Fincantieri S.p.A.

Good afternoon. This is a course called Conference Operator. Welcome and thank you for joining the Fincantieri first half 2025 results presentation conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions by pressing star and 1 at any time. Should anyone need assistance during the conference call, they may signal an operator by pressing star and 0 on their telephone. At this time, I would like to turn the conference over to Mr. Pierroberto Folgiero, CEO and Managing Director.

Please go ahead, sir.

Good afternoon, ladies and gentlemen, and thank you for joining us on today's call to discuss Fincantieri's first half 2025 results. We are pleased to present a strong set of results for the first half of the year, building on a highly successful 2024 and equally positive first quarter of 2025. We recorded a solid performance in all of our key financials and metrics, putting the group firmly on track to achieve its 2025 guidance for revenues and margins and to improve our guidance on leverage with a net debt to EBITDA range of 2.723 times. Let's now move to page four for a brief summary of the financial and commercial highlights of the first half of the year. Revenues increased by 24.3% year-on-year to €4,576,000,000, underpinned by a positive contribution from all segments, in particular shipbuilding, confirming the group trend of the first quarter. Thanks to the virtuous path pursued by Fincantieri over the last years, we delivered also a significant increase in profitability, with EBITDA posting an impressive double-digit growth of 45.3%, reaching €311 million. EBITDA margin grew to 6.8%, with a market improvement compared to 6.3% at year end of 2024 and increasing by 100 basis points versus 5.8% achieved in the first half of 2024. This growth is all the more impressive considering that we operate in the heavy industry sector that typically has slow biorhythms. Our net debt came in at 1.1 billion, 614 billion Euro significantly lower than the 2 billion 42 billion Euro reached in the first half of 2024 and marginally better than the 1 billion 670 billion Euro excluding rights issue achieved in 2024, leading to a net debt to EBITDA ratio of 2.7 times. Turning now to our commercial performance on page five, we achieved remarkable results in the first half of 2025. Order intake stood at 14.7 billion euro, showing an extraordinary growth compared to the first six months of 2024, with a book-to-bill ratio of 3.2 times revenues. As a result, the backlog reached 41.9 billion euro, up 35.1% compared to the full year 2024, with a record high total backlog of 57.7 billion euro, representing 7.1 times full year 2024 revenues. Let's now move to page six. Our commercial pipeline remains strong, driven by our solid positioning and favorable market dynamics in all our segments. In the cruise sector, we signed contracts with Crystal Cruises for two IAN vessels, with Four Seasons Yachts for a second ultra-luxury ship, with Norwegian Cruise Line Holdings for four jumbo ships, and with Viking Cruises for four units. In the defense sector, we signed a contract for the construction of two PPA multipurpose combat ships, The two new PPAs in light-plus configuration will be built at the integrated shipyard of Riva Trigoso and Mugiano, with delivery scheduled for 2029 and 2030, respectively. We also signed a True Life Sustainable Management, TLSM-2, contract for in-service support for all systems and equipment for the FRAM units built and delivered by OSN to the Italian Navy. In offshore, the momentum remains robust with orders for two units for Dongfang offshore. Lastly, in the new underwater segment, we are seeing the tangible benefits of the strong commercial positioning of unique products and services offered by Remazel, VAS and EDS. Looking ahead, we see further opportunities to strengthen our order intake thanks to a commercial pipeline in which we are actively participating of approximately 23 billion euro across all business segments. Moving to page seven, you can see how our commercial efforts are translating into an impressive order book. In the first half of the year, our portfolio benefits substantially from the acquisition of new orders, further consolidating Fincantieri's expensive global reach across all business segments and providing a profound visibility up to 2036. In the first six months, we delivered 13 ships from eight shipyards and as we speak, we have a full state of deliveries scheduled over the next 11 years with more to come. In the first half of 2025, we not only delivered outstanding financial and operational results, but we have also continued to execute on certain core strategic initiatives that represent a solid foundation for future growth and innovation. In recent months, Fincantieri has taken decisive and visionary steps to establish itself as a leading technological integrator in the underwater domain, which more and more plays a central role in geopolitical strategy, driven by military priorities and protection of critical subsea infrastructure for energy and communications, as well as for strategic control of the seabed. In particular, we completed the acquisition of Leonardo's underwater armament system business line via the purchase of vast submarine systems. We formalized the investment in Wsense, a leading Italian deep tech company specializing in wireless network and advanced underwater monitoring and surveillance systems. And we signed two MOUs, one with Edge to jointly develop underwater technology supporting the United Arab Emirates in its ambition to become a regional reference point, and one with Graaltech for the development and commercialization of autonomous underwater solutions. We are also accelerating our digital transformation across the cruise, defense and port infrastructure sectors, also through the creation of Fincantieri Ingenium, a joint venture 70% owned by Fincantieri Nextech and 30% by Accenture. This is not a think tank or a venture capital, but a concrete element for our digitalization strategy for the industry today. One of its strategic initiatives is the development of NaviSapiens, a digital ecosystem designed for the next generation vessels and for upgrading the existing fleet that will be installed on the first ship by the end of 2025, beginning of 2026. Last but not least, in our unwavering commitment to driving a sustainable industry, we established Circular Yard in collaboration with Era Group to implement an innovative integrated waste management systems system across all our Italian shipyards. Now, I will end the call over to Giuseppe, who will discuss our financial results in more detail. Please, Giuseppe.

