1. business and industrial

Impregilo
Impregilo
Presentation
Presentation of
of
the
the Business
Business Plan
Plan
2013-2015
2013-2015
Pietro
PietroSalini
Salini
Chief
ChiefExecutive
ExecutiveOfficer
Officer
Milan, 11 December 2012
Disclaimer
2
This document has been prepared by Impregilo S.p.A. (the “Company”) solely for use in the
presentation of its 2013-2015 Business Plan and does not constitute or form part of any offer or
invitation to sell, or any solicitation to purchase any shares in the Company.
The information contained and the opinions expressed in this document have not been
independently verified. In particular, this document contains forward-looking statements that are
based on current estimates and assumptions made by the management of the Company to the
best of its knowledge. Such forward-looking statements are subject to risks and uncertainties,
the non-occurrence or occurrence of which could cause the actual results –including the
financial condition and profitability of the Group to differ materially from those expressed or
implied by such forward-looking statements. This also applies to the forward-looking estimates
and forecasts derived from third-party studies.
The data and information contained in this document are subject to variations and integrations.
Although the Company reserves the right to make such variations and integrations when it
deems necessary or appropriate, the Company assumes no affirmative disclosure obligation to
make such variations and integrations.
Presentation of the Business Plan 2013-2015
11 December 2012
Impregilo: Mission
3
Mission: to become the recognized Constructor of excellence
for very large infrastructural projects
To achieve this mission Impregilo has set
Industrial goals:
 Focus on core business of construction, disposal of non-core assets
 Diversify geographical presence, grow business in high potential
countries and strengthen of references and technical qualifications.
 Achieve a critical mass to compete better and be more efficient
One financial goal:
 Enforce financial discipline to maximize total shareholder return, ensure
sustainable growth and long-term value creation for all stakeholders
Presentation of the Business Plan 2013-2015
11 December 2012
4
Impregilo: 3 phase strategic review process
Diagnosis and
preparation of hypothesis
Discussion
Finalization and approval
August-September
 Analysis of:
− recent performance; macro
trends, competitive
environment,
− backlog along with projects
and main critical aspects (e.g.
Panama, Venezuela, etc.)
− processes and organization
(focus: business
development, bidding, risk
management)
November
 Internal discussions and review
of 2015 objectives and
accounting-technical aspects
between top management
25 September
 Approval by BoD of “Strategic
Guidelines of Impregilo”
September
 Design and assessment of
synergies from Commercial
Agreement with Salini
End November
 Detailed illustration of Business
Plan hypothesis to BoD
members
 Discussion of Business Plan
and input taken from Board
members
6 December
 Presentation of Business Plan
to BoD
 Approval by BoD
11 December
 Presentation of Business Plan
to public/financial community
October
 Target new order intake
estimated
Intensive, in-depth analysis carried out over 4 months
Active contribution of entire Board and operating management
Presentation of the Business Plan 2013-2015
11 December 2012
5
Business Plan objectives
Industrial Targets for 2015
Revenue
growth
10% p.a.
Revenues
> €3.3 Bn
EBIT margin
>8%
YE backlog
> €12.5 Bn
Book to bill(1)
>1
Financial Target for 2015
ROE(2)
> 14%
1. Calculated as: Total new orders (new orders + variations) / Total construction revenues for the year
2. Calculated as: Net income / Year-end Equity
Presentation of the Business Plan 2013-2015
11 December 2012
Business Plan 2013-2015: fundamental assumptions
Revenues &
new orders
Project Ebit
Central costs
Capex
Net working
capital
6
 Revenues from backlog based on revised detailed forecasts for each single project
 Average new order intake (€ 3.5 bn p.a.) above average of last 6 years (€2.7 bn)
thanks to: market growth, opening of new areas & synergies with Salini
 Marginality of new projects prudently projected to be slightly below
actual backlog average
 Some central cost benefits from economies of scale
(Corporate & Regional Offices)
 Construction: > €500 mn
 Concession: €300 mn
 Will improve as a result of increasing internationalization of the backlog
(up-front payments), increased selectivity of new projects and cash-in from
completed projects
Presentation of the Business Plan 2013-2015
11 December 2012
7
Main KPIs: Revenues Mix
Revenues Impregilo 2011-2015 (€bn)
Cum. revenues 13-15E (€bn)
4,0
~9
3,5
3.3
~22%
3,0
(≈40%)
2,5
2,0
2.1
0.5
(23%)
Concessions &
Plant
(≈5%)
~2%
New International
Projects
New Italian Projects
~49%
1,5
(>30%)
1,0
76%
Int’l Backlog(1)
1.2
(57%)
0,5
>20%
0.4
(19%)
0,0
2011A
2012
2013
2014
Italian Backlog(1)
~27%
2015
1. 2012 acquisition included in the backlog, as of last forecast 2012 Impregilo
Messina bridge (2006) and Pedemontana Veneta (2007) excluded from the calculation
Calculated as total construction order intake (New projects + variations) / Total construction revenues
76% of cumulated revenues 13-15E coming from backlog
Presentation of the Business Plan 2013-2015
11 December 2012
8
Enhance Top Line Growth: drive new order intake
Cumulated order intake2013-15E (€bn)
Construction backlog evolution 2012-15E (€bn)
14.0
14,0
>12.5
12.0
(1)
12,0
>10.5
10.0
10,0
8.0
8,0
10.5
(1)
5.7
(54%)
6.0
6,0
4.0
4,0
2.0
2,0
0.0
0,0
Latin Africa Middle Europe, Italy North Australia Total
America
East Central
America
Asia
4.8
(46%)
3Q 2012
~9
(~70%
Abroad
(+90%)
~4
(~30%
Italy
(-20%)
2015E
1. Excludes Messina bridge
Order Intake of >€10.5bn, average intake p.a. of €3.5bn
Focus on international markets and core segments
Presentation of the Business Plan 2013-2015
11 December 2012
Ebit margin for new order intake: prudent assumptions
Projects average Ebit margin
Rationale
Ebit margin (%)
 Focus on large projects, which
ensure better margins thanks to reduced
competition and higher complexity
Ebit before central
costs
15%
~11%
~10%
10%
9
 Improved risk management processes,
which enable better cost control and reduce
risk of margin reduction
 Improved ability to cherry-pick higher
margins projects thanks to increased access
to markets resulting from strategic partnership
with Salini
5%
0%
Residual life Ebit margin for
projects in backlog
Full life Ebit Margin
of projects acquired in 20132015E
Presentation of the Business Plan 2013-2015
 From an industrial point of view Impregilo is
confident in its ability to improve future margins.
