Earnings call transcript: Indra Group’s Q4 2024 highlights innovation and growth targets

Indra Group reported a robust financial performance in its Q4 2024 earnings call, showcasing significant revenue growth and strategic advancements in technology and market positioning. According to InvestingPro data, the company has demonstrated impressive revenue growth of 64.93% over the last twelve months, with a strong financial health score of 3.5 (GREAT). The company is positioning itself as a leader in the aerospace and defense sectors, with a focus on innovation and expansion. The earnings call also highlighted Indra Group’s ambitious targets for 2025, including revenue and EBIT goals, as well as its long-term aim to become a €10 billion company by 2030.

Key Takeaways

• Indra Group’s revenue grew by 11.5% to €4,843 million.
• The company introduced the IndraSpace division, emphasizing space technology.
• Indra Group aims for over €5.2 billion in revenue by 2025.
• The workforce in the aerospace and defense sectors increased by 14%.
• Indra Group is focusing on strategic geographies, reducing from 45 to 19 key markets.

Company Performance

Indra Group demonstrated strong financial performance in Q4 2024, with an 11.5% increase in revenue compared to the previous year. The company has strategically positioned itself in the aerospace and defense markets, expanding its workforce and focusing on innovation. Indra’s efforts to streamline operations and concentrate on fewer, more strategic markets have contributed to its growth.

Financial Highlights

• Revenue: €4,843 million, up 11.5% year-over-year
• EBITDA Margin: 11.3%
• EBIT Margin: 9%
• Net Cash Position: €86 million
• Free Cash Flow: $328 million
• Order Backlog Growth: 7%
• Order Intake: 17% increase

Outlook & Guidance

Indra Group has set ambitious targets for 2025, aiming for revenue exceeding €5.2 billion and an EBIT of over €490 million. This growth trajectory aligns with the company’s strong momentum, as evidenced by its impressive 49.56% stock price appreciation over the past year, despite a recent 9.24% decline in the past week, according to InvestingPro data. For deeper insights into Indra Group’s growth potential and comprehensive analysis, access the exclusive Pro Research Report, available to InvestingPro subscribers. The company is also targeting a free cash flow of more than €300 million. Looking further ahead, Indra aims to become a €10 billion company by 2030, driven by innovation and strategic market expansion.

Executive Commentary

Ancel Escobarano, Executive Chairman, emphasized the company’s commitment to manufacturing, stating, "We want to turn this company into a company that’s devoted to manufacturing." He also highlighted the company’s resources for defense market expansion: "We have the means and the resources to do it." CEO Jose Vicente Ramos Motto reinforced the focus on innovation, saying, "Innovation is at the very heart of Indra."

Risks and Challenges

• Supply Chain Rationalization: Indra’s efforts to streamline its supply chain could face challenges in maintaining efficiency and cost-effectiveness.
• Market Saturation: As the company focuses on fewer geographies, it risks market saturation in those areas.
• Macroeconomic Pressures: Global economic conditions could impact Indra’s growth targets and financial performance.
• Competitive Landscape: The aerospace and defense sectors are highly competitive, requiring continuous innovation and adaptation.
• Technological Advancements: Keeping pace with rapid technological changes is crucial for maintaining a competitive edge.

Q&A

During the earnings call, analysts inquired about potential partnerships, particularly with Mindside, and the company’s strategy for expanding in the defense market. Indra’s executives addressed these questions by explaining their focus on space and defense strategy and the company’s manufacturing capabilities.

Full transcript - Idaho Strategic Resources Inc (IDR) Q4 2024:

Esaeckel Neto, Investor Relations Director, Indra Group: Good afternoon and welcome to the presentation of results 2024. My name is Esaeckel Neto. I’m Investor Relations Director. And first, please allow me to refer you to the slide which displays the legal framework under which this presentation must be considered. I would like to introduce you to the speakers of this session, Mr.

Ancel Escobarano, Executive Chairman of the Indro Group, Jose Vicente Ramos Motto, CEO of Indro Group, Luisa Brio, General Manager of Mindside and Michael Fortes, CFO of the Indro Group. Ancel, you have the floor. Thank you very much, and thank you for joining us today. It’s a pleasure to be able to address all of you today as the new Executive Chairman of the Indra Group. For those of you who don’t know me yet, I have spent over thirty years in the defense and high technology industry.

And during these years, I founded and I founded and led the company I founded with my brother Javier, which we turned into a benchmark in the defense sector. So we transformed Escribano in, well, from a manufacturer of mechanical components into a leader in high technology defense products, expanding its industrial and technological capabilities. So now I’m facing a new challenge. In the present context, in this geopolitical context, it’s actually the right one. And we are, of course, we are, of course, both the Indra team and myself have the ambition that we need.

