Oman Cables Industry SAOG (OCAI) Earnings Call Transcript & Summary

Okay. I believe we can start. It's 3:02. Welcome, everyone. We welcome you again to our first analyst meeting for the year 2025, presenting the audited financial results of our year ended 31st December 2024. In this meeting, we have with us our Chief Executive Officer, Erkan Aydogdu; our Chief Financial Officer, Marcelo De Paola; and myself, Jad Atallah, of Investor Relations. I'll give the floor now to our CEO to take the lead and start the presentation. Erkan, the floor is yours.

Thank you very much, Jad. [Foreign Language] good afternoon. Hi, everyone. Welcome to our meeting that we're going to share 2024 year-end financial results with you. Thanks for your availability and your interest. Our agenda is mainly our Oman Cables Industry overview in a nutshell. Then we would like to share a bit the macroeconomics and the business environment and our sustainability journey, sustain to lead, that is a pleasure to share with us our efforts and our financial results for year 2024. Obviously, we are very proud to have Oman Cables Industry in Oman with 40-plus years experience. This is a long history in the country. We are exporting more than 50 countries around the world. We are having 800-plus employees, and we have 277,000-plus square meter facility area in Oman, clearly, a big and effective industry, manufacturing industry in Oman. I would like to spend some words on how we are getting the best of the experience in the cable industry. So in the left side, you see that we are having a great integration with our strategic technical partner. And our values are around, first, people; then innovation, excellence, solutions, quality, servitization, network and, of course, sustainability. Oman Cables has a great unique value combined asset in Oman. In Oman, 40-plus years of experience in the local country space. And we have with Prysmian 140-plus years of cumulative experience, by far, worldwide technological and, sales-wise, the leader in the world on the cable industry. So these two combination makes us stronger together. And the synergies that we are having within the worldwide drives significant value creation for all the stakeholders. As I was saying, we are in this part of the geography, a perfect location, and we are exporting more than 50%. We believe this is also a clear value generation for Oman to make it visible in an important industry like cable with the mega trends that we are having at the world space. I would like to now touch to the macroeconomics in a nutshell and the business environment. Let's start with the global growth of the world. So the world, after the volatility, is now projected at 3.3% in 2025, the headline inflation is expected to decline to 4.2% in 2024 and converging back to target earlier in advanced economies than the emerging markets and developing countries. Then we look to GCC. Our GCC is expected to remain economically resilient and leveraging both its traditional strength in the oil sector apparently, obviously, and also its growing non-oil economy to navigate the challenges and opportunities of 2025. Economic diversification is clearly the target setting that we see also in Oman Vision 2040 that we committed all the way. And there are continued investments in the non-oil sectors such as tourism, real estate, manufacturing, that are driving the growth. Non-oil GDP is expected to expand by around 4%, slightly more than the overall GDP growth for all the region. In Oman, we see also growth is projected to be around 2.7%, underpinned by rising oil output and ongoing reforms and investment in non-oil sectors in Oman, setting the stage to higher non-oil growth. Of course, oil and gas sector also still revenues are expected to account more than 70% of the total revenues. This is a space that we call it energy transition, that we play a key role to create non-oil manufacturing industry to grow and make Oman less dependent on the oil revenues, which is fully aligned with the Oman Vision 2040. In our sustainability journey, I'm very proud to share with you huge efforts that we are putting in place in Oman Cables. Basically, I can summarize our efforts here in 4 ambition. First is the climate change ambition, which in 2021 and 2023, we start not now our sustainable journey a few years back, and we tried to decarbonize our industry at our best. In 2024, I can say more ESG strategies are coming in, but I would like to touch the second ambition, innovation, that plays a key role in our sustainability agenda, trying to move on from a cable maker towards a solution provider. Then, of course, an important ambition in Oman, we take it very seriously, and we try all our best in many fronts, is the social ambition. We commit our environment and try to give back at our best and create a differentiation in the social space. And finally, maybe it is a holistic umbrella that I can say the role model ambition that we are having, we try to be role model in the industry in anything we do. That brings us a long journey. As I said, we started a few years back to this sustainability journey. Then we put in 2024 the ESG strategy and KPIs. Here, I think also I'm proud to share that in 2024, we are one of the first companies that we disclosed voluntarily MSX30 ESG metrics. Then we do double materiality assessment to go further in our journey. In 2025, we plan to continue in our journey with the [ ship lens ] and also innovative and sustainable products and solutions into the market. I was saying from cable producer to solution provider. Of course, it is a lot of innovation inside. Our technological partnership is also helping us and creating a lot to bring the knowledge that we have in the industry that a very wide resources are working on these innovations, and we try to bring the value add into our geographies in Oman and GCC mainly. So what are the main topics that we can highlight over here? First, I would like to spend on the grid hardening with some words. Grid hardening is important because energy, electricity is very important, and we need to strengthen our infrastructure in our region. And on this space, we are able to bring some value-added technologies like E3X technology that we are working on. Then we have the PRY-CAM and the HTLS. A few words about them. E3X is a technology that Prysmian has developed over years. This is basically a coating technology on the overhead lines that increases the energy transmission efficiency. So in this case, we are able to pass higher energy transmission or lowering the conductor that we need for the given electricity transmission needs. We are working on this. And PRY-CAM is another Prysmian technology that proactively we measure, try to understand the partial discharge in the electricity connections. And even before any problem happens, we are able