Earnings call transcript: Saipem’s Q4 2024 Revenue Soars, Order Backlog Hits Record

Saipem (BIT:SPMI), a leader in offshore engineering and construction, reported strong financial results for the fourth quarter of 2024, driven by significant revenue growth and a record order backlog. The company achieved a 23% year-over-year increase in revenue, reaching €4.4 billion. According to InvestingPro analysis, Saipem maintains a "GREAT" Financial Health Score of 3.39, with particularly strong performance in relative value and profit metrics. Saipem also reported a substantial improvement in EBITDA, which rose by 48% to €424 million, reflecting a 40 basis point increase in the EBITDA margin. The company’s strategic shift towards an asset-light fleet strategy and its focus on value over volume have contributed to these positive results.

Key Takeaways

• Saipem’s revenue increased by 23% year-over-year to €4.4 billion.
• EBITDA rose by 48%, with a margin improvement to 9.6%.
• The company reduced its net debt by €174 million in Q4.
• Order backlog reached an all-time high of €34 billion.
• Saipem targets €15 billion in revenue by 2025.

Company Performance

Saipem’s performance in Q4 2024 highlights its strong position in the offshore engineering and construction sector. The company has successfully capitalized on the growing demand for offshore oil and gas projects, particularly in emerging markets like Suriname and Namibia. InvestingPro data reveals impressive operational efficiency with a return on invested capital of 19% and a robust gross profit margin of 38.41%. For deeper insights into Saipem’s performance metrics and more exclusive ProTips, explore InvestingPro’s comprehensive analysis tools. Its robust order intake of €5.3 billion, translating to a 1.2x book-to-bill ratio, underscores its competitive edge. Saipem’s strategic focus on modularization and project execution has further solidified its market leadership.

Financial Highlights

• Revenue: €4.4 billion (+23% YoY)
• EBITDA: €424 million (+48% YoY)
• EBITDA Margin: 9.6% (40 basis point improvement)
• Net Debt Reduction: €174 million in Q4
• Operating Cash Flow: €1.061 billion (nearly doubled from 2023)

Outlook & Guidance

Saipem has set ambitious targets for 2025, aiming for a revenue of €15 billion and an EBITDA of €1.6 billion. The company expects an order intake of €50 billion between 2025 and 2028, with €15 billion from low-carbon projects. Saipem’s dividend policy aims to distribute at least 40% of free cash flow, with a medium-term target of accumulating over €2.2 billion in free cash flow.

Executive Commentary

CEO Alessandro Pulitti emphasized the company’s strategic shift, stating, "Value over volume is our driver now." He highlighted Saipem’s active participation in tenders, particularly in the offshore wind market, despite its complexity and cost challenges. Pulitti also noted, "We are actively tendering in several tenders," indicating the company’s proactive approach to securing new projects.

Risks and Challenges

• Offshore wind market complexities and cost expectations may affect profitability.
• Economic and geopolitical uncertainties in emerging markets could impact project timelines.
• Supply chain disruptions and inflationary pressures pose operational challenges.
• Transitioning from lump-sum EPC contracts to value-focused projects requires careful management.
• Maintaining competitive advantage in a rapidly evolving energy transition landscape.

Saipem’s Q4 2024 performance demonstrates its resilience and strategic foresight in navigating industry challenges. With a robust order backlog and clear growth targets, the company is well-positioned to capitalize on future opportunities in both traditional and renewable energy sectors.

Full transcript - Seafront Resources Corp (SPM) Q4 2024:

Conference Operator: Good morning. This is the conference operator. Welcome and thank you for joining the Saipem Full Year twenty twenty four Results and Strategy Update Presentation. As a reminder, all participants are in listen only mode. At this time, I would like to turn the conference over to Mr.

Alessandro Pulitti, CEO and General Manager. Please go ahead, sir.

Alessandro Pulitti, CEO and General Manager, Saipem: Good morning, and welcome to the presentation of the Saipem Full Year twenty twenty four Results and Strategy Update. I’m here with Paolo Cartaglini, our CFO, and with the rest of the Tom management team. I will start with the key highlights and then Paolo will cover the financial results in more detail. We will then cover our strategic update including 2025 guidance and medium term targets. After our presentation, there will be time for Q and A.

Let’s start with the key highlights. I’m pleased to report in the February, Saipem recorded a further acceleration on all key metrics. In Q4, we posted the highest quarterly revenue ever and the highest quarterly reported EBITDA since 02/2012. Revenue stood at 4,400,000,000, growing by 26% year on year and 19% quarter on quarter. EBITDA stood at €424,000,000, growing by 48% year on year and 25% quarter on quarter.

EBITDA margin reached 9.6%, an improvement of 40 basis point compared to the previous quarter. The strong results achieved are even more remarkable considering they incorporated additional provisions on Coursales and tire oil projects. We reduced our net debt position by €174,000,000 in Q4. Net debt has decreased both on a pre and post IFRS basis. We are now in net cash territory even post IRFS sixteen, which is a remarkable achievement.

The order intake in the third quarter was very strong, a €5,300,000,000 corresponding to a book to bill of 1.2 times and was mostly concentrated in offshore E and C. Our backlog currently stands at an all time high level of €34,000,000,000. On slide number five, you can appreciate the growth trajectory over the last three years. Revenue has more than doubled from Q1 twenty twenty two to Q4 twenty twenty four, and EBITDA has increased by a factor of four. In addition, our EBITDA margin has increased by four percentage points.

