here, we wanted to present to you to give you a snapshot of some of the concrete examples of the things we are implementing in this week with our partners. We were in [indiscernible] some weeks ago with Comau. We are testing a real cooperative welding robot, which is a welding robot moving in the shipyard capable of producing weldings on our aisles. Fully certified with a significant increase in terms of the speed of welding compared to manual actions. So more productivity, better quality. Let's say, a change also of the type of worker because one thing is to weld manually, one thing is to operate a welding robot. It is a different skill. It's a different job. And so we are very, very keen to continue this journey. Augmented reality. We have implemented in Monfalcone and Marghera our augmented reality systems to help our foremen to physically see the pipes and the cable trays not yet installed on the real steel. At the end of the day, controlling if the work is performed by our people is correct in terms of positioning, dimensioning, if something is missing, so we are using also augmented reality in our workshops. And then we are also testing an unmanned vehicles and exoskeletons. These initiatives, by the way, are very important within the, let's say, set of initiatives that we are putting in the program that we recently started on safety, which is called Safety on Board, to improve safety, and we will tell you something more in the following slide. Shipyard Digital Twin. I told you before, asset management monitoring, predictive maintenance. And we are also testing a use of quantum algorithm to optimize intercompany logistics. These are some examples. I think the concept is we are working hard to implement new technologies, adapting to our real problems in real shipyards. We are working with the best partners in the industry, and we are keen to bring this forward and implement this massively in our shipyards in the coming years. Now we move to the second pillar, which is financial discipline. Pierroberto told before, turning every stone, looking at procurement best practices. Specifically, what we are looking at is sharing of best practice on procurement between the different divisions to make should cost, design to value, unbundling initiatives. To do this, clearly, we have to set up inter-functional teams because these initiatives are -- we call it procurement, but actually it's initiatives on which you need people from production, people from design. You need to have inter-functional teams to -- even the sales guys when you go to the customers to open the vendors list or maybe introduce new suppliers. So these are initiatives on procurement, which are really spreading on all the levers that we can put in action to increase the efficiency. One other topic we have here is the support to our subcontractors network, trying to lower turnover and ensuring skill and stable manpower. Overall, we are activating actions which are worth EUR 100 million over and above what we have in the business plan. SG&A and process governance. Again, the point is looking at total SG&A costs. Specifically revising the governance of the cost, avoiding duplications and trying to capture further savings over our business plan. Last point of this slide is we are looking at P&L effects. So we're looking at cost savings, but we are also pushing to look at the cash flows, and so look at working capital. So financial discipline also on working capital. And so specifically, items on stock, lead times of staff in our warehouses, increasing the turnover of the inventory, optimizing the supplier advance payments and also trying to recollect any receivable that is still outstanding. Overall, this clearly will have an impact on our financing structure and situation, but Giuseppe will give you more flavor in the last part of the presentation. I think what I can say is that we are also in this area trying to apply as much as possible digitalization, digital tools to keep working capital and refinancing under control. So now, let's go to a very important pillar, which ESG strategy. We said before 2 different initiatives, even if these are interconnected. So the first one is to define a clear road map to implement the goal of the net zero vessel. For us, this is really, really important for a set of reasons. First reason is we defined a road map for each business, so Cruise, Navy and Offshore. The reason why we define the road map for each business is that each business has different needs in terms of power, the dimensions of the ship are different. In terms of customer needs, green transition in foreign Navy is different on green transitioning foreign cruise customer or foreign offshore customer. And also regulations -- applicable regulations. So we defined a roadmap per each of our business. Their roadmap includes all the technologies that we need to arrive to that goal. We can anticipate that there is no single technology, so there is a blend of technologies which you will see later on. But we have clearly identified which technologies we need, and we will give you a flavor later on. And we can anticipate that we are partnering with some key suppliers to implement this, and we can achieve the targets that are needed not only from regulations, but also from our customers. Second part is our group strategy, ESG, where we are not looking at Scope 3 [indiscernible] only emissions, which are captured by the first initiative, but we are also looking at Scope 1 and Scope 2 emissions. We are also committing on clear targets on all the other dimensions of ESG, including clearly what is relevant for our people, and I will give you more flavor in the coming slides about the targets and the KPIs we are using also to monitor the plan going forward. So here, you see, this is our road map for a large cruise vessel. This is important because this foresees that we will be capable of ensuring the delivery of the first net zero vessel by 2025. All our customers in the cruise industry have committed to have their fleets zero emitting in 2050. 2050 seems very long range, but you need to think that to have a fleet which is fully net zero, it means that you need to have all your vessels zero emissions. So you need to start now. You need to start now because you need to have an end either on refitting certain vessels or to changing other vessel, scrapping and new building. So all our customers are requesting us to provide them the technology that is needed to achieve that goal, and through this road map, we're giving them the answer. We are telling them that the technology is here, we're telling them how we will reach that goal and what are the intermediate steps. So let me explain you a little bit what are the different steps towards this goal. First, what is the baseline. Ships -- large cruise vessels we delivered last years compared to the baseline, which is [ 28% ]. Here, we already achieved minus 32% without changing the fuel. So same vessel with same fuel, which is marine gas oil, we already achieved minus 30%. And we achieved this through a full set of high efficient technologies, which are applied on board. Beginning next year, we will change the fuel. We will deliver the first large vessel with dual fuel, NGO and liquefied natural gas. And in the same vessel, we will also put new technologies. Pierroberto was [indiscernible] before the air lubrification system, which is a very interesting system which basically produces air bubbles in the bottom of the vessel, so reducing the friction between the water and the oil when the sheets operating. What is the effect? The effect is that you reduce the consumption. And reducing the consumption is a very important lever today, but in the future. It will be even more in the future, why? Because when we will adopt the new fuels, either it will be hydrogen, green ammonia, green methanol, their fuels will be very costly. It will be very costly and it will be, at the beginning, difficult to find the fuels because the supply chains will be built up over years. So if you reduce the consumption, you reduce the need of the fuels and you reduce the cost of operating the vessel. So working on the 2 dimensions, so everything which reduces the consumption and applying fuel is really the paradigm here. So 2025, high efficient LNG vessel, we will reach minus 55% target. Just to give you an idea in terms of what are currently the international regulations and the targets said by the IMO, which is the International Maritime Organization, the target is to reach minus 40% by 2030. So we are anticipating 5 years the regulation, and we are going above the targets of the regulation. So with this, we are, on one hand, giving the answer to the commitment of our customers. On the other hand, going over and above what will be the applicable regulations and also the taxation schemes, for example, the European ETS scheme, which will be applied in the coming years. From 2025 onwards, we will work on implement onboard fuel cells and batteries. In this moment, we do fuel cells, in particular, fueled with hydrogen. And this, we give the opportunity for our customers to stay locally, so you need