to identify where can be the problem in the overall system and act proactively. That may create a lot of value because we are in advance and we can identify the problems and we can solve them pretty quick. Third one is the HTLS conductors. It's the High Temperature Low Sag. We know that we have declared this investment at our OAPIL in Sohar. So we are in the phase of making the equipment supply. You know that at OAPIL, we already invested in the conductor that we shared in the previous years. And obviously, the conductor, as we shared in the first quarter of this year, will be up and running. Obviously, our original estimation on this investment was a bit shorter. We are like 6 months in delay because of the equipment supply difficulties with the given supply chain issues at the world. So this is happening pretty much everywhere. Our teams are working very hard to eliminate or mitigate the risk of these delays and bring these investments into our plants as quickly as possible. On the safety, which is a very, very important topic, and we are working to contribute on the standards, creating even more standards in the region. So we are tracking the noncompliant cables, which can be visible in the marketplace, and we try to work with the authorities to make Oman very safe in the products because cable is not very easy to understand with our human capabilities, i.e., such that the products are good enough or not. We need a dedicated technology for the compliance check on these cables. We take a natural ownership accountability to contribute to create more and more safer marketplace because these products are going to the houses, residential and nonresidential areas. So it touches the human life. The second one is the CPR cables, which is the construction products regulated cables. This is more on the European side. They identified which kind of products should be used in which kind of buildings, not only the cable, but all the construction products. And there is a performance categorization that your products need to be within and by third-party approval, so a very, very structured way of putting the products into the buildings. And we are working on it because, even though we are not in Europe, we try to bring these kind of additional features into our marketplace. Obviously, it also allows us to export into these geographies from Oman into even Europe, even for these high-quality products and defined very well performance levels. We have our laboratory here in Oman in-house that is up and running as we speak. OMHERO is, again, for the energy electricity monitoring systems even at our houses or the industries that gives us a capability to understand how we are using our electricity at our households and, again, proactively give some information that we can take actions. On the renewables part, obviously, we have the excellence center in Oman. So we play a key role on the capabilities. Over the last years, we improved our capabilities more and more. Energy transmission in the region is happening, we believe even will accelerate even further. So we are talking here more solar, wind and hydrogen needs for the renewable into the country to shift from fossil fuels to the renewable sources on the energy. And finally, electrification. As we noted, everything we do in the social life and the technology enhancement, this is creating a need on the electrification. On this part of the electrification, we have also quite interesting solutions like E PATH, which is an ecological product, which is compatible with the environment in the best way. So we develop the cables and the products this way. And we are launching these products in the region, the first in the sector. And we have knowledge here that cable is a great asset, product is a great asset, but we have to follow where our products are and how much left over the product, so this can create also a value for our customers, our stakeholders because in sustainability, we drive a wider scope. It's not only Oman Cables, but all the suppliers, customers, all stakeholders are here. So we try to put these kind of innovations into the market. And the AIRBAG cables, which is completely evolving on the traditional mechanical properties with the wires, replacing it with a chemical technology that is even better protection of the cable under the weight or under the mechanical impact and is able to come back after the weight so it is a sustainable long-term solution. So of course, there are also some others. These are the innovations that we are working on. As I said, Oman Cables by itself is putting a lot of energy on this area, but also the Prysmian is contributing a lot because some of them, even many of them, I can say, is a combined effort with Oman Cables and the Prysmian. It will take some time to bring them into the marketplace, but we are working hard, and we are making some good step-up on this area. Okay. So the 2024 key highlights, but what I can say is Oman Vision 2040, we take it very seriously. Our commitment is quite strong. And we try to even understand in which kind of parameter how we can act and contribute to Oman Vision 2040. Some examples, safety, I'm not going into all the details, but I can say that we have 3,500-plus hours of training, so upskilling, trying to make people more aware of the safety. Then we have the stakeholders' engagement. In this part here, we have 2,100-plus stakeholders engaged. So anyone around us, we try to bring them into this journey, contributing a lot, impacting on our planet in many ways from a sustainability perspective. And of course, diversity, equity and inclusion. This is very important. We are working also very hard on this part to diversify our resources in many ways. And equity is very important, and we include being inclusive for our society to bring value into our communities. And finally, please allow me to share that there are also some recognitions that we are proud of. So we received 8 awards in 7 different occasions, and we are the role model in the industrial sector. Of course, this is integrated. You know that we are now going through the integrated report. On the right side, you see our financial, very high-level numbers that I can share. Then Marcelo will give us a bit more detail on this part. So I would like to give 3 main cluster update. First is the sales. When we look to 2023, our sales have been OMR 248 million. And in 2024, we are at OMR 268.7 million. When we bring it to the EBITDA, we see that in 2023, our result has been OMR 25.4 million. And in 2024, we are happy to conclude with OMR 28.7 million. And bringing this profitability into the net profit, in 2023, we were at OMR 18.9 million. And this year, 2024 is closed with OMR 22.6 million net profit net result. So thank you very much. And Marcelo, if you can go through some details on the financial part.