Thank you, Pietroberto, and good afternoon to everybody. Well, we can move on to page 10, in which we highlight again the record level order intake. We reached in excess of 14 million euros almost equal to the entire fiscal year 2024. At the end of the semester, the book-to-bill ratio stood at three point times the revenues, and that indicates robust and sustained growth in Fincantieri's commercial pipeline, fueled by robust demand across all core business segments. Of course, in addition to the order of the four jumbo cruise ships that Roberto mentioned before for Norwegian Cruise Lines, and the four ships ordered by Viking, we add to these orders in the second quarter of 2025, the order coming from the Italian Navy that renews and strengthens further our partnership with our national client. orders were also robust in the offshore underwater and equipment systems and services segments together amounting at 1 billion euro on page 11 these all record level brings the total backlog at over 57 billion euros and this slide is it is worthwhile to note the very strong conversion of the soft backlog into backlog in And at the same time, Softback remains robust, announcing further commercial successes in the times in the future. On page 12, revenues reached 4.6 billion euros, up over 24% year over year. Strong contribution coming from the shipbuilding, which posted a 26.3% growth compared to the first quarter of 2019. to the first half of 2024. In particular, the defense segment recorded a 21% increase, mainly driven by the contract that we finalized with the Indonesian Navy in the first quarter of 2025. Shipbuilding accounts for 68% of group total revenues, of which 43.2% from cruise and 24% from defense. Offshore and specialized vessels accounted for 13% of total revenue, and those revenues rose in excess of 10% year over year. And this comes from the sustained growth trajectory in the recent years and the progressive increase in the intake in wind offshore. Underwater reached 274 million euros, ramping up heavily compared to the first quarter of 2025, as expected, we must say, as the submarine program for the Italian Navy is picking up in terms of revenues and also in terms of contribution to EBDA. We expect further revenue growth coming in the second half of the year, and we remain consistent with the guidance that we gave in the underwater day. Equipment systems and infrastructure delivered a 9.8 year-on-year increase, reaching 13.4 total revenues, and this comes primarily by solid performance across the mechatronics and electronics clusters. Moving on to page 13, on EBDA, in the first half of the year, we reached 311 million euros, rising in absolute terms by 45.3% compared to the first half of last year. And, of course, this has been driven by higher profitability in all the business segments. EBITDA margin grew to 6.8%, up 1% year-on-year, and improving compared to 6.3% reported at year-end. Within the segments, shipbuilding recorded an EBDA of €280 million, increasing by 40.1% versus the previous year, an EBDA margin of 6.5%, up 0.6% compared to the same period of 2024, and this reflects revenue growth in the higher margin defense business and the further improvement we are reaching in efficiency in the cruise business. Offshore, 32 million euros, increased by 20.7%, compared to the first half of last year with a margin of 4.9%, up 40 basis points year-on-year. And underwater, 47 million euros and a margin of 17%, driven by what I said before, i.e. the sharp increase in revenue driven by the submarine program and also driven by very good performance from Ramazel and also the bus. In the equipment systems and infrastructure segment, EBDA increased by over 42% compared to the first half of last year, reaching 46 million euros and an EBDA margin of almost 7%. On the back of the return to net profit, and I'm on page 14 right now, at year end 2024, in the first half of 2025, we posted, again, a net result, positive net result of 35 million euro, marking a sharp recovery from the 27 million negative recorded in the same period of 2024. And this result is mainly driven from the material growth in EBDA, lower financial expenses, as well as a reduced extraordinary annual recurring expenses burden. Adjusted net result, 48 million euros, improving almost four times compared to the 10 million euro net loss in the first half of 2024. On page 15, net debt, 1.6 billion euros negative, improving significantly in comparison with the 2.4 billion euros as of the end of June of 2024, and marginally better compared to the end of the year. Net debt to EBDA ratio improved to 2.7 times, and this is significantly lower than the 3.3 times of year end. And this is driven by a strong focus on financial discipline, optimization of networking capital, and also, this is also driven for the neutral networking capital strategy in cruise. As of today, we have a very well distributed debt maturity profile with no significant long-term debt maturities until 2027. And we also can rely on a sound financing structure with no covenants and approximately 85% fixed rate or edged by derivatives. Now, we stand in this. We continue to work on the optimization of our financing strategy. And a few days ago, we completed the placement of a medium to long-term senior unsecured should shine financing. which includes a three-year maturity tranche due in 2028 and a five-year maturity tranche due in July 2030 for a total amount of 395 million euros. We received on this loan a very strong demand that enabled us to upsize the original amount while securing interest rates at the lower end of the guided range. Finally, on page 16, networking capital stood at negative 456 million euros, slightly up compared to year end. This is mainly due to higher trade receivables, and those higher trade receivables were partially offset by reduced construction contracts and client advances, alongside increased inventories and advances to suppliers related to higher production volumes and the sale of the two vessels to the Indonesian Ministry of Defense. With that, I will now hand the call back to Piero Bertone. Thank you, Giuseppe.