to think about the ship staying in a port or maybe navigating in a fjord for a limited period of time with zero emissions, which is and will be a very important goal. We think we will arrive by 2030 at reaching more than 60% reduction, utilizing all the blend of the solutions that I described to you. So fuel cells, batteries, new fuels in the combustion engine, hydrogen in particular. And from that to the minus 90%, that is the goal of the net zero, we are working to add combustion engines capable of working only, not dual fuel, but working only with green fuel, even it would be green methanol or green ammonia. So you see what is the path. You see what are the intermediate milestones. And you see that, as I was saying before, we define clearly what are the technologies needed. And here, you have some examples. Again, we wanted to let you see that this is not paper. This is real. So let's start from the really impressive Commandant Charcot. It's a ship delivered by our Norwegian subsidiary in mid-'21 to our client, Ponant. This is the first electric hybrid polar expedition cruise vessel. It is an icebreaker. So this ship is capable of icebreaking, going to the North Pole, for example. And on board, you have dual fuel engines, liquefied natural gas and gas oil, plus a battery pack of almost 5 megawatts which is very important, again, because you are in really sensible areas. And so you can use the battery pack to stay in that areas without emission, and we're charging the battery pack with the combustion engines while you operate the vessel. Second example, we are bringing you November last year. We delivered first time real implementation on board of hydrogen fuel cells with hydrogen stored and produced on board. Nominal power was low, but these experiences are very important because in this journey, we also have to help stakeholders to write the regulations. Producing, bunkering and keeping on board hydrogen is something which needs also to have clear rules. And so doing this, we are also -- first time, we are also setting the rules. Helping the stakeholders, the class societies, to set the rules then to pass to the larger application. Last example, just a few weeks ago, we signed a change order on the Norwegian Prima Plus Class vessel for implementing green methanol on board which is, as you have seen in the previous slide, potentially 1 of the true fuels which will be the end of the game. So concrete examples. I would say also Pierroberto was saying before, a road map, they need a commitment that is not ours. It is the commitment of the industry. And as you see, all our customers are working with us to implement this road map. This list, I don't want to bother you going through each of this, but this is the list of the technologies that are behind the road map. I think one really important message here is many of these are internally-developed technologies. So we discussed, we explained to you before, vertical integration, the fact that our ESS segment is important for us, and it will be even more important in the future to implement the road map. Even utilization of, let's say, digital software on board to optimize the use of the vessel, you will see later on with Bent Erik concrete examples in the near future having the opportunity to optimize the utilization of the vessel remotely controlled. So having somebody which has in front of them remotely all data coming from the sensors, so now the vessel is used, will be very, very important to reduce the consumptions. And here, you have the ESG plan, fully comprehensive. Again, 3 main areas. One for sure is Scope 3 downstream, we said before. So we are committing ourselves to provide to our customers the design to implement the road map that you've seen before. We have our internal commitments on Scope 1 and Scope 2, so meaning the emissions in our shipyards. And digital transformation, and so all the targets for our digitalization and digital transition in the shipyard. Health and safety. I said before, we just launched our new program to improve safety. We already did a lot. We improved over the last years a lot our safety indexes, but we want to do more and commit more. And we'll also apply the same scoring and same commitment to all our supply chain, and so we will involve also our suppliers. And last but not the least, all the initiatives which are applicable to our employees. So diversity and inclusion, engagement rates. You see specific targets, specific KPIs and specific commitments, which are linked to also the variable compensation of the top management. Now the last 2 concepts, the last 2 pillars, I think we described a little bit before what is the concept between pushing the new life cycle concept on the ship. I would say that the big point here is we do see in the future a layer of data, which is above what traditionally was the automation. Automation is the system on board our vessels that puts together the different equipment, in particular, on the production of the power and the propulsion, and automates the interconnection between the systems. One thing is that above to this, there will be a full layer which will be a digital layer, not a physical layer, on which all the systems onboard of a ship that is becoming more and more complex because as said before, you have seen in the road map fuel cells, batteries, combustion engines, air lubrification system, producing bubbles. You need to think that the ship will become more and more complex -- more and more complex to be operated. And so our clients, we need to have, in some ways, application of artificial intelligence and digitalization over and above what they have today. So we do see to be the creation of a data lake. And this will be very, very important for them, as we said before, to reduce the operating cost of the vessels and to achieve overall, let's say, a good result and having a sustainable business model. We have the capabilities to do this. Again, we anticipated before that our subsidiaries already have experienced in developing the software, the services, the products that are needed to implement this vision. And so we will leverage upon this distinctiveness and these capabilities to implement this vision. And the same concept is basically applicable also to the military business. So this slide represented a bit what we will present in the coming weeks as our new product in fully integrated in terms of value proposition and life cycle to the navies. As Pierroberto was saying before, we have different type of navies, different type of customers. We have navies which have the tradition, the competencies, the skills to operate the fleet and operate the assets. We will have also in particular, foreign navies which are starting to build their capability, starting to build their fleet. They will need to build their land infrastructure and to operate the land infrastructure. So the idea that we have is to apply this digitalization concept also to have and present a product which is fully comprehensive, taking advantage of some service that we already provide today and which goes in the direction of giving to our military customers both services which are capable of helping them to operate the fleet. So for example, remote instance, for example, having ships with sensors to collect the data and understand in the different operating missions how the ship is operated. And also operating the assets, so the capability to manage the spare parts, the capability to do the maintenance, the capability, at the end of the day, to be effective in operating something that is for them completely new, for which it is difficult to find skilled people. So we will present in the coming weeks this full package. Cybersecurity will be an important piece of it, clearly. We are readying our unit for cybersecurity, and we are developing more because it will be integrated in the package of services in this respect. And last but not least is, again, looking a little bit in the future of the company, is the enhancing our naval integration capabilities. We're already prime contractor on programs, for example, Prime in Italy and the Constellation-Class in U.S. But we are in the process of creating and strengthening our internal competencies regarding the integration of the combat system. You've seen in the right part of the slide, a picture which let's you see a summary of what are the systems which are integrated in the hull -- in the platform. So integrating all the systems, being prime contractor, means that you need to have the competencies and the skills to efficiently put all the stuff from all the vessel and let everything work together. So to do this, we want to reinforce our combat system capabilities, and we will leverage and strengthen, in our idea, the joint venture that we have with Leonardo that is Orizzonte Sistemi Navali. So that we will also align our competencies and capabilities to our foreign competitors such as Navantia or Naval Group. And we think this, at the end of the day, will give us a benefit also on the sales effort that we are putting to address the growth of the market in military. I don't know, Pierroberto, if you want to...