Thank you, Erkan. Hello, everyone. First of all, I'd like to say I'm very proud to show the figures for this company, continue in the growth year. You can see here the amount of OMR 268.18 million of sales for this year compared to OMR 248.2 million for the previous year, so 8% increase. And it's important to say the main part is export market, which means the company have the opportunity to grow not only here in Oman, but outside of Oman, and use the capability and the quality of the products we can produce here in Oman. Well, here is our parent company. As you know, the first one is the group. This is our parent company. It's basically the same, OMR 201 million for the sales compared to OMR 183.6 million for the previous year. It's a 9% growth on the sales. And again, the main point is export market helped us to grow in sales. Well, if we go to the business, you can see here the sales, OMR 268.8 million, a big part coming from industrial construction. It's basically linked for the construction in the domestic and export market. The second big business is OAPIL, coming from our aluminum producer, 24% for the total sales. And important to say the growth of the 2024 versus 2023, coming from the electrification. Electrification was very strong in [ 2024 ]. For the profitability, more or less expect the same division for the sales. The profitability continue to grow OMR 38.2 million versus OMR 34.4 million. And basically, the main growth is coming from the electrification business. Well, you can see again here, the sales grew 8.5% compared to the previous year. This growth is basically coming from the better mix and the volume, the main part for the export market. And the metal price increase this year compared to the previous year helped us to increase our sales. For the EBITDA level, I think it's important to see 16% for the increase in the EBITDA, OMR 29 million versus OMR 25 million in the previous year. But it's important to say that the percentage for the sales, 10.7% compared to 10.2% in the previous year and 6.7% if we go to 2022. If you go for net income, the result, OMR 23 million versus OMR 19 million in the previous year. 20%, this is obviously to maintain a very good control for the price, control for the cost. We worked a lot this year to arrive at the savings defined during our analysis and for us to maintain a good profitability. It's important to mention the financial result increased a lot, thanks to the cash generation during 2024. Well, we can see here the financial discipline and strong cash management bringing a very good cash flow, net finance position improving and net working capital by sales is a very good rate, 22% in 2024. Net finance position, we closed at OMR 66 million.

Thank you, Marcelo. Now we will open the door for any questions. Any questions from the audience? Manna Thomas, yes?

I just have two questions, if I may.

Yes, please go ahead.

You mentioned that there was a shift in the product mix during the year. How has it impacted your capacity utilization?

Okay. The mix is very volatile. And of course, we have a certain capacity. In Oman, our capacity is large. And the capacity utilization is changing from month-to-month, quarter-to-quarter, but so far, we are able to serve the market with our capacity in Oman.

Okay. Understood. And also regarding the shift from cable producer to solution provider, how do you see the margin profile evolving? Can we expect a structural shift in margins?

Okay. Thank you for the question. I think this is a great question. As I was saying, this is a journey that we need to put this value addition into the market to create value for all stakeholders. In the beginning of these transitions, it takes a lot of efforts. That's why I was saying we were working very hard on introducing these concepts into the marketplace. I can tell you that in 2024, just for the innovation purposes, we have done 4 roadshows in GCC to introduce these technologies. I'm happy to see that our customers are showing interest on these innovations, and we are starting to bring them into the market. It is not an immediate impact. It will take a while. Of course, we expect the margin to be better on this servitization, but it depends really. Our first focus is to create value in the market for our stakeholders. So this question can be addressed in the next years properly, but we are working on that direction.

I have just one more question.

Yes, go ahead.

Yes. Can you provide more details regarding the OMR 1.9 million investment in Sohar, like the time line and the capacity addition in this year?

Yes. You are talking about the conductor investment for the HTLS.

Yes.

Okay. Yes. On the conductor part, as I was saying, this has been approved before, I think, end of 2023, Jad?

The HTLS, that one was '24, yes, the latest one.