However, given the macroeconomic
uncertainties, the plan’s financial forecasts
reflect a prudential assumption of 10% Ebit
margin for new projects won in the period
11 December 2012
Central costs as % of revenues will decline
Central costs as % of construction revenues
2011A - 2015P
% of revenues
Rationale
 Deconsolidation of central costs related
to Concessions and Plants
8%
6%
10
 Strengthening of the commercial
organization and of the central control
and risk management
6.0%(1)
5.3%(2)
~4.5%(2)
3.7%
4%
 Exploitation of scale effects driven by
revenue increase in the Plan horizon
2%
0%
2011A
Total
central
costs
2011A
Constr.
central
costs
2012F
Constr.
central
costs
2015P
Central
costs
1. % of total revenues
2. % of construction revenues
Presentation of the Business Plan 2013-2015
11 December 2012
11
Operating FCF and NWC improvement will finance
growth & dividends
Operating cash flows generation, 2013P - 2015P cumulated
Main
assumptions
 10% CAGR on rev.
 New projects Ebit
margin slightly
more prudent
 Scale effect on
central costs
Operating Free Cash Flows
 Effect from higher  Constr. >€500 mn;
international project
Concess. €300 mn
presence
 Cash-in from
completed projects
Δ Net Working Capital
Presentation of the Business Plan 2013-2015
Capex
 Average payout
ratio >40%
Ordinary Dividends
11 December 2012
Cash-in: €1.5 bn expected from disposals, extra-ordinary items
Description
2012
2013
€ 970 MN
€ ≈350 MN
29.24%
Participation in
EcoRodovias1
 Disposals of:
− Fisia
− Fisia Babcock
− Sh. Pucheng
 FIBE sale of CDR
 One-off pre-tax
costs prudently
included
12
2014 2014
€ 150 MN
 P&L effect of sale
of CDR by FIBE
 Net claim relating
to Messina Bridge
Contract
Note: €/R$: 2.610
1. For further information: information document October 31, 2012
Disposals of non-core assets and claims recovery will free up capital and
management time to focus on construction business
Presentation of the Business Plan 2013-2015
11 December 2012
13
Business Plan: Main KPIs 2015
2011
Total
Non-core
business(1)
2015
Construction
Revenues
(€bn)
2.1
Ebitda
(€mn, %)
310
127
182
(14.7%)
(26.0%)
(11.3%)
226
102
124
(10.7%)
(20.8%)
(7.7%)
Ebit
(€mn, %)
0.5
1.6
Construction
>3.3
 A Group concentrated
on construction which
demonstrates strong
growth capabilities
>12%
 Improved Ebitda and
Ebit margins
>8%
1. Includes Plants, Concessions and FIBE, and related Corporate Costs
Impregilo to achieve €3.3bn construction revenues and a better return on capital
Presentation of the Business Plan 2013-2015
11 December 2012
Business Plan: foreseen evolution from 2012 to 2015
Yesterday’s situation...
... Today’s formation
Diversification into non-core businesses
(plants, brown field concessions)
Focus on the core business: Construction
Significant capital invested in businesses
that generated lower returns for company
and shareholders
Optimization and reallocation of invested capital
to higher return activities (construction
vs. mature concessions)
No growth in Impregilo’s
construction activities
Selective growth in construction to reach a
size comparable to European peers
Increasing Italian weight in
construction activities
Higher weight of international activities,
focusing on markets with high potential and
significant growth opportunities
De-centralized control and risk management
Strong central management and risk control
14
Business focus & management attention on areas of strength
to generate sustainable growth, higher marginality and greater value
Presentation of the Business Plan 2013-2015
11 December 2012
15
Organizational implications of the Plan
Principal elements of the Plan
Organizational implications
Drive commercial activities higher:
− New order intake to rise from €2.7 bn1 to
€3.5 bn per year
Reinforce the commercial marketing capabilities:
− Reinforce local commercial structure in target
countries and improve coordination with Head Office
− Improve the quality of the tender process (selection,
proposals, pricing)
…thanks also to full realization of the
commercial synergies identified with Salini
− Achieve the top end of the range of new
orders forecast (i.e. €6.4 bn in the 20132017 period)
Implement the new joint commercial procedures to
achieve full effectiveness
Reinforce the operational and risk
management capabilities
− Example: resolve technical and contractual
problems in Panama, avoiding further impact
on margins
Improve the quality of risk management and client
management
Solve the critical problem associated with the
high level of net working capital
Reinforce cash management and control of the cash
conversion cycle
1. 2006-2011, excluding Messina Bridge.
Presentation of the Business Plan 2013-2015
11 December 2012