Prysmian S.p.A. (PRY) Earnings Call Transcript & Summary

Please welcome to the stage, Maria Cristina Bifulco.

Good morning, ladies and gentlemen. [Foreign Language] It's my pleasure to welcome you all to Prysmian Capital Markets Day. For those of you who are here in the room with us in this special venue, thank you so much for making the effort of joining us in person. But of course, thank you very much also to those who are following online. Before we get started, a quick safety briefing for us in the room. There are no planned fire test for today. So if you hear an alarm, please do make your way to the nearest exit. Naples is a very important location for Prysmian. And as some of you may know, the San Carlos theater, this theater was the first Opera theater, still active in the world. So what better place to host our first ever Capital Markets Day. We know we made you wait for it, and we trust it will be worth it. The entire team of the presentation today will be around connecting our work to tomorrow. Connecting our past and our future, market trends and segmentation, opportunities and solutions. In a very few minutes, I have the pleasure to welcome to the stage our group CEO, Valerio Battista, who will walk us through our journey. And the main strategic decision that brought Prysmian to be the company it is today. Our CEO designated Massimo Battaini will then explore new frontiers and unveiled the strategy, which will allow Prysmian to capture market trends and to sustain our leading position. I will bring you behind the sustainability to share with you why sustainability is important for Prysmian, how it is integrated in our business and why we see it as a catalyst for value creation. To complement on value creation, our group CFO, Pier Francesco Facchini, will present our midterm outlook and main financial KPIs. Last but not least, Massimo Battaini will conclude the presentation and bring us into the future. Soon after the presentation, there will be plenty of time for your Q&A, and to those who are following online, please feel free to submit your questions through the chat box, and we will be pleased to answer your questions as well. There will be a very nice lunch. And soon after lunch, we look forward to showcasing you one of our jewel assets, our installation vessel, Leonardo da Vinci. And now let's have a look back at when everything began. [Presentation]

And now welcome to the stage, Valerio Battista.

Good morning, and welcome, ladies and gentlemen, all to our first Capital Markets Day. It's a pleasure to be here. And to see all of you. Most of you, I know since years because, fortunately or unfortunately, I'm in-charge of this company since 2002, 1st of February, a lot of years. It was not the same company, but it was the division of Pirelli Cable. Okay. Now we are here, and we are here to introduce to you what we think to do in the next years. It will be the role of my designated successor Massimo Battaini, but I can tell you what it is today, [Foreign Language] I'm going to remind you because you know for sure. The journey, that drove us where we are, is a very long journey that started 28th July 2005. At the time of the spinoff of the company from Pirelli S.p.A., I was in London, signing many tables of documents in order to transfer as a guarantee, all the assets or the major assets of the group to the banks, in order to get EUR 1.56 billion credit lines. It is not an easy task, but our strength has been always to be able to transform the results of the company into cash. My motto is "no cash, no party". Then once you have the cash, you have the opportunity to choose how to employ it. If you don't have, you have a problem. 2007, we moved public in the IPO. It was Goldman Sachs still keeping the largest chunk of the shares of the company. And we move it public. Everything has been very quick. 2005, July, the spin-off. 2006, September the refinancing. 2007, May, the IPO, listed at EUR 2.7 billion market cap. Let me remember that the company has been acquired by Goldman and the others including myself, at a value of EUR 1.3 billion, not equity, EUR 1.3 billion enterprise value. We have been able to become fully public in 2010. You remember 2008 has been a year of crisis because of the subprime crisis. And in 2010, we went totally public. Goldman exited. And we started to work around the world, alone. 2011, we acquired the Draka. It has not been an easy deal, but we did it. 2018, we acquired the General Cable. I was with Fabio Romeo in New York. And we put $3 billion on the table to take over General Cable. It has been a really successful move that changed the face of the company. Being now -- since then, company with 2 big markets course, Europe and U.S. that more or less it is what it is today. Last but not least, 2022, the improvement of the performance of the company. Thanks to what we did, what we are still doing and a market that is electrifying. Okay, the company has been transformed over the last 10 years. The plans are a lot, but the group revenues, remember that the revenues is vanity. And the number of employees have been multiplied by 4 as respectivity by 3. 30,000 people -- 30,000 families around the world, that counts on what we decide to do. That's the biggest responsibility we all have. As you can see, the plans are everywhere, largely in U.S. and Europe, but also South America and Asia. Next, please. We created a little bit of value for the shareholders, for all the stakeholders from the EUR 2.7 billion market cap at the time of IPO. Today, the company has reached over EUR 10 billion market cap. So what I can say, we did our job, not me, we. We did our job reasonably well or at least acceptable. And now it's time to look at the future because once you run, you have never to stop. That's what I think. We have never to stop. Now what's the problem? I'm not young anymore, I've been running the company in the last 20 years. And my duty is the duty of all of us to create the successors. Massimo has been working with me since 2002 summer. Joining even him from Pirelli Tyres. And now I'm not young anymore, the company need of someone younger, not very much, but younger. Younger, but experienced. Let me put it that way. And it's my duty. It has been my duty to prepare him for the succession. The Board has nominated -- designated Massimo as my successor. And I'm confident. [Foreign Language] company. I'm confident that he will be able to continue to drive the show of the next. I wish him 20 years, but the age is the age, okay? So thank you very much.

Thank you, Valerio, and thank you for the degradation about my age. I think the achievement of this company in the last decade has been extraordinary thanks to your leadership. And together with the rest of the team, which actually is in this room today. We set this company up to be able to capitalize on the growing opportunity of these changing markets. Please join me with a big round of applause for Valerio for his 21 years of tenure as CEO of this industry. As most of you know, we are just a few minutes away from our Italian summer in plant here in Arco Felice. And this place means a lot to me. I remember when more than 10 years ago, I left the role of CEO of the U.K. and move back to Milan. And Valerio offer me the position of head of projects. And back then, it wasn't really excited about the role, because I wasn't too sure how my experience would contribute to this technological business. But Valerio's offer wasn't actually an offer. He told me something like Massimo, you had to take the head of project division. I need you there, [Foreign Language]. I will pay the copyright at the end of this.

[indiscernible] is not [indiscernible].

It's not an option in this company, I know. So I took on the position a bit reluctantly, but just after a few weeks, I became very excited about the complexity of the technology in the Submarine system and the Marine operations. And I came to this place Arco Felice many times. yes, I spent long days -- long weeks to review the project activity with the team. All the time, you know what has impressed me the most was the passion and the commitment of the local teams. And they put all they could, all the effort they had in this business. And this is what I consider a key driver, for our success in the market. So that's why today, we gather here in Naples, and that's why this place means a lot to me. And by the way, we couldn't find a more convenient place where to display our Leonardo da Vinci vassal today. So I'd like to start taking a look at what is going on out there in the market, the energy transition and the digital transformation are deeply reshaping this market and generating new secular trends. As the world moves towards decarbonization and sustainability. We are in the middle of these mega-trends. Over the last 15 years, we've been building a leading position. We've been growing capabilities to leverage this opportunity. Today, time has come for us to reap the benefit of what we sowed. Today, we consider as the cable player best suited to leverage the market growth. On the back of this change in the market, we set out our new strategy. We set ambitious targets for our future. I'm looking forward to sharing the strategy with you today. Connect to Lead, this is the name of our strategy. So we want to lead the market while we connect in the world, while we are enabling the energy transition and digital transformation. We also want to transform ourselves from a cable player into a cabling solution provider. So more system than just cables, more integrated and combining Energy and Telecom solutions. How are we going to achieve this? We capitalize on our strong leadership in spaces like Submarine, Interconnectors, Power Distribution Optical Cables, which are pivotal to the Energy and Digital transformation. We also had to enhance our right to win in new attractive spaces, like data center, IoT, grid monitoring, connectivity, electrical vehicle charging. So while our previous strategy was based on inorganic growth and large M&As, the current one is centered on the organic growth. But it heavily capitalizes on the strength that we built through the past M&As. So somehow the two strategy will be different. They are very much linked. We will also pursue M&A opportunity, aimed at complementing our product portfolio, our geographic reach, our customer base, our market share, they are not included in the [ Far trajectory ] simply because they are not fully in our control. So you might wonder, what am I going to bring to this? What will I contribute to this strategy? I will guarantee continuity with the past. To our usual discipline, our strong stand for value and forecast. But I will also bring a new focus. And a new focus to lead the company towards growth opportunity towards a new pathway of growth. As seen, it is clear that the world is on one-way trajectory. Can you please send the video? [Presentation]