I am the largest private shareholder in the company because I believe in its potential and in future. And we have an ambitious plan to be able to lead the main well, to achieve the main capabilities and technologies to lead the national and European programs have come to drive this change together with this amazing team. And today marks the beginning of a new intra. At the Munich Security Conference, where I was just a couple of weeks ago, I saw first on how Europe clearly has the need to strengthen its defense autonomy. For example, Ursula von der Leyen mentioned that Europe should aim to increase its defense spending above, up to above of 3% of its GDP or in the case of JD Vance.

Well, he mentioned it is the time to invest in defense because we cannot just presume that American presence will be in Europe forever. Spain is following along on the same lines with a commitment to grow its own national industry, and Indra will be the main tractor company. At Indra, we understood the message, and we are ready to respond by increasing our capabilities, growing our portfolio of proprietary products and generate high skilled jobs. In this context, our vision at Indra Group is clear, to become the leading Spanish company in defense, aerospace, and advanced digital technologies. We want and and we can provide an industrial and technology response to the great challenges that Spain, The EU, and NATO are facing, positioning ourselves as leaders in both the civilian and military arenas with a multi domain approach.

In the land domain, we are going to lead the main vehicle programs such as the World Combat Vehicle, Air by Aid or Combat Support Vehicles with our own manufacturing capabilities as well as military mobility with infrastructures and advanced logistics. And as you’ve probably been able to see at IDEXX that took place in Abu Dhabi, we reached agreements with global leaders in military vehicles to expand international footprint. In the domain, we want to reinforce our role as a national systems integrator and as a European provider in programs such as FCIS, a program that we actually called. And at the same time, we’d like to reinforce our role as, at a national level in supplier in defense programs and cloud. In the naval domain, we would like to consolidate ourselves as system integrators forging alliances with leading platform providers, especially in national industry.

In cyber, we aspire to become a national leader in cybersecurity and cyber defense. Let us remember that Intra Group has been building national capabilities for over a decade and leading European projects both in EDA and EDF (EPA:EDF) that we’ve been leading from our company. In space, we our objective is to be leaders and become a Tier one European leader. We want to provide the sovereignty that both Spain and Europe require. And we have created interest space with which we will be leading this amazing change with value proposition that we will show in the clip that we’ve prepared for you after this slide.

To be able to reach our objectives in the five domains, we are strengthening our industrial and productive capabilities with initiatives such as the new Indra technology we have that we will introduce later. And along the same lines, we have accelerated our industrial plan to optimize efficiency and increase production, achieve greater autonomy to develop our solutions and ensure a sustainable and continuous growth of our company. Before handing over the floor to Costa Vicente, as I mentioned earlier, I would like to share with you a video to explain our ambitious vision about the INBRE’s role in space, please.

Narrator/Video Voiceover, Indra Group: In a constantly evolving world, marked by rapid changes and geopolitical uncertainty, Space has become a strategic cornerstone for sovereignty and defense. Its impact is crucial for ensuring secure communications with comprehensive coverage, advanced protection through satellite observation, space surveillance, and geolocation. IndraSpaceNuCo emerges as a unique player in Europe. Its dual civil and military approach along with its end to end capabilities allows it to control the entire value chain. From the design and manufacturing of satellites to the development of control centers as well as operation and service provision.

This integrated positioning drives its scale and competitiveness facilitating access as a leader to large programs. With its own infrastructure for the manufacturing of low earth orbit satellites, INDRASpace will establish standardized and scalable production, ensuring profitability and efficiency. Furthermore, it will lead the development of satellite flight software and command and control centers for advanced missions. As a multi orbit constellation operator, IndraSpace drives the vision of IRIS Square, the European Commission’s initiative to ensure secure satellite communications for governments and organizations. In this context, it will deploy global coverage and resilient connectivity to facilitate decision making and support critical operations in both civil and military environments.

Communications are essential for enabling key defense concepts such as the combat cloud and multi domain and collaborative warfare. In the civil field, it will bring connectivity to remote regions where today it does not exist, and it will transform air traffic management by ensuring communication between controllers and aircraft in oceanic areas. For Earth observation, INGRASSACE relies on state of the art satellites that provide real time images, and it applies artificial intelligence. This means that threat detection, coastal and border surveillance, and the protection of critical infrastructure are significantly enhanced. In the field of space surveillance, it has one of the most advanced radars in the world, combining optical technology and data intelligence for greater anticipation of threats.

Additionally, IndraSpace will deploy essential elements for strategic geolocation. Europe has taken a firm step to boost space, and it is advancing towards the creation of an ecosystem of secure communications, observation, IndraSpace, a unique European player with a comprehensive end to end strategic proposition destined to lead the future of space.