Thank you on this specific point, I want to add that there is ongoing a lot of activity with Leonardo to rethink the battery limits between ourselves and themselves in a way that is win-win. So we believe that being a general contractor and prime contractor is a way to be more competitive on the one hand, and on the other hand, also to increase the marginality for ourselves and for the sake of the Italian system. So Orizzonte Sistemi Navali is already there. It's a vehicle that can be fostered and then enhanced in order to procure that this cooperation is not formal but it's substantial, and therefore, translates into extra orders and extra margins. So there is a lot of activity behind this slide. It's almost 12:00. We have been bombing you and torturing you enough, so I believe it is unethical to continue without a 10 minutes coffee break. So if you don't mind, we will go for a coffee. [Break] [Presentation]

Hi, everyone. My name is Bent Erik Nedrevold. Up until a few minutes ago. I was the project manager for these vessels, now changing my title to war machine. It will definitely help me with the customers. So first of all, thank you for this opportunity on behalf of myself and the entire team to allow us to present these projects to you. There are something we care passionate about and something that we're really proud of. And I'll try -- this is not my usual audience, but I'll try to lure you through what we're doing and help explain what we are making as there, and what else we do so. So what are these vessels or project? Well, basically, the project is part of the Armada series that were Ocean Infinity are currently building. Armada series is a fleet of robotic vessels, 23 in total, which they have set out on a mission to try to make a disruptive change in the market. They want vessels to be more autonomous, more efficient, more safe and being a technology company as they are, they want to achieve this through a technology-driven approach. You can see even this image here is of the first vessel of the series just before launch in Vung Tau, Vietnam. And if you look carefully on the side of the vessel, this is where you'll find this robotic approach really come through. The vessels do not have names as we normally see, they're not named after someone's daughter or some hometown. It's 7801, 78 for the meters of vessel, 01 for the first. So the robotic approach goes down even down to the naming of the vessels. Our role in this is 14 vessels that we are building in total in Vietnam. The 3 first of these will be commissioned in Norway, where we do an installation of topside equipment delivered by Kongsberg and Seaonics ourselves and also the remote solutions. The reason for doing this with the 3 first vessels is we wanted to make sure that we were close to the actual core components that we're developing all these prototypes to make sure that the process was as efficient as possible. After the first 3 vessels are finished, our aim is to be able to fully build an outfit and deliver the vessels from Vung Tau, including the prototypes of topside and remote solutions as well. The vessels that we're building for them have 2 types of design. They're basically identical with what -- with regards to onboard technology, but they're slightly different in length and width. The first 8 vessels are 78-meter long, they do not have a crane. And the last 6 are 86 meters and prepared for a crane as well so that they could do more of the offshore operations, not only subsea. The one of the challenges that we had when we were task to build these is that they wanted a flexible deck layout. They wanted to make sure that everything that they could possibly think of could be achieved on this single platform. And that's not a simple task to do. They also wanted it done with as little crew as possible from the beginning and with as little footprint as possible on the vessel itself. So these vessels, although small, they contain a lot of high-end design and engineering to incorporate not just 1 but 2 moon pools inside the vessel, 2 large holes basically to allow for the safe deployment and retraction of any subsea equipment. Just regarding what the weather and the sea is like you have a safe way of recovering your equipment or deploying your equipment. In addition to that, they had specific requirements for desk space for payload to be able to bring stuff to and from the work site, which made it quite a challenge to actually build these vessels. And that's also what kind of started this off. These vessels, like I said, they're ordered by someone who's a tech company, and they have a different approach. They sort of challenged the traditional thinking of shipbuilding. They came to us, and we are shipbuilders. We've built offshore vessels for years on end. We have the competencies. But with time, you also develop a such way of thinking. So they wanted to disrupt that. They wanted to break down everything to the bare minimum. They said, build me a lorry, so to speak, and let's sit down together and just put the pieces on that we actually need to finalize this. So in that way of thinking, they actually made us rethink our entire approach to these types of vessels, thinking what do you actually need? What is nice to have? How can we look at this differently? And the owner itself is highly committed, not just committed to the cost by buying 14 vessels. That's a commitment by itself, trusting us that we will manage to build these vessels and achieve the goals together. But they're also highly committed to the environment. They've signed pledges to be carbon neutral by 2040. They've had multiple initiatives with regards to reducing their own emissions, reducing the waste they have, their offices should be waste free within 2025, I think it is. So there's all this commitment within the company, not just changing how we think, but also what we do. And the video that started this presentation shows what we told the market, what do we want to sort of bring to the table to help the owner achieve this. And the next few slides will show you what we're actually doing, how we're keeping good on our promise and what we're actually putting into play here. So basically, these vessels, they challenge us in 2 different main aspects. One is the vessel should be as economical as possible to build, to operate and also in the life time of the vessel. This meant that we had to start looking at our designs more specifically, building such a small platform with 2 large holes. If you have those trying to transit around the vessel, there's quite a lot of drag in the ocean as it is a lot more if you make 2 holes in your vessel, quite large ones as well. So these vessels will then were designed with bottom hatches to make sure that transit barriers would be possible to achieve. We looked at propeller designs, we looked at stabilities and ended up actually with one of the more efficient holes we've ever designed. Even if there was quite a lot of challenges or other ways of thinking, we managed to get a result that is really impressive from a seagoing capacity. In addition to that, if you want to achieve the green transition, obviously, you need to design your holes to get as efficient as hard as possible. Secondly, you need to understand that today is today. We will be using traditional fuels for quite some time. So what we did then is we looked at how we wanted to apply that traditional fuel. So we made the generating capacities on board the vessel different insights. So depending on the operation, you can connect or disconnect enough energy to be efficient without running major or big engines on almost idle having high losses and all that comes with that as well. And this system is being controlled by our own power management system, making sure that we're always optimizing the use of traditional fuels. The battery -- hybrid part of it, these vessels are delivered from the get-go with quite a large battery pack. That works along with the diesels on board already to make sure, again, that the efficiency is kept kind of like your hybrid car today. If you need the excess energy instead of starting a big machine to get it, we draw it from the batteries, we recharge it when we need to, and we maintain the level of energy within the vessel. When I talk about being carbon neutral, of course, these 3 items on top are important, but you need to also have some type of thought to your future view. You need to have an idea of what you want to put on board. This owner and these vessels they decided that ammonia is the likely fuel they will choose based on their view on the market. So these vessels are already delivered with a fuel-ready ammonia notation from DNV, which is the class society where building these vessels to be in line with. This basically means that on-board these vessels, there's not just 2 big holes onto the seabed. There's also 2 large tank holes for the future ammonia tank that have all been built according to the notation. The approval of the vessel with this notation is already achieved. So the transition into this future fuel from the element of putting it on board has already been -- the -- you can say the road has already been made. It's just a matter of when it becomes commercially available to something that we see that we can fit on board, they're already prepared. There are slight modifications that need to be done, obviously, but those have already been preapproved as well and the work packages are in place. So when the owner sees it that, okay, this is the time when this becomes commercially viable, it's a rather small operation to actually get it done. In addition to that, these vessels are prepared for fuel cells. So on the entire port -- starboard side, sorry, of the vessel, they're set aside room, they're set aside airlocks, they're set aside connectivity for future fuel cells to be able to both crack and prepare ammonia onboard, turning it into hydrogen and actually using it as a fuel which means that these vessels are truly future proof. They have been designed in a way to make sure that every element that you at least can think of now. And as Claudio said, we're in the starting point of this. There's quite a lot of legislation that needs to be done, a lot of thinking with the IMO, with flag authorities, et cetera. But up until the point of what we can do to future-proof them, these vessels have it. And on top of all of that, what we've introduced on the Armada project is a hybrid electric propulsion system that has been designed with one of our suppliers where we are able to connect all these energy sources directly to the propeller itself, meaning that when you want to operate the vessel, this type of vessel, with a very limited crew, which means that most of your energy use is actually in the propulsion part of your vessel. So we connect the energy sources directly to the propulsion itself, meaning that there's less losses, there's more flexibility and the transition between the different fuels is quite easy. Our propulsion system is already prepared for the fuel cell. We've already made the energy management software to it. We've already tested it. We've already attended several meetings and also an FAT for the fuel cell because in addition to believing in ammonia, the owner also -- they won an initiative, a research initiative in the U.K. to bring forth the first ammonia-powered vessel. So they're building a testing kit with where you do the full process of turning ammonia into hydrogen, hydrogen into electricity, electricity into power to the motor. And we're participating here with our technical expertise to make sure that every step of the wafery were included, and we're also participating. The second big leap for these vessels is digitalization. The normal vessels that we build today in the offshore market are actually quite digital themselves. The Offshore fleet is quite modern. We have the luxury of working in a segment that is used to change and there's quite a lot of small initiatives constantly to make sure that the offshore vessels perform better or they are more connected to the outside world, especially when it comes to data gathering and data being sent to shore. But most of what we do today is gather the data on board, and then we are able to remotely support the vessel if it needs to, in any type critical situation or failure situation. What these vessels will do is that we've increased the number of onboard sensors dramatically, both with regards to condition monitoring but also with regards to camera technologies, sound and we're using sensor fusion to allow the operator, even the onboard operator to have a better view of what's going on. So we're trying to make sure that the vessel as a whole is capable of telling you how it feels in a much more accurate than what it was before. And this will be critical when we take the steps from what we have today, moving into automated robotics where we do part of our operations autonomously all the way down to actually being able to just send the vessel out on its way and hope that in a few weeks' time, it arrives on the other end. These initiatives with onboard sensors, in addition to cameras, will give us a much better image also of how the vessel is performing, which would then in the state of -- or in the aspect of digital twin application, it's highly critical. These vessels since they are disrupting quite a lot to market than what we're trying to achieve, they will go through a rigorous process of approval. Now we do have the advantage of having 14 of them, which makes it so that every data we gather, we gather 14x the amount. Imagine trying to make a self-driven car with only 1 car, it would take you 100 years. That's why Tesla and the others, they center cars out gather to verify what they're doing to test their technology. But even with 14 vessels, we will still rely heavily on digital twins to be able to test each and every scenario you have. Going into a world of automated robotics or autonomy means taking away more people. And believe it or not, the people on board vessels today, they have tasks they do. They do checks. They do repairs. They make sure that the endurance of the vessel is maintained. And if you take away those people, you need to replace it with a knowledge of the fact that what you have on board will sustain you for what you want to do. So if you plan to do something that takes you 30 days and your vessel is telling you in 12 days, I will run out of something or this filter will clog up, then you need to be able to do something about it. In addition to that, in this particular project, we've already applied digital twin. So Seaonics, which is our supplier of topside equipment within Vard, they've already made a digital twin of the equipment that goes on the back deck of these vessels, which has then been sent through Ocean Infinity, and they use that digital twin to build a control system or remote-control system. So instead of flying out and meeting and going through everything, we were able to send a copy of what they're doing, and they've built their control systems on that, which made it so that when they actually did meet, it was just a matter of hours instead of weeks to belying the small items that we're missing and everything was working. And in fact, for -- with regards to remote [ deck ] operations, they've already completed the first testing. You will find that if you go to the website of the owner, you'll find proof of them actually releasing or launching and recovering in ROV system without people in the loop, which is quite an achievement of itself. All this is made possible by the SeaQ remote machinery control, which was sort of the core of the