So the world is truly on a one-way trajectory. The carbonization, the resulting structural market trends are driving this change. We recognize 4 new drivers in this market. Renewable energy generation, electrical application growth, Power grid enhancement and digital transformation. And they represent a unique opportunity for us because they are fully overlapped with our portfolio, with our geographical reach, with our customer base. I know that many of you know really a lot about this stuff. So I don't want to bother you today with more. I just want to share you -- share with you some of the distinct drivers behind the [ dish ] of the market trends. So that you can you can appreciate the relevance for our company. So let's talk about renewable generation. Today, fossil fuel account for 70% of the electricity generation, while renewable sources only contribute for 30%. Tomorrow, this is going to flip, 30% fossil and 70% renewable. This will lead to a 4x increase of the transmission capacity of renewable sources. So long and powerful transmission line are going to be laid to connect generation to application. Because you know, the story, the renewable generation is located in places far from where the consumption is. In our German Corridors project is a light example of these market dynamics. We are laying cables as long as 1,000 kilometer high power, to connect the North Sea of the country, Germany, where a wind farm offshore to the southern area of the country. Here, Prysmian has an important role to play in this space. So not only do we want to enable the transmission of renewable energy. We want to enhance the cost effective and sustainability of these cabling solutions. And the 525 kV [ Plaza ] is a great example of this approach. It's the first cable in the world fully recyclable. So cost per megawatt hour in sustainability are becoming key requirements for our customers moving forward. Lowering the cost, increasing the power, enhancing the low cargo footprint, reducing the Cape Wind of our products is essential to making this energy transition more affordable, so more sustainable. The second trend relates to the [ later car ] application, increase in demand. So what the total energy demand is expected to remain stable over the next 30 years, because the additional demand of energy will be offset by energy efficiency. The electrical demand, the electricity demand will double from 20% of the total energy mix to 40% of the total energy mix. For the engineers in the room from 25,000 terawatt hours to 55,000 terawatt hours. What is the reason for the surge in electricity demand? It's twofold. There are fossil fuel-based application, like gas heating and ICE cars that are shifting to electricity, and there are electricity-based applications that are responding. You've seen the chart some examples. The conversion and the shift of buildings, residential in asset electricity is pretty evident. Heat pumps, induction hubs, driving the complete elimination of gas connection to new building and to existing buildings. A few months ago, we met with a customer of us in the United States, the New York State Utility. The asset manager was desperate, because they could not find, they could not source all the cable they needed to connect or satisfy the growing demand of electricity for their customers. You know what is going on? There is a new law in the New York State. This is called Climate Leadership and Communities Protection Act, which bans new fossil fuel connection for building under 7 stories from 2024 for building greater than 7 story from 2027. So these buildings are going to be electrified, meaning that cables are going to be laid as opposed to gas pipes. So this changes prompting a significant demand increase in the space. Data center also expanding their needs and of electricity. And 5G mobile rollout is also a significant example of relevant increase in electricity demand for the electrification of the digital infrastructure. So all these changes on prompting are wider spectrum of cables and more specialized cable solution to meet all the differentiated applications that this world is going to need. You will see soon why this is very relevant to our space. Let's now talk to the power grid announcement. We talk about the generation, and we talk about the electricity demand increase. Now we need something to connect generation to application. And this is the role of the power grid. And the role of power grid is becoming even more crucial. Because not only has the grid to connect application to generation, transmit and distribute more electricity and satisfy growing demand from the consumption. It has also to deal with intermittent electricity. This is what you get with renewable sources, not a stable flow of electricity. It has also to allow by generational flow. So in the grid, the energy has to flow from the generation to consumption for the consumption to the grid, because the solar panels on top of buildings, are going to feed some excess electricity into the grid from the consumption side. So the annual investment in power grid are bound to double by 2030, and to triple by 2050. The grid is today made of 80 million kilometers. It's going to go beyond 160 million kilometers by 2050. So you might not remember when the first electricity has been generated. Don't worry I didn't remember myself, I had to look it up. It was in 1831, when the first electricity was generated. So it has taken almost 200 years to lay 80 million kilometers worth of cables. Now we're going to do the same amount of activity in less than 30. So this massive expansion of the grid, require safer cable, more resilient cable, more sustainable cables. Because you might probably don't know this, but the vast majority of the CO2 emissions associated with cables in operations belong to the power grid space. Due to the larger size of the grid and due to the fact that not all the energy flow in this grid is renewable. So in this space is where primarily customer needs sustainable solution. Finally, the digital transformation. Data boom is fueling a significant investment in network -- in optical networks and in digital infrastructure, which in turn creates more demand for electricity. The optical cable demand will increase by a factor or 2, as premises move to fiber, data center and 5G are deployed. We also see an emerging trend in this telecom space. We see how solid -- we see our innovation and sustainability also becoming relevant for telecom. Low carbon footprint emission, avoided emission and all the rest. So you've seen our solid drivers behind each one of the market trends. And how much these 4 market trends are intertwined. Renewable energy puts additional load on the power grid, increased demand electricity create a more need of electricity distribution and requires more green generation, optical transformation requires more optical cables and power cables. This is why, we consider ourselves the company best positioned to leverage these market trends, because we are the sole player, we're the sole player with a leading role across all the 4 market trends. I have one more thing to tell you about the market trends. This is the energy convergence -- the Energy and Telecom convergence. I told before -- I told you before that cables had to be smarter to deal with the complexity of the new grid. So cable has to have something they haven't had before. They need to have a digitalized solution. The need to have systems whereby the power cable is coupled with a fiber used as sensor to monitor the power flow, to enhance the cable performances. And this is what we mean by convergence. Why is it relevant to us? Because we are the only one with a strong position in both sectors, Energy and Telecom. So we are to receive from you guys, the question as to what is the role of Telecom in our portfolio. Why do we keep it? I think now you can see why we keep it. You also might wonder why we decided today to disclose our strategy. You've seen that the market is dramatically changing. And thanks to our leading position, our unparalleled portfolio and our unique customer reach that we gained to the past M&As. We are now more prepared than ever to seize the market opportunity. We are now leading the energy and digital transformation more effectively than anyone else. But however, we haven't got here by chance. I cannot exactly say that we've known from the very beginning of our journey back in 2005 that one day we would face such market dynamics. But what I can tell you that from the start, we had clear visions, we had clear ideas. We wanted to grow this company. We want to expand our footprint. We want to grow our portfolio and our customer base and become the market leader. So we knew from the start that one day, we would capitalize on these trends. This day has now arrived. So Connect to Lead, the name of our strategy, set the end of the first part of our successful journey, but marks the start of new pathways to greater growth. So what does our strategy consist of? Connect to Lead is based on 4 pillars, which are key to addressing the market dynamics and seizing the growth opportunity. First of all, strong cash flow generation, balance and innovative product portfolio, unique capabilities of people and knowledge and the new business segmentation. And I look forward to sharing more with you on each one of these pillars of the strategy. Sustained cash flow generation, it is key to providing value to our shareholders and is key to supporting our organic growth, our plan. So we continue -- we are expanding our capacity, we're expanding our capabilities to continue serving our customer in the best possible way and to keep pace with the market growth. We are moving from EUR 300 million CapEx over the last 5 years to almost doubling this value to EUR 540 million over the next 5 years. You might wonder whether have we taken all precautions to guarantee that we are positive and reliable investment return for this large program. I think so. I think so because we select carefully where to invest our money, based on solid business cases. And a solid business case for us means 2 things: that there are reliable driver for growth in each of the segments where we want to spend capacity and more importantly that there are tangible customer commitment. And by tangible, we mean money. We mean advanced payment or capacity booking fee that give us the confidence that customer will buy the volume that our capacity will provide to them at one point. Secondly, because we are executing this large program of investment with the usual discipline and cost rigor that has distinguished this company over the last 20 years. This to avoid the cost of run and to guarantee the proper time to market. You heard me speaking about the market trends, you see in this slide how beautifully have a product range overlaps with all the 4 market trends. In each of the markets, we have a product or a solution as system suited to capture -- to best capture the market growth of that market. So it has taken many years of concerted efforts to build this unique and broader and unparalleled portfolio, but it was worth it as the benefits are clear. Our portfolio also reflected a strong focus for innovation. I should be calling it obsession for innovation. This is not the normal innovation, what you were talking about here, not the ones only aimed at enhancing the electrical cable performance. It's a new innovation. It is working on the enhancement improvement of cable performance, while we move towards sustainable solution. Because we want to help our customers to decarbonize the grid. We want to help them achieve their sustainability goals. We want to lead sustainability throughout the whole value chain of this industry. We prepare forklift portfolio to see some of the distinct innovation in each one of these market trends. [Presentation]

So I think you appreciated our truly breakthrough these innovations are. Let me now move to the key pillar of our strategy, the people value. I know that many companies talk about the strategic value of people in their organization, but we walk the talk. We really consider people central to our strategy. And I'll give you an example. When in 2018, I moved to the role of CEO North America to lead the post-merger integration after General Cable closing, my primary goal there was to preserve the values of General Cable, the asset, the knowledge and the people. And to this end, we haven't simply conducted a normal integration by imposing Prysmian procedures, processes, capabilities and people to the General Cable organization. We effectively created a third entity, a third company where we managed the best capabilities, the best assets, the best value, the best people of the 2 legacy companies. And with this inclusive approach, not only we retained key professional, key engineers, key people of General Cable organization. We also protected our revenue of the combined entity, we also preserved our customer base. And soon after, leverage on this trend, we quickly gained momentum in the market, and we became the leader that we are now in North America. So this is what an inclusive M&A means to us. And that's why today, we are proud to say that 2/3 of our people came through the past M&As. Not just the people, the people, the assets, the knowledge, the capabilities. And this is where the value of this company lies. And we continue to invest in our people, with new programs to make them feel engaged and included in the company. And we have a special focus on people safety and work. It's a great and tangible example of how much we care for people. Let me now move to the fourth pillar of the strategy, the segmentation -- the new segmentation. Our structure will move from 3 segments of business to 4 segments of business, which are exactly mirroring the market trends. renewable transmission, power grid, electrification and digital solutions. We are very excited about this strategy about this segmentation because it drives more focus of this organization towards the market, towards the market trends. It helps us enhance the effectiveness of our go-to-market. And also provide you -- it provides you more visibility on how we play in each one of these segment of business. So this is what the new segmentation consists of, renewable transmission is made of submarine power and land HVDC. Power grid consists of HVAC and power distribution with our airlines. Electrification is made of Industrial and Construction business unity, previously named T&I. And also specialties business unit, formerly reported into industrial and network component space. Digital solution is fully overlapped with the current telecom segment. We presented the 4 segment as separate entities. But we recognize sizable synergies -- remarkable synergies across the 4 segments. The most obvious one is the one-stop shop. Customers like buying the whole range of products they need from one supplier. In North America, you see we serve large distributors with whole spectrum of products, from Telecom solutions, Industrial and Construction and Specialty products. While in Europe, for example, we serve utilities and transmission system operator, with both high-voltage transmission line and power grid solutions. We are also benefiting from the solution provider opportunities. So combined solution Energy and Telecom, as I mentioned to you before, from operational efficiency, which help us enhance the profitability in the diversement by sharing a common cost structure. But more importantly, it provides us the market hedging opportunity. The 4 segments, coupled with a differentiated geographical base, provides us with a great setup. A great setup to help us temper the cyclicality of the individual segment. So you heard me talking about the market trends. You heard me talking about the strategy. Now we move on to the individual strategy of each segment of business. So that you can see how all come together. Let me start with renewable transmission. Here, we serve the wind offshore submarine market, the summer interconnectors market and the land interconnectors market. And these markets are exploding. They used to average EUR 2 billion worth of order awards per year. Now this level has surged to more than EUR 15 billion per year. And on top of the ordinary market, the one represented by individual stand-alone project in the chart at the bottom, I reported the frame agreements. I know that you heard a lot about the frame agreement, said, what are they? They are bundle of projects awarded at once. I have reported them according to the years of production, not to the years of a word. So when the production is going to take place for these projects in frame agreement contracts, to provide you with a more accurate and balanced representation of the market evolution. And you see that the market is edging towards EUR 20 billion, which is 10x what it used to be. Our strategy here is pretty simple and straightforward. We are the market leader. We own 35%, 40% of this market. We are determined to remain market leader, [Foreign Language]. So what are we going to leverage to achieve this strategy, the technological leadership because the technological leadership is a key when combined with a consistent track record to remaining market leader. Then we leverage our large portfolio of projects in hand. It is now as large as EUR 20 billion. With this, we gain great visibility of the revenues of this company over the next 5 years. In fact, 90% of the revenue of our Fabio plan are covered by project in hand. In also be much more selective in chasing new order intake. We can chase a reliable customer. We prefer TSOs, as you know, we tend to stay away from developers. We can also chase higher contribution margin profit -- contribution margin project, sorry. What this EUR 20 billion is made of? EUR 9.7 million of the usual backlog of projects we did notice to proceed in end, and there are EUR 10.3 billion of projects that are awaiting the notice to proceed, but they are supported by what I call before, tangible customer commitments. So advanced payment and capacity booking fees. I know that you had recently growing concern about the offshore space because the cost inflation, the cost of capital are postponing -- kind of postponing or delay of some of the projects, but this concern only belongs to the developers. And if you see from the pie in the center of the slide, we are hardly depending on developers. Only EUR 2.4 billion, so our EUR 20 billion project portfolio is with developers. And only EUR 400 million is for offshore project with developers. So you should consider as we do this portfolio very solid. We also had to leverage on our operational excellence. You know that we failed once with Western Link. But we said only once because we, at Prysmian, learn from our mistakes. And through this experience, we learn how to become more effective, how to preempt this problem through more robust and sizable production trials. When it comes to launching a brand-new technology to the market. So thanks to this experience, we came out stronger than before, and we actually strengthen our reputation in the market because ultimately, we delivered the project. We also doubled down on capacity. We are investing in manufacturing capacity and in installation of capacity, and I'm sure that you don't know this, but you already own 6 units, 6 vessels. This is unique in the cable industry. In a few years -- 2 years, the 6 units will grow to 9 -- not 9, 8, don't exaggerate, 8 units. We're also doubling down on the organization. We are increasing the size of the business. We are increasing the number of people, tackling the challenging the scale and the complexity of this growing business. So the orders are in end, the capacity expansion is undergoing. The organization is strengthening as we speak. Now we have to execute. The people commitment and passion that I mentioned to you at the beginning of my speech, is what makes me comfortable or confident that we are going to achieve the EUR 600 million target for this business by 2027, coming from EUR 220 million last year. Power grid. The segment is composed by 2 business units: High Voltage terrestrial AC and power distribution with overreliance. Also here, the market is growing fast and customers are rushing to secure cable availability. Customers are also becoming more sensitive to sustainable solution, because of what I told you before, this is the space where most of the [ store mission ] are generated. And we are leading this transition. When a few months ago, a European utilities issued a new tender for volume of '23, '27, with stringent sustainability requirements whereby 90% of the volume of the tender was supposed to be coming from products with low carbon footprint and high recycled material. We had already the product available. This was not the case for some others. Our strategy consists in growing our market share, which is already averaged between 40% to 50% depending on the different geographies and to position us as a solution provider. To achieve this, we leverage our innovation capabilities, not only on the electrical side, but on the sustainability performance. And P-Laser, E3X, Alesea are great examples of how we lead sustainability through the value chain. E3X and look at [ Steria ]. E3X is a fantastic product. We inherited it from General Cable, thanks to our inclusive approach. We develop it together. We turn it into industrial products we now generate sizable revenues. And by the way, this year, it has won the Oscars of innovation in the United States, the Gold Edison award. We also capitalized on our strong leadership, strong leadership in terms of customer relationship. We build this valuable customer relationship, thanks to our technological leadership and more importantly, thank to a consistent service level. What does customer matters the most? Short-lead time and security of supply. With our global footprint, we often provide a product to our customers tend to double plant -- dual plant set up. In case one plant phase, the other backs it up. We also continue our journey towards a grid monitoring provider, a solution provider, leveraging the precam product offering. And we are gaining traction in this space also in North America, for example, we launched a few years ago, a package made of cable plus monitoring devices plus extended warranty. We call it advanced plus whatever cables. And this is gaining traction in the market as we speak. So by expanding capacity selectively, looking also always a tangible customer commitment. Here, we're going to grow the company EBITDA in the segment from EUR 200 million last year to EUR 410 million by 2027. Electrification, here, we serve to markets, the Industrial and Construction and data center space with our Industrial and Construction business unit. The renewable and OEM space with our Specialties business unit. The surge in electrification demand by a factor 2 by 2050, from this market towards a more radical and faster transformation. As you see from the KPIs at the bottom of the slide. Here, the distinctive value of our market leadership, lies in the broad, unique and comprehensive product portfolio that we have. We play in all sector, defense, aerospace, railway, crane and mining, industrial building, commercial buildings. We are a fully-fledged player here. And that's why we hated [ Venson ] and the place our capability by calling us a generalist. You know what we are referring to. So we also want to provide you some more insight into the Industrial and Construction space. We limited the marginally exposed to residential space, as you see from the chart. In EMEA, our exposure to residential is of 35% of our revenue. While the rest is no residential. In North America, we are hardly present in the residential space with only 5% of our revenues. All the rest enjoy the great drivers of growth that this industrial space consists of data centers, industrial and ensuring activity investment in infrastructure, in renewable, in commercial and institutional buildings. So that's why we consider solid the prospect of future for this business unit. So our strategy consisting the remaining leader in this market space and leverage the market growth. In order to achieving -- in order to achieve the strategy, we want to continue leveraging our global footprint and provide customers with a fast and efficient service level. Because in this space, the service level is the only drivers for profitability improvement. You know this very well because you remember what happened to our T&I business last year in North America when the result surged to an unprecedented level. The supply chain was disrupted by shortage raw material, lack of labor, all short of manufacturing constraints, we could leverage -- we leverage our global footprint, our global sourcing capability and provided customers with not an impactable service level, but with a service level shorter than that of our competitors. So we have stripped the competitors. We drove the price up in the market, we enjoyed and leverage profitability improvement. We also continue deploying our ECO CABLE brand, for sustainable product across all geographies. And customers becoming more and more available to consider price improvement, to recognize their need for local for print products. Here, we target EUR 700 million EBITDA, which we recognize is slightly lower number than what we reported last year, close to EUR 800 million, but simply because we have factored in some price normalization of the T&I space in North America. Let's have a look at the digital solution. It consists of 2 businesses, optical cables and multimedia cables, and we serve for markets. Fixed networks with Fiber to the Home and long haul, mobile networks, data center and IoT. And across all these 4 markets, what are we noticing? We're noticing a continuous growth in demand for high-quality cables for high-performing cables, because the challenging represented by the data boom are really significant in this space. Our strategy implies that we remain market leader in the optical space, and we enhance our right to win in the data center and IoT space. To support this strategy, we leverage our unique Fibers portfolio, in our innovative cable solution. The Sirocco cable I mentioned to you in the clip and FlexRibbon are the most fiber compact cables in the world. We provide a customer in data center hyperscale space with FlexRibbon with 6,112 fiber. And the cable is not that large. It's that small. Because can you imagine that many data we can transfer with the 6,112 fibers in 1 cable. We're also leveraging the one-stop shop opportunity in the convergence between Energy and Telecom, and also, we are strengthening relationship with new alternative network operators and the new entrants, the likes of Google, Amazon, Facebook and Microsoft. Here, we are moving from EUR 270 million in 2022 to EUR 290 million by '27, after suffering some significant slowdown in the market in 2023 for sure and possibly for few months, a couple of quarters in 2024. So you have heard now how we forged our business to best capture the market opportunity. And what the key drivers are for profit enhancement in each one of the individual segments. And by executing our strategy by segment and by leveraging on the pillars of our strategy. So the stronger cash flow generation, the balanced and unique portfolio, the people value and the segmentation. We will ride the company EBITDA from EUR 1.5 billion last year to EUR 2 billion by 2027. And I can assure you, we will pursue. We will chase this goal with the usual commitment and the termination that we always displayed in the last 20 years. And you heard throughout my presentation, our sustainability is also key essential to supporting our strategy. So let me invite now Cristina on stage. She will tell you more about our approach to impactful sustainability. Thank you. [Presentation]

