Gruppo MutuiOnline SpA

MIL:MOL

Earnings Call Transcript 2022-Q4

[Operator]

Good afternoon. This is the Chorus Call conference here. Welcome, and thank you for joining the presentation of Gruppo MutuiOnline Fourth Quarter 2022 Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Marco Pescarmona, Chairman; Mr. Alessandro Fracassi, CEO; and Mr. Francesco Masciandaro, CFO. Please go ahead.

[Marco Pescarmona, executive]

Hello. Welcome, everybody. This is Marco Pescarmona. We live for our call on the presentation that is available on our website. And this time jump to Page 5 because we recently performed a number of acquisitions that have lately changed the shape of our group. And so we want to introduce the new view and how we will present it out going forward. The bigger changes are we see in the Broking division where a set of connected international acquisitions.

We acquired the company in Spain, as we acquired the contain France Lean, and we acquired the company in Mexico -- and plus a number of nonoperating NPVs. And now the way we report the results of the open the vision is by introducing a new business line perform we call international markets. So we will comment together on the international market for now and when we feel the banking the floret on the line. This is the first change.

The second change is we will no longer refer to more blocking and personal unlocking. Personal loan book is – consumer loan book was a small business line. So we will now refer to credit broking as a single business line. By the way, this is also because we have merged the legal entities that we are doing these productivities. So now it's a single company. So it's also a nonnatural market.

So these are the changes to the break in the region. I said if you look at the beta division, the changes in the last business line, which is now called leasing rental GPLA, meaning that we no longer do business processing services, which was the job of Agent Italia, as we also provide IT services, in particular, the IT call systems needed to operate leasing, in particular, but also potentially rental operators as part of the activity of the business line. So now it is the case a combined offering of our IT platform and Paschi is all that is required, basically, apart from the launches in the capital to operate leasing business.

So I wanted to point this out to you, then on Page 7 of the same presentation. I'm not going to comment on the details, but I like the fact that it is there. We have put some details about the brands that we have acquired and the different geographies or the growth division and what they do and what the market position is and so on.

So let's say the CI level question that people over about the issues.  There is a reminder that these businesses the contracts acquired and was signed at the end of August 2022, that was executed at the beginning of February 2023. So they don't impact the reporting of 2022, but we are already setting things up for their presence as part of the group.

The group structure is, let's make a couple of comments on this as well. And going now to Page 10 and 12, but very quickly, you see now has a quite good number of legal entities. The method we want to pass also is when we make acquisitions, especially like the own businesses and so we tend to have inflator in Italy with a good number of legal entities. And then what we do over time, and we have done it in an the insurance BPO business line, we try to simplify things to manage the entities.

So this is not the kind of structure we would like here for the long term, you should expect to see step-by-step simplification of all the boxes that are basically there in many cases for certain reasons and compete for business reasons and so on. So this is also to comment this apparently complex group structure. Then we can jump into the results on Page 17 with the full year highlights. And let's say, for the one the year was -- I mean, that was an expected than we anticipated at the beginning of 2022.

We had a good start the first half of 2022. And then we started seeing progressively weakening mortgage market that impacted us both on the broking and [indiscernible] side. Overall, the year is part of revenues almost flat revenues 2022 3.8 million, which is down 29% year-on-year. So it looks tiltable, but this also benefits from some acquisitions that we made during the year, the acquisitions, most of them are not so big because we acquired ROPA like information services in and we acquired some companies doing some small companies in insurance plans.

So all these things are overall relatively small. The biggest acquisition we made was at the end the fourth quarter, so you do have a big rate on the year. But in any case, all in all, we would have seen a bigger decline in revenues with the producer. So again, the year is not particularly great. The specific second at was intertext -- the EBITDA is the evolution of the EBITDA is the consequence of the evolution of the revenues.

By the way, one of the areas that were impacted in also one of the businesses that historically have the highest margins, which is online mortgage broking. And clearly, this means that the impact of the revenue decline was magnified in the EBITDA decline. Still the EBITDA is EUR 88.6 million in 2022, and that's down 4.3% year-on-year. It was important to point out that -- the numbers that we are providing are not adjusted. So this EUR 88.6 million of EBITDA includes the cost.