This impressive trajectory in EBITDA is also reflected in our operating cash flow, which has steadily increased in the last three years, achieving a conversion rate of 80% in 02/2024. On slide six, we have summarized our results compared to our guidance. For the third consecutive year, we have over performed the guidance. In particular, in 02/2024, despite various headwinds such as the Saudi Aramco (TADAWUL:2222) suspensions, we met or exceeded our guidance, in particular, on cash flow generation. The performance of Saipem in 2024 was remarkable, especially in terms of cash flow generation.

In 2024, we have generated $5.00 €5,000,000 of free cash flow, post repayment or lease liabilities, a significant outperformance compared to our guidance at the beginning of the year. This outperformance allows us to propose a dividend which is more than three times higher than the initial indications. It is important to note that we are retaining an equivalent cash buffer compared to our initial expectation. We will cover shareholders’ remuneration in more detail later in the presentation. Let’s now take a closer look to the €5,300,000,000 order intake in the last quarter.

Four major awards significantly contributed to this figure. Each one holds a unique significance for Saipem. The Suriname project presents a great opportunity for Saipem to enter into a promising new oil and gas development interior. The project in Indonesia embeds a specific CO2 management scope of work. Again, the 43 kilometers of CO two transportation sea line project in The UK represents an important award in relation to the energy transition.

The new project in Nigeria further strengthens our position in Sub Saharan Africa. Moving to page nine, we are currently managing the largest backlog ever at Saipem. More than 60% is in offshore engineering and construction. Thanks to this level of backlog, we have a strong visibility on our top line for the next two years. Around 90% of expected ’25 to a thousand twenty five revenues are covered by existing backlog.

And this number is 70% for 02/1926. Now let me provide you with an update on core sales. We are pleased to announce that we have completed the drilling of four sockets. Our learning curve has significantly improved, reducing the numbers of days required for each socket. With the four sockets, we have substantially reached the target of seven days per socket.

The Saipan seven thousand is already successful the installation of the first monopile, and it is currently working on the installation of the other monopiles in the drillers sockets. Regarding logistic, the Volo Wan jackup vessel will be soon replaced by the bold turn vessel. The replacement will start next week with the sailing of the Volo Wan to Rotterdam. The transfer of the drilling machine to the new vessel will require around five months. We therefore expect to resume the drilling activity in the summer.

We expect to complete our scope of work within 02/1926. And now I will hand over to Paolo to provide more details on our 02/2024 financial results.

Paolo Cartaglini, CFO, Saipem: Thank you, Sandro. Good morning, everyone. We will start from slide 12, which presents a financial summary for the full year 2024. Group revenue increased by 23% year on year and our EBITDA grew by 44%, primarily driven by our offshore E and C business. We also observed an important improvement in the EBITDA margin, which reached 9.1%, up from 7.8% last year due to a more favorable business mix in our offshore E and C backlog.

Our net result was $3.00 €6,000,000 70 1 percent higher than last year results. Operating cash flows stood at 1,000,000,000 and 60 1 million euros nearly doubling the level achieved in the same period of 2023. Cash flow conversion rose from 63% to 80% clearly demonstrating the significant progress made on legacy projects. Let’s now review the different business segments. Starting with asset based services on page 13, revenue reached €8,100,000,000 for the full year 2024, marking a 33% increase from last year.

This growth was primarily driven by progress in traditional and subsea oil and gas projects, which offset the decline in offshore wind. EBITDA stood at €954,000,000 up 55% with an EBITDA margin of 11.8%, an increase of 170 basis points. Profitability improved due to a better project mix, particularly a lower incidence of offshore wind. In Q4 twenty twenty four, the EBITDA margin stood at 12 Despite the extra provisions recorded on Curacao. For 2025, we expect mid to high single digit growth in revenues and double digit growth in EBITDA, leading to an improvement in EBITDA margin.

Let’s now look at the Drilling Offshore at Page 14. Revenues stood at EUR $918,000,000, reflecting a 24% increase compared to the same period of last year. EBITDA improved by 11% to EUR $335,000,000. We achieved double digit growth thanks to the start of operations for the DVD, the Perro Negro 12 and the Perro Negro 13, as well as an improved day rate for one of our deepwater drill ships, which more than offset the impact of the temporary suspensions in Saudi Arabia and the maintenance of the Scarabeo nine. For 2025, we expect a high single digit decline in revenue and a low single digit decline in EBITDA, reflecting the reduction of the size of the fleet.

As you know, both the Perro Negro nine and the Pioneer jackups will be returned to their respective owners. Let’s now look at the energy carriers on Page 15. Revenue increased by 10% year on year reaching €5,600,000,000 EBITDA margin improved year on year reaching 0.7 for the full year twenty twenty four and one point one percent in Q4 twenty twenty four. This result was achieved despite additional provisions taken on Thai Oil both in Q2 and in Q4 twenty twenty four. As we have already emphasized, our primary goal is to complete the remaining legacy backlog while being very selective about new onshore projects.

Sandro will provide more details about our strategy to reposition our onshore E and C business. For 2025, we anticipate low single digit growth in revenue and a significant increase in EBITDA with EBITDA margin approaching 2%. The complete group income statement is shown on Page 16. We can discuss some of the key items below EBITDA. D and A stood at €723,000,000 and increased by €234,000,000 compared to last year, mainly reflecting the growth of the fleet on a chartered basis and the leases associated with them.

