Fincantieri SpA

MIL:FCT

Earnings Call Transcript 2019-Q1

[Operator]

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Fincantieri First Quarter 2019 Results Conference call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Maestrini, General Manager. Please go ahead, sir.

[Alberto Maestrini, executive]

Good morning. Good morning to everyone. I would like to start this call drawing your attention on a very important result that we have achieved in this quarter. Our total backlog has now reached 34 -- over EUR 34 billion, covering approximately more than 6x the revenues in 2018. This is an extraordinary result, I think, especially if you look at it in the right -- with the right attention. When we had presented our industrial plan in 2017, our backlog at that time or total backlog at that time was EUR 26 billion, and that is almost EUR 8 billion to EUR 10 billion less than where we are today. So I am confident to say that we had a much larger volume where we can work to improve our efficiency, to improve the way that we work because larger volume would allow much more effective action.

For this reason, I think that we can -- we are more confident to confirm our profitability in our results and possibly to improve it. This concept is very important because the entire management is focused in achieving this result, and this is reflected very clearly by our financial and accounting discipline. All the costs that we incur to develop and research and innovate are entirely reflected in our profit and loss account, but for those that we capitalize according to the most diligent discipline according to the accounting principle.

I want to make some examples to give you a very real touch of the way we behave. For example, while we have included the entire -- the initial goodwill of the acquisition of Vard in our -- we're reflecting it in our assets. Our P&L have included all the costs that we have gone through to restructure and transform, for example, the Romanian shipyard from shippers that were working on simpler PSV ships into shipyards capable of building very complex ships with very tight schedule, and I would like to also to add, with the ramp-up that took place in a very short period of time. All these costs, all these efforts have been included in our P&L, and therefore, we expect in the coming months as the learning curve takes effect and therefore, the performances improve to have a benefit in our results.

This is true not only for this initiative but for many other initiatives. I would also like to recall what the important initiative we are making in infrastructure. This is a very important diversification for Fincantieri, and this initiative is having very important results in its first year of life. I would like to remember the bridge in Genova and the bridge in Romania, which is probably one of the longest -- one of the first longest bridge in Europe.

All these results, all the costs, again, to achieve this result have been entirely covered in our P&L. We expect a very good level of revenues this year with positive results, and this is a very young initiative, it's really a start-up but again, with all the efforts we put into it, results are showing up.

A similar statement can also be made, for example, for all the accommodation capabilities that we have brought in-house. I'm referring, for example, my interiors, it's capability for public areas, for cabins, et cetera. All these costs have been entirely covered, and therefore, now we have a fully functioning company whose costs have been entirely included in our P&L.

Let's not forget that we are also going through a significant investment plan because we need to first of all to be able to match the increased volumes that we expect to achieve in the coming years also due to the effect of our backlog, but also to improve our efficiency because we are trying in every possible area to use the most modern technologies that are now available also with the [ third generation ] that is going on for many years in our shipyards to reach a much better level of efficiency.

All this is to show you that, as I said before, a very tight financial and accounting discipline. This has been our leading star, our guideline for the management of the company, and the entire management leadership is focused in bringing up very good results in the coming years.

I'd like now to give the word to Giuseppe Dado to put you through -- to run you through the results of the first quarter.

[Giuseppe Dado, executive]

All right. Thank you, Alberto. Good morning, ladies and gentlemen, Giuseppe Dado speaking. We'll follow the presentation that we published and that you have available.

So I'm starting with -- from Slide #3 and with the key messages of our first quarter, and as Alberto already said, in this first period of the year, we already -- we further strengthened our position in the market with a record level of orders at EUR 6.5 billion, and we signed, and that's another record, contracts for a total of 11 cruise vessels for 5 different brands. In the same period, we also signed a contract for an additional LCS unit of the Freedom class, further strengthening our relationship with the Navy. On this project, the total units sold are 16, of which 8 already delivered.

And as the financials are concerned, revenues are up 13% with respect to the same period of last year at EUR 1.4 billion, and EBITDA margin -- EBITDA was EUR 90 million with 6.5% margin over revenues. Net debt is stable compared to the end of last year.

In this first quarter as well we also delivered 8 vessels, among which 2 cruise vessels and 1 military unit and in particular, we delivered the cruise ships, Viking Jupiter, and -- the sixth unit build for Viking and Costa Venezia, a ship specifically built for the Chinese market.

