Saipem Aktie

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Saipem First Half 2026 Result. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Alessandro Puliti, CEO of Saipem. Please go ahead, sir.

Thank you, and good morning. Thank you for joining the presentation of Saipem First Half 2026 Results. I'm here in Milan today with our CFO, Paolo Calcagnini, and with the other members of the top management team. The agenda for this session is the following. I will start with an overview of the key operational and financial highlights of the quarter. Paolo will then deep dive on the financial performance, and I will conclude the presentation with a few closing remarks. We will then open the floor to your questions.

Let me begin with the key highlights of the second quarter. Saipem reported revenue of EUR 3.8 billion in Q2, representing a growth of 8% quarter-on-quarter and 3% year-on-year. Despite the conflict in the Gulf, we made strong progress on all our projects, recording EUR 1.2 billion revenue in the Middle East. Middle East project execution was robust, we suffered extra cost of EUR 70 million because of the conflict. This impacted our profitability, especially in the asset-based services.

Adjusted EBITDA in the second quarter stood at EUR 402 million, representing a margin of 10.5%. Without this extra cost, we would have posted the second highest EBITDA since 2022. We are currently discussing with our clients about this extra cost, and we think we will be able to recover a good portion of them.

Notwithstanding the disruption brought by the conflict, our cash flow conversion keeps on improving. In the second quarter, we generated EUR 189 million of free cash flow, bringing the overall cash generation in the first half at close to EUR 400 million, representing around 2/3 of our annual guidance. Our commercial activities has recently accelerated, leading to an order intake of EUR 4.1 billion in Q2, corresponding to a book-to-bill of 1.1x. We expect our order intake to accelerate even further in the second half, as already demonstrated by the EUR 2.3 billion of awards already announced in the month of July. Our revenue booking in the second quarter is consistent with the growth profile of the last four years and represents the highest level recorded in Q2 ever.

Coming to EBITDA in Q2, we booked EUR 402 million, reflecting the extra cost generated by the conflict. If we exclude these extra costs, our EBITDA would have stood at more than EUR 470 million with a margin in line with the previous quarter. Also, as already mentioned, even considering this extra cost, our operating cash flow remained very robust in Q2 at EUR 449 million, representing the second highest level of quarterly cash flow ever. The strong cash flow generation is a further demonstration of the continuous improvement achieved by Saipem in terms of conversion of EBITDA into cash.

Let's now move to the order intake in Q2 and our expectation for the rest of the year. Our commercial activity accelerated in the second quarter, leading to an overall order intake of EUR 5.7 billion for the first half of the year. Considering the EUR 2.3 billion of award already signed in the month of July, we already reached a cumulative order intake of around EUR 8 billion, higher than when we achieved in the first nine months of 2025. We can confidently say that for 2026, we are on track to exceed the order intake achieved in 2025, also in the light of the various commercial discussion we are having with clients. Just to give you a bit more color, commercial discussions are already -- are relatively broad-based and revolve around projects in Latin America, Africa, Middle East and Far East.

Let's now look at the recent order intake in the offshore E&C. The most recent award was signed with Eni in the Ivory Coast for the third development phase of Baleine located in water depths up to 1,300 meters. In addition, Azule Energy has awarded us the Greater PAJ development in Angola, which represents one of the most significant ultra-deepwater project in sub-Saharan Africa at a depth up to 2,000 meters. The Baleine and the PAJ projects will keep FDS and Shen Da vessels busy in West Africa for 2027 and 2028 and further densify the planned utilization of our fleet.

Despite the ongoing conflict, our clients in the Middle East remain positive and eager to push forward their investment plans as demonstrated by the two CRPOs awarded to us by Aramco, which we already discussed during the Q1 call. Lastly, we continue to build on our relationship and track record with Exxon in Guyana, and we expect that the limited notice to proceed from long tail will turn into a full EPC contract later in the year.

Let's now move to the recent awards on in onshore engineering and construction. The order intake of the last four months is fully in line with our new strategy for Energy Carriers, both in terms of project type as well as in terms of derisking. In term -- in terms of project types, biorefinery in Italy remain one of the most important areas in our energy transition portfolio. We are progressively increasing our exposure to FPSO fast track projects with appropriate contracting models and in particular, in Indonesia, where we can rely on our Karimun yard.

