Earnings call transcript: WeBuild’s Q4 2024 sees 20% revenue rise, strong outlook

Published 14/03/2025, 18:38
 Earnings call transcript: WeBuild’s Q4 2024 sees 20% revenue rise, strong outlook

WeBuild, with a market capitalization of $25.21 billion, reported a robust performance in Q4 2024, with revenues reaching €12 billion, marking a 20% increase from the previous year. The company also proposed a 14% dividend increase, signaling confidence in future growth. WeBuild’s stock saw a positive market reaction, reflecting investor optimism about its strategic initiatives and financial health. According to InvestingPro analysis, the company maintains a FAIR overall financial health score of 2.34 out of 5.

Key Takeaways

  • Revenues increased by 20% to €12 billion compared to 2023.
  • EBITDA rose 18% to €967 million.
  • Proposed a 14% increase in dividends.
  • Net profit reached $247 million.
  • Maintained a net cash position of €1.4 billion.

Company Performance

WeBuild demonstrated strong growth in Q4 2024, with significant increases in revenue and profitability. The company’s strategic focus on key infrastructure projects and investment in clean technologies contributed to this performance. With a net profit of $247 million, WeBuild has shown improvements over its 2023 results, underlining its robust operational capabilities.

Financial Highlights

  • Revenue: €12 billion, up 20% year-over-year.
  • EBITDA: €967 million, an 18% increase from the previous year.
  • Net profit: $247 million, surpassing 2023 figures.
  • Dividend increase: Proposed 14% hike.
  • Net cash position: Maintained at €1.4 billion.

Outlook & Guidance

Looking forward, WeBuild projects revenues to exceed €13 billion in 2025, with an EBITDA target of over €1 billion. The company plans to invest €1.3 billion in capital expenditures and aims to maintain a book-to-bill ratio greater than 1. WeBuild is also exploring opportunities in the water sector and infrastructure ownership, leveraging global megatrends to fuel growth.

Executive Commentary

Pietro Salini, WeBuild’s CEO, emphasized the company’s strategic focus, stating, "We will continue to focus on cash generation, risk reduction and project delivery optimization." Salini also highlighted the company’s positioning to capitalize on global trends, saying, "Our strategy is clear, make the most of the opportunities created by global megatrends that are fueling major infrastructure investment."

Risks and Challenges

  • Economic volatility: Potential impact on infrastructure spending.
  • Supply chain disruptions: Could affect project timelines and costs.
  • Regulatory changes: May influence project approvals and execution.
  • Competition: Intense rivalry in key markets could pressure margins.
  • Environmental regulations: Increasing focus on sustainability may require additional investments.

Q&A

During the earnings call, analysts inquired about WeBuild’s potential contract for the Messina Bridge, expected in April. The company is also exploring opportunities in Germany and the reconstruction of Ukraine, with its Lane subsidiary anticipated to break even by 2025. The focus remains on maintaining an investment-grade credit rating, underscoring WeBuild’s commitment to financial stability.

Full transcript - Warner Bros Discovery Inc (WBD) Q4 2024:

Conference Operator, Coruscal Conference: Good morning. This is the Coruscal Conference Operator. Welcome and thank you for joining the WeBuild Full Year twenty twenty four Financial Results Conference Call. Our call today is hosted by Pietro Salini, Chief Executive Officer together with Massimo Ferrari, General Manager. As a reminder, all participants are in listen only mode.

After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Mr. Pietro Salini, Chief Executive Officer. Please go ahead, sir.

Pietro Salini, Chief Executive Officer, WeBuild: Thank you. Good morning, everyone. Welcome to our conference call on Whitfield’s twenty twenty four full year results. I’m Pietro Salini, Chief Executive of the Group and with me, Massimo Ferrari, our General Manager. It is a pleasure to be here today to share with you a strong set of numbers and provide you with an update of the Group’s strategy and targets.

Let’s start with Slide four with some highlights of the results. We have once again proven our strong execution capabilities by significantly exceeding our guidance for 2024, staying true to our approach of underpromising and overdelivery. Revenues stood at billion, 20 percent higher than 2023. That means that we have already exceeded our 2025 revenue target by over billion. Our EBITDA reached recognized at €967,000,000 an 18% increase versus the previous year.

In 2024, we achieved double digit growth in both revenues and margin. This is the fourth consecutive year that we have done so. Despite various macroeconomic challenges, we have been able to maintain a net cash position since 2021, ensuring financial stability. The group’s net cash was billion, even with higher investment for future growth and cash generation. At the same time, we have further strengthened our financial structure by improving gross leverage, positioning us among the best in class compared to industry peers.

We generated a net profit of $247,000,000 improving on the already excellent result achieved in 2023. Following this, we propose an increase of 14% of our dividend. In addition to revenues, we reached another target a year ahead of time. We have already secured 100% of our planned 2023, ’20 ’20 ’5 order intake entering 2025 with a backlog of billion. It’s one of the highest in the industry.