The execution of our strategy continues to deliver remarkable results, also in the first half of this year, reinforcing the company's growth outlook across the businesses. Our relentless focus on cash flow continues to drive our daily activity as we turn every stone to unlock value. The significant margin growth we are seeing in the first half of 2025 is a clear testament of the validity of these initiatives. The cruise business continues to witness an impressive growth in demand, which we are satisfying by extending our delivery schedule to 2036. This deep backlog visibility allows us to optimize our procurement costs, while the saturation of our capacity enables us to spread our fixed cost base more effectively, leading to higher profitability. In defense, we are witnessing a favorable macro trend internationally, where we see more than 20 billion euro of potential market opportunities that we can capture, also thanks to our flexible production capacity globally. In the underwater, we have laid the foundations to grow this business further, leveraging on the dual-use DNA of Fincantieri while continuing to validate our new product roadmap. Thanks to the strong results achieved during this six-month period, for ERN 2025, we confirm our guidance for revenues at around 9 billion euro, EBITDA margin above 7%, and positive net result and improve our guidance on net debt to EBITDA, which we expect between 2.7 and 3 times compared to the previous guidance in line with fiscal year 2024. With that, we are now open to take your questions.

Thank you, sir. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. To remove your question, please press star and two. Please pick up the receiver when asking questions. We will pause momentarily as callers join the queue. The first question comes from Emanuele Galazzi of Equita.

Good afternoon, everybody. Three questions from my side. The first one is on APAC. You have been flagging the opportunities there for some time. and basically we have seen some important initiatives to strengthen think and theory relationship there like in Indonesia, Malaysia and Philippines. But how do you see this relationship evolving and do you see other attractive market over there in APAC? That's my first question. Maybe we can go one by one.