We have increased our backlog in the operating and maintenance segment through a multiyear extension from a key client. We won a new gas treatment plant project for Aramco under the National EPC Champion Programme in partnership with one of the most important and reliable local construction companies. We have also started the internationalization of our sustainable infrastructure division with the first project in Romania.

In terms of derisking, each of those contracts and project is different, but they all share a common approach based on a mix of the following tools: first, early engagement through Pre-FEED and FEED activities; second, hybrid contracts with significant portion based on remeasurable provisional and cost plus fee mechanism. Third, Tier 1 construction and fabrication partners responsible for their own portion. Fourth, maximization of utilization of Saipem yard for fabrication and integration of modules. Fifth, clients supply critical items. All in all, approximately half of the aggregate scope of work of this project is derisked through a mix of contractual scheme and other levers.

Let's now look at the disposal of our shallow water drilling business. In late June, we have entered into a binding agreement with ADES for the divestment of Saudi Arabian Saipem Limited, the company which runs our shallow water drilling activities. The associated fleet is made by five units. Three owned jack-ups, the Perro Negro 7, 8 and 10 and two leased jack-ups, the Perro Negro 11 and 13. The transaction value amounts to USD 285 million and completion is expected in the third quarter of 2026. The disposal is part of our strategy to focus on deepwater and harsh environment offshore drilling operation and is also a natural continuation of the path which we started with the sale of the onshore drilling business in 2022.

Let me now turn into the recent commercial activity in the deepwater drilling segment. Last week, we have been awarded an important new contract worth $260 million for the Santorini drilling ship, which will be deployed in Ivory Coast for a long-term campaign with Eni. Operation will start between the end of 2026 and the beginning of 2027. The contract includes a firm commitment of approximately 18 months with additional option periods. This award further increases the level of utilization of our deepwater fleet and improve our revenue visibility for 2027, 2028 and possibly beyond.

To serve this contract, we are bringing forward the SPS of the drillship to the second half of this year that was originally planned in the first half of 2027. Based on the visibility we have at the moment, we are confident that our deepwater drilling fleet will be fully booked in 2027 and that the year 2027 will be virtually free of SPS maintenance activity for any deepwater vessel drilling.

Let me now give you an update on our operation in the Middle East. In the first half of the year, we recorded a good progress on the execution of our project in the region, notwithstanding some disruption in offshore operations. Vessel utilization has been proactively managed to minimize the impact of temporary suspension and late arrival of certain critical delivers to Hormuz. At the beginning of July, we completed three inbound crossing to Hormuz for critical deliveries related to the projects in Qatar. All in all, we managed to book revenue in line of our budget. However, the disruption brought by the conflict generated extra cost of EUR 70 million in the first half of the year.

To give you more granularity, these extra costs related to higher rates for barges and tugboats, higher insurance premium, the cost of temporary storage of certain components, the standby cost of certain vessel and project teams as well as the impact of temporary repatriation of expat family members. We expect to recover a portion of this cost subject to the outcome of the commercial discussion ongoing with the clients.

For the second half of the year, we forecast a similar situation to the one experienced in the first half with good progress on the delivery of the projects, but with some extra cost of similar magnitude.

Let me now give you a brief update on Courseulles. The execution is progressing steadily, and the drilling activity is proceeding at a very good pace. To date, we have successfully drilled 36 sockets and installed 23 monopiles. This means that since our update in late April, we have added 12 new sockets and eight new monopiles. We confirm the completion is expected in Q1 2027.

Let me now give you an update on our commercial pipeline. As you can see from the numbers, the opportunities set in front of us remain robust and continues to grow. In terms of mix, we see attractive prospect in offshore engineering and construction, both conventional and SURF. At the same time, in the onshore engineering and construction space, we are seeing opportunities in upstream, LNG, FPSO, fertilizer, biorefineries and sustainable infrastructures. Geographically, our pipeline is concentrated in the Middle East as well as in Africa, while we also see attractive potential growth in Latin America and in the Far East.

Let me now hand over to Paolo to cover the financial results in more detail.

Thank you, Sandro. Good morning, everyone.

I'll begin with Slide 15, which provides an overview of Saipem main results for the first half of 2026. Revenue grew by 1.9% year-on-year to EUR 7.3 billion, while adjusted EBITDA grew by 9.4% to reach EUR 836 million. The adjusted EBITDA margin continued to improve year-on-year, rising to 11.4% compared to 10.6% in the first half of the last year. As mentioned by Sandro, our performance in the first part of the year was affected by extra cost of EUR 70 million due to the conflict in the Middle East. Without these costs, our adjusted EBITDA margin for the six months would have been equal to 12.3%.