A significant share of that comes from low risk markets. In Air and Safety, we are proud to be ranked first among our peers with the lowest indexes. It is a recognition of our dedication to the well-being of all our, the group employees. Our ability to attract top talent remains unmatched. 13,000 professional were hired in the past year, more than half of whom 35 years of age.

Thanks to the daily work and commitment of over 92,000 employees, both direct and indirect, we manage 148 active construction sites in three key countries. Over 17,500 companies across our supply chain collaborate with us. Turning to Slide five, let’s go through some of our operational achievements. In 2024, we delivered transformative infrastructure that impacts millions of lives. Key projects completed include Milano Metro 4, which reduced congestion in the city, Thessaloniki Fest Metro, which revolutionized transportation in the region, and Riyadh Metro three, which bring faster, more sustainable mobility to the capital.

These are engineering models shaping a better future for all three cities. Since 2012, we have successfully completed over three thirty projects, increasingly clients are suiting us as their partner of choice due to our proven ability to deliver. This is reflected in our strong position in industry ranking across key regions. Let’s go to Slide six. The results achieved in 2024 are not a one time event.

They are the result of a clear, consistent strategy that we purchased since 2012. We strengthened our business model through engineering excellence, attracting top talent, reaching best in class in health and safety, investing in innovation, centralizing key processes such as bidding and supply chain and deploying a rigorous approach to risk management. All these efforts have led to the creation of a solid platform from which to capitalize on the trends in a market that is enormous in scale. We are well positioned to further increase our long term value. Our strategy is clear, make the most of the opportunities created by global megatrends that are fueling major infrastructure investment.

We will continue to focus on cash generation, risk reduction and project delivery optimization. We will be doing all of this without forgetting how we are creating a positive and lasting impact on society and the environment for future generations. Turning to Slide seven, our construction order backlog stands at billion at the end of twenty twenty four, among the highest in the industry. This backlog gives us a clear visibility of future revenues. The geographic distribution of the order backlog is a result of the de risking strategy that we have purchased in our commercial activity.

Around 90% comes from low risk markets. Italy take the biggest share at 46%, followed by Australia up to 18%. As a regard of our commitment to sustainable development, nearly all our backlog is dedicated to achieving goals set by the United Nations. More than 70% is related to sustainable vulnerability projects. Moving to Slide eight, we acquired billion worth of new orders in 2024.

That has allowed us to secure over billion of new orders exceeding the targets under our 2023, ’20 ’20 ’5 plan. 80% of new orders comes from outside Italy. In Saudi Arabia, we won a jumbo contract to visit the Georgina Dumps, but there are also projects in France and Australia. In the first month of twenty twenty five, we’ve been selected as the best business for 2,500,000,000 tons of tenders. On Slide nine, as we look ahead, the infrastructure market continues to be driven by long term mega trends that are shaping the future of our industry despite short term geopolitical development.

This includes the need to fight climate change, achieve energy and water security, rapid urbanization, population growth and the digitalization. Governments and private investment worldwide are committing unprecedented resource to those areas. As demonstrated by our track record, we offer a wide range of products to seize these opportunities. Slide 10 shows how the infrastructure sector average growth rate for the next four years is expected to strongly outperform GDP growth in all our core markets. This is also key data that points out that the sector is contributing positively to the GDP growth in all the areas in which we operate.

Taking a look at our short term commercial pipeline, it amounts to approximately billion, including tenders submitted and awaiting outcome for billion and tenders of billion under preparation to be presented. Let’s move to Slide 11 for some color on our prospects across our core geographies. In Italy, the infrastructural market is expected to be driven by some strategic initiatives. Investments are expected in multiple sectors including railways such as some new section of the Salerno, El Ejogranabria high speed rail line, metro, sports, stadium, hospitals, data center and water infrastructure. In Rome, there is a completion of the Metro Sea and then further investments in metro lines in touring and other cities.

In Australia, the group is among the country top five contractors and is ready to see the opportunities offered by a growing market, driven primarily by the energy sector. In addition to transport infrastructure and hydro power, investments are expected to remain strong in energy distribution through new transmission lines. There is also the construction of hospitals and the development of the water sector such as desalination plant. Then there is the development of the Brisbane area, which potentially new stadium and railway project ahead of the two thousand and thirty two Olympic and Paralympic Games. In Saudi Arabia, we are in a unique position to capitalize on the unprecedented investment being made in mega projects.

These investments are being driven by the Saudi Vision 02/1930 program, as well as two thousand and thirty four FIFA World Cup and Expo two thousand and thirty. A boost is expected in the coming years in metros, railways, stadium, airports and other buildings. In North America, we are taking the necessary step to optimize our operations and bring us a subsidiary lane back to profitability. The infrastructure market in this region is massive. In The United States, the new administration favor private sector involvement in infrastructure, creating opportunities for public private partnership.

The focus is on roads, bridges, hydroelectric projects. In Canada the focus is on the light rail and metros. Finally, another potential strategic area is the reconstruction of Ukraine. The World Bank estimate around 500,000,000,000 are needed to rebuild the country, but we think that a little more of that. We are talking about buildings, but also about our core business, hundreds of bridges, railway stations and water treatment plants were also destroyed and seriously damaged.

