Fincantieri (Milan:FCT) Q2 2026 Earnings Call

0:01 Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Fincantieri First Half twenty twenty six Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. At

0:24 this time, I would like to turn the conference over to Mr. Fruggero, Chief Executive Officer and Managing Director. Please go ahead, sir. Hello, good afternoon. Welcome to Fincantieri First Out twenty twenty six Results Conference Call. We are pleased to report another outstanding set of results marked by strong margin expansion, record net profit and continued deleveraging driven by solid cash generation. These achievements further demonstrate the successful execution of our strategy and the group's ability to convert strong commercial momentum into sustainable and profitable growth.

1:12 We delivered a further step change in profitability with EBITDA growing 12.5% and margin reaching 7.6%. Margin expansion was mainly driven by favorable pricing dynamic and efficiency measures in cruise, higher margin on defense programs currently under construction, as well as the increasing contribution of underwater. Net profit consequently rose to a record €102,000,000 almost trifling from first half of twenty twenty five and reaching a level close to the all time high of €117,000,000 achieved in full year 2025.

1:58 Commercial performance remains particularly strong. VAA secured the largest contract in its history with the Royal Saudi Navy Forts. VAA acquired the record order in INFISH with INFISH for a next generation deep sea research vessel while new major cruise contracts extended visibility on deliveries through 2039. In defense, just a few days ago, the Portuguese and Italian governments announced an agreement for the acquisition of three FRAM EVO free grades. Our growth strategy continues to be supported by strong financial discipline with leverage ratio decreasing to one time, significantly improving compared to the full year 2025, thanks to cash generation over the period.

2:50 Looking ahead, the progress achieved in the first half fully supports the confirmation of our 2026 guidance across all targets. Finally, we are very proud about the strategic acquisition of NextGeo Solutions, WSENSE, Graustech and NetComm announced earlier this month. Together these transactions mark a new phase in the group's evolution and accelerate the creation of an international fully integrated underwater champion, as I will explain in a few minutes. Let's now turn to page four. Our commercial performance remains strong. Order intake reached €6,100,000,000 in the first half of the year with a book to bill ratio at 1.3 times. Total backlog increased seventeen year to 17% year to date, while the backlog reached €43,000,000,000 Total backlog and backlog guarantee approximately eight and four point seven years of work when compared with 2025 revenue.

4:04 Please note that order intake does not yet include a number of major contracts signed during the first six months, particularly in cruise and underwater, which are currently reflected in the soft backlog as they remain subject to financing and other customary conditions. Including this agreement, we already exceeded the approximately €11,000,000,000 order intake presented at our Capital Markets Day February. And as I discussed shortly, additional opportunities continue to progress across all our businesses. Let's now move to Page five.

4:48 In the first six months of 2026, we delivered 11 units from eight different shipyards across the group, demonstrating the strength of our industrial execution capabilities. At the same time, our order book continues to provide exceptional long term visibility with 92 units currently in portfolio and deliveries scheduled up to 2,036, taking into account the cruise orders signed with MCLH and Princess Cruises in recent months, which are not yet affected. Delivery visibility extends through 2039. Let's now move to Page six and let me briefly walk you through some of the most significant commercial achievements announced during the first half of the year and in recent weeks.

5:41 In cruise, we secured orders for nine vessels for Norwegian Cruise Line, Viking Cruises, Princess Cruises and Fortis and Yachts, strengthening our leadership in the sector and further extending our long term visibility. In defense, we continue to reinforce our positioning across strategic programs and geographies. Key developments include the initial contract under The U. S. Navy's LSM program, covering the first four vessels and paving the way for future award of the construction contract, as well as the full combat upgrade of the Italian Navy's PPA units and the industrial agreements with Albania, Indonesia and Croatia, further expanding our international footprint.

6:28 More recently, the Portuguese and Italian governments announced the agreement for the acquisition of three from Evofriges for the Portuguese name. In offshore and specialized vessels, we continue to demonstrate the benefits of our diversification strategy beyond the energy offshore market. Alongside the largest single vessel order in Bard's history secured with English, we signed additional contracts in the fisheries, maritime infrastructure and specialized vessel segments, including an advanced turret roller for Rotten Drift and two multi mission buoy and lighthouse maintenance vessels for Trinity House. Finally, underwater, Pass secured the largest contract in its history with the Royal Saudi Naval Force and only a few days ago we signed a contract amendment with OKAR for approximately €317,000,000 covering logistics support initiative and bus countermeasure systems for the U212 NFS submarine program.