So it would have been greater without this EUR 2 million in one-off transaction costs for financial and legal advice of America to the international acquisition that we need like U.K.-based lawyers and so on, that was expensive for instance, advisers and so on and also the credit acquisition. So there are transaction costs at a and if you can tell a then we're used to.

The EBITDA is just like a consequence of the evolution of the EBITDA and the evolution of the net income is not particularly meaningful as it is represented here because as you remember, in 2021, we had a negative adjustment to EBITDA because of some of the relative changes that affected that income that finalize the change will not have been so significant.

So this is the big picture of what happened, and the fee rise of this evolution has been the worsening of the conditions of the Italian residential mortgage market comment on this season in Page 18. Basically, we expected in 2022 the mortgage market. We expected remote to normalize, and we expect the purchase mortgage to keep growing is disabled. And in fades expectation that possess mortgages will be doing okay until the summer, I would say, depending on the north. But and we said what happened was that starting from September, but then it was and is overseeing a decline also in purchase model you look at, first of all, origination volumes from Assofin.

So these are actual market volumes, partially the drivers of our conditions, they were like down 18.6% in October, 21.3% in November, 22.6% in December 2022 and 25.1% in January 2023. And by the way, in January, the year-on-year drop in the volume of purchase modules 24.1%. So the drop that was the adjustment of the market was driven before by the mortgages. By the way, we asserting more than the market because we were overweight in the oats, then this drop unexpectedly, at least for us, became a significant adjustment to the volume of purchase mortgages.

And clearly, this is linked to increasing interest rates, inflation and people waiting to see what happens. And if you look at the forward indicators, like [indiscernible], they provide consistent indications and actually a consistent indication respond to a continuation of this decline for the first month of 2023. In particular, inquiry in credibility in 2023 are down 22.8% in January, 25.3% in February. So this is all consistent with market contraction now of, say, 25% voltage. And what do we expect for the future.

Well, clearly, the impact in the fall was potentially driven by the increase in interest rates and prices of notes, which had a bigger impact. I think that it was mostly an impact of people deciding to wait and see that it's a total. Now we also have additional uncertainty we are already doing talking about some instability in the banking system.

So we don't know maybe this is positive because interest rates will not increase so much because otherwise, there could be coinvest anyway, this is likely to have potentially coming impacts that are to be seen. So there is uncertainty, let's say our question is that you will see weakness for let's say, the first half of the year.

And hopefully, we'll see improvements going forward. This is based on market, public market information that have elaborate a bit more based on what we see in our docking division, which in [indiscernible] potentially slightly better. On the positive side, in terms of things that would have a positive impact on the mortgage market, the faster that the facilitized mortgages for young people, which were quite attractive in the product are back on the shelves. And they are available until June.

Now we see from financially first half of the first quarter is very weak quarter. So clearly, it cannot impacting so much hope will impact in Q2 '23. So this is the view of the overall market. Now let's look at the [indiscernible]then more interestingly at the different business lines. The working division revenues of EUR 131 million, that's down 2.4% compared to 2021. And the EBITDA was EUR 46.8 million, which is down 7.7% year-on-year. And again, it's also a mix effect. So in general growth in all the business lines, except as margin higher margin and therefore, the impact of the decline in EBITDA was more than preparation.

Looking at the overall comment on the booking division. So the first half was quite strong. And then the second half was unexpected. We already expected remortgages to normalize, but we didn't expect all this negative impact on purchase mail business. And is a nudge you expect a configuration of the same, at least for the first half of 2023.

So we foresee mortgages and more positive, positive, let's say, evolution on the other products. One comment is on the international part. It doesn't affect the 2022 results. We are quite happy with the acquisitions that we made and the positive contribution to the division and also increasing [indiscernible] of one because this is mostly insurance intermediation business.

Moving at, let's say, the areas where we are suffering credit backing, which is now personal loans and secured loans or consumer loans is down year-on-year 19.5% is generating EUR 50.8 million of revenues, so this is a significant drop that comes from mortgage broking and comes in mostly a large part of the impact is in the second half of the year. And consumer loans, by the way, were more stable didn't suffer as much.