Thank you very much, Massimo and hello again, everyone. As anticipated, I'd like to share with you why sustainability is important for Prysmian and why we see it as a driver for value creation. Sustainability has always been integrated in Prysmian strategy since the beginning of our journey. At times when I'm sure many of you will remember, there was no where close, the focus, the interest or the scrutiny compared to what we see today. Do you know when Prysmian installed the first fully recyclable medium voltage cable? Would you believe it was 2006, a year before our IPO. And it was our patented technology P-Laser Medium Voltage. Or did you know that by 2010, a year before the acquisition of Draka, before becoming a full public company, Prysmian has produced 3,000 kilometers of fully recyclable medium voltage cables to serve the Italian grid. As a proof point that sustainability has always been integrated in our business and the very end of life of our products, a key priority for us. Over the last almost 20 years, we have worked hard to apply a 360 approach to sustainability, mixing the business perspective with the corporate, the organization, the culture, the compliance, always making sure we were robust, reliable, measurable and humble. Always making sure we were [indiscernible]. As leader in our sector. We always felt and we feel the responsibility to promote initiatives and to drive improvement across the value chain and now also beyond the value chain. We have been among the very first company to issue a stand-alone sustainability report. In 2013, we launched our employee equity program, YES. ESG KPIs have been integrated into the remuneration since 2018. In 2020, sustainability has been introduced in the board skill matrix as a key competence for Prysmian Board member. The same year we established the Board Sustainability Committee. In 2021, we received the size-based target initiative validation for our climate change ambition, and we launched our Social Ambition 2030. In 2022, we launched our BE IN program to allow shop floor workers to be shareholders of the company. In 2023, we published our first integrated report. And in the meantime, we kept innovating our products. P-Laser Medium Voltage and high voltage, Eco Cable, E3X Robot, Pry-ID, Alesea, [ LSPS ], and I could continue. But it's important to note that throughout this process, we have not been alone. We embarked on this journey together with our customers, investors, colleagues, and we want to thank you all for that. Because engaging with our stakeholders has allowed Prysmian to meet customer needs to align with investors with your expectations. And to attract and retain talent. And we are not stopping here. The journey continues. We have worked hard to guarantee a diverse shareholding structure. As Valerio mentioned, unlike all other Italian companies, we are fully public. With no reference or controlling shareholders. All investors have the same value and the same right in Prysmian being the institutional investors or employees of the company. Prysmian share capital is in the hands of 100, almost 400 institutional investors, 10,000 of premium employees are shareholders of the company. The top management are shareholders of the company. And this is of course, a strong guarantee of interest alignment but also of the highest level of transparency, accountability and focus on best practice. Also in terms of geographical composition, we are pretty diverse with over 40 countries represented in our share capital. And last but not least, we are proud that our investor base strongly supports our drive towards sustainability. Nearly 50% of our shareholders prioritize or integrate ESG KPIs in their investment decision. And they see Prysmian as a company that can play an impactful role in the energy transition. And to be impactful, sustainability is essential. We think sustainability is essential to keep our leader position and also to allow our customers to be leaders in their own space. And this is the reason why at Prysmian, we believe in sustain to lead. And to sustain to lead in Prysmian, sustainability is not only environmental, social and governance, but rather environmental, social, innovation with governance, so we're seeing all the other dimensions to guarantee transparency and vigor. Coming to the environmental dimension. You know very well how serious we are about climate change. And that we have been the first cable makers to receive a size-based target initiative validation for our climate change ambition in 2021, and we also upgraded our target this year. We are committed to decarbonize 90% of our Scope 1 and Scope 2, so 108 plants and 26 R&D centers by 2035. Being aligned with the 1.5-degree trajectory. And we will be net-zero. So decarbonizing 90% of Scope 1, Scope 2 and Scope 3 by 2050, being aligned with the well below 2-degree trajectory. At the end of 2022, we already decarbonized 28% of our Scope 1 and Scope 2 versus our baseline, which is 2019. And we are pretty ahead of schedule if you think that we should be minus 47% by 2030. And one of the main reason of our result is our innovation approach. As Massimo was saying, we are obsessed with innovation to the point that we bring it also to our decarbonization journey. We are the only company in our space to have removed SF6 gas from our own operations. For those of you who are less familiar with SF6 gas, this is a very bad gas. Which is producing during the testing of the underground and voltage cables. Thanks to the support of the Board of Directors with us today in the room, we are devoting up to EUR 100 million CapEx by 2030 to decarbonize our own operations and of course, to support the overall circular economy framework. But our responsibility goes beyond our footprint beyond Scope 1 and Scope 2. And we want to make sure that we help our customers to decarbonize their operations, so scope 3, which are, of course, Scope 2 emissions for our customers. And also to support our customers to decarbonize their own operations, we launched our design for sustainability framework. According to which we want to introduce new thinner, faster, lighter, greener products with enhanced sustainability performance. And the design for sustainability neatly complements the design for performance. To make sure that we serve our customers with the best performing and the most sustainable solutions. P-Laser Medium Voltage and high voltage is a technology which came out from the design from sustainability. Or Eco Cable. Eco Cable is the first green label in our space that we put some products that fulfilled 6 very strict and environmental-friendly criteria like the recyclability of the cable, the recycled content, the transmission efficiency. And we are proud to share with you that very recently, a couple of weeks ago, the Eco cable label received the Bureau Veritas certification, is a further confirmation of our rigorous approach and willingness to set standards. But we want to go beyond. We want to go beyond Scope 3 and to tackle Scope 4, the avoided emission. As of today, 30% of Prysmian revenues come from products with enhanced sustainability performance, which is a confirmation that not only is it the right thing to do, but also there is a strong demand of these products from our customers. And this is possible, thanks to our open innovation approach, our obsession innovation. And thanks to our open innovation approach, we collaborate with our customers with world leading universities, industrial players, think tank, to develop innovations that can pave the way to the industry decarbonization through Scope 3 reduction and more broadly Scope 4. For those of you who are new to the topic, why Scope 1, Scope 2 and Scope 3 are emissions connected to your footprint and your products. So the focus is on reducing them. Scope 4 emissions are emissions that you can in principle avoid through your innovation, but to the impact goes beyond the value chain and beyond the life cycle of your products. A few examples. E3X Robot, it allows -- it increases the voltage of the cable. So it reduces the need for additional lines to be installed. Actually, it serves both Scope 3 reduction and Scope 4. Sirocco extreme, it reduces the overall environmental footprint of the optical network, and it reduces the emissions connected to the excavation work to the installation. Alesea, Alesea is a very nice device that you put on the drums of the cable and it detects in real time, the location of the drums and the cables remaining on the drum, so it reduces at minimum scrap and waste. Our all ground solution, which is an installation technology we inherited from General Cable, which allows cables to be buried in tranches that are less wide and less steep. So it avoids, it reduces the emissions coming from the transportation of [ sense ] or other special materials. Or we developed a sensorized network component called [ LSPS ] which detects the voltage and the partial discharge of the cables, so it avoids, it reduces the emissions coming from the manual interventions for maintenance. Or we are developing the megawatt charger solution, the fast-charging solutions for electric vehicles, which, of course, reduces the overall usage of the fossil fuels. These are few examples of design for sustainability in practice. And as Massimo anticipated, we do believe that innovation and sustainability are [Audio Gap] equal working environment is essential for the success of the company. And also for this reason, in 2021, we launched our social ambition. Setting a broad range of KPIs in these areas to be achieved by 2030. And thanks to our strong focus on execution and strong commitment, we are now in a position to bring forward some of these KPIs originally set for 2030 to 2027. At the end of 2022, 10,000 of Prysmian employees were shareholders of the company. Thanks to program like YES, which celebrates the tenth anniversary this year, or BE IN, which allows shop floor workers to be shareholders of the company. And thanks to the strong willingness to participate to this program, we are now proud that we can bring forward our goal, our ambition to have a 50% of Prysmian employees shareholder of the company by 2027. We know we are pretty unique also from this perspective, and we want to thank all our colleagues for their strong motivation and willingness to contribute to Prysmian value creation. In 2021, we set the target of hiring, promoting, developing 500 women in stand position by 2030. With the overall all aim, of course, of creating and nurturing the pipeline of the future leaders of our company. And also on this target, we are ahead of schedule. And we feel confident to be able to achieve this target by 2027. We believe very much also investing in our people. And for this reason, we are increasing the target of the training hours per year per employee to 37 from the current 29. This will be possible, thanks to our Prysmian Academy which has already provided 800,000 of hours of training to all the employees of the group, all levels. And it will be possible also thanks to the Sustainability Academy, that we launched the last year with the overall aim of providing know-how, awareness, competence to all people in our group. We think you cannot be a leader of Prysmian without a strong know-how sustainability to the point that we are making some of these courses mandatory and of course, not to mention the nonmandatory training on safety. But also in the social dimension, we want to go beyond. We want to go beyond our business beyond our value chain. And we want -- we feel the responsibility to return back to the communities where we do operate, while expecting no benefit in return. We feel the responsibility of promoting and nurturing the talent of talented people coming from underprivileged communities with a special focus on stem areas. By 2027, Prysmian will support the education of over 400 women and young girls and over 1,400 children coming from underprivileged communities with a focus on stem areas. These projects are already underway, Brazil, Colombia, Mexico, Oman, the Netherlands. Many of my colleagues are mentoring these students. With the overall aim of giving them opportunities, life-changing opportunities that most likely they not have had otherwise. Of course, it's important to share what you do, the spirit of what you do. But we also think it's important to set targets and to track your performance against this target. At Prysmian, we believe, in the relevance of measuring what you do. It is not measured, it is not a number. It's not really that. You know Prysmian. At the same time, it's always very easy to set long-term targets where very few of us will be around to answer for it. And for this reason, we apply to ESG KPIs, the same discipline, the same rigor that we apply to the business and to the financial KPIs. And we are setting short and midterm targets, 2023, 2025, 2027. I will not go through the full list of the KPIs. You see in the scorecard, you will have plenty of time to go through them offline. And then, of course, I will be more than available to discuss with you them at your best convenience. My main message here is the list you see here are the KPIs associated with action that we are putting in place to make sure that we can generate impact inside and outside our organization. I appreciate we have been covering a lot of territory so far. And I do hope and have been able to share with you why we are so passionate about sustainability and why we see it as a driver of value creation. And as promised, allow me now to welcome to the stage our group CFO, Pier Francesco Facchini, who will present our midterm strategy and main financial KPIs. Thank you very much.