While the situation remain uncertain, we are closely monitoring it. In a peace agreement, where to be reached, our company will be ready and willing to contribute for the reconstruction effort. Turning to Slide 12, I would like to conclude with an overview of our sustainability strategy. We remain on track to achieve our 2025 sustainability targets. We want to further reduce our carbon intensity by 10% by 2025 versus 2022.

In 2024, we are already above this target with a reduction of 25%. On Health and Safety, as already discussed, we are already the best in class compared to our main European peers. Thanks to our educational and training programs, we have reduced the ratio by 33% in 2024 versus 2022. On gender inclusion and diversity, by 2025, we want an increase of 20% of women leading the group. On innovation, we are committed to invest in clean technologies for over €400,000,000 of which about $250,000,000 already done in 2024.

Our efforts have been recognized by multiple rating agencies. In December 2024, we’ve been awarded the gold rating by Ecovaris, ranking among the top companies in the industry in the ESG evaluation. I now leave the floor to Marcinard for the economic in-depth analysis.

Massimo Ferrari, General Manager, WeBuild: Thank you, Pietro, and good morning, everybody. Before I go through the results, let me remind you that we are presenting adjusted figures to represent the recurring performance of the business. You can find all the details of the adjustments in the appendix. Let’s start from Slide 14. Our transformation is delivering outstanding results As reflected in our strong operational performance, we have achieved the growth across all the financial indicators.

Revenues of €12,000,000,000 has exceeded expectations, and we have exceeded the target set for 2025 for €1,000,000,000 so we are well ahead of schedule. EBITDA and EBITDA have reached record levels, respectively, at almost billion and million, doubling since the launch of our roadmap to 2025 business plan. This significant improvement highlights our success in enhancing operational efficiency, cost control and project execution. Going to Slide 15, let’s take a look at revenue distribution. Our activities were balanced with over 90% of revenues in developed economies with clear rules, political stability and faster payment cycles.

76% of revenues are outside of Italy. Australia, as mentioned by Pedro before, is our second biggest market with 26% of revenues. In North America, we generated 12% of our revenue. The top 10 project contributed to revenues for around 47 of the total. When it comes to revenue distribution by activity, more than 85% is related to projects that contribute to achieving sustainable development goals as defined by the United Nations.

On Slide 16, we show the main levers to increase profitability and maintain strong margins. We have implemented several key levers that have contributed to our margin improvement and moreover, will boost future marginality. Intake selectivity, we continue to focus on high quality projects, carefully selecting opportunities that align with our risk profile and financial targets. It’s a fact that price is no more the most important factor to win a bid. Around 90% of our awards in 2022 and 2024 period are based mainly on best technical offer, meaning, for example, technical solution and health and safety standards.

Price revision formula. We have successful mechanisms to adjust pricing in response to market fluctuations, protecting our margins from inflation and raw material price volatility. New contract standards. We are increasing the share of collaborative contracts, which come with lower operational risk. I’m referring to the incentivized target cost in Australia and the progressive design and build in U.

S. And Canada. Then contract management model revision. We are strengthening the monitoring process to ensure the timely identification and resolution of any issues. Cost efficiency plan, as you already know, it’s several years that we have implemented a structured cost optimization strategy.

To date, we have implemented initiatives to streamline indirect project and corporate costs for about million. On Slide 17, we have the P and L below EBIT line. Net financial costs increased by million. Financial income was million, increasing by million, thanks to the increase of interest bearing deposits. Financial expenses were million, increasing by million, of which million due to the recent bond issues and million of increase in other financial expenses.

This last one increase is mainly linked to write off of financial receivables from subsidiaries and to interest on a dispute in North America. Our EBITDA to financial interest ratio remains in line with industry peers, confirming that we maintain a healthy and competitive financial structure. Net exchange gains were million compared to a positive contribution for million in 2023. Losses on investments amounted to million, mainly due a stop loss agreement part of the disposal agreement of a project in Turkey already reflected in first half results. Taxes amounted to million versus million in 2023.

Our profits continue to grow at million in 2024. At the bottom of the slide, we show the reported net income to 194,000,000 that increased by 57% versus the previous year. You can see also the reconciliation due to the adjusted net income. The adjustments refer to the accounting non monetary items such as 36,000,000 from the amortization of the positive per gain we registered in 2020 relating to the Staudis acquisition and 17,000,000 relating to the Clasp acquisition. Let’s turn to Slide 18.

Our net cash position stood at billion, exceeding by far expectations. This is an extraordinary result taking on even greater significant in light of the investment for the start up of majority major ongoing projects. In 2024, investments in plant and machinery amounted at €970,000,000 It confirms the effectiveness of the strategies adopted to optimize the management of working capital and reflects the commercial successes achieved by the group in 2024. On working capital, despite the significant increase in production in 2024, the measures adopted by the group have proven effective, allowing for a reduction in the average collection time of payments. In fact, trade receivables and contract assets grew slower than production.