D and A is expected to grow in 2025 to about €820,000,000 mostly reflecting the expected increase in lease liabilities and associated lease repayments. Financial expenses stood at €85,000,000 in 2024, almost halved from the previous year. This is mainly due to the reduction in net financial expenses, also helped by the interest income on our cash, as well as to a reduction in project hedging costs. For 2025, we expect financial expenses to be around €160,000,000 mainly due to the expected increase in the interest component of lease repayments. Income taxes increased by €45,000,000 compared to last year to €190,000,000 implying a tax rate of 38%.

As previously mentioned, we expect our implied tax rate to normalize towards the 30% level in the years to come. For 2025, we expect income taxes to be around €240,000,000 mainly due to the expected growth in profitability and profit before tax. On Page 17, you can see the evolution of our net financial position. The cash flow generated in the full year 2024 improved our net financial position by EUR $467,000,000 on a pre IFRS basis, increasing from a net cash position of €216,000,000 to €683,000,000 This more than compensated for the 183,000,000 increase in lease liabilities. That is a direct consequence of expanding the fleet on an asset light approach.

We achieved these results by generating $5.00 5,000,000 of free cash flow post repayment of lease liabilities, Achieving a net cash position post IFRS 16 has been a strategic objective for Saipem since the beginning of 2022 and we are extremely proud of this achievement. Looking ahead to 2025, we expect lease liabilities to almost double from the level at the end of twenty twenty four, reflecting the growth of the fleet on a chartered basis. This increase in lease commitments will result in a doubling of the expected repayment of lease liabilities in 2025 from the 2024 level. The actual level of lease liabilities and repayments will ultimately depend on the timing of the effective date on the various lease agreements. This will be clearly offset, at least in part, by the expected cash flow generation of 2025.

On page 18, you can see the breakdown of our gross debt and liquidity. We have a comfortable level of liquidity on our balance sheet, which exceeded €3,000,000,000 at the end of twenty twenty four. Our current available liquidity of €1,700,000,000 fully covers our gross debt maturities almost up to the full year 2029. I’m also proud of the new RCF line which we signed in February, which stands at €600,000,000 and has better terms of end conditions compared to the previous one. Since the beginning of 2025, we’ve also repaid an additional €351,000,000 of gross debt with the repayment of the 2025 bond and one ECA credit line.

Lowering both gross and net debt remains a key priority for Saipem. Let me now hand it back to Sandro for our strategic update.

Alessandro Pulitti, CEO and General Manager, Saipem: Thank you, Paolo. For the next four years, our strategy will be built upon four main pillars. The first, strong focus on execution excellence. Second, capitalize on the positive upstream oil and gas upcycle. The third, change paradigm on for onshore engineering and construction and rollout a profitable PMC business.

The fourth, broaden our offering in the energy transition. These pillars are underpinned by three cornerstone, a clear and disciplined capital allocation with investment grade credit rating target, a corporate simplification and operational flexibility, and a continuous improvement in health and safety. Let’s now go through our pillars one by one. Execution excellence for Saipem means, first of all, zero tolerance for safety hazards. We leverage on AI driven tools and specific safety equipment such as drones, smart ambulances, and cameras to prevent accidents.

Our workforce is our most valuable asset, and we are dedicated to ensure their safety. Second, we strive to maintain a state of the art fleet and to complement our own vessels with younger, modern, tonnage, chartered vessels from the market. Third, we aim to reduce risk through an execution oriented engineering process. Fourth, we use modularization on construction and fabrication as a key factor to reduce execution risk. By effectively applying this principle, we can position Saipem as the trusted partner for choice for both customers and employees.

Moving to the second pillar, I can assure you that wherever there is a growth Saipem will try to be there. This is as implied by our entry promising new markets, Suriname and Namibia. In Suriname, we are actively engaged in a large serve project for Total (EPA:TTEF), which marks a significant milestone for us as we establish our presence in this emerging country. In Namibia, our Santorini vessel has been drilling for Galp over the last over the past few months. We expected that APC works in the country will be tendered in the coming quarters, presenting us new opportunities to expand our operation and contribute to the development of Namibia energy sector.

Moving to the third pillar, our offshore onshore E and C business is being repositioned based on four key drivers. We aim to prioritize value over volume in our portfolio by being very selective in acquisition. We are moving away from the lump sum APC contracts and increasing the share of derisk contracts. We plan to expand the portion of operation and maintenance services within our portfolio, which not only offer higher margins but also provide a recurring revenue stream, making the business line more predictable and stable. And then we aim to enter in the project management consulting market, which is particularly appealing for Saipem as it is it is it represents AI value added service, the leverage on our APC track record and can guide clients from feasibility to implementation.

Our selective approach has already resulted in a materially lower order intake in the last three years compared to the twenty nineteen, twenty twenty one period. In addition, the order intake already features a material portion of the risk the PC contracts, and more derisking is expected in the next few years. And let’s now move on the energy transition market. We already have several projects in place in the area of carbon capture utilization and storage, fertilizers, ammonia and bio refineries. In addition to this, we have an intense business development activity that covers floating wind, hydrogen, and geothermal.

Carbon capture utilization and storage will remain a key pillar of our energy transition strategy, encompassing CO2 capturing, transportation and injection. We aim to expand our presence in the fertilized value chain as well as in BUFUEL and SAF. When it comes to LNG, we will be selective in choosing both partners and projects to ensure alignment with our strategic goals. In offshore wind, we are aiming to establish collaboration with the main turbine manufacturers with the aim of having an integrated wind turbine and foundation design to reduce to reduce cost and making the offshore wind more sustainable. Let’s now move to page 25.