During the first quarter, we also started the production, as Mr. Maestrini said, the production at the Fincantieri Infrastructure plant in Valeggio sul Mincio North Italy, with a first steel cut for the bridge in Genova. Of course, we kept our focus in sustainability, and our newly appointed BOD is equally composed of men and women, way beyond regulatory requirements for gender diversity.

Moving on to Page 4, you have a detail of the cruise vessels that were signed in the first quarter. And please note that, by looking at the brands from Oceania Cruises through to Princess Cruises [indiscernible]. The orders are spread across a wide spectrum of clients and well diversified in terms of vessel categories and that proves, once again, the strength and the depth, let me say, of our capability and our leadership in this market. I mentioned several times in meetings that we -- as Fincantieri has the widest and deepest product-client matrix in this market.

On Page 5, we have a few pictures of the ships delivered and Costa Venezia is in the top center of the slide.

We move on to Page 6, on order intake and backlog. EUR 6.3 billion orders in Shipbuilding. I said it before, we contract signed for 11 units and 5 different shipowners. The soft backlog was EUR 8.3 billion at the end of last year, decreased as a natural consequence of the chamber order intake that converted a large part of our soft backlog that we had at year-end. Total backlog record levels, EUR 34.3 billion. We mentioned before that's equal to over 6x 2018 revenues.

On Page 7, the deployment of the backlog. Again, 8 units delivered in Q1 2019, and we have 25 units scheduled for the remaining part of the year, and a total backlog of 104 ships. This number becomes 140, including the soft 50 cruise vessels with deliveries up to 2027 and 13 units delivered -- to be delivered up to 2023, 7 of which were acquired in this quarter. We have 29 naval vessels with deliveries up to 2026, 5 of which up to 2023, and 25 offshore specialized vessels with deliveries up to 2024, including the project for the Norwegian Coast Guard.

Now on revenues, on Page 8, were up 13% as we said before, EUR 1.4 billion. Shipbuilding revenues were up 8.8% versus Q1 2018. This is mostly thanks to higher volumes in cruise. We had a hefty increase in the revenues of offshore and specialized vessels, 44% -- 44.5%, albeit the smaller number, and this is thanks to higher volumes that we realized in specialized vessels, such as fishery, fish carriers and ferries and this is resulting from the diversification strategy. However, we have to note that in this segment, the production capacity utilization rate is still suboptimal, and of course, it does not have an impact on the Q1 revenues, but it's really worth mentioning this -- in this segment that in the context of the diversification strategy, in April, we signed a contract with Eni and Cassa depositi e prestiti and Terna to develop and build wave power stations on an industrial scale, and this is a further, let me say, initiative in the path of diversification in order to ramp development in this segment.

The Equipment, Systems and Services revenues are broadly in line with the first quarter of last year, and this result includes also the start of the production on -- of the bridge in Genova by Fincantieri Infrastructure.

Moving on to EBITDA on Page 9. We are at EUR 90 million in line with Q1 2018. And we had a positive performance of Shipbuilding and Equipment, Systems and Services that was countervailed by the negative profitability of the offshore and specialized vessel segments. On Shipbuilding in particular, EBITDA is up almost 30% with margin at 7.4%. Of course, this has benefited from the contraction of our margins, while higher margins especially in cruise. Of course, we had some lower profitability in -- of some large cruise business unit projects that are due for delivery in 2019.

In the offshore and specialized vessels, EBITDA moved from EUR 18 million last year to minus EUR 2 million in this first quarter of 2019, and of course, in Q1 2018, we recorded a very positive impact on EBITDA coming from the MCV project for the Caspian Sea and whilst in this year, Q1 results are affected by the complexity of the current vessels portfolio. And of course, this is in the context of a segment -- of a market that's still facing a downturn, a deep downturn. And in this market, the acquisition of the very few, let me say, high potential projects that goes together most are the less profitable ones.

In the Equipment, Systems and Services, EBITDA is up 20% with margin at 10.3% versus 9.2% in Q1 2018. Of course, you will note that if we exclude the EBITDA margin of offshore segment which is heavily incurred by the market situation, our overall EBITDA margin would be 7.9%.

On Page 8 -- on Page 10, sorry, our net working capital substantially, although we have exceed the time, it has decreased to minus EUR 47 million. But EUR 44 million plus at the end of last year, it's pretty much linked -- the change is pretty much linked to the fact that we delivered some ships, but of course, we as well increased our activity notably in cruise segment.