Thank you very much, Cristina, and also from my side, a warm welcome to you all. I'm very happy to be here with you today, and I'm really very proud of the incredible journey that Prysmian made over the last decade. A journey which deeply changed our company. As you see here, not only multiplying our sales by almost 4, but even more importantly, deeply impacting our geographical footprint as Valerio anticipated. And you see the kind of growth we had in particular in North America by a factor of 13x in revenue, mainly as a result of General Cable acquisition. This much more global geographic footprint entails two very important advantages. The first one, it exposes us to the multiple macroeconomic drivers and cycles of the different region. And this, in the end, means more earnings stability and more resilience of our earnings and the lower operational risk in the end. But even more importantly now, it positions us to take advantage much better of the opportunities coming from the 4 large market drivers that Massimo has described, which play a very important part, both in Europe and in North America. Think, for instance, of the massive growth expected in power grid investments in North America, other than Europe, of course. Let's move from our past journey to the future, to the business reshape to the business resegmentation. Massimo said, this is a key element in our strategy. First of all, with it, we will adopt a reporting granularity, which is much better connected with the 4 large market drivers. And this, of course, will allow us to explain our equity story in a much more clearer way. Even more importantly, the new business segmentation will perfectly mirror the 4 large end markets and market drivers. And as such, we'll even sharpen our focus to capture the opportunities out of these market drivers out of these strong market trends. In numbers, taking 2022 sales as a baseline. Renewable Transmission, EUR 1.6 billion, 2022 sales. Power Grid, EUR 3.6 billion sales. Electrification, the largest one, close to EUR 9 billion sales made of 2 very important parts, the industry and construction business formerly T&I with a total sales of EUR 5.3 billion. And secondly, specialties formerly in industrial and network component with total sales of EUR 3.7 billion composing the Electrification for EUR 9 billion. Last but not least, Digital Solution, overlapping with the current telecom business with sales of EUR 1.9 billion. This is only the 2022 baseline which we necessarily restated to provide a baseline for our 5-year plan. Let's keep in mind that the new segmentation will become effective since January 2024. So we closed 2023 with the current all segments, and since 2024, we will adopt this new segmentation, providing, of course, all the restatements of the prior years. And this is how it look in terms of EBITDA breakdown. Always on a 2022 baseline. Renewable transmission, EUR 220 million EBITDA, 13.5% margin. Power grid, 200 million EBITDA, 5.6% EBITDA margin; electrification, close to EUR 800 million EBITDA, 8.9% margin. And finally, digital solutions, EUR 271 million, 14.5% EBITDA margin. Let me highlight here that these new segments versus the old ones are much more homogeneous in terms of the margins of the individual businesses included in each of them. And this is very important because we'll hopefully allow you to model and project our financials more easily. Let's now finally move to our financial targets. You see in this slide, our adjusted EBITDA targets on the left and our sales organic growth target on the right. Adjusted EBITDA ambition is set at EUR 2 billion in 2027, as Massimo anticipated with an intermediate target in 2025 at EUR 1,775 million plus/minus EUR 75 million. So in a nutshell, we expect to grow our EBITDA from 2022 by over EUR 0.5 billion with the first important step change by 2025, EUR 300 million, basically, and a further step over EUR 200 million in years 2026 and 2027. It's very important to stress here that these EBITDA targets are purely organic. There is no acquisition contribution included in this and are also based on a substantially stable assumption in terms of U.S. dollar to euro exchange rate at 1.08. On the right part of the chart, sales organic growth you see quite clearly that our organic growth is expected to be very much differentiated segment by segment. We will certainly pursue a high double-digit growth in renewable transition, and this is on the back of the 20 billion orders in hand that Massimo mentioned and that we will execute over the coming years. We expect to reach a mid-single-digit growth in Power Grid responding to the opportunities coming from grid enhancement in U.S. and in Europe. We target a low single-digit growth in Electrification as a result of two opposite effects, on one side, the price, the ongoing price normalization in Industrial & Construction North America, we assume to continue to the end of 2024. On the positive side, the strong sales growth in the strong market applications of industrial and construction, namely solar, data centers and industrial construction and also from the specialty space, in particular, renewable and OEM. Finally, Digital Solutions, we expect a low single-digit growth. But let's be careful here, if we move the base year from 2022 to 2023, this growth actually becomes at least a mid-single digit growth because, as you know, this year 2023, we are suffering from some drop in the telecom space, mainly related with the weakness of the American market. And this is how our EBITDA growth looks in terms of segment breakdown. The largest contributor to our EBITDA growth is definitely a Renewable Transmission. With an EBITDA almost tripling from EUR 220 million in 2022, to EUR 600 million in 2027 and EBITDA margin reaching 16.5% in 2027, with already a very significant lift in 2025, up to 16%. The name of the game here is execution. Twofold: first of all, a flawless execution of the 20 billion orders in hand; secondly, an effective and timely execution of our capacity expansion, both manufacturing capacity and the installation capacity. The second largest contributor to our EBITDA growth is certainly Power Grid, more than doubling EBITDA from EUR 200 million to EUR 410 million. With a very significant step change and progress already in 2023 and margins rising already this year to a level of 10% on sales from the much lower level of 2022. In the remaining years of the plan, starting from 2024 on, we will further leverage on volume growth coming from the strong market outlook, both in U.S. and Europe. And progressively go to the EUR 410 million level of EBITDA. Electrification is the only segment where we may anticipate a drop of our EBITDA. As you see here, a net decrease of EUR 100 million, roughly. As I said for sales, this is the result of two opposite trends. On one side, the ongoing price normalization that we are seeing in North America Industrial & Construction that we assume to continue to the end of 2024 and which is having an impact from 2022 to 2025 of approximately EUR 200 million. On the positive side, the EBITDA growth coming from the volume increase in the strong market applications of I&C Industry & Construction, as I said, solar, data centers and industrial and also from the specialty space. Digital Solution, ambition here is to recover a level of EBITDA at EUR 290 million, higher than the already strong 2022. These, if we move again the baseline to 2023 certainly means a very significant level of improvement. I would say certainly close to a very high single-digit growth of our EBITDA based on 2023. Let's see now how our investment plan is supporting and will support our organic growth. We are indeed growing our investments. which are anticipated to amount of 4 of the 5 years from 2023 to 2027 to EUR 2.7 billion, increasing by 1.7x compared to the prior 5 years. Let me say, first of all, that we are confident to stay within this number within the EUR 2.7 billion. And we even included here a little safety cushion, which may allow us to potentially deal with higher-than-expected potential inflation. The lion's share of this investment pie is certainly taken by renewable transmission close to EUR 1.8 billion. And we have two very important part here. First of all, the manufacturing capacity extension, both in our existing European plants and also in the U.S. greenfield. The second part, the expansion of our installation capacity. Of course, including the second installation vessel, the well-known and already announced MonaLisa, but we also included here a third installation vessel to be able to perfectly align our installation capacity with the manufacturing capacity. And let me highlight, going back a second to the manufacturing capacity expansion that both the expansion in the European existing plants and in the U.S. greenfield are very important strategically. But in terms of driving our financial results and our financial targets. Let me clearly say that the expansion of the capacity in Europe definitely plays a much more significant role for the simple reason that the ramp-up of the U.S. capacity or the greenfield U.S. capacity is expected to come in the very final year of the plan, 2027. Let me finally come to the last very important chapter of our financial targets. Free cash flow and return on capital employed. I hope that at this time of my presentation, I managed to pass you our confidence to be able to reach the EUR 2 billion EBITDA. For the same reason, we are also confident to be able to reach this new scale of free cash flow and return on capital employed. As you see, free cash flow projected for 2027, up to EUR 1 billion with a very significant increase in terms of EBITDA conversion into cash flow from the current level of 35%, 39% in 2023, up to close to 50% cash conversion. What is driving this cash flow projection? Obviously, the improvement in the EBITDA, net of the related tax effect. We even included here a normalization of our CapEx level in 2027, you see here EUR 430 million. Our investments will actually peak in 2024, and we also remain pretty high in 2025. And the main reason is the execution of the investments in the two installation vessels that I was mentioning, which is a quite unprecedented fact and that will remain also unprecedented for the future. And this explains why the assumption to slightly decrease the level of CapEx in 2027 is an absolutely realistic assumption. Also, working capital is contributing quite positively to our cash generation. The main reason is the very strong renewable transmission market. Meaning very large down payments from our customers. And of course, throughout the entire time line, and of course, these large down payments are partly offset, partly balanced by the acceleration of the execution of our orders in hand, particularly in the very final years of the plan, and you see that working capital will flatten out pretty much in the final year of the plan. Also very important, return on capital employed. We set a target here up to 28% pretax return on capital employed. The main drivers are indeed the growth of return on capital employed in two segments, renewable transmission and power grid. And that's important because once a we gain witness to the very high returns of the new investments that we are putting in renewable transmission. And let me also stress that this 28% really benchmark us to the quite top class within the European capital goods. You saw that the strong cash generation is a key element of our 5-year plan. Totaling for the 5 years, EUR 3.2 billion and consistently with the cash flow target that I have just presented. Exactly for this reason, we thought it was important to share with you our ideas in terms of capital allocation, where we plan to allocate this cash. Acquisitions will certainly play a role and will certainly be a focus of us, mainly bolt-on acquisitions, strengthening our position and improving our product portfolio in the high-growth businesses and high-growth geographies. At the same time, we plan to start a share buyback program. And the allocation taken by both acquisitions and share buyback program out of the EUR 3.2 billion generated cash, as you see here, is in between -- will be in between 55% and 60%. The split between acquisitions on one side and share buyback will actually depend on the real and concrete opportunities that we will have in terms of acquisitions. So very simply, the higher the acquisitions the lower the share buyback and vice versa. Keeping in mind one thing that the total number of treasury shares coming from the buyback will never exceed 10% of the total outstanding shares for a simple matter of our articles of association. This represents a cap in our share buyback. The second important part of this capital allocation is dividend. We expect and we plan to progressively increase our total dividend by approximately 10% year-on-year, starting from 2024. This means an even higher increase in terms of dividend per share as a result of the share buyback. So dividend per share will certainly grow a little bit higher than 10% year-on-year. Last but not least, we plan to deleverage further 10% of the EUR 3.2 billion cash flow. Targeting a ratio in terms of net debt on EBITDA at 0.5x and always willing to stay within a corridor between 0.5x and 1x for the entire time line of the plan. This because we are very keen on the investment-grade rating that we recently acquired last March. And that we regard as a key strength, particularly now particularly now in this certainly more difficult than before financial markets. Let me highlight two additional points. These financial targets, EBITDA, the related targets in terms of net income and, of course, the capital allocation, mainly the share buyback means an expected growth of our earnings per share higher than 10% for the period from 2022 to 2027, CAGR higher than 10% annual growth. The second very important point is that this capital allocation will be released progressively and in strict accordance with the real achievement of our plan. So there is no way that this capital allocation may end up balancing our financial structure. We will release it step by step. Summing up our financial commitment to you. Adjusted EBITDA, up to EUR 2 billion. Free cash flow up to EUR 1 billion ROCE up to 28%. Ambitious targets, certainly ambitious but also, in our view, very realistic target because they are based, first of all, on a very strong and long visibility in the renewable transmission segment. They are also based on an assumption of the price normalization in North America, the ongoing one, to further continue to the end of 2024. And last but not least, they are also based on quite reasonable assumptions that we have done in terms of volume growth versus particularly strong markets. So I thank you very much for your attention, and I invite Massimo back to the stage.