Esaeckel Neto, Investor Relations Director, Indra Group: And now, Jose Vicente, you have the floor to share with us all the progress made in the last year.

Jose Vicente Ramos Motto, CEO, Indra Group: Yes. Thank you, Angel, and welcome, ladies and gentlemen, to Indra. And Angel, welcome to this company that you know very well from your previous role as chairman of Escribano. I believe that you know this company better than many of us. On March 2024, we presented our plan late in the future, an ambitious plan based on seven key strategic lines.

First, more focus on aerospace and defense. Second, the creation of a space new curve. And as depicted by the video, we have just seen increasing men’s science autonomy by boosting its growth with support of strategic partners. Number four, strengthening our presence in new markets. Five, activating our portfolio rotation and expanding our ecosystem.

Number six, increasing investment in technological r and d, and finally, doubling down on our commitment to critical talent. Today, after one year, we can say that Leading the Future is embedded into the very DNA of every person at this company. Let me now highlight the most relevant milestones achieved over the past months. Firstly, over the past year, we reinforced our leadership in the aerospace and defense industry, achieving significant progress in each of the main domains. For example, in the space domain, after the spin off of the Indraspace division and the acquisitions of Deimos, His Passat, and His Descent, we are now the most integrated space company in Europe in secure communications, applications, and satellite surveillance.

And we are involved in whole market European and national programs such as IDES two, SpainSat, and GM Pass. Just a few days ago, during a meeting with the ESA in Munich, we were told that our achievements in just twelve months position us as a relevant player in the space sector with potential to significantly increase our influence. And this is to be underscored because over the past twelve months, our teams have been performing an outstanding job. In the land domain, the majority acquisition of TENS defense consolidate our position as the prime contractor of major national programs for military ground vehicles such as VCR A x A and the VAC. In the air domain, we continue to play a key role in the FCS program, and we continue to remain strong in the Euro fight program.

Therefore, we are consolidating our position in the large programs. We continue to participate as a key systems provider and radar manufacturer for the f 110 freighter program. Finally, we have exported our radar technology internationally. And a testament to this is a joint venture we signed with the Edge Group from The Arab Emirates where we will be expanding our footprint in The Middle East and in other regions outside the European Union and NATO. Additionally, we have executed key contracts.

We supply mobile radars for military air traffic to the Polish Air Force and also the first space surveillance radar sold to the German Air Force. So beyond reinforcing our position in major programs and benchmark technologies, we have been taking key steps to consolidate our position in aerospace and defense. We have allocated more than 90% of our capital to aerospace and defense because we must accelerate the change in our company’s profile. As stated by our chairman, there are some ways that we have to tap into. That’s why we have reinforced our offering around 11 priority systems, which will enable us to achieve a greater degree of standardization in our solutions and better focus our sales force.

We have also launched the new Indra industrial plan with standardization, vertical integration, and supplier chain rationalization as key pillars of support in the process. Thus, we will gain greater efficiency, and we will be reducing our product delivery lead times to customers. So this is a crucial time in the European defense industry, and therefore, lead times are just as critical. Thanks to this approach, we are transforming our business model. As you can see on the right hand side of the slide, back in 2023, aerospace and defense represented less than half of our EBITDA.

Whereas by 2026, it is expected to account for more than 60% of our EBITDA forecast estimated at over 750,000,000. Regarding the mid side, we continue making steady progress. Regarding its growth and efficiency plan, I believe that there is a brilliant team did a great job. And mid side is outperforming its peers, and therefore, we have become a benchmark. However, we need to consolidate this leadership in digitalization and high value technologies further.

In this first year of the plan, our digital offering is gaining increasingly more weight and already accounts for more than 50% of total revenue with a strong growth in the modernization of legacy systems, migration to the cloud, and cybersecurity, all of them being key areas for our clients’ digital transformation. As to artificial intelligence, we posted growth of more than 50% in the development of use cases for our clients while also advancing the internal application of AI in our processes. As a result, we have achieved a level of efficiency in our software development processes where artificial intelligence is applied. We’re also developing a new commercial model for our offering and priority customers, which has allowed us to increase the gross margin in the priority bid awards by five percentage points compared to the overall awards. On the other hand, we continue strengthening our international presence in strategic markets as evidenced by some key projects such as the transformation of critical systems of the Saudi Arabian power grid.