Our current backlog provide us with an high level of visibility for the next two years. In addition to executing the existing backlog, we expect securing approximately EUR 50,000,000,000 worth of projects between 02/2025 and 02/1928. This assumption is consistent with the level of order intake that has assumed that has assumed in our previous plan and might even look conservative considering the record level achieved in 02/2023 and 02/2024 in the current commercial pipeline. More than half of the anticipated order intake is expected to come from offshore engineering and construction projects. We also foreseeing €15,000,000,000 of order intake being related to low carbon projects, which will be well distributed across various sectors, including offshore wind, sustainable infrastructure, blue solution, CO2 management and bio refineries.

And now moving to the twenty twenty five guidance and medium term targets. Revenue in 2025 is expected at a level of approximately €15,000,000,000 and EBITDA at approximately €1,600,000,000 implying an increase in EBITDA margin of more than hundred basis point from last year. Operating cash flow generation is expected to grow in 02/2025 and free cash flow after repayment of lease liabilities will be above €500,000,000. When it comes to our medium term targets, we expect a substantial increase in EBITDA and margins, driven by a further shift of our backlog toward offshore E and C and the completion of the remaining legacy projects. Cumulated operating cash flow post repayment of lease liabilities for the next four years is expected to exceed €3,700,000,000.

And net of accumulated CapEx budget of €1,500,000,000, it is leading to accumulated free cash flow of more than €2,200,000,000. Finally, let’s take a closer look at our capital allocation and financial policy. For 02/2025, as already discussed, we will propose the dividend of €333,000,000. For 2,026, we expect to propose a dividend of at least 300,000,000. More broadly, we have upgraded our shareholder remuneration policy and we expect to distribute shareholders at least 40% of free cash flow after repayment of lease liabilities.

Regarding our financial policy, we are committed to maintaining a minimum level of available cash of 1,000,000,000. Additionally, we plan to reduce gross debt, prelease liabilities by €650,000,000 by 02/1927. These commitments will help us to achieve an investment grade rating in the medium term, which is now a clear target for our company. Can now move on to the Q and A session regarding our results and strategic plan.

Conference Operator: Thank you. This is the Carusco conference operator. We will now begin the question and answer session. The first question is from Mick Pickup of Barclays (LON:BARC). Please go ahead.

Mick Pickup, Analyst, Barclays: Everybody and thank you for that. It’s nice to see you performing despite the concerns that have been in the market. So first question, if I may, can I just ask about obviously the two problem contracts? I know you’re not going to give me a number. Can you give me an idea of the order of the extra provision?

And potentially what is the cash outflow in the next two years on the legacy projects is the first question.

Paolo Cartaglini, CFO, Saipem: Hi, Mick. This is Paolo. Well, well, you know that we we don’t give details of of, single contracts. What I can tell you though is that, the provisions we have against those two projects are the best estimate based on the shadows of the two of the two, works to be done. And that, all the cash out is already included in the numbers we gave for 2025 onwards.

So the the cash projections that Alessandro just presented include the cash out from for those two projects. And I mean it’s it’s a it’s a number that we feel it’s it’s in line with the projection then it’s a material number.

Mick Pickup, Analyst, Barclays: Okay. Thank you. And then can I just go to the onshore E and C please? And obviously, you’re talking about this new value over volume de risking strategy, which I think some of your peers have done of late. If I look at that twenty five to twenty eight, it looks like you’re building a $1,000,000,000 O and M and PMC business and then half your business is in EPC.

Can you just talk how you get to that mix? Because it only takes one derisked EPC contract of a couple of billion dollars coming in and it’s still going to be a bigger portion of the business. Can you just talk about your ambitions? Because that sort of looks like one project a year de risked EPC you’re going for.

Alessandro Pulitti, CEO and General Manager, Saipem: Okay. So I believe that it is slightly more than an ambition. And we have already increased in the operating and maintenance level because as you certainly recall, the Camino FPSO that was awarded to to to Saipem last year was also including the operating and maintenance contractor for the for the FPSO. So operating and maintenance is already growing and that’s already growth. And we do expect that if in the future to increase this this quantity for sure, both for activity again offshore and also we are expanding the operating and maintenance to to the onshore portion of this work.

We are actually tendering now for this, for this opportunity in The Middle East and North Africa. So there are in the pipelines bids that we are participating And this is what, this is why I’m saying that this is slightly more than, than an ambition. It’s a strategy that it is under execution. On the PMC, you know, we we did so many APC contract that we believe that we are naturally qualified to enter into this segment. It is a segment that it is very important, as you know, just on The Middle East.

The entire PMC market is a more it’s a multibillion kind of kind of market. We are getting qualified and, from many clients for which we are now doing a PC contracts also for this kind of services. So again, we are participating in tenders for PMC, for PMC activity. So this is the way we are implementing the strategy. The other side that you’ve seen, we are clearly reducing the order intake of the pure APC contracts and whatever kind of contracts that includes execution, it will have a contractual scheme that it is much more derisked compared to the traditional lump sum Turkey contract.

Mick Pickup, Analyst, Barclays: Okay. Thank you.

Conference Operator: The next question is from Alessandro Pozzi of Mediobanca (OTC:MDIBY). Please go ahead.