So the problem is really in mortgage volumes. Now what is, I think, more important to you what we are seeing here, we commented about the market as a whole. And of course, we are not immune to the market. So we are seeing the same also seeing weakness. What we are seeing that is a positive, but we feel have to see to be able to translate into close mortgages and revenues is that at the end of last year, and now we are seeing demand for the mortgages. Again, for -- from people that hate an addressable rate mortgage and benefited form -- close to 0 interest rates for a long period of time, although they were out of bad by the increase the sudden increase in interest rates.

And now there are, let's say, standard uniting and they do like to respect to fix -- then in Italy, you can get 6 for 30 years on the same rate of adjustables. So this may change. So there are the number of people that are interested in before. So in the case of , it's interesting demand. The problem is that banks are quite, I don't know, conservative, let's say in worry of these customers. So we don't know because we think they should have done it before.

Maybe people that have space or same as not at any problem, but still the mindset, the mindset of many banks is if you should come to me when you are a bit in trouble because you are now paying to natural your budget or whatever, then I don't want to the line. It's very [indiscernible] we are to deal with this idea of, let's say -- and so we don't -- I mean it is more disclosure, it would be a benefit.

And this is something that the market as a whole is not seeing because the -- as usual, people come to us for mortgages, -- so this today. And then we said, on purchase margins we see what the market is, and we really have to wait and see is demand picks up again, it's other disaster, but it's a significant contraction. And for now, there is no finer this is picking up.

So the positive signs are the other applications that we are seeing that you have to see the quality is not going to be great, but not raising them. So this is what we can say about credit blocking. The other business lines are all in better shape. In insurance broking growth, EUR 28.4 million of revenues in 2. That's up 16% year-on-year.

And now we finally see an increase in insurance premiums and seems to be the beginning of a stronger inflation of premiums, and this will lead to positive outcomes most reaching and also higher commissions because our commissions in Italy and insurance want percentage of premiums. So the business lines we are doing timing.

We believe we are also doing fine from a competitive perspective. So of evolution. Also, we do find in sale and energy comparison. Actually, we had very good growth in energy, of course, because the market was in open and trying to save on very high energy builds, but we also have a block in [indiscernible] products. But overall, we were able to grow with EUR 10.8 million of revenues, up 88% year-on-year, improving profitability, overall, better quality of everything.

And so in the end, it was a good year. And also we are also retool of the acquisition of Paris that allows us to increase our scale and is the type of business. In terms of what anyway, one comment about the market. So if from other markets when a market is open, but this is a market where which only index products are available. So all the products are basically weaker pricing that is the wholesale price and in [indiscernible] way. And so these products are okay because they are available, but they're not as attractive to more present yet and that is present, create an acceleration.

So it's a very buttoned or otherwise you would have done much more in energy. And we expect the current situation to continue we expect our results to be up year-on-year, mostly because we have made a lot of improvements to operate the business depending on how the prices that consumers are paying are evolving the business could accelerate or slow down because people are sensitive to price changes.

On the positive side, for instance, we will have to see on 1 or 3 year 6 prices that are taken before the word can be now as they finish the fixed price window other contracts, they will be asked to pay significantly more even if energy prices have stabilized today, they have been well above for 8 years ago. So there could be potential effects, but we have to see.

Then last part of the commerce as comparison. Here, it will be EUR 37.4 million of revenues, up 9.8% year-on-year.  We were able to grow at a slower pace than in 2021. However, the focus continues to be on improving the product and expanding the services offered. And basically, we are trying to provide partners comparison, other ways for consumers to save on the One of the things to be example is we are providing coupons, basically discount coupons. And it's something we are developing, which been quite small and I think is interesting with the margin. And in this country, that is also developing in by the way, online coupons.

And in 2023, we are expecting growth Then, of course, this depends on the growth of e-commerce. And the commercial is not growing at a particularly brilliant payday. So after the pandemic, people thought that we were of growth of e-commerce. E-commerce is important. It is growing, but at it is also impacted by the competition of the traditional channels. And so it is growing at a relatively low speed at least.