7:40 Furthermore, we expect more underwater opportunities coming from the new acquisition announced. Moving to Page seven, the positive tailwinds and solid performance delivered give us full confidence in our 2026 guidance trajectory. We confirm the targets for the end of the year. Revenue in the range of 9,300,000,000 to €9,400,000,000 EBITDA in the range of €700,000,000 to €710,000,000 with an EBITDA margin confirmed at approximately 7.5% net profit in the range of €140,000,000 to €180,000,000 and finally, net debt adjusted to EBITDA ratio at approximately two times, which equals to 1.3 times including the capital increase completed in February 2026.

8:35 Let's turn to page eight for more color on the recent M and A announcement in the underwater. On July 2026, we announced the acquisition of NexGeo Solutions, WSENSE, DEFCOM, and Grant Tech, a decisive step in the creation of a fully integrated international underwater chamber. Thanks to these acquisitions, the group establishes the first vertically integrated underwater

9:06 operator capable of delivering end to end solution across the entire value chain, spanning hardware, software, telecommunications, underwater platforms and services. The combination also unlocks significant commercial synergies, fosters product innovation and generates economies of scale and scope, materially accelerating the underwater strategy outlined in twenty twenty six-two thousand and thirty business plan. Moving to Page 10. Let me remind you that these acquisitions are largely financed through the ABB capital increase successfully completed in February 2026. The capital increase was approved by shareholders in 2024 and specifically conceived to support the group's inorganic growth strategy while preserving financial discipline.

10:00 We successfully executed the transaction during a favorable market window before the escalating geopolitical tensions affected market conditions and demand proved exceptionally strong with the offering multiple times oversubscribed. Today, shareholders can clearly see the rationale behind that capital increase as these proceeds are being fully deployed to create industrial value through the expansion of our underwater segment. Importantly, with the ABB proceeds only being supplemented by other available resources, the acquisitions have no impact on our 2026 leverage guidance while strengthening the deleveraging trajectory set out in 2028 and 2030 business plan targets.

10:53 Let's turn to Page 11. The first wave of acquisitions with Remodel and Bass laid a solid foundation for the development of the underwater segment, expanding Fincantieri's presence across defense tool use and commercial applications while delivering significant growth in revenue, profitability and cash generation. The second wave expands significantly the group's presence and capabilities across specialized services in marine, geoscience, and marine construction support, proprietary and mannered underwater and surface drone technologies and wireless communication systems for the internet of underwater things. By bringing together these eight market leading companies, we are creating Europe's first fully integrated underwater ecosystem, a platform that can operate, connect, protect and govern the underwater domain by combining services, autonomous vehicles, sensors, communications, defense systems, and strategic platforms into a single industrial capability.

12:04 Moving to page 12, you can see the comprehensive portfolio of underwater solutions now brought together within our underwater segment. What makes this platform unique is not only the breadth of technologies offered, but also their ability to operate within a single integrated ecosystem, offering a one stop shop proposition. By combining services, autonomous systems, sensors, communication technologies, and underwater and surface platforms, we can increasingly act as a front end service provider orchestrating integrated end to end solutions

12:45 tailored to our customers' operational needs. This enables us to evolve into a prime contractor in the underwater domain. Moving to Page 13, from a financial standpoint, the underwater segment has already delivered impressive results, strongly supported by the first wave of acquisitions with Bass and Remodel providing outstanding contributions in terms of revenues and EBITDA.

13:16 Building on the positive boost of the first wave, the second wave of acquisitions further enhances the segment's scale, profitability and contribution to the group's consolidated results and enables us to anticipate by four years the original targets for the underwater segment for 2030. On a pro form a basis, revenue is expected to be approximately €1,100,000,000 in 2026, increasing to €1,800,000,000 in 2030. EBITDA is expected at approximately €220,000,000 in 2026, growing to €420,000,000 in 2030. The EBITDA margin is expected to further increase from the current high double digit marginality of the underwater segment, reaching 19.2% in 2026 and increasing up to 23% in 2030.

14:15 The underwater segment is also highly profitable at group level, delivering on a pro form a basis an additional €60,000,000 of net profit in 2026 and €130,000,000 in 2030. With this, I will hand the call over to Giuseppe for more color on financials. Please, Giuseppe. Thank you, Pieroberto, and we move on to Page 15, Fincantieri, that stands at €6,100,000,000 in the first half of this year. The €6,100,000,000 mainly come from orders signed previously, but that became effective during the first six months of the year.

15:02 But we must note that on top of that, during the first month of this year, we signed orders in excess of roughly €12,000,000,000 Those orders, of course, are not effective, but they become effective in the next six to twelve months, and this is a testament of the very vibrant commercial activity in our markets. And if we move to page 16, this commercial activity reflects very well on the total backlog, which at least almost €74,000,000,000 both soft backlog and backlog increased. Backlog is €43,000,000,000 notwithstanding, of course, the activity and the revenues we booked in the first six months, and a soft backlog of almost €31,000,000,000 We delivered 11

16:02 units this year from eight different shipyards, and we moved to page 17 where we discuss revenues. Revenues reached €4,580,000,000 in the first half, probably in line with the first half of twenty twenty five and marked an acceleration in the second quarter of this year.