Conductor one, I will make comments on the conductor.

Yes, 2023.

Yes. This is now coming and will be running in Q1, as I was saying. So this will be able to bring us more capacity for the conductor making. Obviously, at OAPIL, we try to improve also our mix to create value, not only rod, but also the conductor capabilities. So that will help on that part. And the HTLS that we were talking, it is another product line, which is a more value-generation product on the overhead that the investment is going on. We already ordered all the equipment. So as I was saying, the equipment supply is taking a bit challenges because of the supply chain, but our teams are working very hard on the investment to be aligned with what we declared on that.

I can see [ Shahur ] and then [ Shahim ].

Congratulations on, again, a wonderful year. I just had a couple of questions. We have obviously seen this tremendous growth this year. And I wanted to ask if we should be considering these numbers as sustainable numbers. Are there any contributions from the international markets because obviously, you mentioned that the metal prices were high. If there is a drop in the metal prices, would we see a corresponding decline in sales? And if so, what would be the magnitude of that?

Thank you for the question. It's a very structural question for the cable industry because the metal part plays a key role, of course. So as you know, we are trying to be not so much dependent on the metal price because we just reflect the metal price into the marketplace, and we try to generate value creation on the other side, on the rest, which is our expertise. So obviously, the volatility in the world, not only in the metal price, but some other volatilities, we are in the geography, in the country and in the industry. So of course, we are not risk-free, let me put it in this way. But we are working very hard to mitigate any potential risk because we stay optimistic on the trends that should happen and is happening partly, we'll explore it, we believe. So how sustainable are the numbers? We'll see. We'll try all our best to sustain the numbers. And so far, we don't see substantial risk not to dream so. We will do all our best to sustain, but even grow our execution.

Perfect. Secondly, I wanted to ask that, obviously, your sales are increasing, and primarily, the MENA region is doing very good, but the local sales in Oman are on a decline. Is that because of the demand side? Is it because the supply is heavy?

Mainly, what we see is, as I said, the market is volatile. It's its nature. And the value that we are having is our capabilities, and our geographical diversity is an opportunity that we rely on and we support and invest on these areas. So we don't see any material reason to shift down the domestic market. Of course, there are also project business that has some delays here and there. So it is affecting 1 year or the other. So I think it's better to look more, 1 to 3 years period, to really look into the domestic market share. But as I said, we are in Oman. Oman is our primary market that we are looking very closely. It's key for us, but not only, we also go beyond with the export.

Perfect. You mentioned in the previous question that you are at an optimum capacity utilization. Would you mind us giving the numbers what currently is your capacity utilization?

It's difficult to give any specific number, not because it is very secret, but it can be misleading because the capacity utilization is very volatile. What I can say is we are able to manage our capacity at our best. So we are not touching to the limits because Oman Cables has quite large capability. Of course, by channel, we are looking to improve because cable is a very diverse product category, and then the typology. So our operational teams are working hard to develop further capabilities in case we see some issues. But in this volatility in 2024, we were not seeing any risk or potential downside because of the capacity.

Just a couple of more questions. Number one is what are your capital expenditure plans? Or what amount of capital expenditure is the company planning in the next 5 or 6 years?

We like to grow, and we are looking for the opportunities, of course. When we have an investment that can be described well with the market, we will share immediately. Of course, as you know, we are working on different opportunities. So when they will come into the execution stage, as we have done in OAPIL, we will be sharing with the market. So we will continue to invest and try to scout opportunities in the marketplace. It's very difficult to give a specific number for the next 5 years, but we are following very closely and trying to invest in our industry to be able to capture more opportunities.

Right. I have a couple of more questions, but I'll let my colleagues here ask their questions first. And then if there's time, I will come again.

Thank you.

In your presentation, you mentioned about electrification as being a very positive trend for you in 2024. Do you see that trend likely to continue in 2025? That would be very helpful if you let us know more with your outlook.

Thank you for the question. Electrification as a trend has to continue because of the energy need that we all have in the country, in the region, even in the world. So that trend is unavoidable in our view. Obviously, the time line is different from one place to another. So it depends also on the project time line, financing. So there are many, many parameters under the electrification. But we are optimistic in the next period also for the similar trends.

Mr. Erkan, we hear a lot about data centers. The word comes up very, very often. Countries are very centric in building up data centers. What is the kind of opportunity do you see as a cable manufacturer as an opportunity there?

Thank you for the question. Again, a very good question. So yes, data centers is very important, and it requires cables. When you build the data center, the infrastructure requires cables. When we look to the world trends, obviously, data center is very dominated in the U.S. and in Europe; and then Asia, then Middle East and GCC, so it goes like this. However, we have opportunities from two ways. One is we build data centers in the region, and we are following very, very closely also that piece of the market segmentation. On the other side, with our great service quality and our expertise, also combined with Prysmian, which is on the world level is following very closely with the solutions and innovations, we are becoming a potential supplier, not only for our region, but for the rest of the world. So that also feeds the export that we are talking. So that can be another opportunity. We'll see the developments in the region. Obviously, we are following very closely. In case there will be a higher acceleration in the region, of course, it will create some opportunities also for us.