On Southeast Asia, we confirm a number of possible deals either in Indonesia, in Malaysia, Philippines, you know, where the programs are loud and clear there. Then we are quote unquote cultivating other markets such as Thailand and Vietnam. So those are the countries in which in Southeast Asia we are very focused on. Again, we are also increasing our presence in India where we are already working on certain specific market components, in particular propulsion systems. but we are positioning ourselves in terms of collaboration with the major state-owned and private shipyards because, you know, India has a making India strategy and requirements, but we are working actively also to be quote-unquote supportive and instrumental to this kind of renaissance of shipbuilding also in India. So that's all in all our, I would say, enlarged Southeast Asia perspective.

Thank you. The second one is on the cruise business because looking at your second quarter results and I think also you mentioned during the presentation, the cruise business is reporting, let's say, material improvement in terms of profitability. Can you give us a sense on how margins are evolving for the cruise business?

But let me say, we have been explaining since the presentation of the business plan in 2024, sorry, in 2022, that the main objective was to demonstrate that the profitability in the cruise business is better than what the market expects. So we've been working, we've been promising it, and we've been also explaining that the different pillars, the different projects, strategic projects envisaged in the 2022 business plan were exactly aimed at unlocking this value. To give you the sense of those strategic projects, probably the most effective has been the procurement excellence and operational excellence. Procurement excellence has to do with a different approach on how to pursue economy of scale, considering the big volumes that we can aggregate at group level, and economies of scope at the moment of concentrating the procurement strategy on certain specific category. So basically this is a typical exercise you can perform when you have a variety of items to be procured and purchased and when you have also big volumes. Consider that, you know, a company having something like 9 billion of revenues in the general contracting business typically you know, the procurement accounts for, let's say, 60%. So assume that you have something like, I don't know, 5.5 or even 6 billion or whatever it is. If you save 1%, it's 60 million. If you save 2, it's 120. If you save 3%, it's 180. So this is the magnitude of, let me say, an incremental increase improvement in the performance when you have such volume to be addressed. So economy of scale and economy of scope on procurement, which is definitely where money is in a business like the general contracting. The rest is operational excellence. So how you manage execution risks in terms of contract management, in terms of risk management, in terms of construction management, in term of management of subcontractors and performance at large. So we have been optimizing our operations from different perspective. For example, from the perspective of applying new technologies on welding or how to, you know, anticipate building conflicts when it comes from different itemized components in the typical engineering flow and construction flow. So there are a number of, I would say, micro-activities that have been implemented in the last three years, and now we are taking the fruits of that very meticulous day-by-day order optimization of the execution.

Very clear. The last one is a very quick one for Giuseppe and it's on financial charges that were down materially year on year. If you can just provide guidance for 2025 on financial charges and expectations.

Yes, materially down, also thanks to the optimization on networking capital that we have realized in the first quarter. Of course, we are partially profiting from a better interest rate environment, let me say. We should be in line with the first half of the year for the second half.

Okay, very clear. Thank you.

The next question is from Alessandro Pozzi of Mediobanca.

Hi, everyone. Thank you for taking my questions. I have two. The first one is on U.S. defense spending. We have now a better idea of where U.S. is going to spend money and how much it's going to spend money in defense of 13%. the defense budget year on year. Obviously, you talked about the opportunity to build icebreakers, to increase maintenance activity, especially in Jacksonville. Can you give us maybe an update on the opportunities that you see there? And also, the second question is, there's an article that caught my attention the other day talking about the potential expansion of the shipyard in Ancona. with building much larger cruise ships. If you can maybe give us an idea of how that will improve the performance of cruise going forward. Thank you.