Finally, and this is nothing to do with the profit results on the international markets. We already commented that this is insurance, which is the best possible positioning because inflation insurance benefit of an inflationary environment. So we'll see what happens. We see signs of inflation in some of the countries like Spain, there are tiers of the inflation in time with mid-operators -- but overall, the is going in the right direction. And our focus for 2023 is to increase the financial performance of these businesses compared to 2022. And we will have a focus on execution.

So we will focus on the basics, the important things, leveraging the internal resources is in the talent that we have, but also transferring a number of operational and commercial tactics that we have developed in Italy those are clearly applicable and I think bring benefits. And on this, of course, as impacted to see traction and results, we will be able to provide more post coming going forward. So this ends the comments on the work in the region, and now I'll ask Alessandro to continue with the DG division.

[Alessandro Fracassi, executive]

All right. Thank you, Marco. So we are on Page 23 with the BPO division. If you look at Page 23 and you send back, it seems like nothing has happened on 2021, 2022. Basically, both revenues and EBITDA margins are exactly where we were the year before. The truth is obviously, there has been actually behind the scenes, a lot of things are happened.

And in fact, as we move to the following page, we see that the different business lines have a very, very complex dynamics. And as Marco has mentioned at the beginning, the stable result has also been using thanks to the acquisitions that we have done. It's surprising how all of this mass has ended up in basically numbers moving by less than EUR 1 million, both on revenues and on EBITDA. I guess you can read it as a very resilient business in trouble sometimes. So I basically already commented on what has happened in 2022 at the overall level. If you look at the overall level, Q4, Q4 appears particularly good. Actually, we caught up with some of the lag in revenues that we had before, thanks to the last acquisition of ready for the last 2 months.

But anyway, even if we had not done acquisition during the year, we would have seen a decline that would have been around 5% overall division. So let's go and look at what we said in 2023. Marco has already commented on the macro environment. Obviously, here, we need to see whether is banking, if there is a reason sort of a banking crisis in 2023, which affects the willingness to lend. If that happens, obviously, the comments that I'm making now will not stand.

So we do not put into these -- the scenario that I'm going to comment a significant restriction of the supply of credit. So if that doesn't happen. And so what happens is settled, we see an inflationary factor continues, although it should slow down. And so interest rates will continue going up. But at a certain point, it will also slow down. The relative market will be impacted with a lower number of transactions and potentially also the house prices.

So this is the macro scenario, which we look at our outlook. So in that case, we expect more or less pain I will comment business like a business line to add -- without the new acquisition of trade, we probably would end up again in a similar result of what we have seen in 2022. Thanks to the acquisition of Traband also some small increases in some other businesses. We are aiming at reaching a EUR 200 million threshold in revenues in 2023.

So let's go into the different business lines. We have commented throughout the year the full performance of the mortgage BPO revenues. And -- while we do expect the demand to remain weak, as Marco said, for 2023, we are forecasting to be relatively stable in 2023. The reason being that first of all, we have acquired a new customer in this area, and so that would increase revenues also in the face of a decreasing market scenario.

And we have a very significant credit appetite by one of the long-standing players that want to catch up in terms of market share, and they are advertising aggressively in this period, they have very high budget. Now I don't know whether they will be able to really get all the results that they effect, but that makes me a little bit more positive in looking at the BPO prospects for mortgages.

Also, as you know here, we have the parametry services, which were hit during 2022, also at the end of 2021. There is -- and we are seeing that a slight improvement in the remortgage scenario because of what Marco commented, -- so the fact that there are people that in a rising interest rate environment decide to switch to the fixed rate.

Unfortunately, there are not so many people that in the last 5 to 7 years, have done by variable rate more logistics at rates where the most popular product. But anyway, these people -- some of these people are getting scared and so they are switching to fix rates and that creates a remortgage activity, which we see in a very significant way in our paranorservices.

So those are the positive in the phase on the background of a weak mortgage event that Marco has already commented -- going to the real estate service is that this was a positive surprise this year, and it has partially offset what we have seen in mortgages. And that also has an impact and is not always surprised as the impact of the acquisition of [indiscernible], but the big growth -- organic growth came from the Ecobonus Business.