Also, your export markets have shown a robust growth. Have you been able to add any more markets to your exporting countries? Or do you see any potential, any new markets that you've added?

Yes. We are looking into that also. So if I make the sequence, we are looking at Oman and then the GCC and then also the beyond. We were able to add some export markets depending on the project. It's also very much project-driven. We are looking also for some more opportunities, if we can go and scout more opportunities in the rest of the world. So it is a continuous effort from the company to find out, to bring our solutions into a wider geographical presence.

There's been a lot of geopolitical uncertainty in 2024. Of course, you've spoken about the supply chain disruptions that you've witnessed. But we've also seen the collapse of the Assad regime in December. Do you see any possible opportunities stemming in, in terms of reconstruction? We've been kind of picking up on those clues. Do you see any opportunities for you there?

Thank you. We are following very closely these risks, and we create our mitigation plans to manage these risks properly. So of course, again, it's quite a volatile situation. So I'm not very sure how that will evolve, but we make all our preparations to not to get an impact from these interruptions. Our teams are working. Our supply chain is working very effectively to be in advance, proactive and finding the best ways in the supply chain to bring our solutions into the market. Is there any reason not to be very optimistic in the short term? I think there isn't any reason to be too much pessimistic, let me answer this way. So we are following and hopefully, it will recover.

Okay. One last question from my end. What is your outlook on the Saudi market? We've heard last year that they were kind of contracting or controlling the projects. Since you're on ground, what is your outlook as to the kind of project flows that are coming in from Saudi? And do you see any new possible growth opportunities there?

Saudi is an important market, of course, with the growth that every one of us can see. And we are trying our best to scout the opportunities over there. So again, it's pretty much a project-driven business. It can vary from 1 year to another. But we are quite present with our efforts and try to scout opportunities in the Saudi market. Further opportunities over there, we are looking at. Obviously, if there will be some interesting opportunities that we can find, space, we will try our best to capture these opportunities also in Saudi.

[Foreign Language] I've seen 3 hands in the front before me. That's why I was keeping quiet because I thought they wanted to ask questions. So I was waiting. If there's nobody wanting to ask question, I'll be very pleased to join you guys. I mean, probably I'm the only local, what you call small investor, or let's say an analyst. So in the future, [Foreign Language], I was pleased also to have a good telephonic conversations with Mr. Jad regarding your business. And as I said, I'm pleased also to join you guys here. Once I joined, it was with Cinzia. She was a great leadership person. And I believe for the last 4 years, she had taken this company to amazing results. And I think, Erkan, you have just continued what has been done before. I hope the future will be very optimistic and very nice for the company, for our economy, [Foreign Language]. And if you will excuse me, because I wanted to -- as I said to Jad this morning, if I can speak in now, because this kind of discussion, I wanted to see in the future our local graduate to understand what is happening in the industry in these companies. If you allow me, then Jad, myself, I can talk both in English and Arabic. Is it okay for you, Erkan?

Sure, sure. Go ahead. Maybe next time, we can try also Arabic, but it is not easy for us, you can appreciate.

I believe you were in Turkey for some time. So once I heard you say [Foreign Language], it looked like your accent is in Arabic.

Thank you, yes.

Okay. I wanted to ask you about -- you have joined the company now nearly 1 year, and the company has done just great results. How do you see the company in the next 5 years and the business of the cables industry? And you are a provider solution now with the main business previous, data cables production. So how do you see it in the next 5 years [Foreign Language]?

[Foreign Language] thank you very much for your nice words. I fully agree with you that it has been a journey at Oman Cables that in the last years, we had a great continuity also of the efforts. Cinzia has created a very good ambition in the country, and we are in continuity of this. I fully agree. And yes, this year was good. The next 5 years, and thanks for asking next 5 years because it already gives me the feeling that we are not just looking 1 year, but you are looking beyond. And that is very good, and that is also aligned with our approach. We are optimistic for the future. So the trends that we are hitting in the energy transmission, electrification, digitalization, so these trends will be there. So we are optimistic also in the next period to perform well. Of course, there are also risk on the other side, so the risk and the opportunities. Our job is to mitigate the risks at our best and try to scout more opportunities. We remain positive for the next 5 years.