video you saw. This is basically the software that we've developed as a company to make sure that everything on board can be connected. But the important thing is not just connecting everything. This -- the biggest sort of benefit of this system is that it sorts the information. Because when you're sat at a console rather than sat on the vessel itself, where you hear the sounds and you can actually touch on feel things, you don't need 5,000 bits of information. You need to know the critical information and you need to know how to fix it. So basically, our SeaQ remote machinery control is much like any -- if you have a smart home today, there are certain suppliers, Homey and others that make like an umbrella. So if you have your lights from Philips and your heating control from someone else, instead of opening 5 or 6 apps on your phone to turn the light on, turn the TV off and the heat on, you just go through one interface and it tells you what you need to do. So instead of having to actually maneuver it through all the information, this RMC will make sure that the person in the onshore control center gets a view of what they need to know to make the proper decisions. And obviously, there benefits are many. We've said that for these projects, the main benefits that we're achieving is lean crewing, actually lean crewing from the beginning. That vessels are designed with the smaller set of crude that one is traditionally needed for that type of operation at sea. So already the disruptive thinking has led to a decrease in leaning, one that will just has scaled throughout the coming years when technology gets proven and approved. Navigation will be also a point where we improve now with the fact that we have a situational awareness telling everyone around the vessel how it feels, but also what it sees. And imagine in the modern world today, if you look at modern warfare, for instance, you will see now that the introduction of drones makes it so that someone not in the front line can actually assess the situation better. This is also what we see now today. These vessels have camera technologies. They had all these sensors that are added to the visual impression of the operator onshore that allows them in a calm and collective manner, assess the entire situation, whereas the people on the bridge, they have to rely on multiple sources to get the same information. With regards to the onshore control center, there's 2 elements of that in this project. For the Ocean Infinity one, you will find that they have built their own operational center in Southampton, due to officially open this month, actually. It will allow for just about 20 operators to operate vessels independently, and there's also engineering stations and other facilities in that operational center. So for Ocean Infinity, we are delivering the digital ship and the information to them, but they are visualizing and utilizing the information. But obviously, in parallel, we are developing our own solutions to make sure that we can offer this as a product, not just the digital ship, but also for those without the ambitions of building a control center, they can then buy one from us. And what you see here is actually that first control center in operation with live data from the vessel, with DP data, with CCTV from the vessel itself. We've already gone through the phases of testing this. We started customer acceptance testing early this year with actual connectivity through their operational center. So it's not something we're talking about. It's something we're doing today. And these vessels will be connected from the delivery, and they will hopefully be connected -- and receive all the data they need. This will depend on quite a lot of rules and regulations, of course. So in the initial stage of these vessels, they will be monitored remotely. They will not be controlled. So this is a clear line. Once you cross the line of control, then you get quite a lot of other discussions, other rules that need to be looked at, et cetera, and it will require a push from the entire industry. Now this project is also the -- not the first because we've had others before. But we're trying now to make sure that we can find the competencies we need within the company. And for me, personally, this project has shown that Fincantieri NextTech are actually a key supplier to us. They are supplying the entire situational awareness from a navigational perspective. So we kind of split the boat in 2. We take care of what's below main deck, and they take care of what's above main deck. And we couldn't have achieved this without them. And to be able to work closely with our colleagues and finding that we have what we need, the toolbox is already there. It's just a matter of opening and finding it has been, to me, a real eye opener. It's been a tremendously rewarding process to actually see it come together and the way we work together. We've had our team in Sicily on their demonstration sites. We've had teams in meetings in their main offices, and it's been a really good process. So they're already on board today. We have their systems are on top of the mast and on top of the wheelhouse and they deliver situational awareness today to the end user, connected in South Hampton. But what's our plan moving forward? Because like I said, a lot of this has to do with what we can do from a legislative view. And we will deliver the first vessel in 2023. Actually, we will deliver the first 3 vessels in 2023. And then you will see that there are certain steps added, steps that we are working in correlation with the owners and also with our tech department to make sure that we achieve. We delivered the first vessel, which will give us, from the get-go, a monitoring view of the vessel. And then achieving fully autonomous operation will require a stepwise approach. The problem we have is that our technology, not just ours, but the market itself, there's a lot of technology now that supersedes or has come longer than the actual rules and regulations they're trying to build to. So this process that we are following now closely with the owners is an alternative approval process where we do a risk-based approach. So we take every piece of novel technology that is usually not found and it goes through a rigorous process of looking at the risks of identifying possibilities. And the advantage we have, like I said, is that we can do this on a vessel base of 14. So we can prove our technology, a lot quicker than many of the other competitors we have who have maybe test vessels or they have 1 or 2 committed commercial contracts. We have 14, and that's a huge benefit to us. We will follow each and every vessel during this and ensure that the data-driven development is being made. We are always on place in their control center in Southampton. We gather data from how they operate the vessels, the challenges they see. And also, we -- even today, we're receiving a lot of operator feedback to make sure that we can tune what we're bringing to market to fit their needs. And obviously, our main challenge or main goal for us has to be to make sure that now that we develop these digital solutions, we can also put them into other segments. We have a lot of segments from our colleagues in Italy, for Naval, Cruise, et cetera. We're developing a technology that is not only for the Offshore market, it's something that we can use throughout. And I do see this project with a huge steppingstone in that and making sure that we can use our internal company -- competencies in the best possible way. And like I said, this will be a continued approval process. We're using this alternative one. And our end goal is in line with the owner's goal, and you can see it on the screen there. There's not many years to go. So we are on the clock, and we are pushing every day to achieve these goals.