So you've seen that we set challenging ambition for our future. And we are firmly determined to meet our financial goals and our commitments. As we always do. This industry is definitely leaving a new time, a new life. That we never had this industry confronted with such a stronger market growth. in the last 20 years. You see most players are investing in expanded capacity. We believe -- we are convinced that we are the cable player best equipped to leverage the market growth. And I tell you why. Because everyone can invest and buy new equipment to expand their capacity and expand and seize the market opportunity. But what they cannot -- what they cannot buy -- what they cannot match is our technological leadership that we earn through many years of strong focus on innovation. What they cannot match is our valuable customer partnerships. That we've been nurturing over consistent track record over many years. What they cannot match is our unparalleled footprint, a unique product breadth. That began through the last M&As. And more importantly, what I cannot match is the capabilities, the knowledge and the values of our people. This is what sets us apart. And I'm proud of this team. They all played a key role in making Prysmian the success it is today, and they're going to be crucial to the success of the future. So I hope today, we have been able to make you understand, make you appreciate how unique this company is. There is nobody like us in the market. We, as market leader, feel the challenge and the responsibility of the role. We have no one to follow, we are those who must drive the industry forward. And I'm passionate about leading this team along the new pathways of the future towards the new successes. Today, we set out our new strategy which is meant to enable us to lead the energy transition and digital transformation. And I'm very excited today to unveil the new logo, which we created to match this ambition, to reflect this ambition. Please, Valerio, if you want to join me on stage. Thank you, Valerio.

After many years, we are going to change the logo.

It's again the story of the age, after a while, you need to replace something. [Presentation]

We hope that you enjoyed.

Thank you all. We invite now Cristina and Francesco on stage, and so we get ready for the Q&A session. Thank you.

So thank you very much. You have been patiently listening to us so far. Now it's the time for your questions. and hopefully, our answer.[Operator Instructions]. So as Valerio always says, who wants to shoot first, and then it's Sean.

Thank you so much for today. It's been tremendously helpful. I like the -- well, there is new split now, renewable transmission, split between HVDC and HVAC. And I think it's clear that the backlog looks highly derisked because of the very clear exposure to the transmission operators. So I guess you're putting that risk now into the power grids. And maybe just talk through the overall -- how you see the risk exposure around this, coming more focused developer segment, if you like, and how we might think about potential delays around offshore wind because the market seems to be worried about that?

Thank you, Sean.

I believe that Massimo, the question is for you.

Thank you, Sean. I think as said, I think this trend to renewable energy is really relentless. We cannot think that because of some hiccups in the cost inflation or in the cost of capital, the whole journey that I said is a long journey, dragging us from where we are today to the whole electrification through renewable sources by 2050 is going to be hindered by these hiccups. Of course, we had this inflation. But as I said, those inflation, the relevant cost of capital increase is only affected at let me call it, 10% of the market. It's a tiny share of the market, the one that is going to suffer from the ability to transfer the cost inflation and the result in increased costs for this project into the market. All the rest of the players, TSOs, utilities are naturally according to the existing rules. Transferred this to the end user. This poses again, anyway, another question of who is going to bear the cost of this sustainability journey? It's all of us. I think we have to assert that this is the needed cost for making the world more sustainable.

If I can, just a second question. Thank you also for the color around the residential versus nonresidential exposure. What are you assuming, in fact, for European construction normalization?

We tell you a few numbers, even if you don't want to be more specific. So this -- the surge in price increase started at the beginning of '22 -- went through the end of '22 and let's call it, quarter 1, '23. We gain through this inflationary markets and to the capability to best service our customer. Some EUR 300 million worth of EBITDA in the industrial and construction space. What we are going to see now that for what has already happened in '23 in terms of normalization, what we foresee will happen we foresee, we don't have certainty. It could be going a different duration. What we will see to happen in '24 that we will probably consider some EUR 200 million of this overall price improvement. This will not bring to give you another element of reference. The level of margin in the format T&I space in North America to what it used to be before all those inflation started. We will still be right ahead of the previous level of margin.

I see Daniela and then gigi. And then we would -- then after Gigi will take [Maxiel], which is connected online. Please Daniela.

I have two questions. One, you showed us how the divisional structure is going to change. It's very clear how that maps to how you want to spell your equity story. Can you talk about operationally within the business? Is there much change to go through this? Or are you effectively this is how you were operating? That's my first question, and then I have a follow-up queue.

I think the latter is the right answer. So this is not going to change massively, actually, it's not going to change at all our organization in terms of how we operate in the field. because we are just assembling the different pieces of individual business segment, the one underneath, the microsegment in different clusters. So PD was already run with the digital focus. High voltage AC was already run by a dedicated team just reassigning some of these businesses to different segments. But this assignment is important because the leader or the fourth segment business will drive definitely a more structural and effective focus of the whole organization towards the market trends.

Very clear. And then clear that you don't have a lot of exposure to developers, but obviously, others might have bigger exposure and they are adding capacity, as you've mentioned. Can you talk about sort of how do you derisk for those potential 1 or 2 years, if there are delays in wind? What's the flexibility on your CapEx program? Or is it all setting stone you've made commitments to spend the cash?

We have flexibility, although we don't plan. We don't envisage to change our expansion projects. We are spending capacity in many plants in the Finland, Submarine in Arco Felice, here in France for HVDC, in Averill, in North America, we are building a new factory in North America. This is probably the most sensitive element of expansion. Are we going to continue with our expansion in North America? The answer is yes. It's just because we are not exposed to it. We think that the market is large enough that even if we were to suffer from some offshore business delays which, by the way, we barely have in our portfolio. We will have other replacing opportunity to justify the investment in North America. The market in North America is still growing. It's still not a market yet. It accounts for 15% of the total market. It is probably more unstable than European market, which is much more mature. I think that we get there, we get it because of the sustainability. We notice a sensitiveness and a lot of attention, a lot of focus on stability in the power grid space in North America. So inevitably, this is the strong focus of the country. So the renewable sources, the offshore wind or solar park are happening -- will have been happening. So no changes to our plan even if we have flexibility to change it.

I think there is Luigi De Bellis from Equita.

I have some question on the transmission business. First of all, if you can elaborate on the order intake assumption of market share during the period? What is your view on pricing and saturation of the plans? Both for the industry and Prysmian up to 2027. And if there are new technologies that can impact the pricing during the period.

The saturation of the plans of us, our competitors or direct competitors so namely Nexans and NPT. And I'll also add some of the newcomers like LS, is more or less overall booked through 2027. We have no spare capacity and leveraging this large backlog, we can cover all the revenues up to 27%. Similar is up and similar situation happening for other competitors. Probably more NKT in terms of saturation than Nexans. But more or less, the order intake of 2024, which will happen next year, will be for project whose execution would be beyond '27. And we already have seen this year, most of the frame agreements have a reserve capacity for execution that will happen in '28, '29, 2030. So despite the large efforts, all of us in expanding our assets, our capacity, this saturation of -- these additional capacity is already pretty full. New technology, we don't envisage new technology because we are still executing a technological shift. We were on the 320 kV technology until a few years ago, actually I said, 2 years ago. The last project on the 525 kV has been awarded early in 2022. So it will take at least 6, 7, 8 years for this technology to consolidate and to move forward. And also, we see that our proprietary technology on paper installation technology, despite our expectation that one day, this technology will be fading out. This is still resistant -- is still resilient, and many customers like this technology for the expansion of their networks, especially in the South of Mediterranean Sea.

I take a question from Akcea online Gamax. The EUR 600 million target for EBITDA for renewable transmission implies a meaningful step-up in margins. Help us understand the step-in from 13.5% to high teens here. Is this just pricing on new projects or something else?

It's the beauty of a market where there is a great imbalance between capacity and supply. So the market now is in the end of the supplier. So the customers are desperate to secure capacity. And everyone is pricing projects at higher margin than before. We are now in a different situation than we used to be 3, 4 years ago. We are executing our old backlog, the one that we landed before the inflation crept in. So we still have a couple of billion of Euros of projects with all the margin. All the rest of this EUR 20 billion orders, namely EUR 18 billion is with higher margin. So the answer is that the 16-plus percent EBITDA margin this business coming from 13.5% today is purely driven by high-potential margin projects and better mix of projects.

Massimo let me add one [ cost ] de facto, the market till 2030 is already blocked because the capacity of the players as of today, but it cannot be changed in 2, 3 years is already booked. It's already booked with prices and expected margins. So whenever we are going to think about the future, we have to think after 2030.

Okay. Monica. Monica Bosio from Intesa Sanpaolo. And then I have another question online.

I was wondering if we can discuss the power grids. Do you see different speeds between U.S.A. and Europe? And maybe different margins, if we can elaborate a little bit more on this side, across the business plan. And my second question is on the M&A. You have been clear, bolt-on acquisition on high-growth segments, high-growth regions, but are you planning any potential rationalization in some areas, maybe in the industrial one? Sorry for the question.