Net results stood at EUR 131 million on an adjusted basis, whilst operating cash flow stood at EUR 841 million, in line with last year. The difference between adjusted and reported results reflects a provision booked in Q2 for EUR 35 million in relations to the implementation of an early retirement scheme for Saipem employees in Italy. Approximately 2/3 of such costs are associated to the Energy Carriers division. These costs are expected to continue in the second half of the year for approximately EUR 69 million for a total of EUR 104 million. This initiative will bring substantial savings from 2027, and will help rejuvenating the overall population of Saipem in Italy.

Let me now turn to the performance of the three business lines. And I'll start from asset-based services on Page 16. Revenue in the first half of 2026 stood at EUR 4.3 billion, representing a 5.3% increase year-on-year. Such performance was mainly driven by strong progress of our projects in Latin America, the Far East and North Africa, partially offset by the completion of Sakarya 2 in Turkey and Búzios 7 in Brazil. The mix between conventional and the 25% year-on-year with a margin expansion of 2.5 percentage points versus the same period in 2025. The margin expansion was mainly driven by a better project mix and by a higher utilization rate of the construction fleet. The strong results also factor in the disruption brought by the conflict, which has generated extra costs for EUR 70 million for the group, of which 80% associated to the offshore E&C projects in the Middle East. Without these costs, our adjusted EBITDA margin would have been 17%.

The growth in adjusted EBITDA more than offset the increase in the lease component of D&A, driving adjusted EBIT margin up by 60 basis points year-on-year from 5.4% to 6%. Excluding the costs associated with the conflict, the EBIT margin would have increased to 7.3%.

Anticipating the project execution in the Middle East remains resilient and broadly in line with the first half of the year, we expect revenue in the second half of 2026 to grow in the mid- to high teens compared with the first half with an approximately 100 basis point expansion in both EBITDA and EBIT margins.

Let me now move to Drilling Offshore on Page 17. The year-on-year decline in both revenue and EBITDA mainly reflects the reduction in the size of the fleet following the exit of the Pioneer and the Perro Negro 12 jack-ups in the second half of 2025. Second, the lower activity by the Scarabeo 9, the Saipem 10000, the Perro Negro 8 and the Perro Negro 11, with the last three units undergoing ordinary maintenance in the first half of 2026.

Marginally lower day rates for the Saipem 10000, the Santorini, the Scarabeo 9 and the Perro Negro 7. Last, the additional costs related to the termination of the operations of the DVD and the related handover of the drillship to the owner. This was partially compensated by the higher day rate of the Scarabeo 8, and the higher utilization of the Ferro Negro 10 and the Saipem 12000.

Assuming the completion of the disposal of the shallow water drilling business at the end of September and taking into account the planned maintenance CapEx for the Santorini, which was brought forward from 2027 to 2026, we expect a double-digit decline in revenue in H2 2026, low teens EBITDA margin for the second half of 2026 and a breakeven EBIT for the entire 2026. For 2027, we don't expect any major maintenance activity for our drilling fleet.

Let's now conclude the review with Energy Carriers on Page 18. Revenue remained broadly stable year-on-year. This was the result of an increased contribution by projects in Italy and in the Far East, offset by lower contribution of projects in the Middle East and in Africa, the latter despite an increase in the revenue due to the restart of the Mozambique LNG project for Total.

Adjusted EBITDA margin rose by 60 basis points year-on-year, mainly because legacy project volumes continue to decrease. As in asset-based services, the Energy Carriers business line absorbed 20% of the EUR 70 million of extra costs related to the conflict in the first half of the year. Assuming no major disruptions in the Middle East, we expect high teens growth in revenue in H2 versus H1 and a broadly stable EBITDA margin.

Let's now take a look at the figures below EBITDA, as shown on Page 19. D&A increased by 20% year-on-year. As discussed several times already, this reflects the growth of the fleet on a chartered basis as well as the change in accounting treatment for the DVD vessel. In particular, D&A related to leases increased by 50% year-on-year from around EUR 240 million to around EUR 360 million. The overall level of D&A expected for full year 2026 is confirmed at around EUR 1.1 billion.