16:28 Of course, this is due to the progress of production activities related to the existing backlog, and this acceleration offsets the unfavorable comparison with the first half of last year, where we had the one off revenue recorded for the two vessels for the Indonesian Navy. Revenue grew in the cruise business by almost 15%, driven by backlog execution and some progress on ships that were acquired at better prices compared to the past. Offshore revenues grew by 22.4 compared to the same period of last year. Underwater posted a growth of almost 30% and also equipment system and infrastructure recorded revenues up by 16.2% at CHF720 million, mainly driven by mechatronics and the infrastructure business.

17:30 On page 18, significant increase in EBITDA. We reached 7.6% EBITDA margin. Last year, we reported 6.8%, and this is a very strong increase with the shipbuilding that improved materially to 7.5% supported both by favorable pricing dynamics and efficiency initiatives that we keep undertaking

18:03 throughout the course of the year and as part of our strategic business plan. And of course, please note that this margin growth comes notwithstanding the revenues, the decrease in revenues in defenses. So it's quite remarkable, let me say. Offshore EBITDA rose to €40,000,000 confirming the growth trajectory of the business with the marginality broadly in line with the trend of recent years.

18:34 We had a substantial growth of almost 30% in underwater EBITDA to €60,000,000 and a margin of 17%. And this confirms that this segment comes at a premium with respect to the other segment, the other business segments. Equipment Systems and Infrastructure segment delivered a strong contribution to the group's profitability with EBITDA rising by 9.5% and EBITDA margin reaching 6.5%. This is all across the three segments that form the equipment systems and infrastructure business. On page 19, of course, significant growth in net profit, three times net profit levels of first half of last year, And this is in track with the guidance on track with the guidance that gave for 2026.

19:38 Net profit growth was supported by very strong operational performance that we saw on the previous pages, euros 102,000,000 and

19:48 almost reaching the level of the full year 2025. I remind that we closed at €117,000,000 in 2025. Again, operational results coupled with the reduction of the cost of debt, And this is structural and ongoing and will further improve in the quarters to come. And of course, this is also linked to the disposal of nonstrategic

20:19 stakes in joint ventures that we had in China and a lower impact, and this is structural again, a lower impact of asbestos related litigation costs.

20:35 Adjusted net result, excluding those extraordinary nonrecurring items, was positive for €130,000,000 compared to €48,000,000 in the first half of last year. On Page 20, net debt adjusted net debt strongly improved compared to the end of twenty twenty five, reaching €715,000,000 Of course, this value includes the effect of the capital increase that we did in February 2026. Excluding this effect, adjusted net debt would be €101,200,000,000 roughly. And again, this is as well supported by solid cash flow generation. Leverage ratio improved to 1x compared to 1.9x EBITDA compared to as of last year, as of end of the year 2025.

21:32 And this reads 1.7% excluding the effect of the capital increase. Net working capital negative at seven twenty three million euros slightly improving compared to end of last year, and this is thanks to the decrease in work in progress and somehow higher trade receivables trade payables, sorry. Now I leave the word back to Pedro Verto for his concluding remarks. Thank you, Giuseppe. Let me now summarize our takeaways on Page 22. We delivered a strong performance in the first half of twenty twenty six, further reinforcing confidence in 2026 targets and beyond, which, as you may remember, we have raised in our Q1 twenty twenty six results.

22:27 The structural improvement in profitability continues with EBITDA margin reaching 7.6% and net profit rising to a record €102,000,000 supported by margin expansion in shipbuilding and increasing contribution of underwater.

22:47 At the same time, our growth is highly sustainable with solid cash generation driving continuing deleveraging. Commercial momentum remains strong with an impressive total backlog, solid order intake and contracts signed year to date already reaching the fiscal year or the full year order intake target, while providing visibility through 2039. And more is to come as we expect new major defense orders to be signed in the coming weeks. Finally, the acquisitions announced in July marked decisive step in the evolution of our underwater segment, accelerating the creation of an integrated international champion, bringing together eight market leading assets, providing end to end solutions in defense to our use and commercial sectors.

23:41 These transactions are largely financed through the capital increase completed in February 2026, thus preserving group's financial discipline. Ted, we are now open to take your questions. Excuse me, this is the Carskor conference operator. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and 1. To remove yourself from the question queue, please press star and 2. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and 1 at this time. Press star and 1. The first question is from Antonio Gianfrancesco of Intermonte.