Unfortunately, the Ecobonus Business will gradually disappear through the year. And I remember answering somebody's question probably 3 to 6 months ago, when I was asked if I was still seeing a positive prospect for 2023 on this business. And I said, yes, because even if the amount of the tax credit is decreased. So some of the biggest incentives go away, there is still -- there is still appetite for tax credit in the market. And this is what we have seen until basically 15 days ago or a month ago when the government decided we take away the possibility to sell the tax credit.

So that basically 0 out the secondary market. And basically, we expect this market to really be reduced to a minimum by the end of June. What we were doing here again is to audit the goodness of the credit the tax credit the tax credit was correct, the correctness of the tax credit and then imply the difficult documents, but also making sure that the real estate intervention has actually happened and that changes in the investment that's been done and the refurbishing and the renovation were actually there.

So actually, the banks that rely on us can be pretty safe in the fact that they have got good tax credit. While one of the other things that I sent in was in the newspaper, there was a lot -- a high level of fraud, which was generated by banks or other financial distributions that were buying the tax credit without any audit. Anyway, that will tier out. And obviously, we expect to see a decrease from the record year 2022 during 2023. That is probably the only really sure bad news in terms of business line that we will see -- to BPO performed well, slightly up in 2022 relative to 2021.

The areas that we are growing are especially in new areas in which we enter starting in 2020. So the area of credit or credit to SME is guaranteed by the state, but all the forms of subsidized or guaranteed lending where the state is helping the credit world. So not only in credit and my bank but also by some governmental agencies helping, for example, the a internationalization project and things like this.

So -- and we are also strengthening our position as a subservicer in securitization efforts in the guaranteed loans market. And we believe looking forward that this market will grow because there will -- this credit will start performing and so and so. So this will create for sure a need of servicing this portfolio correctly will be front actions in the market, secondary market will be developed. All of these ideas will give opportunities to this business line, which is well positioned and well credited in the market for servicing this source of portfolio. So we are positive looking at the future for.

In terms of the insurance POs here, we have a performance that is up more double digit. We expected to do a little bit more. But here, most of the growth comes from the acquisitions, we expect the organic business to perform a little better. But anyway, we see a 2023 that is totally not connected to the discussions that we've had at a macro level up till now. So we expect a continuation of the organic growth, we need to focus on consolidating the operational machine and improve also the margins on this area we have done, again, 2 acquisitions Albiol, but we have done these acquisitions and we need to consolidate them not only in the larger insurance business line, but also in the group.

So we will have a focus on that in 2023. Investment services grew nicely. Although operating margins were affected by the negative performance of financial markets. This is because some of the business line service revenues is driven by the asset under management level of our clients, which is not really a good revenue driver, meaning that it's not completely connected to the cost. And so sometimes it was in the operating margins, which is more connected to the way we price our services than what it's really our vision -- in 2023, we expect to have here a slight reduction of revenues because we have some contracts were terminated, and we are also negotiating our services with the main business line.

And therefore, we expect to be to be forced to a streamlining of our services and increase efficiency and that part of it on to our plan. Well, this is the story of other day, but you might see some discontinuities when this happens when we cotton. Anyway, there is no risk of losing despite the pricing level, but there is no looking forward. The leasing and rental unit where now, as Marco pointed out at the beginning, we not only do any more BPO services, but now we also provide the core system, and we are the leader for the specialized finance in finance. And it performed well in 2022.

You see a growth that is 12.6% year-on-year. But if you take out the impact of the acquisition, it would have grown anyway more than 5%. So this is a business line that is continue to grow. And it grows even in the automotive market, which is one of the macro driver of this business. Even if the automotive is still affected by the restrictions in the global logistics chains. But as we look forward at really the macro and long-term trends, we expect the automotive business to move in the rare direction for the kind of services we expect to see more financing in automotive purchases.

We expect to see a faster movement of the stock of cars as we move to electric cars in any way, better vehicles for the environment. And this is really what drives the revenues of this business line of a significant part of this business line. So you will see obviously significant growth in 2023 because we will report the business line also the numbers of Sber Consult but -- and obviously, the focus of our effort in 2023 will be creating that unified value proposition that are commented during our last call.