Financial expenses stood at EUR 66 million in H1, a decline of EUR 28 million year-on-year, reflecting mainly a lower hedging cost on the back of the reduction in the interest rate differential between the euro and the U.S. dollar as well as lower volumes of traded derivatives. And then a decline in the net financing cost ex IFRS 16 as a result of the decline in the gross debt and growth in the cash position would generate a positive yield, partially compensated from the higher interest due to leases and exchange differences.

Financial expenses for the full year 2026 are expected to be approximately 15% to 20% lower than in 2025. Income taxes rose year-on-year by 20%, implying an effective tax rate of 47.5% on a reported basis for H1 2026 compared to 34% a year ago. This is mainly due to two factors: a tax settlement in West Africa and the difference profit mix between the various companies of the group. These two effects are expected to impact H2 and as such, the tax rate is expected to remain stable on a reported basis in the second half of 2026 compared to the first half of 2026.

Let's now focus on the cash flow and net financial position on Page 20. In H1 2026, considering the EUR 330 million dividend paid in May, the pre-IFRS 16 net cash position improved by EUR 79 million and stood at EUR 1.1 billion at the end of June. This is primarily due to the cash generation totaling EUR 388 million, which was supported by the strong performance of the business as well as a release of cash flow from working capital as some key projects were completed.

More broadly, the improved cash conversion we have experienced in the last four years is mainly due to the improved quality of the projects and the related contractual terms as well as the optimization of the working capital management. Lease liabilities declined by EUR 84 million in the first half and are expected to continue to decline in the next two quarters as we release some chartered vessels back to the owners with the expected completion of some specific projects. In fact, we expect lease liabilities to decline to approximately EUR 900 million at the end of 2026. Lease repayments in H1 2026 amounted to EUR 305 million, and we expect lease repayments to be around EUR 650 million to EUR 700 million for the full year 2026.

Now to wrap up, let's quickly look at the Saipem debt and liquidity position at the end of June. Our liquidity position is very solid and stands at EUR 3.5 billion. This is made of EUR 1.3 billion of available cash, EUR 1.6 billion of cash in JVs and EUR 600 million related to the undrawn RCF. As anticipated last year, we are looking to reduce gross debt by repaying all maturities that fall in 2026. So far this year, we have, in fact, already repaid using available cash, EUR 30 million related to an SCA facility in April and EUR 241 million worth of EMTN bonds at maturity in mid-July.

We also have a clear target to achieve an investment-grade credit rating in the medium term, a target which is well supported by the conversation we are having with the rating agencies.

I'll now hand back to Sandro for his closing remarks.

Thank you, Paolo. Let's now go through our updated guidance for 2026. We are now five months into the conflict and acknowledging the situation in Hormuz and it is still unclear, we think it is prudent to update our guidance for 2026, in particular. In terms of revenue, we confirm the guidance issue in February, also considering the resilient project delivery in H1. In terms of EBITDA, we are considering the extra cost booked in H1, our estimate for possible extra cost in H2 as well as the impact of the deconsolidation of the shallow water drilling business. We are, therefore, adjusting our EBITDA guidance from EUR 1.9 billion to EUR 1.75 billion.

We confirm our operating cash flow guidance, thanks to the structural improvement in cash flow conversion. Our free cash flow guidance is also unchanged. For the sake of clarity, this number does not include the extraordinary proceeds we expect to receive from the disposal of the shallow water drilling business.

Let's now wrap up with some closing remarks before we turn to the Q&A session. In the first half of the year, notwithstanding the Middle East conflict, our project delivery was resilient and our cash flow conversion continued to improve. We have recently seen a meaningful acceleration in the order intake, and we are on track to comfortably exceed 2025 volumes.

In front of us, we have a growing and well-diversified commercial pipeline. The disposal of the shallow water drilling business will allow us to fully focus on the deepwater activities. We have achieved the full utilization of the construction fleet for the next two years. The prospect of our industry remains strong and are further reinforced by increased need of energy security and diversification. Thank you for your attention, and we are now happy to take your questions.

[Operator Instructions] First question is from Alessandro Pozzi, Mediobanca.