24:31 Please go ahead, sir.

24:34 Hi. Good afternoon, and congratulations for a very strong release. Two questions from my side. The first one is on the SAVE program. I wanted to ask about this program also given the recent comments from the Italian government on requesting almost, I think, 15,000,000,000 under this framework. I was wondering whether this could actually accelerate the formalization of specific Navy programs such as the VDX or already in the second half of this year? And second question is on the

25:13 guidance because you're already at 7.6% EBITDA margin in the first half of this year and the profit is already quite advanced versus the full year target. So I was wondering what is the main prudence embedded in the second half of the year? And what you would need to see to consider another guidance revision in coming months? Thank you. So, first question on the SAFE. On the second question I will leave the floor to Dussepe. So, SAFE, I think that the trajectory of Italian government expenditure on defense is independent from the SAFE adoption.

26:11 So, I strongly believe that, you know, it is already expected for the 2026 and in particular 2027. And again, SAFE has to do on the way you want to finance this if you want to have access to a measure that is financially convenient in terms of cost of money and in terms of maturity or not. So my position is that trajectory is there and will be there. With specific respect to the orders we are targeting for 2026, which are the ones that we have been somehow pursuing and we have more than once shared with the market, those orders are not necessarily linked with the government decision to take or not this financial instrument.

27:17 So

27:19 it is important, it is very important, there is a lot of debate, but at the end of the day it has not changed very much what is happening for us in 2026 and for the years to come the increase in expenditure is clear, expected, confirmed by the government in several occasions on a national, I would say, scene and in the international scene. Is that on the EBITDA? Why we are so prudent? No. I mean, yes, results in the first quarter in the first half were very good.

28:05 As I said before, you must appreciate the the level and the way we reach those results, again, with the revenue growth improves still waiting for the order acquisition in the defense business. So defense still has to kick in and contribute further increases in marginality. And that is why those results are even more remarkable, in my opinion. As with the possible update of the guidance. Stay tuned. But at the moment, the guidance is what we said and we confirm is for roughly EUR $710,000,000 in EBITDA with a margin of 7.5%, period.

28:56 Let me also add that, you know, in a business like hours, SMS or recorder are like photograms of a movie. So the biorhythm of our business is a biorhythm whereby such a, I would say, small window it is not changing the story and we rather like to see, you know, the progression going on with the biorhythm of our business. And in this respect we are very satisfied because we have been constantly, constantly growing every indicator since I would say end of twenty twenty two. So this progression is the way you should look at our number.

29:45 Don't look at the photogram. I understand we have, because it's our language. But again, let's look at the movie rather than looking at the photograph. Very clear. Thank you. The next question is from Emmanuel DeGalazia of Equita. Please go ahead, sir. Good afternoon, everybody. I think I have two questions from my side. The first one is still on the naval business. We have seen the agreements in Croatia and Albania. Can you comment a little bit more on this opportunity and the potential time line? And in addition, if you can also provide an update on the commercial opportunity with the U. S. Navy?

30:35 The second one is on the cruise because it seems to me that looking at your results, the momentum is building in the cruise sector with a very solid performance in the second quarter, specifically in terms of profitability. Can you discuss a little bit more on the trend that you see on the cruise sector? And generally speaking on the mood of your client? Thank you. Very good. Very good. Again, Croatia, please consider that when you have to secure a target of orders, you participate to a number of opportunities that are higher vis a vis your ultimate target. So I don't want to go again in the issue of Norway, in the issue of Poland.

31:39 I see if every tender we participate in the market is waiting for us to take 100% hit rate and therefore if then we are not 100% hit rate, we have a problem in the commercial pipeline. So please let me be a little bit, I would say, boring in saying that in the business of securing large orders, if you to secure x orders, you have to bid for epsilon orders. And the difference between x and epsilon is not an issue, is not a defeat, is not the bad news, is the way you manage businesses. So having said that, Croatia is a huge opportunity. It's the Adriatic Sea.

32:24 You know how much we are strong in the Adriatic Sea. It goes without saying. It is the, I would say, extended Ruli Venezia Giulia space. We have common roots. We have a lot of similarities, we have already a lot of synergies with that part of the sea, with the other side of the same sea, so there is a lot to do in Croatia. We are addressing that that opportunity with a lot of emphasis. But again, don't take me that we are going to have $30,000,000,000 order intake because I don't have $30,000,000,000 of orders between Mudrano, Riva and Castellammare.

33:12 So Croatia, it's a good opportunity. They are building kind of light corvettes and it is something that is going to be mature throughout 2027. Albania is a different story. Albania is an expansion of our construction footprint. So we wanted to create in Albania a kind of additional shipyard with the government of Albania building the shipyard with Fincantieri and local knowledgeable parties managing the shipyard in order to build their smaller vessels serving not only the very, I would say, light Navy ships but also ships for other kind of constituencies such as coast guard or such as police when working at sea and things like that.