Besides these advances, we are still in the process of incorporating a strategic partner that will provide Minh’s side with more flexibility to accelerate its growth and consolidate itself as a global benchmark in the digital sector. And let me underscore that we are open, but we are not going to rush things up. Moving on to our international expansion, fiscal year twenty twenty four was key for Indra. Our growth outside Spain was driven by our key geographies that is United States, Germany, The United Kingdom (TADAWUL:4280), Poland, The Emirates, and Saudi Arabia, going from 45 countries down to 19 where we’re now placing our focus. Let us take a look at our main achievements over the period in North American Central And Northern Europe.

We were able to nearly double, our order intake compared to 2023. And this was possible thanks to our expansion in The United States and Canada, where we were able to formalize some key contracts such as the one signed with the US Federal Aviation Administration or the agreement with the Canada for Air Traffic Management. In The Middle East and North Africa, order intake grew by 41% compared to 2023. In, The Emirates, the agreement with Edge Group for local production of radars for NATO countries is not worthy. In Saudi Arabia, we signed agreements for the development of the first virtual air traffic tower in Alula and for projects to transform the country’s power grid.

Finally, in Latin America and Southern Europe, with a 12% increase in order intake, we were able to strengthen our position with the acquisition of MQA for IT services in Colombia. On the other hand, we also made progress in our m and a strategy, which is a fundamental pillar to bolster our growth, our key divisions, and consolidate our presence in strategic markets globally. In 2024, we also carried out transactions across our lines of business with a priority focus on defense and space. These been sectors where we focused most of our investment in line with our portfolio rotation strategy towards these sectors. Let us now talk about the sixth strategic line, and that is, boosting our investment in technological r and d.

Innovation is at the very heart of Indra. We are a technology company, and we are going to expedite our investment in technological development to galvanize ourselves as leaders in aerospace, defense, and advanced technologies. For this purpose, we are developing a technological roadmap to speed up the development of new products with advancements in microelectronics, AESA radars, gallium nitride, quantum technologies, and advanced optronics. We want to take a leadership role in advanced digital technologies such as artificial intelligence and quantum computing. The Intra Technology Project runs along these lines and is going to be a benchmark in our country.

Our advanced technology hub will enable us to continue investing in innovation, critical talent, industrial development, and sustainability in line with our net zero target. All these efforts will consolidate us as a benchmarking technology and innovation. And, of course, I want to now refer to our most important asset, our people. The very engine of the company and our innovation is talent. In 2024, we created 2,005 new technology jobs, surpassing more than half of our target of 5,000 new positions by 2026 when we presented our strategic plan.

For example, in aerospace and defense, the workforce grew by 14%, establishing us as a benchmark in the industry. In addition to attracting talent, we are strengthening their development and retention, achieving a reduction in voluntary turnover by more than three percentage points, therefore leaving double digit figures behind. Our commitment to talent, has been recognized, for example, with a top employer seal for the seventh consecutive year, and Minsight, in turn, was highlighted by LinkedIn in 2024. In short, we continue reinforcing our culture of excellence, alluring and retaining the best professionals to build the future of our company. And now let me take this opportunity to extend my appreciation to all of the company’s teams for their effort and dedication in order to reach this first year, standing on such strong foundations in terms of progress.

However, we still have a long way to go ahead of us. All in all, and as we will detail when reviewing the financial results, fiscal year twenty twenty four was a positive year for Indra. We achieved revenue of more than €4,800,000,000 with an EBITDA margin of 11.3% and an EBIT margin of 9%, thereby consolidating a pathway of profitable and sustained growth. These results not only reflect the company’s strong performance but also lay a solid foundation to ensure that we meet our 2026 ambition. The plans for 2026 has clear cut and achievable goals that we are going to attain.

Let us now talk about our 2024 financial results. Twenty twenty four was a record year for Indra. We posted solid results that reinforce our progress and enable us to look to the future with confidence and optimism. Our order backlog grew by 7%, ensuring greater stability and visibility in the business, driven by the strength in defense, international expansion, and some key contracts. Order intake increased by 17%.

We should highlight the integrated systems and simulation areas in defense as well as new contracts in ATM in Canada, Colombia, and Vietnam respectively. Revenue climbed by 11.5%, therefore, reaching 4.8 hundred and 43,000,000,000. Beyond revenue growth, we were also able to improve profitability by one percentage point that is half what we set out under the strategic plan. The EBITDA margin reached 11.3%, while EBIT margin grew to 9%, reflecting therefore operational improvements and a change in the business model mix. This performance resulted in a result 35% higher year on year with a cash generation of $328,000,000 over the period.

As a result, we were able to reduce our net debt to negative levels closing the fiscal year with a net cash position standing at €86,000,000. As a result, we can now look into the future standing on solid grounds and with confidence. So as you can see, this has been twelve months of intense work. However, we were able to deliver positive results in the defense business. Order intake climbed by 29% mainly thanks to the contribution from integrated systems and simulation.