So on power distribution, give you more color about the profitability or the distinction between the two markets. All markets are growing in demand. Of course, North America remains unique in terms of profitability, in terms of discipline in the market, in terms of solidity of the drivers behind the market growth. First of all, because the grid is very obsolete in North America. As you see from the multiple outages that the gird suffered in the last 20 years. Also the overhead lines system is pretty old and aged, and there is a lot of pressure of the government towards utility to upgrade and enhance the performance of the overhead lines. In that sense, E3X is a great answer to this need. So this strong driver of demand in North America also generates a higher profitability in North America. I cannot deny that in North American space, the market has been driving significant demand. And when you drive significant demand and the capacities are short, we have benefited from this pricing capability. Also in Europe, there are pockets of opportunities in some customers, with some geographies, we have nice profit. Overall, the profitability in European market is a few points lower than that on North America. Your second question was about the M&A. And of course, we -- our primary focus is on bolt-on M&A, which I think it's difficult to distinguish what we mean by bolt-on M&A. We mean not large M&As. M&As, whose goal is to strengthen our position somewhere in the portfolio, in a geography or with a -- in a specific market. Then, of course, we will not discard opportunities to consolidate without running the risk of distracting us from the main goal of the strategy. They main goal of the strategy is the organic growth. So we will never see a consolidation opportunity in the next 5 years of the size of the two that we conducted in the last 10 years. First of all, because we don't think that there are sizable opportunity of M&A. And second, because given the current scale and market share of this company, in all geographies, we will immediately run into antitrust consideration here. So transformational deal may be more in less size, for sure. Focus is on organic growth and specific bolt-on acquisitions. No -- no, as I said, it could be but at a much smaller scale than what we conducted in the past.

I think there is Akash Gupta. Before Akash, can I just take the question in queue online, which is about our copper strategy. What is your strategy regarding copper supply since we expect to face a copper shortage in the coming year? And then soon after there will be Akash.

But this is a recurring theme in the analyst calls with our -- with you guys and also with the other companies. I don't think the market will suffer from any metal, aluminum, copper constraints because as we are expanding our capacity to meet the market opportunity, rod producers in mines -- rod producers, most of the time are vertically integrated in mines. They are also expanding their capacity ahead, to leverage the market growth. We cannot influence their decision. What we can do to protect ourselves and to possibly stem the risk coming from the shortage is to differentiate our supplier base. We have strong contracts, long-term supply agreement with a dozen of rod -- metal rod, copper rod suppliers. All of them are vertically integrated. And so we think that with this wide support base, we can definitely withstand the possible risk coming from a shortage, which, by the way, I would discount.

And now it's the turn of Akash Gupta from JPMorgan.

I have three, but maybe a clarification on what you said before. So on this North America, what are you saying it's EUR 300 million maybe positive pricing one-off and you expect EUR 200 million of normalization in 2024? Is that right?

Yes. We expect EUR 200 million normalization in prices in terms of EBITDA impact to T&I or -- and that's in construction business in North America.

And then coming back to my questions. The first one, I have is on portfolio. Again, I mean, we have seen some of your competitors have not just acquired but also looking to sell noncore. And if you look at your current scope, are there any businesses at maybe smaller or bigger in size where you think that maybe someone else could be a better owner and -- than what you have like -- do we have any scope of divestments?

We mentioned before that we consider the electrification happening in the market as an additional driver for having a diversified portfolio to cover all the segments, because all segments are going to -- are going to benefit from this additional electrification and growing demand of cables. So when we look at our electrification portfolio, we don't see products or segment, which we might divest because we don't recognize the value of this segment or project, this portion of the project in our portfolio. We are considering only one space, which I would like not to mention now, where we might consider to divest, it's a little portion of our portfolio. More because we believe that we don't have the focus to drive it, to drive the growth than anything else. We will assess in the next 2, 3 months, and then we'll make a decision.

And then my second one is on your medium voltage growth where you guided mid-single digit. And I was a bit surprised because I thought this medium voltage market in the next 5 years could be growing more like high-single digit, perhaps low-double digit because we not only have the replacement driver in the West that the existing distribution grid can't cope with the new infrastructure. But then we also have new drivers like these small, midsized data centers that are popping up everywhere, electric vehicle charging infrastructure, et cetera. So maybe if you can say what you all have embedded in that mid-single-digit growth for medium voltage? And how much of that is price versus volume?

The medium voltage, as I said, is the connection between renewable and the applications. So we tend to underestimate the importance of the grid. We only focus on projects because everybody's attention is on submarine interconnectors and land HVDC. But once we have a high-voltage electricity brought to a country or in a place of a country -- a way to distribute it. That's why the size of the power grid is so huge, 80 million kilometers, I mentioned before. Then looking ahead, the main driver for our EBITDA growth is the recovery of the profitability that we suffered in last 2 years, in 2022. Because this space is regulated by frame agreements. In contrast to what's happened in the T&I space, where we manage it to price it up as inflation crept in. In power distribution, we had to open negotiation on existing contracts, and those negotiations have been kind of not painful, but not easy to achieve because we were not entitled to price improvement. So this year, you will see the positive return, the positive outcome of this negotiation with a significant growth in terms of EBITDA in the power distribution space. Then also, as I said, our ambition is to grow our market share. So from now onwards, the growth that is not EUR 210 million, from EUR 200 million last year to EUR 410 million, that is lower, is basically reliant on pricing stability because we have renegotiated everything we needed to renegotiate because the level of pricing is same, it is already consistent with the cost. The growth in this space is actually coming from the expansion of capacity that luckily we launched 2 years ago when all this was not yet known. And then we reinvigorated this capacity expansion recently with another wave of capacity expansion, which will come on stream in '25. And this second wave is backed by customer down payment also in the power grid space. And this is unique and never we have we seen down payment in the power grid space. Just to tell you, our customers are adamant at pursuing cable availability to support their electrification needs. And you're right, data center, electrical vehicle. Think of a power station for electrical vehicles. You don't need just the tower, you need a network underneath it to bring the power for [indiscernible] grid to power station.

And the final one is for Francesco. When I look at the cash flow bridge and assumption for working capital, you are getting significant this capacity reservation fee, and I expect this trend to probably sustain for the next few years. And when I look at the size of those capacity reservation fee and then the size of positive working capital inflow that you have assumed in your calculation which is more like EUR 50 million, EUR 70 million compared to maybe we have triple-digit million of these capacity reservation fee. So can you maybe tell us about, are you going to keep this all fee? Or does it trickle down to sub suppliers as well, so they may also need to block or hedge something. And yes, I mean, how do you feel about working capital assumptions overall in terms of historically being conservative on that?

Yes. Thank you, Akash. The main driver of working capital, as I was showing it, is certainly the renewable transmission business, as you said. We assumed the strong market to remain strong for the entire period of time. So we had very -- we are having now very large down payments. We are assuming these larger down payments maybe to decrease a little bit because, of course, now the down payments include also the down payments in these very years, for instance, from the frame contracts which are coming this year. So we are assuming some slight decrease. But you have also to appreciate the working capital increase in terms of construction contracts increased, which will come from the acceleration of the execution. And this will mainly kick in when also the additional manufacturing and installation capacity will kick in. So, in principle from 2024 and even faster from 2025. So these 2, more or less balance each other, I would say, a certain prevalence of the down payments versus the increase of the construction contracts. But then there is also the other elements of working capital related to the rest of the business, where we are assuming not such high organic growth like in renewable transmission, but certainly a good level of growth, like, for instance, in power distribution, and this is, of course, meaning an absorption in terms of working capital. So in general, I would say that we anticipate working capital to be very positive as in terms of contribution in the very first year of the plan, thanks to the down payments and then to progressively flatten out in the final part of the plan as it is written in the numbers that I was projecting.

I think there we have question there, then a question there, and then we will be back so please.

So obviously, on the supply side, it's very constrained, right? There's -- it takes several years to build capacity. Some of our competitors are even more booked out than us. So very supply constrained. And then on the demand side -- I'm talking about renewable transmission business. On the demand side, obviously, high visibility I guess my question is, we're assuming pretty healthy margin improvement in EBITDA for the renewable transmission business. But why -- what's preventing us from asking for a little bit more, right? This is kind of unprecedented in the last 10 years in terms of supply/demand mismatch, asking 3% more, 5% more, that's a huge -- but probably doesn't make too much of a difference for the transmission customers, but makes a huge difference for us. So obviously, we're experiencing an upcycle, but I'm just curious, this kind of -- in this unprecedented supply/demand mismatch, what's preventing us from asking just a little bit more?

I'll give you a simple answer there, cable players are always shy to ask for -- cable players are always shy to ask for price increase. I think you're right, there is such an imbalance between capacity and demand, why not to ask for a 5% higher price, because there is always someone that doesn't feel comfortable with this price upside. And so even if there is no enough capacity when you combine us and [ KT ], Nexans, as well as Sumitomo and [indiscernible] to satisfy the demand of customer, there is always someone that tend to say, "Okay, I need some volume saturation in my factory in 2027. I want to change this project, drive this price down and other prices down. I don't go very high on the price." And what we gain in reality is a much more robust position on the supplier side to stem the tough [ T&Cs ] the customer used to impose us in the past. And there is a big trade-off between risk and price. We normally price it up when the risk associated to [ T&Cs ] is high. Now we are still pressing up even the risk associated with [ T&Cs ] is lower. So this we gained, and this is across the industry. Customers are less strong at imposing tough [ T&Cs ] which means that we can theoretically relax on our prices, but we have not. So there is an inherent margin improvement, thanks to this lower level of risk embedded in the project and some price benefit. Then maybe one day, if this surge in demand continue to remain that strong as today, we will have another wave of pricing up in the market.

If I may. There is always a limit. The limit represented by the effectiveness of the investment for our customers. If we, the industry, raise the cost of the investments too high, the real risk is that the TSO or the customers will stop at least the project we are talking about.

And that is another important point there to consider. The current price also reflects the cost inflation. So we have increased prices by 20% to embed inflation that have has been happening in this space. On top of this, price improvement to reflect inflation, we had priced it up. So when you look at the project cost today -- project price today versus the same project 2 years ago, you don't simply see the price upside of our margin improvement. It is a significant portion of price improvement associated to cost inflation. That is what makes crucial the point that Valerio said. The cost, the project can go too high and in the end customer might say -- yes, the TSOs we'll develop may say, "The project is not viable any longer." So we are on a fine line between [ T&Cs ], pricing inflation and we have to remain in a balanced position here.

And within renewable transmissions, do we get more pushback usually on the submarine side or on the land-based HVDC?

More pushback for...

Do we see more pushback, when on the submarine side or the...

I don't think we can distinguish. It's -- the pushback comes from the customer and attitude, it is not associated to the segment we are talking about here. There is growing demand in both segments. Interconnectors and submarine. Maybe there is more resistance in the offshore space, but I will not call it a distinguishing factor.

Nick Green from Bernstein. As a point of clarity, first then, please, can you confirm, is your existing capacity enough to deliver your EUR 20 billion order book as it is? Or is some of the expansion to deliver the EUR 20 billion order book?

Yes, it is. Everything we, we planned for the next 7 years, 6 years of capacity expansion, vessels included, is consistent with the EUR 20 billion backlog.

Okay. Then as the second question, can you help us understand how you've come to conclusion that a capacity expansion is the right strategy. Clearly, one option is to deliver the EUR 20 billion order book and have a much higher cash flow than normal and not invest in additional capacity. So you presumably come to the conclusion that the market is going to keep on growing very fast after 2027, you'd maybe lose market share. Just talk us through why this isn't an arms race of expanding capacity and you think it's the right thing to do.

I didn't capture the reason why you think there is other option to serve our backlog than invest in capacity. What did you mean?