On US, basically we are working on two directions. One direction is how to I would say, contribute to the bottlenecking of the naval shipbuilding in U.S., which is a big priority for the new administration. And we believe that Fincantieri can be very helpful, again, having more than 15 years of experience, having invested something like $800 million, and having 3,000 people there. So the first focus is on how to, I would say, take advantage of this momentum in the, let me say, reorganization and, you know, in these new phases of the programs, of the Navy programs, and correspondent improvement in the productivity of existing shipyards the second priority is on the Repair as you very clearly mentioned in Jacksonville, but also in the civilian shipbuilding So we are as you may know Also in the civilian shipbuilding because we have a shipyard that is already active in a number of ships that are built in U.S. according to the U.S. regulation. And we are, as you mentioned, highlighting and emphasizing the skills and competencies and capability we have for icebreakers and cable layers being two kind of ships that has, you know, the characteristic of being strategic because they're needed for your I would say sovereignty for your self-resilience and independence. So we are working on those two directions. Again, the new administration is progressively, let me say, materializing its view and vision on the months to come, and we will keep you posted accordingly. Moving to Ancona, the investment program from Ancona was already there. The project was signed, if I don't go wrong, something like one year ago. Project being the , so the port authority incurring the infrastructure costs for strengthening the throughput capacity of the shipyard. because, again, we have the availability of those spaces under a concession. And then we are expected to do our investments, which refer to the equipment associated, so lifting power and cranes and things like that. So Ancona is a key shipyard for Fincantieri because it's the shipyard in charge for the luxury segment, taking advantage of the specific supply chain that you can rely upon in that region, again, having to do with luxury. And so certain specific skills, materials, components, and things like that. Luxury ships are also, I would say, increasing their size, remaining still in the luxury segment. So we need the shipyard to be able to manage ships having gross tonnage, you know, beyond 50,000, 60,000, which is the current capacity. So I believe that those investments are, you know, healthy for the shipyard, healthy for the country, and giving flexibility to Ancona, again, still remaining focused on the luxury segments, by giving flexibility to Ancona shipyards, which plays a very important role in the system of shipyards of Inca Theria Plage.

Thank you. Will it bring more volumes or is it an example of a gain in productivity and efficiency?

It's both. We can manage higher gross tonnage. We can manage more ships at the same time in the shipyard, which means flexibility on the tonnage of the ship and ability to improve the productivity, and therefore, I would say, profitability of the infrastructure itself. So it's an investment in flexibility and in productivity.

Okay. Thank you very much.

The next question is from Antonio Gianfrancesco of Intermonte Sims.

Hi, good afternoon, and thank you for taking my question. I have two, please. The first one is about your defense business segment. So what is your general outlook in that market? And mainly what you can tell us about the major tenders you are competing for. I'm thinking about frigates for Norway, submarines for Philippines, and also on the Polish or submarine program. My second question is related to U.S. tariffs. I was wondering how you are thinking about the impact of potential rising in aluminum and steel prices in single markets, considering that the current U.S.-EU tariffs agreement doesn't seem to cover those materials, and the U.S. has imposed about 50% global tariffs on them. Thank you.

Can you repeat the first question? Which segment are you interested in?

Defense business segment, please. And mainly on the tenders you are competing for, so frigates for Norway, Philippines submarines, and ORCA program for Polish maybe. Thank you.

You know, you listed the main tenders, so the tenders are proceeding well, so are open, and we are in the race again. with a positive mood because we have a very well proven product. Then we have availability to deliver, but also availability to deliver specific delivery expectations. Because you know the competition now is not only necessarily on price, but it's also on your ability to deliver in advance. because now who is buying naval assets and defense assets in general is interested to have those assets at sea in operation as soon as possible. You're not mentioning Saudi, which is nevertheless a very important tender we are in, as well as Malaysia and other European countries. You mentioned Poland, which is a tender in which we are very committed because it has to do with submarines and it has to do with some new ideas and new features of our fully Italianized submarine. So all in all, we have many prospects all the, you know, all the balls are rolling and we are positively well positioned. That's your first question. With respect to tariff, we don't have, as of now, impacts, simply because, you know, on steel and other materials, We have a flexibility of procurement in multiple regions. And on top of it, the quantities we are buying, considering the total cost, total technical cost of a ship, of one of our ships, is now changing the profit to loss. So at the end of the day, as we have many times emphasized, Our business is a business of system of systems rather than half application. So being far from being a traditional shipyard, being a, again, system integrator, not only we are not impacted because of the region of procurement, but also we are not affected because that specific commodity is not making a big difference in the total cost, in the total technical cost of the ship.

Thank you, very clear. Welcome.

The next question is from Gabriele Gambarova of Intesa San Paolo.