I just have other two questions, probably small ones. Regarding your liquidity, I mean, you have a lot of liquidity. I mean, probably you are keeping it at the bank, I mean, probably all this liquidity. I mean, is it possible to use some of the cash that you have, 10%, let us say, in our Muscat base? I mean we have really great opportunities as the pricing is very low compared to the other. Is there any way, I mean, to maximize your income? I mean, and you are professional, I believe, what you call this, finance people, that can manage. I mean, a part of you is on this liquidity in estate because there's no extension for this year or probably, I don't know, what you're going to do. I mean this is the only way to maximize your, what you call this, return from the liquidity you are having. Is there any thinking in this way? I mean, is there any possibility to use some of it to create more income for the company? And also because our Muscat base now is really good like the latest new company, it was like [ OQEG ]. It is a really very good company because for the next 20 years, the return is well known. The return is about 7%. There's not a risk, from my point of view. I mean, as I said, we have great people there. They can see the kind of opportunities.

I leave this question to Marcelo. On the finance side, we are very strict on what we can do, what we cannot do. So I don't want to say something wrong. Please, Marcelo, could you help for answering this question?

Thank you, Erkan. Thank you for the question. Well, obviously, we analyze the alternatives obviously. But the concept for the company is to try to say it, not speculation, and obviously try to, in a very conservative way, to manage the cash. But obviously, it's open to discussion to see the alternatives we have in the market.

Probably I have another one question, a small one. In this industry, what you call it, the cable industry and electrical industry, which is normally the sector is a very difficult sector compared to the services and financial sectors. And I mean, from my point of view, from my last few reading, for a time, it is probably in the same line, but different, they are doing transformers and they have also a really great leadership for the last 2 years, as compared to this company, and in very good shape. And they are doing also exporting. Is there any way of having like understanding between the companies, both companies, to use their -- since they are building their businesses, what you call transformers, they probably they have a good relation with the different environment, in electrical environment. I mean you can provide also cable, so what they have, what you call it, their client in overseas, is there any way that you make a good, I mean, cooperation between both of you guys to maximize your business for exporting and the retails also?

Thank you for the question. On our industry, you're right, it's not a very easy straightforward industry. So we need expertise. We need to scout opportunities very well. On the cable industry, when we have different channels, of course, we may have contractors that makes the electrical work. And at many occasions, these stakeholders are asking for solutions specifically for cable and other equipment. So somehow, we are supplying to the same project, different products. So yes, some kind of scouting opportunities to try to identify if we are in need of anything to capture from other industries is a way. But I have to say that we are also following very well the market with very good tools, with our people in the market, but also digital tools and frequent updates. And from time to time, we see each other in some events, and we have some talks, and we have kind of cooperation anyway. But your point is well noted. Thank you.

Can I ask another question, please? Regarding people and the responsibility, I mean, the company has done a great job. I mean regarding the social, I think you have this STEM program, or the SHE STEMS and for the kids. Also for your own staff, I think you are doing some exchanges with the Prysmian factories. I mean, what you call this, great things. And today, I was talking to Jad, we can do something else also more like training for small in-house with you, like in finance and IT. It is only a training. And with some grants for these young generations, I think I may visit you soon, [Foreign Language], and we can communicate in a better way, so I can probably bring to you my thinking how to invest the company, I mean, partly or for a small amount of money, with our young graduate who is coming to the economy itself. So thank you for listening, and wish you the best, all of you.

Thank you very much. Thank you.

My name is Abbas Muslemi. I work as a Portfolio Manager for Vision Capital. I was going to Prysmian, the parent company's, numbers for the third quarter, and then there are a couple of things that stand out when I compare Oman Cables to Prysmian. One is that you have a share buyback program there. Second one is your net leverage is you have room to go up to 1.5x net leverage. Now Oman Cables stands out because you're sitting with all this net cash, and it's a conversation we've been having right when Cinzia was here, for many years now. And you have this OMR 1.5 million, OMR 2 million in CapEx. Now you, Erkan and Marcelo, are both long-term Prysmian employees and the controlling stake is also by Prysmian. So why is there such a big disconnect in terms of how the parent company is handling the buyback policy, the leverage policy, versus what's happening in Oman Cables? Because fundamentally, we know cost of debt is cheaper than cost of equity. That's one. We know this cash is not yielding you in terms of the ROE that you can generate on the business. So why is there a difference in terms of how you guys are looking at Oman Cables' balance sheet versus what's happening at the parent level?

Sure. Thank you for the question. I will pass it to Marcelo. Of course, just to be very fair, Prysmian is very multinational, a different, diverse company versus Oman Cables. So here, we are saying that we are getting the advantage in the best way to bring value into the marketplace. So the programs that you are asking, maybe I can pass it to Marcelo to have an appropriate answer for that.