You said that you could deliver the EUR 20 billion order book without investing in additional capacity.

No, no , no I said that the planned capacity, the expansion capacity that we already planned that will materialize in the next 4, 5 years, is consistent with the backlog we have to deliver. If we decide to stop our investment, we would not be able to honor the customer commitments.

The EUR 2.7 billion CapEx that we showed.

Can you split it? Can you give us a sense of how much of it is additional growth capacity and what you're anticipating over the 2027 numbers?

Yes. Yes, we are doubling the submarine capacity. You call it, 2,000 kilometer per year is our submarine capacity as of today. This is going to grow to 4,000 kilometers. And on top of this submarine capacity, we are expanding the land HVDC capacity, adding some 1,500 kilometers of capacity.

Okay. And just one for Cristina, please. You've shown a rapid acceleration on your Scope 1 and 2 targets, 47% by 2030 to then 90% by 2035. So that's a fantastic target, but maybe the 47% is not ambitious enough that you get to 90% by 2035. So is there an opportunity to put a more ambitious target down?

Sure. Sure, Nick. Of course, the minus 47% is in line with a 1.5-degree trajectory and that we were showing we are ahead of schedule. So we are probably -- you know us. We like to under promise and over deliver, and so there can be an opportunity to further over deliver also on the Scope 1 and Scope 2 by 2030. Thank you, Nick. Then there is Patrick, but then I don't know if there's still -- there was a previous question. Yes.

Michael Pye from Baillie Gifford. You've talked about the supported pricing environment that you have at the moment due to the mismatch between supply and demand. How do you think about the potential for competition from Asia, in particular, from China? What is your strategy for guarding against that, I guess?

Within every particular strategy. The market is so large that customers are bound to resort to some other competitors to satisfy their demand. Of course, those competitors are starting from very far because they are Asian or Chinese or Koreans. But, because they don't have any sort of track record in the living projects in Europe. They don't have any sort of owned installation vessels to install their cables in Europe. So customers definitely taking a chance at awarding a project as happened with a tenant firm agreement to some Korean player because this led to prove what we have been proving over the last 20 years. So a track record is essential. And cables is only one single element of the project, probably the easiest to prepare, then you have to transport it, to install it, to bury at the sea level, in the ground and make it work. So I'm not suggesting that they will fail, but I think, we feel comfortable with our capabilities, I would not be feeling that comfortable with the capabilities of Chinese or Koreans.

And if I may, in the meantime, the technology has not died. The technology evolvement is what we leverage for the future. In the meantime, the Asians, let's say, are going to reach the same or a similar level to the ones of Europeans on these projects, we are already thinking to the next level. That's what we have to do.

Then it was [ Patrick, ] and then Vivek and then we will move back to respect to the order of the queue.

I want to come back to the renewable backlog and the margins that you are saying improving. I assume a lot of those projects we're taking a few years ago when you still or at least having the Western Link in the back of your mind. So can you confirm or comment on whether the contingency, which one always needs in a project, whether that was a bit larger, based on issues in the Western Link. And then Massimo, you said you learned a lot. So are you more, do you feel better about those contingencies today, than at the point of time when you sign the order, if you see what I mean?

[ Patrick, ] I think I had to correct, first of all, on the assumption that a sizable portion of our backlog belongs to the past. Only 10% of the backlog that we have been -- in today is related to past 3 years, let's say, 2020, '21 and '22. The vast majority is what we landed in -- from '22 onwards, and '23 is a great year in terms of order intake, as you've seen from the press release in this market. Now what happened in '22 that those inflation kicked in, and we were unprepared because we had that time, large projects awarded before inflation, and we were in the middle of the execution with no entitlement whatsoever to negotiate anything with our customer. But again, this is where the relationship with customer comes into play. Because we told them, "Listen, we have this energy cost increase." The fuel cost increase went through the roof. So we have been able to obtain even if we're not qualify, price recognition for those inflation. Then for the new order intake, we set cost assumption, not even talking about contingency, cost assumption for fuel energy, raw material, in line with the peak of the inflation that we had in 2022. And we also factored in some inflations increase over the next few years because we are aware that what is going to be awarded, what has been awarded last year or is it going to be, or what has been awarded this year is for execution not coming tomorrow morning. But in the 3 or 4 or 5 years, because of this imbalance with capacity and demand. So we have set the cost very high, in line with the current and previous level of inflation. We factored in some increases, and then we have the normal level of contingency that since Western Link happened, it was almost 10 years ago, by the way, we are factoring in our projects. So we feel safe from a margin perspective because the inflations have been factored in also too, with some contingencies. Contingency, provision for possible risk have been maintained in line with what we said was needed after Western Link, by the way, what is much more important to say is what I've told you before, we are now taking a more robust production trials before launching the technology. So before launching the 525 kV technology in the market, this was in 2022 when we had been awarded IJmuiden projects with the 525 technology in Europe, we had invested in 10 kilometers of production trials. Because with Western Link, we didn't fail with the technology, we failed with the production. We could not assure the proper quality during production. So I feel very safe in this regard.

And just can you just help us understand how much of the cost is really possible to hedge or somehow secure because it's -- some things you can't really hedge. And just to get a sense for how much you can lock as a percent of the total broad numbers?

We can only hedge metal. The metal is what we hedge. The copper, the aluminum is what we can hedge. All the rest of raw material is not financially liquid. So we cannot hedge [ fuel ]. We cannot hedge other things. But we protect ourselves with this natural hedging by setting the cost high and assuming additional cost inflation. We don't want also to hedge everything. Otherwise, we'll be remaining with the margin associated to our transformation capabilities. While in the past, of course sometimes we suffer from the cost inflation, most of the time we gained because we could spare some margin out of the real efficiency and out of the real costs, those raw material -- have been incurred for raw material during the execution. So we will never transform this market into a fully hedged business.

There is Vivek, and then we will get back there.

I have one question on the capital returns. You discussed how the magnitude of the buyback will depend on M&A opportunities. So what is the timeline for your decision-making process, when you'll decide how much the buyback to do? And is it fair to assume that the buyback will be relatively back-end loaded as you determine the scale of those opportunities?

The timeline will be rather flexible. Of course, we'll try, first of all, to understand the real acquisitions opportunity, then little by little and progressively we will release the share buyback. And of course, there may be a piece of share buyback released before having crystallized the acquisitions opportunities. But in the end, it will be a piece of it because the buyback will be spread over the 4 years -- the remaining 4 years of the plan. So everything will be done very progressively.

Thank you very much now. Now, we are here and we have Brett online who will take...

One at a time for each side of the room.

Absolutely. Apologies. We are asking our colleagues to run from one side of the room to the other. You can spare the gym tonight.

It's George Featherstone from Bank of America. A couple for you. So firstly, on power grids margin, I think you said it's at 10% currently. Could you just clarify that? And if that goes, it's quite a step up versus the prior year. Where can we go from here? Should we expect more gradual change in the coming years?

10% exposure to the...

The margin for the -- in the power grids business.

Yes. All right. You take it.

The 10% improvement, the 2 10% improvement in power grid has already happened in 2023. We don't assume any other improvement in power grid in terms of margin. We assume this to stabilize at this level. It may even be a bit better than this assumption, of course, hopefully, but this is our assumption. What we assume is volume growth kicking in since 2024, to the end of the plan, which is the famous mid-single-digit growth, higher in U.S., a bit lower in Europe. Why do we assume this from 2024 and it didn't materialize before, simply because before, as we speak, we didn't have the capacity. So the new capacity, both in, first of all, in U.S. and the second step in Europe will come available in 2024 and then 2025, and this will support the volume growth. But there is no assumption of further margin progression in power grid. From 2024 on.

Actually, we are already having this month the first upgrade of capacity in North America. So those projects we launched 2 years ago, in the month of October, we will see the first step change in our capacity increase in North America, giving more room for customers to be served with a shortly time and secure supply for the next, for the current wave of demand in the United States.

Consider also one thing that the 2022 level was a really very low level. I was showing this, the 5.6% power grid margin. Actually, this business was the one who much -- most of all suffered from the inflationary effects in 2022 because as Massimo said before, this is based on frame contracts, and it was impossible to renegotiate and change these contracts at that time, what we were able to do in 2025.

Okay. Thanks also for the color you've given on the normalization you expect in the construction business in the U.S. next year. Does that mean for your plan for 2024 then that we should expect the group EBITDA maybe to be flat versus this year and then a re-acceleration back in 2025 as that headwind abates?

Thank you for a difficult question.

George is always challenging.

You want to have a preview of '24. We have to wait a little bit because normally we issue the guidance in a few months. What I can tell you that T&I is only one of the business. Industrial construction is only one of the business, we've proven in the past, even if one goes down, we might have upside in the others. Even in this case, we always told everyone that T&I will normalize, PD will go up. PD will continue to go up in '24, as we said, thanks to the capacity increases. Telecom, we expect to see a rebound [indiscernible] next year because this year, we're suffering a lot. So we cannot tell yet what 2024 will look like. We will guarantee stability of these results. Last year, you all have been taken by surprise because we reached the EUR 1.5 billion level of EBITDA coming from EUR 1 billion, and the challenge was how long are you going to be able to stabilize these results. We've proven this year that we have been successful in stabilizing this result. If anything, we have actually improved it a little bit with our last guidance, we will do the same next year.

Okay. And then the final one, just, I guess, more of a kind of broader question on your own vessel fleet. Is there a conversation you ever have internally about outsourcing some of that? Or what's the kind of debate you have in terms of investing in your own capacity here?

We have 8 -- sorry, we will have 8. We have 6 vessels because they are fully needed and booked for executing our CapEx. Then we don't want to give other competitors, the beauty of enjoying the high technological capabilities of these vessels. Because no one will tell you ever what is going on this vessel. But our vessels are more advanced than any other vessels in the market in terms of loading capacity or in terms of installing cables to greater sea depth. We can install cables with our vessels up to 3,000-meter depth. So we are not planning to invest in vessels to outsource this capacity.

Sorry, my question is more, can you outsource the installation to...

No, even less this case because it costs a lot to assort the vessels. But beside the cost, there is, again, the technological capabilities. The external vessels are not as capable as ours to perform this installation. So you give up a lot in terms of margin on the projects and you underperform. And the end customer, once we launch, when we launched the Leonardo da Vinci that you see today in the market, customers said, "Okay, this is a new standard. Now I want to stick with you with this type of vessels." So we were not going to use or resort to external capacity, if not marginal for smaller projects for smaller installation activities.

Massimo, if I may. Do not forget that the risk to have third parties installing the system is the trap that we have seen materializing in U.S. recently with the...

Offshore project.

The offshore wind farm projects.

Alessandro Tortora from Mediobanca. And then Akash again and then I have a question online from Brett. We will come to Brett.

Just one question left is related to product innovation. When you see basically cable solution for floating offshore becoming a reality also for, let's say, large-scale project? And do you believe that you have time to market is competitive or maybe, let's say, faster than the other competitors?

Floating offshore, you mentioned, right?

Yes, floating.

We're still in the development phase. We are developing a new solution for higher voltage for the offshore floating farms. We don't expect this market to becoming a real market until '26, '27 onwards, because beside the cables, which has to be dynamic because of the floating features of the platform. There are other challenges that the developers of this floating farm technology have to address before this technology becomes solid. So this will be a good portion of the market, I think, about from '27, beyond 2027.

Just to be a little bit more detailed by 2024 -- by end of '24, we expect to have in our labs, the test for the first 220 kilowatt floating HV cable.

There was a second part of the question.

It was only one, right? And then...

Yes, it was just -- so quick follow-up for Francesco, if I may. Why don't you improve, let's say, this year-end free cash flow assumption considering that you cashed in significant amount of capacity reservation fees?

The final year...

Yes, 2023.