The first one is on the guidance. I think it's quite reassuring to see that you haven't changed the revenue guidance, meaning that, I guess, the progression of milestone is still as expected. So there's no meaningful change there. But EBITDA is coming down. If I look at the second half, that implies maybe extra cost of EUR 80 million compared to the EUR 70 million in Q2. So I was wondering can you give us a bit more color around what are the assumptions for the new guidance for revenue and especially EBITDA in terms of extra cost? Do you expect the current situation to persist? Or is it based on some sort of normalization in the second half?

And with regards to the extra cost, how confident or how much of the extra cost do you think will be reimbursed by the clients given this is not your fault. The second question on the merger with Subsea7. I'm not sure how much you can say, but I was wondering, are you surprised that this is entering Phase 2 now in Europe?

Okay. So in terms of guidance and the cost that we have been -- that possibly we incur in H2, you were mentioning EUR 80 million. If we look at the figures, this is not entirely due to the extra cost -- that we possibly faced in the conflict, but also includes the missing EBITDA coming from the disposal of the shallow water drilling fleet. So the EUR 80 million is the sum of the two. Our assumption is pretty simply a linear that we possibly incur in the same level in H2 of extra cost we incurred in H1. So this is the basis for the, let's say, our updated guidance.

Regarding the merger situation in terms of antitrust authorities all around the world is that we have to clear 16 antitrust authorities around the world. We already received positive clearance from eight antitrust authorities. We are entering in Phase 2 in many situation, so not only -- in Europe, but also in Australia as it is well known. And this is perfectly understandable considering the size of the merger and the business. And I would say that this has to be considered normal in these circumstances.

And with regards to the reimbursement of costs that also on the second half, I guess, you have six months of potential disruptions, whereas I think in Q2, probably you have four months. So the EUR 70 million is probably based on four months. So I was wondering in terms of assumptions, do you expect own more inbounds over the next few weeks and months, some sort of maybe normalization in the Gulf?

Okay. So let's come to the first. Possibility of recovering extra cost from the client is clearly present. We are currently discussing with them. Some of them, they clearly -- they already gave us positive indication. But those are variation orders. They require a bit of a lengthy process. So we may expect to factor in 2027 rather than 2026. This is something that we have to acknowledge.

Again, on the forecast for the next, let's say, the H2, I consider the same. It's not a matter of being four months or six months. It's a matter of having the let's say -- having to acknowledge that some extra cost will last for a while like the extra premium for the vessel, extra cost for local tugboats or local supporting vessels. So this is, let's say, the bulk of the extra cost we envisage.

Okay. Just a final one. I think in Q2, you had 30% of the revenues coming from the region. I believe is that a good estimate also for maybe 2027?

I'll leave to Paolo on this.

Yes. I mean the number for 2027 is very close to 2026. So the region keeps accounting for a significant portion of our backlog.

Next question is from Mark Wilson, Jefferies.

Obviously, I've got to ask regarding the Middle East more on the cost there. But in particular, Alessandro, could you speak to the transits? You clearly managed to manage some of those transits. You spoke last quarter about between May and July, and you said you've managed to get some. So where do we stand in terms of materially important transits for the rest of the year and how that relates to those costs?

Second question for you, Paolo, on working capital. You mentioned you had some projects that had completed and we did see the positive inflow from working capital. So are there any more of those to expect in the second half? And indeed, into '27, I imagine legacy projects might be part of that.

Okay. So in terms of transits, we managed by the beginning of July to have three very important transit. So we have three inbound important deliveries for projects in Qatar that are allowing to make actual progress in those projects specifically in the so-called COMP2 project where we managed to pass with large living quarters that has been set on a jacket that was already in place. So that was very important crossing.

We managed also to have an outbound crossing for deliveries from the Middle East to the Far East, other critical. So that was, let's say, a good achievement also recognized by clients. Basically, like many other operator with a good work of readiness, we managed to cross in the window one week where many other operators managed to have their crossing Hormuz prior situation became again, let's say, complicated.

For the future in the year, that are planned in the second half 10 inbound -- some of them are again for the COMP2 project in Qatar. So that are the [deck] for the compression for EPC 2 jacket and a jacket for EPC 2 and jacket for EPC 3. So this is why we envisage a situation in the second half that could be similar to the situation of the first half. So with some window in which we can, let's say, cross Hormuz safely and -- but we may be associated with some waiting time to wait the right time to cross. Clearly, any waiting time is also generating extra rental cost for the vessel and then the situation is also very much influencing the insurance premium. So that's the reason why we are seeing a second half possibly similar to the first half.