Working capital also benefited from the strong commercial activity. We have maintained a sound net cash position since 2021 even as we navigated into several global challenges and macroeconomic uncertainties. Excluding the temporary effect of the liability management that I will explain in the next slide, gross debt stood at EUR 2,800,000,000.0 with the gross leverage coming down to 2.9 times, well below compared to investment grade industry peers with an average of 4.1x. Let’s start to Slide ’19. In 2024, we did successfully issued two new bonds totaling EUR 1,000,000,000 maturing in ’twenty nine and 02/1930.

The proceeds were used to fully repay bonds maturing in 2024 and part of those maturing in 2025 and 2026. The remaining cash will be used to repay the outstanding bonds maturing in December 2025 for €180,000,000 Since we have refinanced very low interest rate notes, the average cost of debt have increased a bit, but we managed to contain at comfortable level. The expected reduction in interest rates present an opportunity for us. As central banks continue to ease monetary policies, we anticipate the medium term positive effect on our borrowing cost. Liquidity stands strong at more than billion.

Finally, in 2024, both rating agencies have improved our outlook. These positive evaluations reflect our reduced risk profile, improved financial discipline and solid growth prospect. On Slide 20, I would like to show how we have performed versus the guidance from past years. We can you can see that we have consistently met and on multiple occasions, how to outperform the challenging targets year after year despite macroeconomic challenges. I will now leave the floor to Pietro for the outlook.

Pietro Salini, Chief Executive Officer, WeBuild: Thank you, Matthew. Turning to Slide twenty two. We have built a solid and resilient group that is already shaping the next strategic plan. In 2023, ’20 ’20 ’4, we secured over $13,000,000,000 in new orders on top of our business plan. We have also invested over $1,000,000,000 in CapEx, making us one of the companies with the largest TBM fleet in the world, all while maintaining strong financial discipline.

This is reflected in our net cash position of $1,400,000,000 a controlled financial leverage in line with investment grade players and a reinforced debt to equity ratio. Following this strong order intake, we are planning to invest around 1,300,000,000.0 in CapEx in 2025, while maintaining a strong net cash position of more than €700,000,000 This net cash target is stronger than our business plan estimates. This additional order and investment not only drive higher production in 2024, ’20 ’20 ’5, but more importantly, they will fuel future revenue growth and cash generation in the next business. Moving to Slide ’23. Building on this record high backlog and solid asset base, we are also implementing a range of strategic initiatives that will be a fruit in the next business plan.

As we capitalize on a booming market, we will continue to position ourselves as a partner of choice for clients addressing climate transition and energy security challenges. In the water sector, we are taking a transformative step from being solely a constructor to an investor. Our public and private partnership proposal to tackle the draft crisis in Sicily reflects this shift, allowing us to enter the high margin business of water production and distribution and expanding our footprint beyond traditional infrastructure construction. Additionally, we see potential upside from ongoing negotiation on mega projects such as the Messina Bridge we are not yet included in our 2025 guidance. We are also de risking our portfolio, ensuring a balanced and resilient project mix that minimize exposure to high risk contracts while maintaining a steady cash flow.

At the same time, we continue investing in employee training and development, equipping our workforce with the skills needed to support our growing business. Beyond organic growth, we are seeking to extend our value chain by integrated specialized companies in key sectors as a steel structure and foundation, engineering and mechanical, electrical and plumbing. These companies could operate both as captive entities and as suppliers for the industry generating additional EBITDA and cash flow. At the same time, we remain fully committed to our cost efficiency plan, continually identifying opportunities for optimization and financial performance improvement. Our working capital optimization efforts are progressing, driven by a revamped contract management approach, ensuring better contract structuring, risk mitigation and cash collection.

Lastly, we are advancing the reorganization of our subsidiaries, ensuring that each entity meets its profitability targets and tackle market opportunities more effectively. Lastly, on Slide 24, we present our 2025 guidance. What we have shared today, our achievements, the measures implemented in the market perspective, reinforces our confidence in the group prospect and support an upward revision of our 2025 targets. In 2025, revenues are expected to exceed billion, while EBITDA is projected to surpass billion. We now anticipate closing 2025 with revenues over billion higher than in 2022 compared to the billion increase outlined in our business plan, representing over 50% of additional growth beyond initial projection.

Cumulative EBITDA for 2023, ’20 ’20 ’5 is expected to exceed the previous business plan by more than 200,000,000. We remain committed to maintaining a solid net cash position expected to be above 700,000,000 at year end despite continued growth CapEx. Lastly, for 2025, we are targeting a book to bill ratio greater than one. I thank you for your attention. We are now ready for the Q and A session.

So as not to go slowly on things, we encourage you to focus on the group’s strategy and other growth initiatives that underline its current and future financial performance. For any other questions you may have on figures or some other details under the tables or some technical details mentioned during the presentation, the Investor Relations team will be available to answer them after the call. Thank you to all of you.

Conference Operator, Coruscal Conference: Thank you. This is the Coroz Co conference operator. We will now begin the question and answer session. The management will answer all the strategic questions and the IR team is available for detailed questions after the call. The first question is from Matteo Bonizzoni, Kepler.

Please go ahead.