Revenue also grew successfully by 26% in fiscal twenty twenty four, driven by FCAS simulation and space. In addition to this double digit growth, we were able to maintain constant profitability with an additional margin of 20% and an EBIT margin of 18%. They both be benchmark margins in the defense sector compared to our European PS. Air traffic is one of indirect group’s jewels. The decision to create its own division, advancing its autonomy resulted in very good outcomes, outstanding outcomes in 2024.

And this double digit growth trend continued throughout the full twelve months. And the positive performance shown in order intake with a growth of 58% is accounted for by contracts in Canada, Colombia, and Vietnam as well as by the contribution of Park Air in Brazil. Similarly, sales increased by 30% across all geographies, thanks to both organic growth and the inorganic contribution of Park Air in The United Kingdom and Selex in The United States. If we now take a look at the mobility division’s results, order intake climbed by 18% as explained by contracts for urban transportation management in Ireland and all projects in The United States. We are already present in five states in The United States.

Sales slid by 1% due to declines in revenue from AMEA and America wide margins improved significantly, thanks to a lower impact from problematic projects and a greater focus on profitability. If we now take a look at main side, we continue expand in our portfolio. Order intake and revenues posting growth of 13%, nine %, and 7% respectively, mainly driven by energy and industry and financial services. These are benchmark growth rates in its industry compared to our peers. Margins continue to grow with the EBITDA margin, improving from 7.7% up to 8.1% and EBIT margin from 5.4% to 5.9%.

If we now take a look at our 2024 guidance, the first kit of our strategic later the future plan, we are surpassing all the objectives that we set at the beginning of the year and those revised in July. In terms of revenue, we were able to post €4,907,000,000 in local currency and €4,843,000,000 reported, reflecting the fourth solid growth that exceeded expectations at the beginning of the year and at midyear. Final EBIT results also out strict expectations, reaching $438,000,000 Finally, in terms of free cash flow or FCFs, we closed the year with three twenty eight million dollars surpassing our updated guidance by up to $68,000,000 This outstanding result demonstrates our strong cash generation of financial management. Regarding our outlook and objectives for 2025, we expect to surpass 5.2 hundred billion in revenue local currency, which accounts for significant growth compared to 4,843,000,000.000 reported in fiscal twenty twenty four. Our EBIT target is to exceed $490,000,000.

And finally, as for FCS, we aim to generate more than 300,000,000. Miguel will now provide you with further details on some of our key financials.

Esaeckel Neto, Investor Relations Director, Indra Group: Thank you, Costa Vicente. And let’s now continue taking a look at the most relevant financial results. First, I’d like to highlight the very positive evolution of free cash flow, which reached $328,000,000 in the whole year. It is an excellent figure taking into account the non payment of $41,000,000 in the second quarter for in taxes linked to the twenty twenty one-twenty twenty three remuneration plan. So once again, the performance of the fourth quarter was very positive, thanks to the high concentration of collections in the last month following the usual seasonal pattern of the company.

And regarding the evolution of working capital, I would like to highlight the positive change in day sales outstanding, which is minus seven days compared to zero days in 2023. This is a result of our continuous operational efforts to optimize cash flow generation. This improvement is mainly explained by a reduction of ten days in the average collection time and one day in the average payment period, which more than compensates for a slight increase in stock due to the business growth. Let’s now try to explain the very positive evolution of our net financial debt throughout the year. Given that we ended with a net cash position of NOK 86,000,000 compared to a net debt of 107,000,000 in 2023.

Out of all different lines, I must highlight the exceptionally high operating cash flow of $541,000,000, which was 19,000,000 higher than that of last year, thanks to the higher growth and operating profitability of all our divisions. As a result, the leverage ratio now stands at minus 0.2 times net debt to EBITDA, which represents an improvement of 0.5 compared to December 2023. Last and on debt structure, I would like to highlight the reduction of gross debt to $530,000,000 compared to over 700,000,000 in 2023. As a result, the average debt maturity stands at one point three years with an average cost of 4.2% and a cash position at the December of $616,000,000 And now I’d like to give the floor to Ancillary Escobar to close the presentation. Thank you, Miguel.

As Jose Vicente mentioned, we are making or taking solid steps to achieve the objectives of our strategic plan. We have also seen that the results of 2024 exceed expectations, which is excellent news. And moreover, I am sure that we can improve the medium further. We have favorable wins given in the current geopolitical situation. I am fully committed to the change we’re making, investing in technological capabilities and innovation to transform ourselves into a product and a system company for the defense and space sectors.