Yes, good morning. Thank you for my questions. The first one is on Cruise. The top line growth was very sustained in the first half, so I was wondering what do you envisage for the whole 2025? I mean, do you expect the business to keep on growing this way? And do you confirm that it is not supposed to absorb cash, basically? The second one is on the U.S. Navy budget for 2026. They do not envisage to order further Constellation-class frigates. So I was wondering, I mean, what's your reading of this also to, let's say, avoid... interpretation that could be wrong. I think the constellation is going well, but I wonder if you could comment on this. And the last one is on the fiscal year 25 guidance for leverage. Is there a specific moving part, a specific assumption that

led you to to improve this uh this guidance by by three four hundred million euros implicitly thank you so on the on the cruise business we are again our business is not a business with ups and down so in particular it is direct function of the production curves of every project so What is happening in the cruise, it is exactly what we have been expecting. It is perfectly in line with our budget, with our business plan, and with our overall strategy. So there is no, I would say, acceleration in the growth. It is exactly the path that we have designed, and it is going exactly in that direction. So I don't see any jump. in terms of revenues, and I don't see any, I would say, working capital consequent absorption. So it's absolutely the ordinary course of the ordinary projects according to their production curves. Moving to the information about cost selection class, as anticipated before, the new administration is looking into all the programs and is reviewing all the programs and the aim of it is to relaunch and put their hands into the mechanism in order to improve profitability progress of the, I would say, US Navy construction capabilities. So the fact that the additional order of constellation plans is postponed has no implication for us. It is simply the consequence of the new administration that is looking into programs and strengthening the different programs before then continuing on their strategic developments. So it is the natural consequence of the change in the administration that is taking very seriously the acceleration. But first of all, they want the current contract to accelerate before enlarging the contract itself. So for us, it's not the point of having another order because we have plenty of constellation class already to order. We would like to participate to this new approach to shipbuilding in order to accelerate production. So that's the focus of the administration. That's the focus of FinCAP theory. So that's my comment. There is no negative reading. It's, you know, it is the other way around. it's a country that want to relaunch a building and wants to, you know, strengthen existing commitments before taking new commitments. On the net financial position improvement, I think it is the, again, natural continuation of the generation of cash that we have already recorded and experienced in the first quarter. So already in that occasion, we anticipated that in case this positive trend would have been, you know, repeated and consolidated, we would have adjusted the guidance accordingly. So that's what we are doing. So it's the, I would say, ballistic continuation of the cash generation of the previous quarter that is leading us to a good improvement.

Okay, very clear. Thank you, Pierroberto. If I may, just a follow-up on infrastructure, which is not core business, by the way. Is there any idea, any chance that... I mean, sooner or later it will leave the company's perimeter. Any update on this?

Let me say, first of all, we are very satisfied with what we did in the infrastructure business. So after the offshore business, this is the second very evident turnaround we have achieved. The company basically is delivering all the projects of the past, you know, having suffered for losses. Let me mention, you know, for example, the Miami terminal, which was delivered to MSC, you know, and has been a technical success because, you know, it's the biggest terminal cruise terminal ever built in the world. You need geography that is not necessarily easy to deal with when it comes to constructions, because there's an issue in terms of availability of workers, contractors, and things like that. So let me say the infrastructure business is living a very positive moment, because they are leaving at their back the legacy of the past, and they start to collect the fruits of a different business model, which we call de-risking and partnering, i.e. to limit to the maximum extent the appetite for generic construction risk. So it's not a generalist. It's a company concentrated on Basically, they have three businesses. One is the business of hospitals, which is definitely a niche. The second is the business of certain kind of steel fabrication, which is needed, for example, for the construction of bridges. And the third core business is the marine works. So construction works at sea. They are sticking to their niche, so not enlarging the appetite for different specialities and disciplines. And then they are partnering, not only the risking but also partnering. So they are contributing consortia by consortia, consortium by consortium, those capabilities in larger consortium. So this business model is proving to be successful. To get back to your point, in the next business plan, we will evaluate all these strategic options. Again, the company is strong, is on the safe side, is well balanced in terms of This profile is well-equipped in terms of well-proven products. We are having some good synergies for the naval business because basically they are very reliable at the moment of working on naval infrastructures. For example, naval bases, certain construction works and marine works for naval purposes. which is something that we are exploiting in a win-win setup with the Navy. But again, I believe that our restructuring is completed and the company is well-equipped and best positioned to be self-sufficient economically and financially, which is again very important and very rare in the infrastructure business, and the company is ready to evaluate all strategic options with a very cold eye.