Matteo Bonizzoni, Analyst, Kepler: Thanks. Good morning. I have two questions. The first one is, can you update us on the process to finalize the award of the Messina Bridge? Over how many years the contract execution would take place?

And what is your current stake in the ULink consortium, which I think you have rounded up recently? Second question is regards a team which has taken center stage in construction sector recently, the Germany infrastructure plan. So the construction sector reacted big time to these unprecedented announcements from Germany on a $500,000,000,000 infrastructure plan. In Europe, in the past, correct me if I’m wrong, you have been active in countries like France or Norway, but not so far I think in Germany or not recently at least. Could this become an opportunity for you and the same for Ukraine where in the past you were active with I remember not particularly satisfactory profitability with Todini?

Thanks.

Pietro Salini, Chief Executive Officer, WeBuild: Well, thank you, Matteo. The first thing I will address the Messina Bridge issue. As you know by by reading the papers, everything is on the papers now. It’s quite at the end of the process for approval. We are waiting the cheapest to approve the project and the contract to start by the April.

So it’s something which is quite in the next days, if we can say that. And we are of course ready and as of that, all the industry partners are ready to start with pride this very important project for Italy and for the South Of Italy in especially. The design and construction phase is expected to last seven point five years and the completion of it is anticipated in 02/1932. I hope to be there and to pass through the bridge myself and all the team by the end of 02/1932. Then we were talking about the expanding of the expansion of the market.

There are enormous demand for infrastructure everywhere in the world. Of course, Germany, it’s a single part of that market. We are markets in which we are present as I explained during the presentation. Of course, we tackle those markets with intensity and with the experience we already paid in those markets. So we try to reduce the footprint of we build not to be in too many countries because this means I’ll say a lack of focus on the market and not to be able to capitalize on the experience already done and to the organization which is already there.

So this is something which is important. In the next business plan, we will focus strictly on countries and markets which are profitable, interesting and large enough for our company to deal with the magnitude of and the dimension of project that we are best in Class IV. We need to have very large project to exploit at its best the capability of and the competence of our company. What was the third cost question? Probably something on Ukraine.

On Ukraine, I will reiterate all that can be told now. Of course, we are talking about something that the hope of everyone that the war will finish as soon as possible. I really appreciate the effort of The U. S. And the President Trump to stop this sacrifice for the young generation, especially in Russia and in Ukraine and to start immediately to rework on to repeat Ukraine and Russia, because we also have to remember that not only Ukraine has been affected by war.

So in both countries, I think there are a lot of things to be done. And we are ready of course to do our part. Thank you.

Conference Operator, Coruscal Conference: The next question is from Emmanuelle Gallazzi, Equita. Please go ahead.

Emmanuelle Gallazzi, Analyst, Equita: Yes, good morning, everybody. Two questions from my side. The first one is on the commercial pipeline because you mentioned over billion of potential over there in, let’s say, new markets. So can you just give us some more color on these? Where do you see the most relevant opportunities?

And the second one is on the Australian market, if you can update us on the performance there, the margin improvement and

Pietro Salini, Chief Executive Officer, WeBuild: how the integration

Emmanuelle Gallazzi, Analyst, Equita: of Clough is going? Yes.

Pietro Salini, Chief Executive Officer, WeBuild: Very interesting investment we did in Australia. We are now an Australian company, and craft is fully integrated into the business. There are no distinction between the two. Competence, very specific competence of craft, especially on transmission lines and on energy are very well positioned now for the needs of Australia. So we are going well.

The contracts in Australia is leading the world into this innovative approach to contractor, which is the collaborative approach. There is no more the idea that you have public and private one from one side of the table and the other one on the other side and any needs, but we both will face the difficulties of the project and share the risk. So this is what is very important in Australia. I think that this is going to be spread around the world, but and also in U. S.

They are doing the same thing. The main project in the conventional pipeline are the Northern Water desalination plant in two stages in the Spencer Gulf, Gourumba pumped hydro projects, pumped hydro energy storage system like Gourumba in Queensland. We are now the result of best offering the new women and babies hospital affairs. We see major market opportunities in either of our desalination in hospital. There are lots of contracts going around.

So Australia for us is a booming market, very interesting and we want to grow in Australia. The other question was?

Emmanuelle Gallazzi, Analyst, Equita: Was on the EUR 30,000,000,000 of potential orders coming from new markets, just to better understand what is included in that number?

Pietro Salini, Chief Executive Officer, WeBuild: We have a pipeline, I explained that we have a pipeline which is well over $120,000,000,000 which is done by the contract that tenders that have already been submitted and are waiting outcome and the new tenders that are going to be done. So that Also in Italy. Also in Italy, there is an enormous pipeline of new contracts. So I think that from the contract point of view, we have to limit it, not to expand it. We will pursue a policy of a very selective policy in 2025 and in the next coming years.

As you see what we have to do, we have in the past an enormous growth. This has meant also on the financial side, an enormous effort. I think that it’s time now that we tackle our growth with a different perspective. As you have seen, we announced revenues growth, which is limited in 2025. And this means that we want to be very selective and also that we want to collect cash.