Okay. Thank you, Erkan. And thank you for the question. I think you exactly started to explain. In reality, Prysmian have a diversification for the countries different from Oman Cables. We're basically here in Oman and need to maintain the control for the business. But for the point of view, to go to the market, my opinion is completely different. We need to concentrate our actions here in the region and avoid to create a different value compared to the Prysmian for the world. I think it's a good partnership, but I think a different approach compared to Oman Cables.

Yes, the only feedback I had, I take your point, the only feedback is an investor who's been in Oman Cables, at least I think, the best part of 5 years now, and I'm sure that's a feedback you've heard from the analyst community and Oman as well, is this cash that you're sitting on, if it's not going towards a large CapEx program, and obviously, that's something that is left to your best judgment, one could consider opportunities to enhance shareholder value. I mean, after all, every company exists to maximize shareholder value, and you're doing that at Prysmian. That's something I've been following for a while now. It's just a feedback from my side and something you guys can discuss in the Board meeting as well.

Thank you.

Thank you.

Thank you, Abbas. [ Jois ], I can see you have a question.

Congratulations on the good set of numbers. My first question is a follow-up from what [ Shahim ] was asking about Saudi, but I'm looking at the GCC. Previously, you had a strategy of planning to look at GCC for revenue growth. And could you please provide some update on where do we stand right now? You mentioned around 32% of the revenue is coming from Oman as compared to 38% last year. So right now, can you give us some numbers on what percentage of revenue was coming from other GCC countries in 2024? And how do you see it going forward? And what will be the revenue share that you are targeting from other GCC countries?

Yes. The domestic market we have seen, our export we declared already. So how much of it is GCC? We can say that a big bulk of that is GCC. So I don't have the numbers with me, but we can say that an important part of the export is mainly in GCC in many countries. So we're very diverse, again, depending very much on the project pipeline. So geography is important, but also the projects and the geography is also important. So it is volatile from 1 year to another. Our role here is to scout all the opportunities in Oman, in GCC and beyond. So for the 2024, there has been a good contribution. And we think also the good contribution will continue in the next years from the GCC into our revenues.

Do you have any internal targets for your GCC revenue?

We don't have a specific target for GCC specific. But of course, we have the top line targets, and we try to cascade it down depending on the project pipeline that we are seeing in the marketplace.

Okay. Second one is on Manna's question about the capacity expansion. You mentioned about your connector side expansion, there are some cost escalations as well. So how much is the additional expenditures that you have incurred for this connector plant expansion?

It's not about being more on the cost side of the investment, it's more the time line. I was mentioning more the time line of the project, it's getting some delays, but it's not because of the specific reasons, it's because of the general supply chain topics, which the equipment supply is taking a bit longer time. That is what I was mentioning. Having said that, OAPIL is more on the mix development. So in the totality of the plant, we are trying to make this mix development in OAPIL to bring value to all stakeholders in the market to diversify our product portfolio, to be able to mitigate the risk of the volatility of the different product segmentation. So the more diverse we are in the product, in the geography, it's better for us to scout the opportunities.

Okay. And what's the time line for HTLS expansion? You announced it in October. So when should we be expecting the first revenue or plan getting them commissioned?

We are looking in 2025 inside. I need to check the exact time line probably in the Q2 time line, but I need to check it out, it's not in front of me. But as I said, after our declaration to the market, we have been ordering our equipment, and we are now consolidating the time lines of the business. So in 2025, we're going to have it. Exact time line, maybe in the other meetings, we can give a frequent update with the relevant data around it.

Okay. And Erkan, what kind of revenue are we expecting at least in 2025 and 2026 from these expanded capacities?

Okay. So our ambition is to grow. As I was saying, the OAPIL expansion is more on the mix enrichment. It's not additional capacity, but it is more the mix enrichment expansion. In this way, our expectation for 2025 remains positive, but it's not easy to give a specific number on the segmentation. It's too early for 2025. We are trying our best to, as we were discussing, sustain our results and grow further.

Okay. But will it be low single digits or high single digits, double digits? Do you have any indications on that? Any guidance?

Let's say that the growth that we are having is immediately very, very large. Maybe it is a little too much to say. I just want to try to answer the question. So we would like to have some growth. First of all, of course, you know that we are coming from the past quite a space that we have finalized and we have to sustain these results and trying to make them grow. So giving a specific number, again, is not very easy, but it's not a business that is jumping very high, very immediately. So a lot of efforts trying to capture the opportunities in the market. In overall, the trend is positive, and we try to remain positive also in the growth ambition.

Okay. Got it. And Erkan, coming back to the cash question, you have $150 million in your balance sheet, and you have answered it pretty well. But my question is, how much of cash balance in the book would be ideal for you? Do you have any hard targets for that? Because you keep on increasing the cash, you reduce your payout ratio. So how are you planning to reward the investors, the shareholders, over the long term? And if you have any targets, would you mind sharing that?