Trade receivables decreased, and this is due to the cashing of the final payments for the cruise ships delivered in the quarter. And we also had an increase in inventories mainly due to the delivery of a vessel that was included in the inventory after the [ inventory ] consolidation. This is a vessel sold by Vard, initially was a contract with an owner that failed. Net debt is substantially stable, although we had a slight increase.

In conclusion, I'll spend some words on what we expect for the next quarter of 2019. Of course, we already pointed out how this year is expected to be brought in line with 2018. In the Shipbuilding segment, in particular, we have 8 additional units to deliver in the next quarters, 6 of which are cruise units. And we are also in the production phase of Qatari order for the naval business. The first delivery is scheduled for 2021, sorry. In the offshore and specialized vessels, we are keeping up with our diversification strategy, which is challenging, but so far quite successfully in leading to a recovery in the profitability of this segment, a recovery that's still ongoing. The segment still suffers, as I said before, from a depressed market environment, but we are in process of adapting our shipyard's headcount and our production footprint to the current workload. In Brazil, for instance, we aligned workforce to the level needed for the pure daily maintenance of the plant, and we are maintaining the shipyard in view of possible future local opportunities potential projects in the oil and gas segment.

Moreover, we are carrying on Vard integration process. The Vard cruise business line is now reporting -- since November last year, is now reporting directly to the group, and we also aligned both Vard's business units to the group procurement process and policies.

As for the Equipment, Systems and Services, we are already confirming the growth plans that we expected, and this is thanks to the backlog deployment -- development of the Naval contracts and the volume growth of the cruise units production, and also, thanks to the lengthening in projects and infrastructure activities that were mentioned by Mr. Maestrini before.

Thank you for your attention. And now we are happy to take questions.

[Operator]

[Operator Instructions] The first question is from Monica Bosio with Banca IMI.

[Monica Bosio, analyst]

The first one is on the Shipbuilding division. In the press release and in the presentation, you mentioned in the deck, the EBITDA margin of the Shipbuilding has been impacted by the [ delicate ] impact of Vard cruises because of the lower margin. Actually, according to my elaborations, in the last year, Vard cruises activities reported some operating losses. Thus they should have a negative margin. I'm just wondering, if you -- if it's -- it is still the case? And if you share my view or if things are going better in term of margin for Vard cruises? And if you can elaborate a little bit more on the recovery path of these activities, if it's still reasonable to expect breakeven or even something more for late 2019? And the second question is similar but on the offshore division. The operating losses were very limited, just EUR 2 million. Are you now more opportunistic than before on that area? And can we expect a breakeven in the second quarter for these divisions? And the very last question is on the Naval segment. Unfortunately, you have not been awarded the Tamandaré tender. And can you please give us some update on the opportunity ahead during the year for the Naval segment and maybe also in the medium term?

[Alberto Maestrini, executive]

I think -- Alberto Maestrini is speaking. I think I would like to start by giving you a general view on our strategy in Vard. As you know, the prices in the offshore sectors impacted very strongly on all the activities in this sector. We have immediately reacted, as you may easily remember, by filling the capacity, which is also an opportunity for us from this business, filling the capacity in Romania with blocks and sections of our cruise vessels. And as the demand has ramped up, of course, this activity has increased at the pace that probably was difficult to proceed. Clearly, the initial solution was structured in a way that also, for example, for small cruise vessel to build essentially the haul and all the steel infrastructure in Romania and then to complete the outfitting in Norway.

Clearly, this was an organization which was very effective in terms of time, but was very poor efficient in terms of costs. Clearly, the time it takes to develop a ship in 2 different places in effort to share all the information. I think that, that reflects in a way also the difficulties that we have in bringing the shipyard to the right level of efficiency. Now what we have -- having seen the continuous status of lack of orders in the market, we are continuously focusing, and at the same time, the high level of demand in cruise, we are now focused to achieve a much higher efficiency with a very clear strategy where we intend to focus Norway more on the -- and more and more and more on the offshore initiatives, especially investing in all its most innovative products. Develop a wider capacity in Romania so that they can also deliver complete ships and therefore, we avoid a costly transfer of vessels between 2 countries, and therefore, also a reduction in the production capacity in Norway to reflect -- and to reflect the status of the market. All these will be entirely managed directly by Fincantieri and specifically for cruise by the cruise business unit. This will allow us to a have very -- a clear and complete overview of all the policies both in terms of market and sales and also in terms of production.