We want to collect back all the effort we have done, the investment that we have done. And this means higher returns and higher free cash flow into the next plan. We have already two legs into the next business plan. I think that we are talking about 2025, but we are all already working on ’26, ’20 ’7, ’20 ’8. And this means that our position, especially the position we have on the portfolio that is huge $63,000,000,000 of orders for the start of 2025 is huge.

So I think the market is not an issue here. We have a booming market, but we will be selective.

Conference Operator, Coruscal Conference: The next question is from Enrico Cokow in Termonta. Please go ahead. Mr. Coco, your line is open.

Enrico Cokow, Analyst, Termonta: Yes. Can you hear me? Okay. Good morning. Thanks for taking the questions.

Actually, I have two follow-up questions. One is on the Messina Bridge and then another one is on Ukraine. So on the Messina Bridge, the question is during the presentation you mentioned the fact that you think you will present a new industrial plan. So my question is if you will present the plan after the award of this contract, so after you will include the Messina Bridge contract in your backlog? And of course, if you expect this to happen this year?

And then I have on this contract, on this project, I would like to know the level of advanced payment associated, I think, should be really good 10%, twenty %. And I would like to know if the contract will be split in several years and so you will take these advanced payments every year? The second question is on Ukraine. I remember that you signed MOU with a local company, which was around the hydro technology and business. So So my question is, if on Ukraine, you would focus just on this, on your hydro technology or you are looking also other business such as, I don’t know, rail and so on?

Thank you.

Pietro Salini, Chief Executive Officer, WeBuild: Starting from Ukraine, which is easier. Of course, we bring the entire portfolio of capabilities of the company. We are excellent in railway, metro lines, transportation, highways, water and whatever. So the needs are huge, transmission lines, energy distribution, so everything can be possible. And especially you have to imagine that in these conditions, time is a lesson.

So when a piece will finally be there, the needs of the people of those infrastructure will be huge. So the first thing to tackle is time and our capability on that, on this regard is very important. For the Messina Bridge, yes, of course, there is an advance payment foreseen, which is by below, it is a contract under the codichet of the codes of public works. So we will have an advance up to 20% will be distributed along the construction line number of issues, a number of installments. So this is what is foreseen on the contract of the Synab Bridge.

We didn’t put it into the backlog because even if we have a law that gives us the contract of the Messina Bridge by law, it is not been signed. So we cannot put in the Deltograph now. Of course, if we expected the CPES, we approve it in April. I think that we are talking as a matter of weeks, let’s say, in front of us in order to do the deal and to conclude the deal and start the construction of it. I am confident about that.

Enrico Cokow, Analyst, Termonta: And can I ask if you will present a new industrial plan after these awards? Or I don’t know, will be next year?

Massimo Ferrari, General Manager, WeBuild: Yes. Probably, at the beginning of next year, we already started to draft

Pietro Salini, Chief Executive Officer, WeBuild: the Yes, but it’s not a matter of changing. So we will remain a larger flexible company.

Massimo Ferrari, General Manager, WeBuild: Yes, we need new numbers.

Pietro Salini, Chief Executive Officer, WeBuild: Unfortunately, with new numbers, we’re not exactly changing our business. So what is important and I also put some lines on it on what are the major issues of the new business plan is the new companies that the captive companies that can work for other clients on the specialties that is needed from us in a prospect of buying or making. We have chosen on those particular very specific segments, steel manufacturing and engineering and special foundation and all those are that which are strategic to for the execution of projects to have capability in house. The second thing is, of course, entering into the market of selling the product and not selling the construction, which is for instance, the team that is linked to the water. We want to change from selling desalination plant to use our experience and expertise in selling water.

So entering into the investments of the infrastructure to deliver to the people directly the product. And this can be done in many fields because of course, imagine the repower of all the dams around the world. Everybody thinks about the sustainable energy only linked to solar and wind mills. But in reality, we have an enormous portfolio of old hydro powered plants in Italy and in U. S.

Imagine only 4% of The U. S. Dams are producing actually energy. So we also think of markets in that respect in which we can put our expertise and maybe enter into this field of owning and exploiting some of those plants to produce energy directly. Thank you.

Thank you.

Conference Operator, Coruscal Conference: The next question is from Alessandro Torsto, Mediobanca. Please go ahead.

Alessandro Torsto, Analyst, Mediobanca: Yes. Hi. Good morning to everybody. I have four questions. Okay, brief question, if I may.

The first one is on the domestic market. Italy, clearly, Fotvino sales is a big result. Do you see here the possibility basically to stabilize the sales? Or there are some factors that may bring, let’s say, to a normalization from these record level. Clearly the Messina Bridge award would support this level as you commented before.

So that’s the first question.

Pietro Salini, Chief Executive Officer, WeBuild: Okay. We will do with that one. As we explained in the presentation, the group actually it is very visible in many very large infrastructure projects. But in reality, we are addressing the internal market in Italy even if we can consider a market that being in Europe, the market is European, it’s not only Italy. But also looking at the Italian market, we have share of this market, which is very limited, less than 2%.