Marcelo, would you like to go for that?

Thank you, Erkan. In reality, the cash is good, absolutely agree with you. The point is or the target is Oman Cables, every time, analyzes opportunities. And in the correct moment, it's possible to share something, the opportunity to share to the market. For this moment, I cannot comment.

Okay. My sort of other question that I have is you mentioned your EBITDA is OMR 29 million. Could you please tell me how did you arrive at this number? Because when I looked at it, your operating profit is OMR 24 million and the depreciation is OMR 3.3 million. So my calculation suggests EBITDA to be around OMR 27.6 million. If we add the impairment expenses, still only OMR 120,000 is getting added. So still that figure would be falling short of OMR 28 million. Can you please tell me how did you arrive at the EBITDA number?

I can answer, Erkan.

Yes, please. It is a very technical question.

No, no, no. Absolutely, the profitability for the business, we do not have any special or one-off things here. There's the profitability for the different business. I think the different mix you have here help us to improve the profitability and obviously bring us this kind of the result.

I was just talking about the calculations. Your operating profit, EBIT plus depreciation, should be your EBITDA, right?

But you need to consider the result for the financial. We increased the cash, generated a good profit for this cash, which helped us for the net profit. It's good now to update and to consider this result.

So are you adding the investment income into your EBITDA?

No, no, no. My EBITDA is a profitability for the business. If you go for the net result to arrive to EBITDA, if I understood your calculation, you need to consider my finance result which increased a lot for this year because of the cash generation.

I think I need to check it again, and probably I'll take it with you later. See, another question, the last question that I have is on your contribution margin trend. 2022, you had 8%. And right now, '23 and '24, it's been hovering around 14% to 15%. But at the same time, I have a feeling, I'm feeling that it's getting plateaued over the last 2 years. So is there any room for further margin expansion? Or when we look at the future, should we be looking at this as the normal contribution margin that you will be able to achieve?

Okay. Thanks for the question. Of course, it is a lot of effort to improve the marginality. So it's also a bit diverse in the segmentation of the product and the business channels. Obviously, it's not only the price. We said that we are also working very much on the cost side to remain competitive. I think it's important for us to work on the cost side in a very disciplined way because that only allow us to make more export because, at the end of the day, we need to be lean, we need to be very good in every front to be able to compete in the worldwide market. So the margin growth was there. Obviously, we want to consolidate the margin growth because cable is a complicated product and it's not an easy value generation. So the efforts that we are putting there is quite significant. So we want to keep, if not make even further jump. How we make further improvement is more on the servitization part. If that part of the equation is flying well in the next years, I would say, that will help. But of course, on the other side, the market is also competitive. So we try to balance this in the best way possible.

I wanted to ask how exposed is the company to international prices of metals. So for example, if we assume that the prices of copper, aluminum increase today by 20%, is Oman Cables able to pass that on? Or would they have to keep it with them? What's the structure on that? How soon are you able to pass on the rise in costs?

Normally, on the metal side, we are trying to have a hedging, which means that, when we get any order, we try to book it at the metal value. So if the price is high, it's high; if the price is low, it's low. So we don't speculate on that part, and we try to create value. Of course, the volatility of this is a point, but we have all the infrastructure to manage it properly to get the minimum impact, if not 0, and passing these prices into the market.

Perfect. And with the mix and with the capital expenditures that Oman Cables is undergoing, should we be expecting that in the coming years, the revenue base that was recorded this year or the last year, there is certainly a chance to improve that revenue based on the change in mix or utilizing some idle capacity that the company has maybe?

We'll try our best for the growth. It's a combination of different things. Scouting opportunities in the market, working in the cost and trying to develop the top line is our ambition. As I said, in the next period, we are optimistic for further growth. Of course, we have to go month by month, quarter by quarter, year by year, and we'll see. So hopefully, we will be able to sustain and grow also in revenues.

Perfect, right. So the capacity is not constrained. Just one last thing, obviously, this cash has been in the discussion. But could we see any inorganic growth? Anything that you, that Oman Cables, is aiming for, any other business that you think that would be a good pick for the business? Or would it be invested in the same way that it is being invested right now?

Yes, of course, growth is organic and inorganic both. We are looking at the opportunities in the marketplace. It's a usual practice, our working style. And if we see an important opportunity in the marketplace, of course, that can be an option. But still, if anything material appears and we are not able to mention, but once, if we get any opportunity that way, of course, we want to avoid also risks on that process. But we are looking into all opportunities in the marketplace.

Thank you. Thank you so much. So thank you, everyone, for joining us today. I believe we'll meet again in midyear 2025 to midyear results. Thank you for your interest, for your engagement and for your questions. Thank you so much.

Thank you, [Foreign Language].

Thank you, everyone.