I can take the microphone for a moment. I wanted, first of all, to thank Bent Erik because, again, it was my idea to have him making a kind of technical presentation to you without exaggerate. But I believe that the purpose of our speech is achieved, i.e., we are showing you that what we are thinking is already there. So we can do it. It is not that we are designing a roadmap, we are living inside a roadmap. And what they did in Norway is there. So the control room, we couldn't put pictures for confidentiality reason, but the control room is there. And it's not one prototype at MIT, it's 14 vessels of 85 meters. So it's not a prototype for a fair somewhere in California. It's real industrial developments. And I'm particularly grateful because you put the spell on the fact that whatever we are validating there, it's a source of cross-fertilization in the rest of the group. So you are already witnessing not only that it is today, but it is exportable and creating this some of the part effects. That is the reason why it's worthwhile to have in the same -- under the same hat, Cruise, Naval and Offshore vessels. So it's real stuff and it's there to be cross-fertilized in the rest of the business. So when we say we want to become total cost of ownership of our clients, when we say that there is a big potential in the cruise digital, when we say that there is a lot of digital to integrate in the naval ships. It is not a dream. The product is there. We need to cross-fertilize now. So thank you, Bent Erik on behalf of the audience.

Thank you.

So some financials and some guidance for the future. So this is a snapshot of the key assumptions of the business plan on the top line. We have the markets. This is what we're going to do, and this is where we start from, the baseline as of today. As we said before, all the markets in which our core business operates, are going through growing trends. So we expect order intake resumption in the cruise business after, I would say, 3 years in the doldrums during COVID. And of course, we expect -- as we you know very well that we enjoy the widest product client portfolio. We have catered the needs of all the main cruise operators in the business. And we expect a resumption both in terms of growth for certain brands and in terms of substitution for other brands. And of course, this order intake will be driven by the passenger dynamics that we saw before. We -- external sources plot need for new birds -- for new ships starting from 2027 and the green and digital transition. In defense, in Naval, of course, the current geopolitical situation requires further investments in the defense business. And of course, we will tap the robust order intake coming from both domestic and you saw before what we expect and foreign defense programs. And last but not least, Offshore. Growth in capacity in the wind offshore segment underlies a growth in the construction of vessels for the construction, the support and the maintenance. And you saw the iconic project that we are carrying out in Vard with Bent Erik. How we intend to tackle these trends? Of course, we want to maintain our leadership in the Cruise business, deliver the current backlog and improve further the profitability. Current backlog that was acquired before COVID and before the inflation. And that's why you saw, let me say, these 2 elements putting a dent in our margins, but the backlog is sound and robust. And of course, in Naval, we're going to execute domestic and foreign programs with strong margins and better net working capital profile. Vard, we're going to push on the turnaround. We already -- you saw in the past 3 years that Vard has slowly recovered its profitability, and we target further recovery up to reaching breakeven levels even this year. And of course, the push for further technological innovation. And you saw before that our innovation is not on PowerPoint, it's real projects and real ships. And last but not least, the Equipment, Systems and Services will support the shipbuilding programs and we will keep our leadership in the current offering and derisk infrastructure segment. Where do we start from? A EUR 34 billion total backlog, including the soft backlog and the number of negotiations and options that we have right now, which grants us a full coverage of revenues for the next few years, over 90% for this year, over 70% for next year. In Shipbuilding, EUR 1.3 billion in Offshore, of course, revenue coverage is somehow lower because the production cycle in Offshore is, let me say, half of the production cycle that we have in the Shipbuilding. EUR 2.5 billion in Equipment, Systems and Services, out of which Pierroberto mentioned before, EUR 2 billion in the infrastructure business. Still on assumptions, margins and leverage. So this is what we have done and we are still doing. So derisking. We reviewed completely our project portfolio last year during the first half results. And of course, the review was focused most notably in the infrastructure segment that has booked substantial losses, I would say. And we have what we're doing to improve enhanced profitability. And you saw the presentation of Claudio, own operational excellence on procurement and the specific initiatives related to Vard. All those initiatives, of course, will -- we hope will bring further incremental savings up to 2027. On the cost side, of course, you saw price inflation was heavy, heavy last year. And when we develop the business plan, we factored in the high-level prices, the current high level of prices and the fact that there is volatility. We came out of a very long period of low inflation. Inflation was not in the radar screen of many companies in the past 15 years, I would say. Now inflation is back, it's back and has bitten us heavily. So we decided to make very conservative, I would say, robust and solid assumptions in terms of cost inflation. Also factoring in the cost inflation that was agreed under the agreement that we did with the trade unions, the collective agreement we did last -- end of last year, with the Italian Trade Unions. Financial charges, again, calculated with the year-end 2022 yield curves. The yield curves have somehow lowered in the recent months. We have over 70% of our liabilities hedged for 2023 and I would say, for the rest of the business plan up to 2027. Of course, this is our main strategic priority, deleveraging. And as Pierroberto and Claudio explained before, we will focus on maximizing cash flow generation through great attention to net working capital management. We said we're going to turn every stone and turning every stone means also trying to negotiate better payment terms with our clients. And in some businesses, and to a certain extent, we have already been able to achieve this. Of course, deleveraging will also come from the growth in businesses where big terms are better. This is our solid order book in terms of deliveries scheduled for the next -- the business plan years up to 2027. This is what factored in the business plan. You see here these are the EUR 0.5 billion of orders acquired in the first quarter of 2023 in Offshore. Of course, lower visibility because it takes 12 months, 15 months to build and deliver an Offshore vessel here, construction and engineering times are somehow longer. And this is the backlog that was mainly acquired before COVID. Now we go to the segment evolution. We -- as we said before, we are -- we took a decision to disclose more both in terms of actual figures. And of course, we're disclosing with the same level also forecasts. So starting from historical trend, we already saw some rebound in cruise orders in 2022 as per the improved outlook in the sector. And we are at record revenues, and we do plot the same level of revenues in the Cruise segment for the years to 2023 to 2025 and 2027. We are working at full production capacity here. Six deliveries per year, it's probably the most that we can do at this point in time because there are capacity constraints related to the dry dock. We do see revenues growing also in the Naval business, in the defense business, albeit gradually, thanks to the new programs that will come in from the Italian Navy and the export programs. We will not see what we have saw -- what we have seen in the past with the [indiscernible], which was a large contract granted in one shot back in 2015 was roughly EUR 6 billion contracts. We will see probably a lot more but distributed in the next, I would say, 3 years in terms of all their acquisitions. So this will give us also even longer visibility when it comes to the defense business. And of course, the increase in Naval revenues, together with the holding strategic initiatives that we are deploying will bring a growth in EBITDA margin in the next 3 years. Growth that will not -- does not factor any decrease, let me say, in the cost of energy and commodity for instance. So we're keeping our forecast where it is right now, and we're not improving margins through the expectation of lower price levels as far as commodity goes. Offshore. This is, of course, a story of growth, a very nice green transition play. We have the labor in the past to use Vard to cater the needs of the old oil and gas offshore industry then we switched to cruise with some success. Of course, demand for exploration cruise vessels like the Ice Class vessel that Claudio illustrated before has halted. We do see a very rapid growth in Offshore, in which, according to our calculations, in wind offshore, of course, in which according to our calculations, we already have the market leadership with a market share of roughly 36% of the total vessels awarded so far. So this continuous growth will bring us 50% growth in revenues up to 2025. We expect to almost double by 2027 with also a growth recovery in EBITDA margins and EBITDA levels. Last but not least, Equipment, Systems and Services. So we came out of a very difficult year. This is mainly due to the reassessment of the strategic reassessment that we did on the infrastructure projects in July last year. That's a specific name, the project in which we suffered most. We do forecast, of course, the deployment of the EUR 2 billion backlog that we talked about before in the infrastructure business with very conservative margin assumptions and some growth in the mechanical components and electronics business, driven by the shipbuilding sector. And this is the consolidation of the segments that I've illustrated so far at group level. So this is the story. The increase in EBITDA margin will come from a better product mix from a margin standpoint and also from a cash flow standpoint, the growth from Offshore and Naval. And of course, very important, the derisking of the loss-making infrastructure projects. On cash flow and balance sheet. So on -- starting from net working capital, we reached back to 7%-8% of revenues in 2021 and 2022. We believe that this is the level of net working capital absorption that will keep throughout the business plan. We spent a lot of money in the CapEx in the last 3 years, of course, to prepare for the next industrial cycle of the company, but you will see that in the business plan, CapEx expenditures will go from increase to maintenance CapEx. So with a very low impact in terms of cash flow absorption. So this is the ratio between CapEx and D&A that we plot throughout the business plan horizon. We do have -- enjoy still financial flexibility and -- well, there are many banks here. So we know better than I do. We have no covenants. And we do -- we will concentrate on this. This is our night and day target -- day and night, I would say. And this will be driven by the growth in EBITDA, the control in net working capital dynamics and the lower CapEx, and, of course, with a very low exposure to interest rate risk. When we talk about this as we turn every stone, I mentioned before that we're trying to improve also our payment terms. Although this is a very difficult exercise in the Cruise business, and we are not factoring in the business plan improved payment terms. So the business plan from a client perspective, we do factor in the usual, let me say, payment terms typical of our businesses. Well, this is a summary that we also added 2027 of the targets and the drivers that we see. I'm done. I'll leave back the word to Pierroberto for concluding remarks.