Alessandro Pozzi, Analyst, Mediobanca: Thank you for taking my questions. When I look at the last couple of years, it’s been an extraordinary period for the order intake with big volumes being booked. When I look at the guidance, the 50,000,000,000 commercial pipeline is not different from what you gave before. But I would like to reconcile with the revenues in the midterm because I think you have a guidance above the 15,000,000,000, whereas the 50,000,000,000 of order intake implies a book to bill of less than one. And but I’m sure that there is some level of conservatism built into the commercial pipeline.

So I was wondering how should we reconcile the implied and say $12,500,000,000 of order intake per year versus the revenue above $15,000,000,000 that you have in the mid term. Also second question on onshore E and T, I was wondering if you can maybe give us a bit more color for 2025, how much will be or even for now in terms of backlog, how much are those projects zero or low margin versus those projects that carry higher margins? And final question on Thai Oil. We’ve seen Samsung (KS:005930) announcing the security bonus being pulled. We don’t know whether Thai Oil is going to change potentially the contractor or not.

So I think there’s a lot of uncertainty there. Can you give us a bit more color on what you think is the way forward for the tile oil project? Thank you.

Alessandro Pulitti, CEO and General Manager, Saipem: Okay. So first of all, to reconcile, I believe that we should take into account that the that our commercial pipeline, that we presented is, it is a patent in the last eighteen months. So if you if you, if you take this timing, then then you will better reconcile the the the numbers. So let’s go straight on the tail and then and then Paolo will give you a more, a more detailed on your second question. So, yes, we confirm what Samsung Samsung announced.

And we we also record that recently the the the general assembly of of Tayoil voted in favor of a budget increase in time for completion the the projects. And so we are currently waiting for client feedback for recognition of extra cost and time required to complete the project. Nevertheless, as Paolo said, we are located adequate provisions to cover both scenarios, continuation with the same consortium or termination or termination of the contract. That’s that’s the situation, on Toyota (NYSE:TM). Paolo, then if you want to give a call around the

Paolo Cartaglini, CFO, Saipem: I understand. And your question on, on the projects with zero margin, we’re expecting 2025 to be in the area of 1,200,000,000.0 in terms of revenues roughly.

Alessandro Pozzi, Analyst, Mediobanca: Okay. Thank you. And just going back to the order intake, I just wondered if you can I mean, you’ve been just a bit conservative with the 50,000,000,000 estimate you have provided and maybe can you give us a bit more color where you see more, let’s say, area of activities in the next four years and I’m sure probably Suriname and Namibia is going to be new areas, but as well as probably Middle East is going to continue to be a big region for Saipem?

Alessandro Pulitti, CEO and General Manager, Saipem: We do expect clearly continuous activity in The Middle East. There are several bids that are announced there and up to which we are we are participating. So therefore, Middle East will remain, it is and will remain a very a very strategic area of acquisition or new backlog for for Saipem, especially in the in the offshore in the offshore E and C. This is this is what we really can confirm. But we are seeing also target coming from the Far East where we we can have, let’s say, also, participating to important bids for new floating units.

And the other pipeline of project coming from West Africa and coming from the South America. You see that we have also been recently awarded for Suriname, and we are expecting on the other side of the Atlantic new bids coming also for Namibia. So you see still plenty, plenty of opportunities.

Alessandro Pozzi, Analyst, Mediobanca: Okay. Thank you.

Conference Operator: The next question is from Daniel Thompson of BNP Paribas (OTC:BNPQY). Please go ahead.

Daniel Thompson, Analyst, BNP Paribas: Hi, good morning. Thanks for taking my questions. Just two, please. Firstly, I was wondering if you could run through the drivers of the margin uplift in the final year of this plan, which I think implies just over 13% EBITDA margin versus 12% in 2027 under the prior plan. Is that mainly just pricing because I would expect there wouldn’t be any legacy projects in the backlog by then?

And then secondly, I was just wondering on the onshore E and C side, where the new or adjusted onshore E and C strategy leaves your FPSO business. I still see quite a few floater opportunities on there. So just wondering if you could run through how you de risk those particular projects? Thank you.

Alessandro Pulitti, CEO and General Manager, Saipem: Okay. So marginal lift across the plan. Clearly, the the marginal uplift is driven by two main factor. First, the continuous shift of our of our revenues more on the offshore activity that it is more profitable than the onshore one. So this is a continuation of the strategy we put in place back in March 2022.

Second, as you rightly said, also will be driven by the completion of many of the projects, or many of the legacy projects. By by end of 02/2025, and the beginning or the very beginning of 02/1926, for example, we are planning to to to to complete many, many projects, for example, land in Saudi Arabia. So just to give you just to give you, an example. The risking floaters, FPU and F Peso, this is this is going through several several actions. For example, now in many situation where we are going through a converted hull for for the vessel, this is delivered by by the client.

Several, let’s say, item are directly purchased by the by the client, and then they are innovated and they are innovated to to our to ourselves. And, basically, the client is retaining the procurement risk on those on those on those items. And then we’re also taking into account that we activity that we did on conversion of floating unit, p 79, for Brazil, Scarabe Five, for Congo, E and I, Camino, for Total, Balaine that we did also for Total. We accumulated a very a very important experience in the sector, both in terms of yard selection and when it comes to our own yards, and also third party yard in the in the far in the Far East. Jobs we are expecting, for example, coming in Indonesia, we will leverage on our own Carimoon yard, a yard that is directly under our control.