As Giuseppe said before, in Brazil, we have reduced now the workforce to a minimum to reduce our cost, but we still expect the possibility to have a positive outcome from the investment that Petrobas is planning in that country. We are also talking to other operators to have a wider market access. So I -- we think that although the Naval bid was not -- did not have a positive outcome, we expect this to still have a positive future for the company in that country.

In general, a last comment, and then I'll pass the word to Giuseppe if he wants to add something. In the Naval segment, in general, we expect by focusing in a recovery of -- an improvement, sorry, of our efficiency and take into account the significant investment that we've made in -- not only in that area but also applicable to the area from fuel cell to lithium battery to cybersecurity to gas and energy proportions. All this investment will have a positive fallback also on Naval, take into account also that the maritime and the Naval security in general is in clear priority for very many accounts. So we expect that there will still be a positive outcome also in that sector. I don't know if you want to add something, Giuseppe?

[Giuseppe Dado, executive]

I think there is one more point that the monetary on the confidence and on the margins in the offshore and specialized vessels. We are always confident, Monica, and of course, we have, as also Mr. Maestrini Alberto said, there is room and scope, let me say, for improvement, and we are confident on [indiscernible], we strive daily to improve efficiency and to again work better. And at the same time, of course, we prefer to over deliver than to overpromise.

[Monica Bosio, analyst]

Okay. So we think with the previous indication that the division will be at breakeven, that's for the offshore in the last quarter of 2019?

[Alberto Maestrini, executive]

If the market remains as it is, we expect that is the safest prediction you can make.

[Monica Bosio, analyst]

Okay. I'm sorry, if I come back on the Shipbuilding. If I can compare the results, the stated and the reported, for 2018, my understanding is that, Vard cruises were loss making. I'm just wondering, if it's still the case? I think, yes. And if it's still the case, to assume a breakeven for the Vard cruises business in the last quarter of the year more or less as you indicated during the last conference or maybe something has changed and things are going better because we are more efficient I don't know? Just some flavor on this.

[Giuseppe Dado, executive]

Again, Monica, there is scope and room for improvement.

[Operator]

The next question is from the Alessandro Pozzi with Mediobanca.

[Alessandro Pozzi, analyst]

The first one is on order intake, I think very strong in Q1. Can you give us perhaps some color on the profitability embedded in the new orders? I think you have a target of reaching 8% to 9% EBITDA by 2022, and probably in Shipbuilding, it's even higher. So I was wondering, how the new orders compare to this target? And also, I think the order intake is now 3 quarters of what you won last year since 2018. I was wondering what sort of order intake do you expect for the whole of 2019.

[Giuseppe Bono, executive]

Alberto, I'll take this. Of course, very, very, very important achievement in terms of order intake Q1. Our profitability is broadly in line with our guidance, of course. But please note that, the deliveries of the orders that we acquired in the first quarter, notably in the cruise segment, of course, fall beyond the current business plan horizon. Of course, when we'll update our business plan, we'll start seeing the profitability of these vessels. But for the moment, the levels of margins are broadly and -- they're consistent, let me say, with the target that we have set in 2022, albeit the contribution from this project will -- from these projects will be minimal.

So I remind you that when we first released our updated business plan last year in March 2018, we said that already that business plan, the revenues -- 90%, 9-0, of the revenues coming from cruise were already secured. And therefore, the order acquisition that we achieved recently and also during the last quarter for -- put us on top of what we said 1.5 years ago or 1 year ago, actually. And this allows me to make reference to what Mr. Maestrini said at the beginning of the call, this comes on top of what we already achieved last year, and what was achieved last year was already embedded in the numbers and in the business plan. This gives us further room and further scope to grow further in revenues and to grow as well in profitably. We have to strive to achieve those results.

[Alessandro Pozzi, analyst]

Okay. And just 1 question for 2019. I think your target is to have similar EBITDA margins compared to last year, which means a meaningful improvement in the coming quarters potentially with EBITDA margins around -- towards 8% that is driven by higher revenues in the Shipbuilding, is that right?