Thanks, Giuseppe. I think it's almost time for Q&A. I want just to wrap up. I told you that I'm very satisfied with the presentation because at least from my side, we wanted to appreciate that there is much more in Fincantieri than what you think. To appreciate it, we have a big ambition on the one hand. But on the other hand, we have very clear ideas, bottom projects, already existing technologies and business model that can deliver much more if we work on the distinctiveness of the one hand, digital and green and on the competitiveness on the other hand. So if we become impeccable on both levels, to me, there is a strong equity story here based on the uniqueness of Fincantieri. So all in all, the business model is about focusing on core business. So no deviations, no distractions on ancillary business that is not where we are the best and the first, and we have to demonstrate. Therefore, we need to strengthen and to cross-fertilize. And I believe we gave you a lot to download a lot of information in this respect. Then we have to shift from shipbuilders to life cycle partner of choice. So the distinctiveness is not only for the margin, it's not only to sell, but it's to evolve into a companion of journey, not a constructor, so life cycle. And this is exactly what we did in the military business. So once again, it is not that we need to change our skin, we need to cross-fertilize our business. Four, the market is there, which is not obvious. So the market is there in our 3 core businesses and the market is very sparkling. We need to be selective. We need to deliver impeccably. We need to move from the top line to the bottom line. Cash is the king, but the market is there. You can optimize if you have a business and if you can sell and we can sell. Fifth, infrastructure. Infrastructure, I believe, we dedicate a little bit of extra time. We explained to you, which is our spirit. I've been around in infrastructure business quite a long time. So when I say refocus and the risk -- I know what I mean, and I know which is the risk and infrastructure business in this country and outside. Financials. Again, I don't want to say that we need to become like warriors or fighters, but this is a business in which if you take EUR 10 billion of risk and then you have no dividends and earnings, it's a source of frustration. It's a source of frustration for investors and it's a source of frustration for management. So Fincantieri is a reality, unquestionable, unparalleled but will be a different Fincantieri, the day in which all this strength will translate into bottom line. And we will be sleepless until that moment with clear ideas on the product side and on the disciplined side. People. There is a lot of people that probably will look at our presentation internally. In order to do this, we need to onboard people on this project. This is a people business at the end of the day. It's a business of engineers. It's a business of construction manager. It's a business of people that is going abroad for the sake of the company. If they will onboard this new Fincantieri, I have no doubt that we will do it. On the 17th of May, we will have the first convention of Fincantieri people gathering altogether in Trieste, and we will [ hammer ] more and more on all this. And then the third priority is to create a channel of communication with the investor community. We believe there is much more in Fincantieri, but we -- it's our role to make it available, to make it readable, to make it possible to be evaluated. There's no magic sticks. We will take quarters. We will have to come with results and will need to gain respect. Initially, respective is there and trust from the investor community to the extent we will deliver, I would say, pragmatically and consistently results. And then again, let me touch again on the sustainability with no rhetoric, it's industrial sustainability. I believe that we will be the ones transforming sustainability. In industrial sustainability, we will be market maker in the new solutions, taking advantage of what we have already in-house. So this ends the presentation. It has been very intense 3 hours, more or less. So we are on time and on budget probably. Now the floor is yours. Thank you.

I'm Monica Bosio from Intesa Sao Paulo. And first of all, thank you for this detailed presentation, both on the strategic side and thank you for the high level in the financial details you gave us, it's very helpful for us. Coming back to the financial details and looking at the EUR 300 million savings, how can we split these savings across the plan? Are these savings more back-end loaded? Or it will be equally split across the plan? And looking at the CapEx, how much of the CapEx will be dedicated to minimize the occupation of the dry docks and what about the rest? And do you plan also some partnerships or some small bolt-on acquisitions in the digitalization in the marine propulsions? And looking -- sorry, continue. Looking at the business segments, looking at the Cruise business, what is the segment which is growing the most? Is it the luxury one? And because I can imagine that this segment has much higher profitability. As for the Naval -- I'm sorry, for the Cruise, do you have prototypes in your backlog? And sorry, I asked is, if you can give us any detail. And on the Naval segment, looking at the order intake, which I don't know. Are you including some jumbo orders across the plant? Or is it not -- there are no jumbo orders?

What a beautiful and long list of questions, all equally interesting and intense. What was the first? On the savings, I can leave the floor to Giuseppe. But what I want you to appreciate is that we went into a very, I would say, detailed bottom-up exercise on the 10 strategic projects. So every strategic project as an owner, which is not a director, it's a second line manager. And as annualized targets and those annualized targets are in the MBO all the people. So I want you to say that it's not a high-level helicopter view business plan, but it's a bottom-up, driven by cascading of targets kind of business plan. So that's why we have upsides and then we have the upside of the upsides. So what I want you to say that in the business plan, we put a very, according to perspective, a robust number. And then we have some extra targets that will be equally in the cascading. So my expectation is to do better than this, obviously, but don't want to put in place a plan that is unrealistic. So those numbers are realistic, are divided into the 10 projects. Another comment qualitative, then Giuseppe can be more precise. But around the number that is qualitative is that there are projects with limited visibility in terms of numbers, but with a huge value in terms of strategy. Let me give you an example. Have you seen what we are doing on the unmanned with Vard? Assume for a moment that we sell something like this to a cruise operator. What would be the value of it? Let me draw a number, EUR 20 million. With EUR 20 million change our life? Will EUR 20 million pay our salaries? No, but we are creating the new Fincantieri because once we shift from being a constructor to be companion journey life cycle, a total cost of ownership partner, then we are going truly to project Fincantieri in a new environment in a new, I would say, segment. So yes, Giuseppe can give you more color. What I can tell you is that in terms of organization, there is a lot behind those targets. And qualitatively, I invite and encourage you to look at those numbers also qualitatively because once we deliver on our road map, the first digital offering, the first green energy transition offering, it is not only the value, which is there, the margin that is there, but it is the fact that we are validating an evolutionary business model that will procure Fincantieri 10 years will be here. Whatever is happening in China, whatever is happening in Korea, we don't [indiscernible]. So we need to prepare ourselves for a long industrial cycle where we defend our distinctiveness even selling small things or selling something that is witnessing our ambition to be a technology-driven shipbuilder and not a need to impossible cost leadership-driven kind of operator. And now you have the easy part of the answer.