So this is another derisking initiative because when we work in our own yard, we have full control of the activity and full control of the cost. And then this is making us very much more, more comfortable. So, you know, the de risking is not coming with just one or two action. It is a full new approach to the project where item by item, we look at the project in a under a different light, the derisking light. And this is also connected to the initial proposition that was that we will never ever enter it into a volume over value.

Our driver now is value over volume, and this is what it means being selective as well. So I hope I clarified you a bit the strategy there, and the way new activity we are taking is substantially different from the one that we used to take.

Daniel Thompson, Analyst, BNP Paribas: Yes. Thanks for the clarification. Just coming back on the first question, it’s more on the 2028 on 2027 uplift where the backlog has already shifted to offshore quite a bit by then. So just wondering is there an element of pricing surprise that maybe what in those out years that wasn’t factored in under the previous plan that is coming into the back end of this plan? Is pricing surprise to the upside plan on plan?

Thank you.

Alessandro Pulitti, CEO and General Manager, Saipem: We leverage more than pricing surprise. We leverage on our efficiency because that that’s the only that’s the only thing that we can really control. Pricing is also depending on clients. And clients, generally speaking, they are not willing to to to to pay higher pricing. You also to consider that most of our clients, the international oil company, are basing their decision investments on a very conservative level of oil price or gas price or commodity price.

So we always keep in mind this when we, when we are bidding. So the the the the the the the we do not rely on pricing surprise. We tend to rely in our forecast on better efficiency, better mix, better better way of realizing projects. For example, I was stressing during the presentation the modularization that this is really what can bring to a more, efficient way to control project schedule and cost of the projects as well because we we increase the building in areas like yards when it is when we can control progress and cost and reduce the amount of stick built, stick built construction. That in sometimes it occurs in areas where logistics or or for other reason are making more difficult to control the stick builds vis a vis the the modules that you can build in a very known yard.

Then the other model is the competitive feed model. So we tend to to to to enter into this kind of tendering so that being in control of the feed, we know exactly the project. We don’t have to endorse engineering done by other by other contractors. And so we can build a construction strategy that it is more efficient and less risk.

Paolo Cartaglini, CFO, Saipem: Alessandro, if you may add something to to answer your question. Today, you see you see the the margins, as I said before to Alessandro Pozzi on that still reflects a significant portion of the revenues that come with a zero margin because that’s the tail of the legacy portfolio. And as I said before, this is more than, than €1,200,000,000 for 2025. So if you replace the zero margin on the 1,200,000,000.0 and you make an assumption on a fair on a fair margin for that portion of the portfolio, you already, you already add up significant EBITDA margin to 2024 and 2025 figures. And that explains part of the growth you were asking about.

And then obviously, there’s also part of the portfolio which is not zero margin, but it still would be replaced by contracts that have been acquired in the last couple of years that come with better margins.

Daniel Thompson, Analyst, BNP Paribas: Got it. Thank you.

Conference Operator: The next question is from Mark Wilson of Jefferies. Please go ahead.

Mark Wilson, Analyst, Jefferies: Thank you. Good morning, gents. I’m not going to ask you about the current projects because I think those have been well covered and well done on that execution considering. What I would like to ask is looking forward across the plan, you speak to one of the points as being the fleet seeing constant upgrades to maintain the technology. So I’d like to ask within that CapEx outlook 25% to 28%, do you think that the current fleet and higher ring vessels can deliver against the outlook to 2028?

And indeed, are there any scenarios where you would see a requirement or need to expand the fleet beyond what you currently have? That’s my first question. The second one in 2027, ’20 ’20 ’8, but you expected that to fill that spare capacity. Could you give us an update on where you stand on that fleet capacity in those outer years? Thank you very much.

Paolo Cartaglini, CFO, Saipem: I’ll take the question on the fleet. So well, first, you look at the CapEx and you can see that there is a 1,500,000,000.0 of CapEx from 2025 to 2028, which is mostly maintenance and upgrades on the on the own vessels. And we think that covers the needs to be to keep their fleet fully operational and and best performing. But also, you should also look at the at the lease liabilities because because those are in fact CapEx and the fleet expansion. And the fact that as we said before, the the lease liabilities are growing and they would be growing in 2025 tells you that in fact, we are adding capacity to the fleet and we are and we are doing it to lease vessels rather than own own vessels.

So you can argue that part of the lease liabilities are are CapEx in fact because we are putting more capacity in our fleet. And the combination of the two is what we feel it’s required to deliver against the backlog. And your second question, I think that Alessandro will

Alessandro Pulitti, CEO and General Manager, Saipem: cover. Okay. Regarding fleet, fleet utilization, ’27 and ’28, We are currently participating to significant tendering in West Africa that they may give us results in the next month. So if it is not for the first quarter presentation, we may have a proper update for sure within the first half of this year this year presentation because several tendering activities ongoing and so then we will can you really update with the signed contracts regarding the percentage of utilization on the fleet toward the end of the of the strategic plan. Whether or not we will require new vessels, I believe that we we we are in a in a very good position.

We rented last year our JESD six thousand. This this is part of our asset light strategy, and this vessel has a rent and contract of five years plus two years optional. So, really, we don’t see any any measure addition to to to the fleet, other than renting supporting vessels for the sake of of the operation and the various contracts, but this is, I would say, is is normal. It’s business as usual, business as usual activity. We also rented the the the Shinda unit that is another that is another vessel to to to support our serve operation in connection to the contracts that we already signed.