In 2027, as I said, compared to the first year of the plan, we decreased a bit the assumptions in terms of down payments. The main reason is the frame contracts, because the frame contracts are coming in this year. So we are not assuming frame contracts come and bring down payments in 2007 (sic) [ 2027 ] for instance. And this is in that year, totally balanced by the working capital increase because execution is dramatically accelerating in 2025, of course. That's the key assumption.

There is a follow-up from Akash and then we have Brett online.

I have two, please. And the first one is on projects. So I just did some back-of-envelope calculation and basically by 2027 you will be around roughly EUR 3.5 billion, maybe a little bit over that, revenues. And when I look at your slide on the market, we see market going to somewhere between EUR 18 million and EUR 20 billion by end of this decade. And if I apply your historical market share of 35% to 40%, then at some stage, this business should be more like EUR 7 billion to EUR 8 billion revenues or basically doubling from what you will have in 2027. So the question I have is that when we look at, let's say, beyond 5 years and more like 10 years horizon, how do you see prospects for further capacity investments given there is just too much of demand? And is there, I mean, this is -- you can say it's both risks and opportunities, but is there a scenario where you may end up with more CapEx? And in response, it basically accelerates the growth prospects beyond 2027?

Take you, Akash. We...

You are flying too high -- Akash, we have launched Akash. We have launched a lot of growth. Let's materialize it. Once it's materialized, meaning 2026, 2027, we are going to see maybe a next round of demand and investments. Obviously, that will be if customer -- if the system is going to be happy with the execution and the results from the financial point of view. And from the cost point of view of the electricity generated.

We are closely monitoring this market share. We are already foreseeing, based on the backlog, based on the market projection on the next 5 years, what we expect to be able to lend as projects of these new market trends. We foresee a stable 35%, 40% in the coming years because despite this imbalance in the revenues and the 30% share of the market, the next year projects are going to be awarded with ever longer date for execution. And Valerio said, we take it a step as a step. Closely monitor it. Next year, we'll assess the market share. By the way, this year, we exceeded our ambition because we are going to end up with more than 45% share of this market. So probably next year, we will ease off a little bit the pressure. We might enter in another phase of expansion with decision that will be taken late '25, '26 for '28, '29, 2030.

And then the second follow-up is I mean people are in general, positive about electrification and demand for cable. And one of the questions we often get is that how long does it take to bring capacity online. Everyone knows in high voltage, it could be 3 to 4 years depending on its -- Greenfield to Brownfield. But, can you tell us, apart from high voltage, if you go in other businesses, whether it's telecom, whether it's industrial and network component or whether it's PD or T&I. How does it take you to bring the capacity? What sort of flexibility do you have any comment on that would be great.

Yes. Thank you, Akash. In the high-voltage space, as you know, there is the long process of qualification, which makes the time to market 4 or 5 years for new capacity. Then in the other segment of business, it is much more relevant to understand whether we are building a new plant or expanding an existing plant or relying on a portion of the assets already available for the expansion or where to bring the entire line of capacity. But in average, you're going to have certainly longer 15 months of qualification. We have a type test or even less than this. So 3, 4 months for requalification. And normally, we see an average of 1.5 to 2 years for expanding power distribution or industrial construction capacity, also Telecom capacity.

We have Brett online asking how we are coupling the new segmentations with the organization in terms of leadership?

We are going to announce -- why you're smiling? We're going to announce the new organization in a few weeks. On January 1, we will report the financial data of the company according to the fourth segment, and on January 1, there will be an organization in place with a fourth segment business leader heading the organization. And by the end of October, we will make this known to all of you.

It was an expected question. That's the reason why I was laughing.

It was an expected question.

And then we have [indiscernible].

I guess my question is more on the digital solutions business. I think your presentation made very clear the structural growth drivers in high voltage and power grids. But in terms of the Telecom, digital solutions business, how should we think about the structural growth drivers there and the push-pull between that and some of the softness in the cyclical side of things that you mentioned this year?

The drivers of the growth, yes, the 1 that I described before, the digitalization of structure like data center, the 5G mobile rollout is another example of additional demand for optical cable also for electrical cables. So the drivers are clear. And unfortunately, telecom space is the 1 where you have shortened fast cycles. So 1 year ago, we didn't expect at all that the Telecom market would slow down in 2023. There was no sign whatsoever they slow down. And so that has happened because they built or they bought a lot of cables in 2022 because they were in account of a panic mode of having cables because they need to install all these projects. In the end, they ended up with a lot of cables and now they enter into the destocking stage. Then there was another factor that has hindered the market in 2023, which is the cost inflation of projects. Some of the projects would not make sense any longer. And the subsidy, the government subsidy to subsidize the rule that broadband only be released late at the end of first half. And so all the operators developers have to redesign, define the new projects to benefit the on the subsidy. So those 3 elements were unknown just a few months ago. But as they were unknown in terms of expectation of market downturn, we also believe that this downturn, looking at the history, will not last too long. The destocking will end at some point. The funds has been released. So we do expect that -- we have good confidence that by mid-'24, the whole market will rebound.

We have online Brett, who was just asking about the organization coming back with a very nice message. Thank you, Brett saying in my state of Tasmania, Australia, Prysmian produced and installed the longest interconnector in the world and it's great that Prysmian will be coming back to Tasmania to install Marinus Link. So thank you for your interest in our little island at the bottom of the southern hemisphere so thank you, Brett.

This is again -- marks the beauty of this company, we have a wider customer base and geographical footprint, and we like to electrify the world. We said before, we are connecting the world. Not just Europe, not just Italy, not just France, not just Germany, not just the United States, we are present everywhere.

And the Marinus Link is an example. It's connecting Tasmania to Australia.

We have Gabriele Gambarova from Banca Akros here in the room.

I want to ask a couple of questions. The first one is on the new cable line vessel. I was wondering if it's, let's say, a copycat of the Mona Lisa and Leonardo da Vinci or there is a further announcement on this vessel?

So Mona Lisa is a copy-paste of Leonardo da Vinci. The third one is not a copy-paste of Mona Lisa. It's a new vessel, which will be specifically designed to suit the frame agreement projects, not because they are frame agreement because the technology there requires laying cables made of bundles of 4 cables. So we need more rotating platform on the third vessel than we had in Mona Lisa and Leonardo da Vinci to specifically benefit the frame agreement project.

Okay. So I guess it will cost more than EUR 240 million?

Yes Mona Lisa -- Leonardo da Vinci costed EUR 200 million. Mona Lisa will cost EUR 240 million. The new 1 will be EUR 250 million. But there will be another small vessel for the shallow-water installation because I told you that we are going to add 2 vessels to our fleet, in that we are adding 3 vessels Mona Lisa, the third one and this smaller vessel for shallow water, but in the meantime, we will retire Jules Verne. So the addition is 3 minus 1 makes plus 2.

Another question. Sorry, a follow-up on this. Basically, all your cable laying is done by Prysmian, 100%? Or you will resort to third parties?

Laying cable, the submarine laying of cables is not 100% by -- done by us in many situations for shallow water or nearshore installation, we resort or might resort to outsourcing capabilities. Because we don't want to make our fleet completely capable of doing everything while -- we'll run the risk to have idle fixed costs at certain points. So while we don't envisage a full saturation of an asset we don't go there, we resort to the third-party capability. But this is only related to the simple shallow-water installations.

There is Enrico Coco from Intermonte.

Yes, thanks. I will ask one. I understand that Telecom has never been so strategic. There is a lot of cross-selling between Telecom and Energy. So the question is how much did you put in the budget to decarbonize the Telecom? And if not in this plan, is this something that is going to be expensive or not?

So we are not decarbonizing the Telecom space. We're offering our customer solutions which help them.

Sorry, I know that the production of fiber, the optical technology is really energy intensive. So this is the business where you need to invest money if you want to decarbonize. And so my question is, if it this plan in the CapEx budget, there is also something for the -- decarbonize the Telecom production?

Right, I agree. The, so we are talking about the Scope 1 and 2 CO2 emission, we are decarbonizing also the fiber plants and the optical cable plants and like with the others with the usual activity of LED replacement, changing motors and so on. And so let me say that out of the EUR 100 million that we devote to this initiative, EUR 10 million, EUR 15 million are for the fiber/optical cable business.

Okay. Matteo Bonizzoni from Kepler Cheuvreux.

Two questions. The first one is on capital allocation. You start from EUR 1.4 billion of debt, 2022. You say EUR 3.2 billion of free cash flow, some dividends, doing the calculation because you point to go to EUR 1 billion to EUR 2 billion net debt in 2027. You have EUR 2 billion, EUR 2.5 billion of cash out in the plan from M&A and buyback more or less. So my question is provided that it's early to say how much M&A you will do. Are you really able in case M&A is very small to do, a EUR 2 billion buyback, which is 20% of your market cap. And in that case, it would imply or not, share cancellation? That's the first question. And the second question is on your Greenfield investment in Massachusetts, Brayton Point. So, we have said that the picture in the U.S. now is fluid, no? It seems that there is also the presidential election issue next year. So let's say -- my question is, if I remember correctly, you were pointing to end -- to finalize this greenfield investment by 2026. What is your attitude to this plan? So my question is, it's confirmed? Or is your more sort of wait and see. So maybe you are seeing how the situation evolves and you're able -- you are ready to fine-tune the completion of this plant according to what is happening.

You or me?

I will leave first to the capital allocation [indiscernible].

Starting from the debt, first of all. With that capital allocation that I remind, include three pieces, the acquisitions, then the share buyback but also dividends, of course. We plan to deleverage from the 2022, which was EUR 1.4 billion to around EUR 1.1 billion. And this deleverage is actually taking place mainly in 2023. For the simple reason that the net cash flow after dividend in this capital allocation is actually distributed or used either for acquisitions or for buyback. Going to the -- more specifically to your question on the buyback, you remind the pie chart -- you remember the pie chart, the allocation of the EUR 3.2 billion on acquisitions and buyback is a total of 55% to 60%. This is actually EUR 1.9 billion, if you -- EUR 1.9 billion, if you translate it in numbers. You shouldn't assume, you shouldn't assume that if there is an extreme case, no acquisition, and I don't think that this will be the case. All this EUR 1.9 billion will be replaced, will be made with buybacks. Because as I mentioned during my presentation, there is a limitation. And the limitation is the 10% treasury shares on the total outstanding shares.

Unless you cancel.

Okay. We are not necessarily ready to do that. And so realistically, you may ask where is the limitation of the buyback. It's realistically around EUR 1 billion, EUR 1.1 billion. Then, of course, it depends on the share price. So it's -- you would need a crystal ball to put the exact cap of the buyback.

Valerio you want to take Massachusetts? Or I can myself.

Massachusetts because we were just in case debating internally about the Brayton Point. Our view is that we have to progress. What does it mean? In the meantime, we buy the land. Later on, at the proper time, we will launch the construction of the site. I personally do not intend to step back. Even if, of course, the market in U.S. is still to be evaluated. There are projects. Some projects are coming. Some projects are going to be disregarded, but that's a trend. We have not to be scared of the short-term fluctuation of the market. If we -- as we have seen, the trend is clear, we have to go for the trend that we have seen. And that's what is my opinion. Then...

No, no. I confirm it. I would be even more aggressive in the sense we buy the land in the coming months because the permits that have been finally made available, and we continue with acquiring the purchasing of the equipment the next year and the erection of the building also because this plant buildup will take 3.5 years plus the qualification. And this plant is not reliant on the Park City Wind project that you heard about in terms of PPA cancellation, which, by the way, is a contract still in end, and it's a contract that we were supposed to produce in Europe, not even in North America. So if other projects or the project is the first project to be loaded on this plant, Commonwealth will not continue, which we consider unlikely. There are other projects that will saturate this plant from day 1. And the day 1, as you said, is second half of 2026. So we don't intend to slow down nor to stop this decision. We will continue according to the original plan, the original pace.

Thank you, I don't see other question coming from online as well. So thank you very much.

Thank you very much to all of you.

Thank you very much for your patience. It's time for your nice lunch here [indiscernible], and soon after the vessel visit. Thank you.