It is time to keep on growing and to realize our ambition of becoming a 10,000,000,000 company. Please allow me to explain my vision for the Indra Group in 02/1930. In ground vehicles, we will continue to well, we will continue evolving with platforms such as WCVs and CESVs and new models, giving ourselves the necessary capabilities to design and manufacture the vehicles of the future demanded by our armed forces in defense electronics. We will continue developing an advanced portfolio that will include radar sensors, electronic warfare and C4I. Also, our command and control systems increasing the use of AI in ammunition and weapons.

We will expand our offering with UAVs and anti UAS systems, munitions and missiles, equipping ourselves with the necessary capabilities to manufacture them and deployment them in our armed forces. In space, we would like to differentiate military and civil sectors. We will become a key European player in secure communications, surveillance, and space services contributing to the protection and control of the space. And additionally, we will secure our country’s strategic capability in a sector as important for national European sovereignty space. In air traffic, we will reinforce and further accelerate our growth and our expansion focusing on key markets such as The U.

S, where we just what we just reached shortly. In mobility, we will invest in intelligent transportation solutions with more remote solutions and connected vehicles to transform the sector. In artificial intelligence, we will also focus on prioritize the development of artificial intelligence and other key technologies to ensure multi domain superiority and maximize the automation of critical processes. And finally, we will provide Minsight with a greater flexibility to make the most appropriate decisions regarding the entry of a new partner. And to this, we will keep on driving selective mergers and acquisitions as well as strategic alliances, especially in weapons and ammunition by relaunching our project Indra Ventures through which we will invest in companies or startups to boost their growth.

And this vision will allow us to become a productive company, and we will have autonomy to manufacture and deploy around products and systems. We know this is a demanding challenge, but our achievements and the solid foundation that we have built make us help us be certain that we will succeed. It is time to accelerate and move forward stronger than ever. And this is the end of our presentation, our vision and the key elements regarding this Indra of the future that we will welcome. Thank you very much for your attention.

And we can now have a Q and A session. We’ll be very happy to answer your questions. Thank you. We will start the Q and A session. We will start with the participants that are here.

And we will start with the first question from Beatrice. Well, Mehdi from Westinberg. Well, first of all, congratulations for your results and thank you very much for answering my questions. Three, now taking the opportunity that the turbine is here. And first of all, congratulations for your appointment.

And I would like to know which is the roadmap or your vision for the company for the next three to five years. And second, we believe there’s still some uncertainty as for the recent purchase of Ispasad. I would like to know if you’re going to give more details about it. And last, I would like to know if you have advanced in the decision on payments or having a new partner in Minsight. Thank you.

Great. Thank you. Thank you for your question. Well, on the road map for the next three to five years, well, let’s see. Well, clearly, we have a defined strategy.

We are working very hard to implement it. And in the short term, three to five years, it is not too long of a term. We would like to turn this company into a company that’s devoted to manufacturing and that focuses around customer service and delivering products on time and have all the capabilities within our own factories. And to do so, we have a strong plan, a strong investment plan to buy assets and equipment and machinery and increase the number of workers. We have already grown by 2,500 new employees, and we like to recover capabilities that were in the hands of other vendors, so out of the scope of our company.

And to do so, while the company presented a plan leading the feature one year ago. And of course, following it, we are going to meet those objectives. And on the purchase of vespasat, well, what can I say about the purchase of Espersat? Espersat is an asset. It is an essential asset for the company.

It was part of our plan. And we want to and we want to turn space. We want to reach 1,000,000,000 of turnover by 02/1930. And now as you know, we have reached the commitment to acquire it. The company is not just, is not yet part of Indra.

We’ll We’ll probably close it in September. And the information we can share with you is what you’ve already got, which is exactly what Redeya shared with us. And yes, and you have the third question. Oh, divestment. What about divestment?

Well, in Leading the Future, we also mentioned that we were going to divest and we will divest if they are ready to be done, but we will not carry out bad sales. We’re looking to find or we’re searching the right partners or well to carry them out if there’s an opportunity to do so. But and we will determine if it’s good for the company. And today, the company, as you can see, can carry out the acquisition of other companies or partners that can be included in our portfolio because we have the financial muscle to do so. And as you can see, as the results show, we don’t really need to divest even if they sell things to us before we make a decision.

Thank you. Next (LON:NXT) question, Carlos Trevino from Santander (BME:SAN). Thank you. Carlos Trevino Santander, two questions. And following the question from Beatrice on Mint side, When you’re saying that you are not going to rush things up, I guess in the past few months, you have received some propositions.

What’s the most relevant for you in that idea of not rushing? Would you give priority to an industrial partner rather than a financial partner? Or the or is it the well, the valuation of the partner, that would be the most important aspect? And second on defense, which are the specific capabilities you’re missing in within the company and the things that you believe could be added to the company? Thank you.