So I would say the the the fleet in terms of measure ship will remain will remain pretty constant. As Paolo said, our CapEx is mainly, no, is mainly, is entirely devoted to the stay in business issue, so means recertification on the vessel and upgrading of the system on the on on the vessels to the best available technologies that by time to time, they they come to the market and they and they keep improving performance of our tonnage.

Mark Wilson, Analyst, Jefferies: Thank you very much. It’s very clear. If I may have one follow-up, maybe I could ask a bigger picture view then on global capacity. There’s been a lot of commentary about overall market capacity for subsea installation, particularly in SLA and JLA. Do you see any new tonnage or capacity coming to the global market that is currently under construction?

Could you speak to that?

Alessandro Pulitti, CEO and General Manager, Saipem: To be honest, we are not aware of this kind of tonnage being under construction in these days, at least to the market that we that we know and we can have access. If, I do not have % as I believe no one, what is going on in the in the in the Far East. As far as we know, there are no under construction, but JLA for sure, which and that are entering in the in the market. And up to the point, and then we will give you a bit of a secret, that we may think to reinstate the JLA tower on our site and 7,000 for certain for certain, for certain planned activity. That it is was since it was not used at least since ten years.

This gives you also a feeling of how much the the the the the market is tight on this, and not there are a new vessel coming into coming into the market.

Mark Wilson, Analyst, Jefferies: Thank you very much. Appreciate the color. I’ll hand it over.

Conference Operator: The next question is from Massimo Bonizoli of Equita. Please go ahead.

Massimo Bonizoli, Analyst, Equita: Good morning. Two quick questions. One on Mozambique LNG project. Can you give us some color on the assumption included in 2025 guidance? And the second on onshore strategy, you mentioned the intention to grow and expand into low carbon fertilizers and biofuels.

Do you need any acquisition of technologies in this area to support your plan? Thank you.

Alessandro Pulitti, CEO and General Manager, Saipem: Okay. We start to the very end. No, we do not plan to have any acquisition of technology. You know, on on fertilizers, we we normally bid with the topso topsoid technology for ammonia, and then we have our own patent for the for the urea. Regarding biofuels, we are very much exposed to the to the plan of E and I to convert refinery into bio refinery, and then we we serve the client, let’s say, utilizing their own E and I eco fining eco fining technology.

So, we don’t see the need of of acquiring technology. Then the first question was on Mozambique. If I do not, if I recall well. And regarding Mozambique, we’re clearly ready to restart as soon as the client will give us the green light. I believe that Total CEO was pretty clear in his last call.

So the issue of security is substantially over. They have to clear certain issues on the financing, and then when this will be done, we expect them to to press the button and we’re ready. Now regarding the exact planning, I will leave to Paolo to complete the the answer.

Paolo Cartaglini, CFO, Saipem: Yeah. As far as the 2025 projections are concerned, we don’t expect any major difference in terms of financial impact on our accounts compared to 2024. So we’re not assuming, let’s say, full restart very soon. So if you want to have a comparison between 2024 and 2025, we’re not assuming any major difference in the amount of activity that we will be performing.

Guillaume Delavy, Analyst, Bernstein: Very clear. Thank you.

Conference Operator: The next question is from Sebastian Erskine of Redburn Atlantic. Please go ahead.

Sebastian Erskine, Analyst, Redburn Atlantic: Yes. Hi, good morning and thanks for taking my questions. A few. Just on the margin side, I’d be curious if you could give an update on where margins are tracking at the leading edge kind of the subsea, the surf side. Obviously, the business is indexed to conventional kind of shallow water, but yes, just maybe an update given kind of the peers and how they’re reporting.

Second on The Middle East, obviously a key part of your commercial pipeline, perhaps an update on some of the projects you expect to materialize over the coming kind of twelve to eighteen months. Obviously, we know of the Qatar in 2024, but clearly there’s a comp four work scope that you potentially would be involved in. So perhaps an update on that region. And then finally on the offshore drilling side, I mean just I guess in terms of the into ’26 and as some of the vessels roll off through existing contracts, there’s a wider concern obviously on well publicized on kind of white space and pressure on day rates. I mean I guess an update on that business potential perhaps maybe for small suspensions from Aramco on the shallow water side.

It’s a nice as a business it’s a nice margin contribution, but obviously kind of how do you view the business long term into ’26 as well? That would be very helpful. Thank you.

Alessandro Pulitti, CEO and General Manager, Saipem: So I will start from the end, from the drilling. We are actively tendering in several several tender issued by the clients. So we expect then to to to to utilize our fleet in 2026 and and beyond. Regarding possibility of further change of strategy in in Saudi Arabia, you know, we will keep leverage on our satellite so that we have further vessel that are on rental so that we can we can manage in case there is a further request or reduction. So for us, it is just matter eventually to downsizing, but we will not have idle cost of the vessel is not reduced.

In the area, we are also participating to tenders in other with other with other operators. So it may be also possible that we will move some unit in other in the same region, but on other field development. Then your first question was on margins. If I were the I will leave it to Paolo. Okay.

Paolo Cartaglini, CFO, Saipem: Well, on on the on the margins, I mean, today, the the the subsea market is an healthy one. So we think that there is a fair balance between between, clients and contractors. And and, we think that going forward, the the margins will, will remain where they have been for the last couple of years. But as Alessandro said, we think that the degree of efficiency in managing our business will make an important contribution to the higher margins for the for the offshore offshore segment. And on the commercial pipeline, I don’t know if you want to take it, but it’s been discussed already before and we still see a good client demand.