34:22 So, that is the strategy for that ship, is a market that is growing a lot, which is a market that is made of high number of ships different from the huge ships we are accustomed to build in our historical shipyards. So, in the Albania expansion there is a lot of strategy. But on top of the strategy there is also the, I would say, simultaneous opportunity to pursue an order from the Albanian Navy which will be, by the way, channeled to the joint venture, to the Albanian joint venture. So it's the ideal way to break the ice and to, you know, have this new, I would say, revamped shipyard starting production and delivering the first ships with the idea of then, you know, replicating the same kind of small ships for other navies in other nations.

35:35 So, in Benning, it's a different story. Your third point on USA, USA is in the process of accelerating its Golden Fleet program. As we have specified several times, we are intrinsic. We are integral part of The U. S. Revitalization of shipbuilding. The tangible evidence is the award of the LSM program, which is, again, a numerous one in terms of units, and Fincantieri is selected and already at work.

36:24 It is not all about LSM, so the shipyard will be included in the launch of other programs in this orchestration that the U. S. Administration is envisaging in order to take advantage of the few experienced shipyards in The U. S. Your fourth point on trends with respect to cruise. Cruise is apparently unsoppable in terms of growth. This is driven by the value for money proposition, I. E, the comparison between the cost of an equivalent holiday onshore vis a vis offshore.

37:21 So, if you look at what happened to the cost of tickets, cost of hotels, cost of restaurants, cost of accommodations at large, onshore vis a vis offshore, you understand why cruise is so attractive. And if you consider that the addressable market for cruise liners for cruise operators is the tourism at large. So their idea is to increase the penetration of crew is over the overall, I would say, basket of holiday standards, holiday money standards I would say.

38:08 So there is a lot to do. Conceptually they can grow a lot because, you know, they can move from the market made of forty-forty five kind of passengers per year, cruises per year, all the way to the billions of tourists all over the world. So conceptually, the penetration can be higher and higher in this addressable market. Then the second trend in the cruise industry is not only this value for money arbitrage, but also the segmentation. So, in order to better address the market typically you cut it into slices and you associate with each segment a specific offering.

39:05 So this is the second micro trend. So in order to convince the incremental tourist to become a cruiser, typically what you do you segment. And in this respect, Fincantieri is a fantastic partner because we can be one stop shop for the several brands of each big player. So if you have your brand for luxury, your brand for upper premium, premium, contemporaries, and basic, we can cover end to end all your needs because we have a system of shipyards rather than a shipyard and every shipyard participating to the system can be the best, can fit at the best with the specific size of the ship. So, for example, we build in Ancona super luxurious ship.

40:06 Then we can build in Morfakona super large ship. Then we can build in Marghera and medium to big ships or medium ships in Sestry. So basically we can accommodate all the brands. So this is what is happening in the cruise. I think there is a third phenomenon, which is the substitution effect. So the cruise business has been very successful in the last thirty years, but you know you need to substitute your ships as soon as kind of oscillation is taking place, but also technological substitution and new regulations. So the demand for new cruise ships is not only driven by the increase in the market share, but also is driven by the substitution because you need to substitute all the ships with newer ships considering the regulation but also considering the kind of look and feel. If you are accustomed to be in a ship that is modern, that is attractive, that is full of entertainment, then you don't want to be on an older one with less of it and again, with the kind of old generation. So what we are also experiencing is the substitution effect.

41:34 Very good. Thank you. The next question is from Marco Vitale of Mediobanca. Please go ahead, sir. Good afternoon. Thank you for taking the questions. First one is on naval business with revenues still on declining trajectory in the second quarter. The question is, excluding impact from the Constellation class cancellation, how is the underlying business progressing? And when should we expect the segment return to growth? Second question is more high level on the underwater. How do you view your positioning in the segment after your deal and also take into account the evolving competition after the several transactions that's been announced within the segment?

42:31 Would you still targeting faster M and A to strengthen your offer? You're happy with that at the moment. Thank you. So on the defense, unfortunately or fortunately, the answer is very obvious. So you will see revenues after orders. It's difficult to see revenues before orders. I would say it's unlawful. So in order to have revenues, you have before to have orders. So we are working in order to have the, I would say, materialization of orders in the very short term. And so I would say you will see the rollout of revenues accordingly.

43:22 So as you know, we are expecting 5,000,000,000. There are, I would say, very visible signals that this 5,000,000,000 are there starting from Portugal and not only from Portugal. DDX is there, the LSS is there, the is there. So, there are a number of opportunities that were I would say, here and there disclosed. And again, once those orders will be there, revenues will be there.