[Giuseppe Dado, executive]

Well, of course, we expect much optimal result coming from Shipbuilding revenues. I mentioned before, systems -- equipment systems and components is growing, but the consistency and the absolute level of revenues bring a good result, double-digit EBITDA. But the contribution is relatively smaller, not minimal, but smaller and growing. Therefore, yes, you have to expect good results than most -- bulk of the EBITDA growth and EBITDA margin coming from Shipbuilding.

[Operator]

The next question is from Emanuele Gallazzi with Equita.

[Emanuele Gallazzi, analyst]

I have 2 question. The first one is a follow-up on the Naval segment, just would like -- if you can, let's say, share with us an update on that main tenders in the segment? And the second one is on IFRS 16. I was wondering if you could give us an indication on, in fact, the EBITDA level in each division, and if it is included in your guidance for this year, so flat margin?

[Alberto Maestrini, executive]

I will take the first question on the Naval segment. I think it is everybody's knowledge that there is increased attention on the maritime security. This is general and is reflected in a wider and stronger presence in all the critical parts of the world in terms of seasonal steps that needs to be controlled and parceled. I think that this general increase in investment in security would be reflected in a wider opportunity -- set of opportunities also for us. Therefore, of course, we are bidding in many areas in many countries. We have renewed our efforts, and of course, this will not mean that it can be publicly expressed, but we expect to have continuous wave of opportunities in front of us in the coming months and years.

And we also expect that the investments in Italy will continue. It is -- there are plans to improve in existing fleet in different areas, and we are also counting -- we're counting also this, for example, I'd like to mention the summer that is very strategic in Italy. So in general, I would say that the market is stronger, and therefore, we count to be able to be effective again in the coming opportunities.

[Giuseppe Dado, executive]

Okay. On IFRS 16, we disclosed in the notes to the financial statements of 2018 that overall the yearly impact of these changing accounting principles, which I believe widely was EUR 13 million. Now I like to do the math on the materiality of this number. When we gave the guidance of -- for this year, we did not include that, of course. But again, is it material? Is it nonmaterial? I'll let you decide. For me, it's not.

[Operator]

The next question is from Gabriele Gambarova with Banca Akros.

[Gabriele Gambarova, analyst]

Mr. Maestrini, in your opening remarks, you mentioned -- you said that you included the costs to restructure the Romanian yard and to start the Fincantieri Infrastructure initiative. So I was wondering, if these initiatives had any impact on the Q1 margins? And if yes, what could be roughly speaking the entity of this impact? And then a second question on Chantiers de l’Atlantique. I know it's a long story, but I was wondering, if you know where we are with this antitrust, let's say, procedure, if there is -- or do you expect -- do you have in mind any deadline for this decision important? And the last question is on Vard cruise. In your press release, you mentioned several cruise vessels that are due to delivery this year. I was wondering if you can share with us when it would be delivered and if margins may pick up once you start with new job orders.

[Alberto Maestrini, executive]

I just make a quick, probably, a better explanation what I meant. Let me make another example to introduce the concept. For example, when we participated to very important tenders like, for example, the Australian tender to mention, one of the recent was in Naval, but is also through for all the efforts that we do when we prepare innovative prototype design in cruise. We have -- it's not just a commercial effort, it's an effort that involves our procurement office goals, a significant number of resources in engineering, also the best one we have to provide the best solution for our customers, it provides writing and executing agreements with local companies, and therefore, we need to have the support of specific skilled companies. All these costs have always been included as a general, as I said, discipline that we use in our accounts. Of course, this impacts continuously in our accounts as of course, specifically also in Q1.

What we have not reflected, and we expect to get is a positive outcome of the learning curve, that we will get, for example, from the -- for our operations, which are now going -- gone through a lot of changes, a lot of improvements both in terms of new resources, just make an example, now the shipyards in Romania have a workforce that is well above 6,000, and when we started, they were -- due to the crisis of the offshore, were to a minimum. So these all efforts have been entirely included in our P&L. But now we expect all the benefits of the improved efficiency. Learning curve will ramp up, and we will get all these benefits. This is the message that I wanted to clarify and to explain, therefore, why we expect this future backlog will give us a much stronger opportunity. Giuseppe, if you want to continue?

[Giuseppe Bono, executive]

No. Gabriele, close to how many ships -- how many cruise vessels we expect to delivery from Vard. For this year, we have 2 more vessels to be delivered: one in the summer; and one in the early fall. And of course, learning curve, learning curve. So the more we work and more we deliver, the more we expect to improve.