So in putting together in a service proposition on both the IT service and the operational BPO services. And then on the other hand, moving investing in bringing our IT platform also to serve the retail market where we are already strong in terms of BPO services, and we plan to penetrate it also with our with our IT platform, it will make some investments, but we have a really good relations with our clients, and we believe that there is a significant opportunity here the main reason for which we have done this investment. So I think this concludes the comments on the BPO division, both regarding the 2022 and the output for 2023. Back to you, Marco.

[Marco Pescarmona, executive]

Thank you, Alex. Now on Page 28, our proposal on the dividend, we got both to a conservative dividend proposal of $0.12 per share, the size earnings for share that are in value, but we have made 2 important acquisitions. One was [indiscernible] others, the international one for broking and for -- to fund these acquisitions, we significantly increased our leverage. And also, we made an investment, which was which is a financial measure in municipal market share but also observe liquidity.

So we have -- if you go to Page 30, the financial position of negative for both of EUR 195 million as of December 31, 2022.And -- this will increase because the plan for the international acquisition will be, as we announced an enterprise value of EUR 150 million. So basically, we want to have take a safe approach to the covenant that we are with the bank and so on. And so while retaining some dividend even back to the level that we normally paid either in certain years of difficulty years or when we wanted to preserve cash because we have other business for the cash.

So the fate of the dividend. Now looking at the net financial position the key figure is negative EUR 195 million at the end of 2022. The other you see the item to keep in mind these -- our investment in manure shares here the number of shares that is EUR 44 million at the end of 2022. And those shares are worth EUR 95 million of the date. Now there was significantly more.

And anyway, we intend to look in -- when we look at our financial position, we tend to look at it in tandem with the [indiscernible] market investment for 2 reasons. One is because in a large number of the covenants that we have with the vent. -- investment in supermarket is netted from the net financial position. So it's not in all the government but in quite large number of them. And the second reason is that in any way this is an investment that if we need EUR 1 million for one reason or another could be adjusted.

So we could dispose part of it a second of flexibility year -- by the way, for those that are not familiar taxation, any capital gain that we will have on this after 12 months of the last share purchase will become exempt compensation. So it's also nice from a tax aspect. So this is the financial position. Of course, we keep an eye, and we will also provide comment in the following calls on our more financial position and so on because again, we are more levels now than what we used to do in the past, and it's important to be quite on top of this. but we don't have any particular concern or [indiscernible] either. And with this I'd say we have completed the presentation, and we can open the floor to questions. So operator, please go ahead.

[Operator]

[Operator Instructions] The first question is from Aleksandra Arsova with Equita.

[Aleksandra Arsova, analyst]

The first one on margins, operating margins, we should expect in the coming quarters. Since I was reading in the press release and maybe you're seeing some inflationary pressures. And apart from the business mix in the Broking division in the BCO, we saw flat EBITDA margin even though the decreasing BPO mortgage activity was related to low-margin activity.

So maybe just to explain what we should expect in the coming quarters we should expect some slide deterioration or not. And the second one is again on the margins and profitability in the international business, however I remember when you announced the acquisition in August, these 2 companies in a and can or we assume slightly lower margins than your usual broking business. So what is the target EBITDA margin you expect from this division in a couple of years, maybe...

[Marco Pescarmona, executive]

Maybe I'll say something Alessandro wants to add some color on that in terms of operating margins, I think for the same perimeter, like-for-like you should look at what we did in the last 2 quarters for the next 2 quarters. So we're in a period more volumes remain low of some of their capacity. And it's true that we lose in some cases, no margin business like the notary activities for mortgages, but also we were less in some areas with other capacity. And basically, the we are saying this next couple of quarters like Q1 2023 could be similar to Q4 2022 and maybe hopefully Q2 to 2023 to Q3 2022. -- rate. But you have to see this issue of some overcapacity in some others. And so Alessandro, do you want to add anything on...

[Alessandro Fracassi, executive]

Yes, there are a couple of things what I had. I mean, we -- on the BPO side, as you know, the main cost factor is the operating personnel. We are facing a tightening of the labor market at this point and then maybe things would change. But just to give you some flavors. I mean it's -- most of our people have a contract with the of the commercial sector, and this is a contract and many of our operating people are at the minimum contractual wage. And if there is a renegotiation at a national level, which will happen in the course of 2023, then we will see auto-market inflation in our costs.