So in comparison to our peers around Europe, which in the domestic market have a share of it, there is a larger possibility of growth in front of us. If we think about, I don’t say the name, but the largest company in France is doing 10% of their market is a 10% of the French market is in their end. Yes, we have an enormous opportunity of growth in our domestic market. As you remember, the group was always positioned abroad, as historically always worked at abroad of Italy and only recently we shifted our attention to Italy. But I think that with the new code of public works and with the design and the relationship with the client that we have now with Federogueroztato or with VANAS, we were the major clients.

I think that the difference of working with us or not working with us is significant. And of course, we have to win tenders, but nobody is giving us anything for grant, but we have enough competence and engineers to produce value engineering solutions for the Italian market. So we think that there is still a very big opportunity of growth in Italy. That is

Massimo Ferrari, General Manager, WeBuild: it. Let me add, Alessandro, just to give you an idea that are not only the large projects with RFI and ANAS, but there are also many other projects like hospitals, stadium, highways, where we have been called by the clients, by the concessionary, by the private or municipality in order to execute the works.

Pietro Salini, Chief Executive Officer, WeBuild: I’ve written the agreement we’ve had to make these new investments for the storage, pumped storage plants in Italy. So there are many things. We also think that in the future nuclear plants, of course, we are talking a very long term project, but also in the nuclear plant field, we can have a role.

Massimo Ferrari, General Manager, WeBuild: Second question?

Alessandro Torsto, Analyst, Mediobanca: Kenny, the region, if I look at, let’s say, last year results made a big jump in sales, billion. Also on this, can you comment on the profitability achieved by this region last year? Thanks.

Massimo Ferrari, General Manager, WeBuild: In Italy, it was on average in comparison with the expectation of our global portfolio. So positive close to double digit

Pietro Salini, Chief Executive Officer, WeBuild: and cash positive. At the site level.

Massimo Ferrari, General Manager, WeBuild: At the site level and the cash positive.

Alessandro Torsto, Analyst, Mediobanca: Okay. Then the question is on CapEx. Clearly, $1,300,000,000 that’s the target for the Viera. Can you help me understand how this CapEx will impact your operations because you achieved in the past years a significant progress in sales basically spending much less. Is it a catch up versus last year or is it CapEx that will allow basically further expansion in sales or I don’t know, you are going to do more in house works.

So please, your thoughts also on this point because clearly 1,300,000,000.0 are not peanuts. And lastly also, considering this very, very important program, a kind of rough indication of CapEx beyond 2025.

Pietro Salini, Chief Executive Officer, WeBuild: But this is very important because and it’s linked especially to the level of contracts which has been awarded to us. If you see, we have practically 13,000,000,000 of contracts more than what was envisaged during the business. This means of course additional investments and this means also additional upfront statement. This means that the portfolio of those contracts is it is especially in Italy where this development has been important Linked to very, very high CapEx requiring contracts with the marginality, which is basically. But what we have, we have now the in front of us the execution of those contracts.

We have to purchase the machinery which is involved within that construction. It’s mostly a large part of the high velocity railways in Italy. So this means tunneling, as you know, unfortunately, Italy has a lot of maintenance and making it a railway, it is not easy. So this means tunneling, which is for us is a very, very significant competence and investing in machines, which each one of them, let’s say, if you think about the machine plus all the accessories that are there, you may imagine that any of that machine costs around 60,000,000 on those. We are now having a very large fleet, more than 60 of those machines around the world.

And this is just to give an example, of course, but this is very strictly linked to the quality and typology of the contract that we are using. Of course, we are choosing to do contract in which the entry levels and the entry barrier, it is a little bit different from the bread and butter contract in which Ukraine is sufficient to be a competitor.

Massimo Ferrari, General Manager, WeBuild: This will give us a great competitive advantage for the future bids. Not only,

Pietro Salini, Chief Executive Officer, WeBuild: we have invested for instance in an industrial side in which we record this all those TBM around the world in order to have them new for the new start, not to reinvest in new machines, but to work on those, to recondition them and to be ready to reuse them. So not only the investment, it is now, but in the future, we see a diminishing investment in CapEx for this fact that the rotation of this CapEx internally will be longer than expected and longer than before.

Massimo Ferrari, General Manager, WeBuild: Just to give you some numbers, Alessandro, notwithstanding the financial targets confirmed before by Pietro, we started in 2022 with $5,000,000 of CapEx. And we will have, as you mentioned before, $1,300,000,000 of CapEx in 2025, having $1,100,000,000 plus CapEx in comparison with our business plan. Notwithstanding of that, we will have a net cash, significant net cash. We still keep the approach under promise and over deliver in terms of net financial position. And we are still committed to reduce interest charges, also reducing gross debt, but mainly working on the reduction of the leverage.

Alessandro Torsto, Analyst, Mediobanca: Thanks, Massimo. Sorry, and the question was related to a kind of, let’s say, normalized trajectory for CapEx after this program and also for program you mentioned. We will come back, I don’t know, 2%, three %, four % of sales, which basically means roughly, let’s say, $400,000,000 CapEx beyond this program you announced?