44:07 So, next year for sure, you will see the acceleration in the revenues as a consequent effect to the acceleration in orders. On your second question, the underwater positioning and evolving competition, our positioning in the underwater it is something that we have that we tried to explain very clearly during the dedicated presentation on July 6. So basically, the positioning is to create a platform that is a platform that can cover all the needs with proprietary technologies and at the same time being also able to provide services.

45:10 So to be a kind of prime contractor in the underwater able to provide kind of underwater as a service. So you don't need to buy drones. You don't need to buy command and control. You don't need to buy telecommunications. You don't need to train your personnel. You don't need to hire people. I can do it for you because I am a service integrator. I'm a player that can do it for you and addressing your needs. So, this is unique. There is no one on the market that can offer underwater as a service ranging from defense to the dual use and to commercial services.

46:02 This is the, I would say, highest distinctiveness we can provide. In terms of evolving competition, the competition is very clear in terms of proprietary technologies. So take, for example, the underwater drones, or the surface drones, or the command and control of drones at sea in general. So obviously, is competition, but this competition is somehow regulated by the national content. So everyone wants drones, but everyone wants to have drones that are, you know, under my full control without black boxes.

46:55 Without black boxes that can be switched off from far. So this is the key understanding for certain critical technologies. Not for everyone, obviously, not for every technology, but for the key technologies the competition is not driven by the price but is driven by the, I would say, freedom of use and full control of the solutions. So this is not a normal business. This is a business that is managing a level of interest that is calling for technological sovereignty.

47:47 Obviously, you have to couple technological sovereignty with competitiveness, because nobody wants to throw money out of the window, but it's not a matter of I will buy something from far, I would like to buy something from near. This is what we are experiencing. And Italy is a very expert and knowledgeable place, having expert and knowledgeable industrial base that can validate technology and then can, you know, sell it to other countries that are, you know, compatible with our geopolitical platform. This is exactly what we have been doing.

48:35 On your additional question for additional M and A, if I don't go wrong, I believe that we made very clear that the M and A waves we have executed are driven by a make or buy strategy whereby we had very clear which were the technologies that we wanted to address, that we wanted to cover, and we were very explicit on which are the source of distinctiveness in this portfolio of technologies. We believe that our make or buy strategy and the relevant M and A campaigns are done, are executed.

49:33 Obviously, we remain opportunistically ready to pursue any other selective opportunities in case we get along, in case we get across. But again the strategy was very clear, was very well planned in advance and it is now executed with this second campaign of M and A initiatives. Clear. Thank you. The next question is from Tomato Castello of Jefferies. Please go ahead. Yes, good afternoon and thanks for taking the time to answer to my questions. I have three questions. The first is a follow-up on shipbuilding and it is around the profitability, whether you expect the marginality to keep at the same level throughout the remainder of the year despite a weaker defense mix?

50:35 The second is on the drivers of margin pressure on the Offshore and the Equipment System and Solution divisions. And then the third one is a reminder on the CapEx guidance for the year. Thank you. So the first point is on shipbuilding profitability. Shipbuilding profitability is has been planned with the revenue mix you are seeing today. So obviously, because again, revenues in our business is very, very, I would say, easy to plan because they depend on order the intake.

51:25 So we have very clear the mix in the revenues of 2026 because they were dependent on the mix of orders of 2025. So the answer is yes. So we can obviously confirm guidance for the remaining part of 2026, and we don't have any issue related to the revenue mix. On your second question is about margin pressure on offshore and equipment service, we don't have any special concern.

52:11 The margins in our offshore business is driven by the level of circulation of shipyards and is driven by the contribution of the Vietnam production chain vis a vis the Romanian production chain. So it is expected. It is a business that we know very well and I think that the numbers are stable and can only improve. So we don't see any issue or pressure downward. On your third point, outlook for 2026, we didn't give a guidance on CapEx.

53:09 They are implicitly considered in the net financial position and in the net financial position to EBITDA projections. We don't have anything special to mention in that respect. The CapEx for 2026 are driven by the maintenance CapEx we have been expecting and projecting plus certain specific improvement in, for example, Montfalcona Shipyard where we are in the process of finalizing the installation of the largest ever crane, which will be so important in 2027 and beyond for the construction of for the more efficient and effective construction of the largest cruise ships ever.

54:18 So I don't see nothing more to signal. Thank you very much and good luck. Thank you. The next question is from Gabriele Gaboraba, Fincantieri S. San Paulo. Please go ahead, sir. Yes, Thank you. Good afternoon, Peralta and Giuseppe. Thank you for taking my questions. Just a couple. One is on the medium lending ship program in The U. S. You mentioned it pero verto, but I was wondering if you could give me some more color. I think the numbers are really big. There was this, let's say, recent announcement from the prime contractor you will be awarded for ships.