[Gabriele Gambarova, analyst]

And regarding the antitrust aspect, do you have any news on Chantiers de l’Atlantique?

[Alberto Maestrini, executive]

Sorry, I missed your question. Could you repeat, please?

[Gabriele Gambarova, analyst]

I was asking, if you have any idea of when the antitrust -- European antitrust procedure on the Chantiers de l’Atlantique [indiscernible]?

[Alberto Maestrini, executive]

I expect that we have started, and we are on the verge of concluding the initial prenotification period. And there are positive discussions with the structure, the technical structure of European community. It's not easy now to make a clear prediction, but I think that we are well ahead in the efforts.

[Gabriele Gambarova, analyst]

So there is no deadline basically? Or I mean, no idea of when this procedure may come to an order?

[Alberto Maestrini, executive]

Procedure depends on the European community, not on us. But we are confident that the good reasons that we have showed them and the positive reactions that we got should be taken into account.

[Gabriele Gambarova, analyst]

Okay. And sorry, just 1 last question on Naval, again. Do you have any idea of how the Romanian EUR 1.6 billion of a tender -- I mean, do you have any news on this front because it's not so easy to get information? I don't even know if it came to an end or it's still ongoing, I don't know.

[Alberto Maestrini, executive]

The information we have is that there is a very thorough evaluation of the different offers they received, and there is no official position. Therefore, I cannot predict anything at this stage. We are expecting -- we are waiting for an official position, of course, of the government.

[Operator]

The next question is from Matteo Bonizzoni with Kepler.

[Matteo Bonizzoni, analyst]

First question is on the guidance for 2019. In terms of revenues growth, Q1 was up 13%, last year was up 9%. What kind of revenue growth should we expect for the full year, something similar to Q1 or something more similar to the 9% of 2018? On the margin guidance, you said before that your guiding margin -- EBITDA margin in line with 2018 that was 7.6%, but you also added that this exclude this EUR 13 million of expected impact positive on -- from IFRS 16 that is 20 basis point more. So it's correct this interpretation? Then I would ask second question is regarding Shipbuilding. In Q1, Naval was less, cruise was up 13%. So I get that this mix also little bit analyzed the overall profitability for the division. Question is, for the full year, should we expect Naval to recover in the next quarter?

[Giuseppe Dado, executive]

Thanks, Matteo. On revenues -- on revenue growth, we have to first consider the trend that we have seen in the past 2 years, I would say, in which revenue growth was more on the back end of the year. While this year, we already recorded a very positive revenue growth already in the [ first half ]. We expect overall growth in the year to be in the lower than what we saw in the first quarter. So it would be roughly in the high single digits.

On margins, I think I answered before on the impact of IFRS 16. Yes, we reiterate the guidance of an overall EBITDA margin in line with last year, consider that the impact -- the yearly impact coming from IFRS 16, which is accounting is EUR 13 million. So it's plus, minus that.

And your third question, Naval revenues flat. Of course, considering what we have seen in this quarter and what we saw last year, given the fact that our order acquisition -- the Naval revenues are pretty much stabilized and coming from the 2 major programs that we have with the Italian Navy and the Qatari Navy. Whatever revenue growth comes on top of our expectation comes from cruise. Therefore, we expect the bulk of the Shipbuilding revenues to be -- to come from cruise segment.

[Matteo Bonizzoni, analyst]

Last question, if I may. Construction loan declined to EUR 545 million this quarter, that I know improved. Where should you expect at year-end?

[Giuseppe Dado, executive]

Up, up and also this is in line with our qualitative guidance that we gave on overall net debt. The delivery program in the cruise segment for the first 6 months of next year is huge. We deliver, I believe, 5 cruise vessels in the first 6 months of next year. And of course, also, in terms of average size of those vessels, it's pretty -- it's higher than this year at least. Therefore, you do the math. Since -- we all know very well the terms of payment in the cruise segment, 80% at delivery, you have to expect an increase in financing. Of course, increase in financing will be absolutely temporary and related to the construction of the vessels once we deliver, [ we exchange ] and we start all over again.

[Operator]

[Operator Instructions] Gentlemen, there are no more questions registered at this time.

[Giuseppe Dado, executive]

Well, thank you very much and goodbye.

[Alberto Maestrini, executive]

Bye.

[Operator]

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.