Jose Vicente Ramos Motto, CEO, Indra Group: What’s the most important aspect of meanside? Our workforce and our customers’ meanside has been built over the years. And we have a very important team not only here but also in Latin America. We have to seek the best solutions for both our clients and for our, work workforce. You know that there are certain valuations because you, at Santander, are conducting your own assessment and evaluation, and we also see what’s happening in the media outlets.

Very often, they carry out valuations ahead of time. We know the valuations we have to stick to. And most importantly, when we sell MeanSight, the purpose is not to pay out an extraordinary dividend, but rather to invest those funds in another company when the time comes. Such timing is critical for us in order to act in a responsible manner and in the best possible time. As for our defense capabilities, I come from the industrial engineering sector, and I’m really happy that the chairman comes from a similar background.

I was rather surprised, the lack of manufacturing capabilities so far, and we have to rationalize that because here we’re not talking about cost anymore. And last year, I explained this. There are 16 greater families with a 10% standardization, and we are working on another 11, families with a 60% standardization. In the next three years, we have to secure lead time. In the face of the Ukraine conflict.

When we get offers, the key driver is when the materials will be delivered. And today, we need to improve if we really want to climb and increase our sales. David, you have another question?

Esaeckel Neto, Investor Relations Director, Indra Group: I want to start this. David? Good afternoon from JV Capital. And with the question of mindset, we see an improvement of margins in the fourth quarter. And can you please provide more visibility on the main levers for that margin improvement?

And also what your outlook is for this business in 2025? Thank you. Thank you, David. Well, we are, yes, we keep on improving our margin and we’ve been working on different levels for the past two, three years. And I believe those are the levers you already know.

They’re basically be summarized in improving operations. And we’ve got churn automation, including AI in software development. So that’s the first group of levers. There’s a second block that’s linked to changing our offer mix. We come from the world of services and now we’re getting into the world of projects with specific capabilities.

So we’re getting into data, AI, IoT and different Vanguard technologies that let us defend higher margins. And the third group of levers is basically linked to geographical concentration and because Evidently was mentioning for the whole group. But in the case of MidSide, well, this is of course, local scale is very important when we come from being in dozens of countries. And now we are focusing around the six or seven geographies where we have several thousand people and to make sure that that local scale allows us to have better margins. And the geographies are the ones you already know, Spain, Italy, Mexico, Colombia and Brazil mainly.

I’m missing some, but these are the three main groups of levers. They are also accompanied by the growth and allows us to increase our margins as well. And it is also true that in the fourth quarter twenty twenty four, as you mentioned, there’s a peak in our margin. That’s just circumstantial. We have reached a series of milestones that allowed us to increase our sales and that’s why the margin was a bit higher.

But in any case, the trend is the one you see. And answering your second question about the outlook for 2025, We see that we could be around six and six point five, that’ll be our margin and we could be there comfortably. And then don’t say comfortably, they’ll probably ask for more. Second question next question from Juan. I’m from Alantra Equities.

And I’d like to ask the Chairman about his vision around the defense business. What can you get in terms of market share? Or what is the size of business for Indra that you could reach in about five years? And I see you have mentioned for the first time weapons and ammunition. Well, in my very humble opinion, there isn’t much overlap with what industry is doing today.

How do you believe you could develop this segment, especially taking into account that one of the main ammunition, I mean, one of the main manufacturers was sold shortly ago. Thank you, Juan, for your questions. Well, in terms of size, I mean, well, size right now and the opportunities are huge. I mean, multiplying as this has happened to other companies in the sector already. Some of them are more German or French.

I mean, multiplying the business by 10 or the value by 10. Well, that’s the great opportunity we’ve got. It’s not because they did better than we did because they did not start being better. They were just more ready, but it is not late. We can do it.

We have made a decision to do it. We have the means and the resources to it. We’ve got the professionals to it and the opportunities to achieve it as well. So in these investments and this idea of bringing back home manufacturing capabilities, We, the well, the executive team believe that we’re going to be able to meet the strategic plan two years in advance. I think that’s the this is an ambitious vision, but I believe it’s quite it’s not too optimistic for the present times, but those are not made up by Indra.

They actually stem from the geopolitical situation. So given that we are ready to carry them out and with the investments we’ve made last year, I mean, having a majority stake at Tez and the new contracts for vehicles, we are going to focus our manufacturing capabilities and we’re going to produce on time with quality and we are trying to grow in the market, especially among in the ground vehicle sector. And the demand is around six or seven times higher than and, well, production capabilities. And that’s why at Indra, Indra has a lot of room to grow in that sector. And that’s why we made a decision to invest in that sector.