55:06 So, if you could, let's say, go give me some more color on this even considering that somewhere I've seen I've read that some possibly the government accountability office, I put the size that the constellation the remaining part of the constellation program might be terminated. So, I was wondering if, for instance, on Lake Michigan could become, let's say, could focus on a single program that is the LSN, for instance? And the second question regards the P and L, There were €26,000,000 of financial incomes from your investments in the first half. I was wondering if it was possible to have some more information on this specific item.

56:05 Thank you. Thank you for your question. On the LSM, on the LMS, I think it's the continuation of the story we have been describing. So, the program is a very large one. It is expected, if I don't go wrong, to be more than 30, something like 35, 36. Two shipyards have been identified, ourself and another one. It's a kind of faster track program because they want to build many of those ships. And four are in the process of being formalized for ships.

56:56 And in the meantime, in order to cut corners, we received a kind of preorder in order to start placing, you know, designing and placing orders for the long lead items. So the procurement of those components pulls construction lead time as long, and therefore, you know, you need to start producing as early as possible in order to avoid then extra time. So the willingness to go is, I would say, witnessed by the award of this pre order.

57:46 On your second point, constellation class, I think there is still a lot of reasoning in U. S. About which is the right strategy for free games. So there are a lot of school of thoughts. Someone is even starting to think that constellation plans would have been a good option if you want what I'm hearing here and there. There is the school of codes regarding with respect to which it's better to start from an existing platform even if this platform has to be redesigned in order to be a combatant ship, so meaning you need to add anti warfare measures.

58:46 You have to transform kind of cost guard, cutter into a heavy conductor ship. So there are multiple schools of thought. We are obviously available to contribute to this debate upon request. But again, Golden Fleet is not all about LSM and Constellation Plus. So there is a large number of different programs that are going to be launched. And again, the U. S. Administration made no secret that they want to enlarge, accelerate, and involve the few reliable shipyards in The U. S.

59:38 So I think as we have been saying since two, three years, the good news is that U. S. Is revitalizing shipbuilding and the good news is that Fincantieri is being in U. S. Since twenty years with three shipyards plus one and with a long lasting expertise with the supply chain and The U. S. Engineering setups. On your third point, which is the financial investments, I will leave the floor to Josep. As I said before, that was €26,000,000 for capital gain from the disposal of our minority stake in a joint venture we had in China.

1:00:37 Fully disclosed also in the the MD and A of the six months results. Okay. Thank you very much. Very clear. The next question is from from Deutsche Bank. Please go ahead. Thank you. Can you hear me well? Yes, please. Go ahead. Alright. Great. Thank you. So I have just two questions. The first one is with regards to auto. Now you have disclosed quite a lot and they have come to around 6,000,000,000. So what I'm interested is on some of the major orders which are still yet to come in, which includes the Portugal four ships from the LSM and DDX. Can you give us an approximate what the order size which we're talking about for these three, four programs?

1:01:34 So that's part one of that question. And as a follow-up, can you also give us an update on where we stand with regards to the 5,000,000,000 of order commitment? How much of that 5,000,000,000 has been disclosed or firmed up? So that's the first question. And the second question is with regard to the net debt leverage. So you have provided that the leverage would be 2x by end of twenty twenty six, and I believe that's based on the first tranche of cash outflow with regards to the M and A of 600,000,000. Just wondering what would the leverage number be if you include the second tranche where you need to pay out another $304,100,000,000, I suppose, for the public tender offer for next year.

1:02:23 What would be that after that is done? Those are the two questions. Thank you so much. Okay. So on the €5,000,000,000 order intake in the defense that we have been expecting for 2026, we are not announcing anything yet. So it is expected to come. What is already visible, so it's not being announced, but very visible, is the announcement made by our government with respect to three gates to Portugal.

1:03:10 So not included in the backlog, not disclosed yet, but so on top And in terms of what is inside the $5,000,000,000 the first information is at your disposal, I. E. The frigates from Portugal. Then there are a number of expected orders from the Italian Navy, which obviously we are not in the position and in the condition to disclose. But DDX is the destroyer, is there, and it's written in the public documents of the Minister of Defense.

1:04:06 And the same is with respect to other kind of ships under negotiation with the Navy. So, again, five is a number that can include or better, I can I can mix I can make five only including the ships? I'm just hinting here with you. Is that? On net debt, yes, we we reiterated the guidance of net debt levels of two times EBITDA at the end of the year, and we reiterated the guidance when we did the press conference on m and a. And this is directionally, of course, linked to to also the timing of the closing of the deals as we are waiting for complete the antitrust clearance and the golden power clearance, but, directionally, as we reiterate that message, two times EBITDA over EBITDA by the end of the year.