Very clear. Thank you very much, and congratulations for the results.

Thank you. Thank you.

Sir, the final question is from Michele Baldelli of VNP Paribas Exane.

Hi, good afternoon to everybody. I have a few questions. The first one is more technical. If you can elaborate how much the PPA has contributed to the H1 depreciation and amortization, please. The second one is on your arguments about the expansion of productivity in cruise and all the investments that you are doing and will continue to be doing. um is it something that will point to a potential increase of the deliveries per year in the next future or shall we think about like just the developership that can increase and um another question relates to the naval and underwater international awards do you expect them anything already by the end of this year or they are, let's say, probably expected more next year.

Thank you.

Excuse me, sir. As you're lying in mute, we cannot hear you answering.

Oh, sorry, sorry, sorry. The mic was switched off. So on the PPA, on the purchase price allocation, I will leave the ground to Giuseppe. On the productivity, the focus on our operational excellence is to improve the profitability. So productivity means a better use of the resources with benefits translating into margins and cash flows. So all the activities we are doing, for example, for minimizing low added value activity with the intense adoption of new technologies such as drones for internal logistics, rover and robots for internal logistics, or what we are doing in terms of robotization of grinding, welding, and other activities that are typically performed by workers, which is more and more difficult to train and to somehow recruit. So this is the sense of the productivity, is to improve profitability on the one hand, And on the other end, project the company in a long-term vision whereby if you want to be a manufacturer in this part of the world, you have to be a technologist. On the naval underwater visibility for the future, there are programs going on. So Poland is one of them. There is Philippines. There are a number of other programs, for example, in Greece or in other geographies that are going to be on the market. Let me say we are progressively experiencing a growth in demand. Obviously, our public administration kind of programs So the, you know, the decision process and the tender process, given the complexity of the asset and the nature of the owner, the process is slow, but is well-traced by us. And we are, you know, we are following every tender with a lot of commitment and positiveness.

Going back to your first question, it is in the range of 12 million euros for the first half. You said 12? 12. One, two.

Okay, perfect. Thank you very much. And just as a follow-up, on the U.S. Navy and your presence in the U.S., I have a comment then up to you if you can elaborate on it or not. But basically my thought was around the fact that Saudi contractor is close, let's say, to the final part. U.S. Navy constellation program is slow to ramp up. You have 3,000 employees. Can we say that basically the profitability in U.S. is, let's say, almost absent this year? And from there, there could be, let's say, improvement that probably the new business plan can detail more better than what is it today. Can you add something on it?

You know, as I clearly said, the program is being under revision by the U.S. Navy. So which is positive because again, all the programs of the Navy need to be re-evaluated and reconfigurated. So I don't have any specific information to disclose. I don't have any specific concern to disclose. We are continuing our production. We don't have any reason. not to imagine that this production will continue. The asset is a very valuable asset. The market is a very valuable market. And 15 years of experience, a 15 year of familiarity with U.S. systems is in itself a big asset. So I don't think that there are other information to disclose apart from our you know, eagerness to contribute to this relaunch of the sector, again, capitalizing on what we have, which is the most, or better, one of the most modern shipyard in U.S., associated with a very important program, associated with one of the most knowledgeable international shipbuilder that is committed to U.S. So I think it's definitely a source of upside for Fincantieri. Thank you very much.

Sir, at this time there are no more questions registered.

Thank you, ladies and gentlemen, for joining the call. Thank you to Roberto.

Thank you, Giuseppe, for the presentation.

Thank you.

Thank you for attending. Please reach out to me and the IR team for any further follow-up questions. Thank you very much. Thank you. Bye-bye.