Massimo Ferrari, General Manager, WeBuild: Yes, probably. We will see with the new business plan, but this spike of CapEx come from the reason measured by Pietro. We won a lot of project significantly CapEx intensive, but we will land the business plan with the fleet of TBM that probably no other players in the world can have and can put in place also in terms of competition.

Pietro Salini, Chief Executive Officer, WeBuild: Also, this plant we have done in collaboration with the producer of those machines, which is important. We made a joint venture with the producer of those machines, not only to refurbish them and also not only we put them in shape, but also to convert this machine at the end to suit new needs that are coming out from new projects. So in the tunneling, we will not only finish those projects that are done with this machine needed, But also we’ll be ready to do all the tunneling work around the world with a fleet of machine already amortized, already in the main, already invested in. So this is what and of course, we will choose this type of work in which the use of those machines will be required because this is very important to us.

Alessandro Torsto, Analyst, Mediobanca: Okay. Okay. Thanks. Thanks. And then much more, let’s say, anticipating my last question, it was clearly on the fourth quarter growth debt reduction target.

I basically understood your comment on carrying more about the leverage ratio, so considering the IRR phase. So it’s actually, but in absolute term,

Matteo Bonizzoni, Analyst, Kepler: do you

Alessandro Torsto, Analyst, Mediobanca: have a kind of internal limit in absolute term? So for instance, I don’t know, not surpassing the $3,000,000,000 gross debt. So just understand if there is a kind of

Massimo Ferrari, General Manager, WeBuild: Yes, it’s reasonable because we have to keep under control the interest charges, and we hope to have, for 2025, less effect in terms of taxes in order to increase significantly the bottom line. So we will work on very different levers. As you know, we don’t have just the debt to capital market, but also the RCF line and backup lines where we can optimize the use of debt of them in order to reduce the interest charges that at the end is a common target for us and for the investors because it’s going to increase the cash flow

Pietro Salini, Chief Executive Officer, WeBuild: for equity.

Conference Operator, Coruscal Conference: The next question is from Senan Kiran, Mutinish and Co. In your prepared remarks, you mentioned your credit metrics being investment grade already and your own positive outlook from both agencies. Does the senior management have an investment grade rating target?

Massimo Ferrari, General Manager, WeBuild: Sorry, we were not able to hear well. Did you ask if we are committed on the investment grade target?

Conference Operator, Coruscal Conference: Exactly.

Massimo Ferrari, General Manager, WeBuild: Yes, absolutely. Absolutely, we are working on that. We hope that with the latest results, we can have some improvement from the rating agencies, and we will work also on the first half results in order to confirm targets that are very close to us, to the one that we have. So it will be very important to be a construction poor construction company with an investment grade. All the plans for 2025 and the new business plan will be committed on that.

Pietro Salini, Chief Executive Officer, WeBuild: We have reduced the growth and the bend of the curve for the growth in order to obtain the metrics, financial metrics that gives us this possibility.

Conference Operator, Coruscal Conference: Thank you. Can I also ask for this year 2025, in terms of the way your contracts are being structured, do you see any changes in the percentage of advance payments or your cost pass throughs?

Pietro Salini, Chief Executive Officer, WeBuild: No, no changes in that policy.

Conference Operator, Coruscal Conference: Thank you very much.

Pietro Salini, Chief Executive Officer, WeBuild: We have an average because of course, this is different. It depends from which country you expect your portfolio to come from. So there are different legislation, different from any client. So the average which has been put inside is the average we use normally.

Conference Operator, Coruscal Conference: The next question is from Tuzapag Grimaldi, BNP Paribas.

Emmanuelle Gallazzi, Analyst, Equita: I have just a quick one on Lane, since it was a topic of the discussion of the past calls. So if you could share with us a bit of an update of the profitability improvement there. Was it a breakeven above breakeven this year? And how should we think at Lane in 2025? And just a very clarification probably you touched upon earlier on, but it’s just to say none of the effects of the Messina Bridge are in the guidance.

Am I right on that?

Massimo Ferrari, General Manager, WeBuild: Right. That’s right. Okay.

Pietro Salini, Chief Executive Officer, WeBuild: No effect of Messina Bridge. And on the lane, the lane has had some legacy project, which had some issues in the past. So of course we are under litigation, but let’s say for the moment, we are shedding off all the losses coming from those products. And the discipline into the new order intake, taking already in a couple of years ago is going to produce the transformation of, let’s say, no more project that can bring to us significant surprise like the one taken four and five years ago, but much more disciplined than analyzed order intake. This is the issue of force working into our penetration, working into the reduction of cost into the full integration of the processes with the we build the processes.

These are the, let’s say, the key factor. We put in on the company a new organization, total new organization. And I think this will make the difference.

Massimo Ferrari, General Manager, WeBuild: So we expect to that lane can come at breakeven for 2025. We have some ordinary and extraordinary action in order to achieve this target with the lane management. Of course, any other details or curiosity, you can call Amarizda and the team and myself. I’ll be available with you and some investors also for the next week through video call or in Milan. So thank you very much.

And to all

Pietro Salini, Chief Executive Officer, WeBuild: of you, thank you very much for this time.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.