1:05:12 Thank you. The next question is from Laurenti DiPatricia of Bank of America. Please go ahead, sir. Hello. Good afternoon. Thank you for taking my questions. So the first one would be on offshore. So you say in the release that the market will now normalize after a period of strong growth. Can you elaborate more on the reasons behind this? I thought, for example, the expected oil and gas market pickup could have helped there. And then second question on on NextGeo.

1:06:00 So I saw you had an announcement recently that the owners will transfer some of their stakes to you. So what does this mean for the phasing of the stake that we of your stake of next year that we should expect for the end of this year and next year? When will you reach 100%? And then separately, what growth for this business should we expect for the next few years? So first question on kind of outlook of the offshore business. The offshore business is mainly driven by, I would say, several different underlying sectors because you have the wind, you have the oil and gas, you have the cable layers, and then you have others kind of ship. Others meaning trollers, research vessels, and things like that.

1:07:06 So the the the there was a peak two, three years ago driven by wind farms. Then wind farms had a kind of slowdown and this slowdown is being more than compensated by what is happening in the oil and gas. So I believe that this is the first micro trend that we have to acknowledge, I. E. The kind of ships are quite similar, in particular for the SOBs, INC SOBs, so support and service and construction support, So more or less similar if you compare oil and gas with wind.

1:07:53 And again, this is quite visible. So I'm sure you are aware that there is a large wave of expected investments in the offshore oil and gas for several reasons including the fact that, you know, we need more energy, and there are some gaps due to, you know, recent years slowing down investment in oil and gas offshore. With respect to cable layers, the business of connectors is so evident. It is growing.

1:08:39 There are other listed catalysts that can give you more visibility in this respect. What I can tell you is that it is not all about electric connectors. There is a lot to do in the fiber optic connectors, in the telecom connectors. So we are experiencing a lot of focus on the telecom. And again, the demand for cable layers is obviously a direct function of what is happening and how much this connector's business is speeding up. Let me also add that there is a lot of demand also because the maintenance of underwater cables is proving to be another priority that was underestimated in the past.

1:09:33 So, in a world that is so much dependent on those cables, the current capacity and capability to serve and to maintain is lower than needed. So we are also having a lot of solicitation, a lot of requests also for ships that are again connected with underwater cables but also with the kind of hybrid ability not only to lay cables but also to repair cables. On the other possible specialized vessels, I think the recent backlog is very evident.

1:10:22 So we are having a huge contract for research vessels. Again, research vessels, it's another testament of what is happening in the underwater. So those research vessels are able to map seabeds, you know, interact with the seabeds in view of, for example, seabed mining, so going for surveys or other kind of missions that are to new businesses, new opportunities. And also the business of is going to be interesting to Barb because they have an extensive experience and a very satisfied set of clients that are, you know, showing up periodically.

1:11:30 So that's why we believe that there is nothing bad to be expected from the offshore business and we believe that conversely it can be only upward given the order intake, given the saturation of shipments we are expecting and again given the contribution of Vietnam to the blended marginality part. Your additional question is on NexGeo. On all the acquisitions, we adopted an approach according to which we want to guarantee continuity to the managerial, I would say, endeavor by means of involving shareholders' managers, because they are shareholders' managers, in the new phase.

1:12:34 So basically, we wanted managers owning shares reinvesting in the new phase, in the new company. And that's what we did, which means two things, which means that the company will take benefit of this continuation of activity of this management team that did fantastically because Nexeo was a company built from scratch something like ten years ago, capitalizing on the past experience of the key managers and then they leased it a couple of years ago. And again, I think they did a fantastic job. That's why we are so happy to have them on board, not only as managers but also as shareholders.

1:13:29 With respect to your question on when it would be 100% owned by us, we gave extensive details in the press release issued something like a couple of days ago. So you will find there all the details. It's a traditional scheme whereby there are targets and there are puts and calls, put and call options, so no rocket science. What is really important for you is to appreciate that there is a big alignment of interest between the new shareholders, the manager shareholders, and the management targets, which is what you need to do when you are managing such a valuable asset such as next year made of references but made of also human capital that is remarkable. By the way, what I'm saying applies identically on the other acquisitions. So it is the same for WSENSE, which is a very beautiful scale up company.

1:14:43 It is the same for Realtek, which is made of a very, very smart and experienced team of managers and it is the same with respect to DEFCOM, which is truly ahead of the market in terms of novel surface drones. Okay. Thank you. Gentlemen, there are no more questions registered at this time. Thank you very much. Thank you very much for your time and your interest. Thank you.