Well, the $300 million that we talked about are, I would say, early distributed throughout the business plan horizon, okay? That's a fair assumption. I'll take also the prototypes. Well, the first question is what segment is growing more. We are seeing, as I said before, scattered growth, there are some brands that are still growing their capacity. There are some brands that have planned or substituting the current capacity. We mentioned before Four Seasons, this is a new sector. So we're going to see a lot of players in the hotel business coming in. We saw already a lot of players going to other yards, unfortunately. But we believe that the Four Seasons projects will be the start of a very long relationship on this business.

I believe also, at the end of the day, the market is -- the cruise market is driven by the dynamics I was telling you before. So substitution on big ships accelerated by energy transition requirements and digital management opportunities. Then there is this new accretive business that is driven by the segmentation of the market. So for sure, if it is correct that shipowners want to penetrate high end of the market because the high end of the market is the one that is not cruising. I don't know many of you have ever been on cruise ships. For sure, the minority of you. So they want the rest of this audience to try a high-end kind of product and then to stick to it. Considering that if you go to New York on holiday today, you will see what's the cost of the ticket, what's the cost of the restaurant, what's the cost of the accommodation of the hotel, of everything. So tourist is being very expensive today. Cruise tourists can be a good alternative, even to in players. This is the Four Season iconic project. But Claudio, do you have any comment on the market?

No, no. I think you said, well, in this moment, our big customers, they are in the process of, let's say, taking over the debt after COVID. So there are a lot of small operators which are entering the market Four Season is a good example. But we do expect through green transitioning needs and true recovery of the market that is happening in these days, [indiscernible] have seen last week over a Caribbean presenting the results better than expected. Prices are going up. Margins are better than what projected. And so we do expect this trend, trend of the product development going transitioning and the market going better with prices pumping up, that this will drive the demand for the coming years and the market will recover soon. Also because remember that if they don't order the ships, they lose market share in the future. So our customers will have a pushes as the market rebounds to order new ships.

Some color. One of your questions was some extra color on the naval pipeline, commercial pipeline. In the number of commercial pipeline, we have, first of all, our strategic partner, the Italian Navy, that is already planned [indiscernible] and similar kind of development. On top of it, it is, for sure, a Jumbo project, the continuation of the Constellation class frigate in U.S. And as I told you before, we are on a pipeline that is massive because the U.S. Navy is the biggest Navy on earth. And they are very satisfied with what we are doing, very satisfied. And then there is the export. On the export, which are the -- just to give you more color, which are the areas where we see more opportunity. First of all, I told you the enlarged Mediterranean, including the Middle East, Saudi and Abu Dhabi are going to be 2 contributors of a Middle East poll. At the end of the war, the world will be divided in multiple poles. That's what -- that's the legacy of the world. And one of the poll will be the Middle East, they want to enhance its Naval capability. A client like Saudi, a client like Abu Dhabi, having the fantastic reference of Qatar, Needless to say that in Qatar, we are delivering on time and on budget despite COVID. So the Emir of Qatar was very satisfied with Fincantieri because we delivered -- we know excuses despite COVID. So we have references in the area, and we have potential customers in the area. Another theater that we use this world is the Southeast Asia. I told you before that one thing is the enlarged Mediterranean in which Europeans has to take care of their own sea. And then the Pacific East will be the place in which there will be a lot of overheating in terms of geopolitical tensions. So Malaysia and Indonesia are 2 key markets, are big countries and they have their own targets. And we are there to serve Malaysia and Indonesia, and there are already tenders going on. So Jumbo, there are a lot of jumbos I would say. It's very important to cultivate these kinds of business because to go abroad is not easy. To sell abroad is not easy. I come from a market that is 95% abroad. So I know exactly what does it mean to take a big job 7,000 kilometers from here. So it's a cultivating exercise, but the most important thing is that the demand is going very, very steep. And we have the 2 key things you want when you want to foster your naval capacity, i.e., stronger corvettes or even frigates and progressively later on, some underwater capability, which are the 2 dish of the house, I would say.

Prototypes.

We gave the message that we have 80% sister companies. Correct? Okay.

One in 2023, One in 2024 -- 2 in 2024 and one in 2025, 4 vessels.

If I may maybe add something on this, '23, end of '23 is a peculiar year because there is a change in regulation in the cruise business on stability regulations. So we will deliver one prototype in January '24, beginning '24, and we have another one in '23. So 80% of the backlog are sister vessels and prototypes are concentrated this year. We delivered last week an important delivery in general for Oceania. So we are in these days, in these weeks following the programs and I would say that, as Giuseppe was mentioning, today, this concentration, which is mainly related with the change in regulations. .

Any uncovered question? Do we miss any questions?

[indiscernible]

It's a very good point. Consider that, just to tell you how much we are being disciplined and algorithmic in our business. This gentlemen, is quantifying, which is the increase of productivity that is expected by the new sequence of works. So by "reengineering" of the sequences outside. So it's calculating, which is the expected increase of productivity with a hell of people, with a lot of soldiers, but he is the general. And when -- and then we measure it. So if we believe that by doing this investment, we are going to save x construction hours, he's controlling it. And once it is achieved, he transformed this expectation into a deduction in the whole life budget of the project. When you work project by project, you have the accounting of the project. So there is an estimation, a measurement and then a deduction. So the project managers are going to pay the expected increase in productivity by a decrease in the allowances in their own whole life cost of revenue estimation, you know what I mean? So it will be, I would say, a scientific exercise. So this is the criteria just for you to appreciate. But you don't want a qualitative view on quantitative. Any of you can disclose a number like this? So you can always sue us if you want. But we are not going to disclose it.

It's within the EUR 300 million, and even distribution throughout the business plan.