Now what you call backlog for us is the CapEx for the clients. So it’s obviously after two years where we tied up 30,000,000,000 of contracts offshore, obviously, there is some time needed to plan for new investments from our clients and for us to give capacity to to realize new new projects because as we discussed a few times, 2025, ’20 ’20 ’6, we will be pretty busy already. So demand demand remains benign and market conditions remain good. And even though we need to acknowledge that acquiring 16,000,000,000, 17 billion per year has been quite an extraordinary achievements. And so we’re targeting a more prudent, possibly realistic 12,000,000,000, 13 billion going forward.

Sebastian Erskine, Analyst, Redburn Atlantic: Thanks very much. Thank you.

Conference Operator: The next question is from Guillaume Delavy of Bernstein. Please go ahead.

Guillaume Delavy, Analyst, Bernstein: Yes, good morning. So most of my questions have been answered. Maybe a very open one for you, Alessandro. Globally, if you look at the past six to eight months, what has been, I would say, the main surprise you’ve seen when looking at the energy scene, something which basically you were not expecting, could you maybe provide us some color about that? Is there any?

Alessandro Pulitti, CEO and General Manager, Saipem: In the energy the energy world is very complex. What it is surprising and what not in a world where every single day there is is surprises, it’s a bit difficult for me to answer. I can tell you I can tell you the truth. Certainly, what for me is surprising in the six to eight months is what is happening on the offshore wind where you see that really, there starts to be a clear difference between ambitions that are declared by by countries in terms of gigawatt to be installed and tendered, and then the actual work is awarded and the fact that many of the many in many case, the contractors, they do not apply for the offer and the capacity. This means that there is still a mismatch in terms of cost expectation between the demand and what it is they’re offering.

That is and the offering, unfortunately, is linked to the actual cost of the, of the projects. So that’s, let’s say, if you want if you want, this is what is surprising me still that, there are still expectation that offshore wind can be done, can be cheap. It’s not. This is the, this is what is surprising me. Offshore wind is complex operation.

Foundations are linked to to soil, to to to to to to the bedrock condition on the seabed, so they cannot predict it exactly at the very beginning. So the so all these things, they cannot be they cannot be done, they cannot be cheap. That’s my, but it seems then when auctions are offered, then this element is not yet considered in the value of the energy that is offered. That’s the surprise, if you are asking me about the surprise.

Guillaume Delavy, Analyst, Bernstein: Thank you very, very much, Aetna Nittavara.

Conference Operator: The next question is from Guillermo Levi of Morgan Stanley (NYSE:MS). Please go ahead.

Alessandro Pulitti, CEO and General Manager, Saipem0: Hi, good morning. Thank you for taking my questions. I have two please if I may. The first one, there has been a press article recently recently mentioning that Petrobras is considering contracting themselves a pipeline vessel to carry out installation of rigid pipes in the press. Could you perhaps comment on that?

Maybe tell us a little bit about other types of new initiatives that oil and gas producers are taking in order to circumvent the current tightness in this market? And then the second one, could say, you have now achieved the target of seven days per socket in the fourth one. For us to estimating which part of 2026 that project is going to be completed, Is it as simple as just assuming seven days for the other six sockets? Or are there any other difficulties or challenges there that I might be missing? Thank you.

Alessandro Pulitti, CEO and General Manager, Saipem: Petrobras, yes, we acknowledge their willing. To be honest, it’s not a surprise because this is Petrobras made also expressed this willingness also a few years ago. So it’s not a surprise for us. We are really observing the situation and we’re ready to offer Petrobras solution for this whenever whenever whenever it is appropriate. There has been always discussion with Petrobras about a model for lane rigid pipe.

They have a fleet of long term rented, PSVs, and they may have to to and they may think to have a similar strategy also for vessel for laying rigid. However, at the moment, it’s something that we are just, we’re just working around it, and we will let you know if in the next month, there are some evolution. Crusades, if the seven days per week the seven no. The seven days per week is normal. Sorry.

I’m a bit tired. But then the the seven days per socket is really a target to the project because this is yes. We do expect that the next 60 sockets that that can be drilled with the rate. Remaining part of the project, as far as regards our scope of work, the scope of work of Saipem, so I’m not commenting at all the rest of the scope of work. It is the installation of the of the monopiles.

The the first done was done was done by Saipen seven thousand in an extremely seamless way, even taking less time than than expected. And now the vessel is working on the in installing the the the the monopiles on the on the other on the other sockets we drilled. So we do not expect being installing monopiles really a complex activity or an activity that can impact further the shed.

Alessandro Pulitti, CEO and General Manager, Saipem0: Perfect. And a third one, if I may, just a follow-up on Tayojo. Just for me to make sure that I got the accounting correctly. But the security bonds from our estimates are over €100,000,000 Has that already been provisioned? So that’s why we didn’t see a big impact in terms of provisions from this project this quarter?

Paolo Cartaglini, CFO, Saipem: Well, I mean, the devaluation we typically make on projects include all the factors we know. At the moment, we we close our our accounts. And so it’s it’s it’s not only the the bonds, it’s the overall estimated cost over the entire life cycle of the project. So the answer I can give you is that today we have accounted for all the costs that we expect going forward, which include all the elements.

Alessandro Pulitti, CEO and General Manager, Saipem0: Understood. Thank you.

Paolo Cartaglini, CFO, Saipem: But obviously the cash out was already happening in Q1. So that is a cash effect that has been already included obviously.

Conference Operator: This concludes our Q and A session and our call. Thank you for joining. You may now disconnect.

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