And obviously, trade unions international level are fighting for probably correctly to pass on some of the inflation into the wages, and then we'll have an inflationary effect. Now we can also put on some of it on to our clients. Many of our contracts have a revision at that we're able to increase our prices with the inflation. But then when you go to clients then you say, well, the CPI de increased by 10%, increase prices by 10%. It's actually not as easy in the contract sales. So you have to miss something on the law.

So this is partially of what I mean by acknowledging the inflationary pressure especially on labor cost and on the other side, not always being able to pass it on to clients. In some cases, it's automatic. I mean when you get a commission on the price of something, if there is an inflationary environment, your commission anyway increases. So that's easy. But this is the moment where pricing are moving a lot and the time every time the prices are moving a lot, and they don't move in a homogeneous way in the different type of the value chain you might have some tensions.

And then in the end, you will find a new equilibrium. But in the months and in the years that it takes to see a full effect of these experiences. So I don't expect something very significant in the margins because of this, but I just wanted to point out that this is something where we have to put our -- we have to keep our eyes on and we have to keep our hands on the scaling will -- because there are pensions.

[Marco Pescarmona, executive]

And back to the second question, the in profitability in the international business. I think on the exact what was in front of mine I think the press when we announced acquisition, we referred to something like EUR 65 million of revenue and something like EUR 8 billion of expected EBITDA for 2022. So that means something like 12% EBITDA margin and we believe that new businesses, especially when we have leadership positions in the case of Spain, it is normal to have a possible to have higher margins.

So -- and we are working on that. And the part that we said before that we expect these businesses make a bigger contribution than 2022 means the, I would say, most of the extra, you don't know we cannot say that we as it could be.

So the idea that it could be more than this EUR 8 million because we expect not necessarily the actual, but a significant part of the improvement should come from margin expansion, then maybe some comes also some comes from growth, but yes, I'm not giving a target, and I'm not giving a target done or anything, but the truth is that the businesses should operate at on-off of 20% in terms of margins in 25% the normal margin for this type of business. And it is according to that scale.

In Italy, we have well above 30%. And so we try to get there, it is easier in markets where the market is mature and we have a leadership position in developing market we talk about Mexico. Mexico is profitable, the market with potential growth but see at the very beginning. So this is not going to be feasible. But I would say we will be able -- we have to be able to -- we can to be able keeping to expand margins and this happens we've given a cost from how they're feeling is an improvement over current level is achievable.

[Operator]

Next question is from Filippo Prini with Kepler Cheuvreux.

[Filippo Prini, analyst]

Just a couple of points again on your new year business award. The first thing is you mentioned again that the business autograders France, Mexico and Spain, the contribution of EUR 65 million of revenue in EBITDA, but just a confirmation or so the figures at the reported for the fiscal year 2022. And secondly, you mentioned that in 2023,you expect that this [indiscernible] could be more -- again, I know that maybe it's [indiscernible]this increase of EBITDA is simply coming because the business is growing I get that the guidance of your insurance business could be abroad or maybe because you start to [indiscernible].

[Marco Pescarmona, executive]

So I refer to the figures that we indicated in our press release and the amount of acquisitions that the expectations of those days. I don't know the precise figures that will be reported. And by the way, those figures were adjusted water like interco companies with the current group. So the reported will be different and not well being inflamed way.

So -- but in terms of trying to give you an indication of what extent for this year, what we are trying to say is compared to the EUR 8 billion that was in the press release, we should be able to do better. And irrespective of what is going to be reported, which is not particularly meaningful. And where this comes from, I would say, a lot of it will come from like improvement. But improvements could be best practices or also focus.

So maybe it means that you not doing some after projects that was a bit of a long shot. So it's -- as I said before, keeping the [indiscernible] focus on the key things and transferring our best practices. These things together should improve the results. This combines with a favorable macro environment. And this makes us comfortable that we will deliver at least above what we communicated as expected...

[Operator]

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

[Marco Pescarmona, executive]

Okay. Then I think we can close the call. We think we thank everybody for participating as usual, and we look forward to meeting you one-on-one or speaking to you on the next call. Thank you...

[Operator]

Ladies and gentlemen, thank you for joining the conference is now over, and you may disconnect your telephone.