And I mean, it’s not such a big investment. We were already there. We just didn’t have all the parts, all the pieces of the parcel. It was not all integrated. So the vision of the company, well, I’d like to mention that I think we’re going to get to those 10,000,000,000 2 years in funds because we are in the right situation to do so.

If we were much more optimistic, I think we could even make it even one year earlier. But let’s say two, so otherwise you write it down and you ask about it in 2027. So why ammunition and weapons? Well, that’s not just like that. I mean, although your your question does make sense.

I mean, we are manufacturing vehicles. We’re integrating vehicles and those vehicles have ammunition and weapons. We are not going to sell the vehicles without a cannon or the ammunition. It’s the whole system’s been delivered and Indra is a system company and we sell those systems. Loitering ammunition that, well, luckily, well, just so important today, but that’s just ammunition.

And it’s another part of our company, and we develop those aircrafts or UAVs that have, I mean, they carry a load. We don’t manufacture it. We just buy it. But it needs to be part of our portfolio. We need to have those ammunition as part of our portfolio and they are using artificial intelligence program missions and they choose the possible targets that armies or that the military chooses.

And that’s why it is aligned with our products and aligned with the company that’s going towards further integration and closer towards being demanded. I think we read the market right and that’s what where we’re going towards because we have the chance to do it and there’s a gap there to be able to grab it. Thank you, Juan. I think we’ve got one more question here. Please go ahead.

Yes, good afternoon. And Ibasa Felix from Renta for congratulations for your results. And first, I’d like to ask about test defense. Now you’ve owned 51% of it. And it’s quite long that there have been issues with the delivery.

Now that Indra is managing it, have you already felt some positive changes? Do you trust you’re going to be able to meet the delivery schedule? And also, I thought I understood that the sales of Mint side would be used to well, for new acquisitions. So there’ll probably be nothing else in case there is no monetization coming from Mint side. Is that the case?

Great, Ivan. Well, the fact that we got a majority stake at Test, it’s recent and the change has been big. Well, it’s due to the loss of control. I mean, I was involved in tests in my previous job. So but the thing is that we hadn’t lost control.

There were four shareholders in the company. There were four of us. We had to agree and we needed to reach a consensus. So we’re missing this or that. So the fact that Indra I mean, now Indra is the one that organized it.

There’s just one party that sets the pace for the rest. And we have that upgrade, what the ability to set that pace and do that on the three shareholders that are still at this, who own a minority stake. Yes, they are shareholders and not as much as Indra. Indra controls the company. Indira is the one that sets the pace.

And so to speak, they are suppliers or vendors like any other vendor. And the agreement is that Indira will be able to change their the vendors and just have full control of the company. We are still it’s not just by the company and I’m in charge of everything the following day. There’s a process of and this process will probably finish in the next weeks. So now we are the ones who manage purchases, procurement terms and what’s being produced and when it has to be done.

And as you know, we have already delivered the fixed vehicles, but they have been given to the buyers. And we have a program and we’ve reached an agreement with the Ministry of Defense. And this program has suffered we could say that they have suffered some delays, but it’s actually not the case. It was hard to, you know, get a system or systems working. Can be, you know, a system or systems from with the different vendors involved.

I mean, it was a bit harder than expected to make sure everything worked perfectly. So I mean, make sure all the gears were walking together was the tough part. On divestments, on main side or any other asset, well, the opinion of or my opinion and also the opinion of also Vicinity and the rest, we are not going to divest and to have, you know, to offer a dividend. If we are going to divest, it will be because we have a plan to invest in new assets that will provide more workload to help us go towards the plan our plan to make sure, Indra is the defense company, that the fourth economy in Europe deserves. Today, we haven’t got that size and we will get there.

And to do so, we have our plan. And as I mentioned earlier, we will try to get there two years in France. And then we have another one in 2028 that will be ambitious enough to be up there and be in 02/1935 to be a player of 20,000,000,000 or whatever we might be. So to become a real a big player in the defense sector because I think we deserve it. Thank you.

Jose Vicente Ramos Motto, CEO, Indra Group: Okay. We are right on time. I don’t know whether you have any closing remarks. Thank you all for attending this prescience presentation. When we implemented the plan one year ago, many of you had some doubt about it.

Now there’s no doubt that this plan is already a fact. And as the chairman said, our 02/1930 ambition is going to be delivered in 2028, which is not an easy task. There is plenty of talent. Therefore, our number one priority is to enhance lead time. And to this end, we have to prepare industrialization, rationalization plans in order to enhance industrial agility across the organization.

Thank you all for attending. Ezekiel? Thank you very much. We thus come to the end of the presentation.

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