Is this a prudent view? Yes, I believe it is a prudent view. But I believe that owing the circumstances, we must be prudent. Regarding the rest, I leave the floor to Paolo.

On the cash generation and working capital. So Mark, I think that, I mean, there is a trend that we have seen in the -- starting from 2023, which is a higher -- structurally higher cash conversion compared to the past. And the reason being that there is a better mix of contracts and contractual terms. There is also a much more focus on working capital in general. And the efforts are paying off because we gained quite a few percentage points of cash conversion in 2025 already, but then the trend continued in 2026.

Now yes, there have been a few projects that contributed to the decrease in the working capital. But more in general, I can share with you a couple of additional insights. The first one is that when you look into the commercial liabilities, so payables to suppliers, they didn't increase in H1 2026. And also the advances from clients decreased. And that gives you an indication of the quality of the -- of their performance and the reason why I called it a structural trend rather than a short-term movement in the working capital.

Also because if it's not the liabilities, it should be the current assets contributing to the cash, which is good news because it tells you a lot about the contractual terms of the new contracts. And as the new contracts kick in, you get the benefit when it comes to the overall working capital.

And if you look at the wider picture in the last year, so from June 2025, working capital decreased roughly EUR 300 million or EUR 250 million, give or take. And that is mostly because of the trends I just shared. So I think it's a structural thing, and we're enjoying the benefits of the work.

Next question is from Mick Pickup, Barclays.

Two questions, if I may. Firstly, just on the drilling side, it's been a while since we've missed on drilling estimates and it's obviously because of maintenance. Can you just run through what you said about the maintenance on what we're missing in the second half? I know you said 2027 is quite a clear year, but can we just get the back half of '26 sorted out, please?

Okay. So the main event for 2027 is that we went through SPS for Saipem 10000 that will end at the end of July in a few weeks and then beginning of August, the rig will start working back in the Mediterranean. The new event is that since we signed this contract for Ivory Coast for the Santorini, we -- starting from beginning of 2027. And since the client wanted a clean start, we anticipated and so we brought forward SPS that was expected at the beginning of 2027 into 2026. We are now accounting 60 days of SPS end of -- end of in the second half of this year. In 2000 -- during this year, we did also maintenance for Scarabeo 9. So situation is such that next year, we will not have any planned SPS for the drilling fleet in the quarter. That's the situation.

Okay. And then on that redundancy cost that popped up in the quarter, obviously EUR 35 million this quarter. I think you said it's EUR 100 million for the year. Can you just talk about when the cash goes out for that?

I will leave the floor to Paolo.

So the cash would be paid when the colleagues will leave the company. So it's going to be partly in 2026 and then 2027 and onwards. We think that this year it's going to be roughly EUR 30 million, the cash out from the redundancy plan. But I think we should focus on the benefits in the medium term because from 2027 we'll experience significant benefits in terms of labor cost and most importantly, will significantly reduce the average age of the working population in Italy.

So there's also -- there's only this accounting treatment because you have to account for all the cost in advance and as always, and then you will see the benefit as the colleagues will leave Saipem end of this year in 2027.

Okay. And what is the rationale for getting rid of your most experienced people?

Well, actually, I mean, it's not that we are [indiscernible] people leaving the company because the way it works is that the colleagues can express their willingness to leave the company and the company can accept or not. So it's a case-by-case -- it's a case-by-case discussion. And the most valuable people, I don't think they are leaving the company because of the early retirement plan. This said, it's in the right if they don't want to work anymore to enjoy their retirement, right? So it's a business -- almost a business as usual kind of decision. The fact is that in Italy, there is a law that allows people to retire as earlier as five years compared to the original retirement age. And some colleagues decide to enjoy their lives [indiscernible]. I wish I was in that age, not yet.

Next question is from Massimo Bonisoli, Equita.

Two questions. One, if you could explain the rationale of recognizing the Middle East related extra cost upfront in Q2 and then in second half rather than waiting for the conclusion of the commercial discussions with the clients on potential recovery or pass-through. I understand it is prudent by doing so how did it work in the past? And the second question, could you share some indication on recent trends in offshore drilling day rates? Are you seeing any signs of improvement? Or should we still expect a more mixed environment in the short term?

Okay. Regarding the first one, and let's say, the decision to consider possibly in second half the same cost we incurred in the first half. The fact that this cost may recover by the client is on the -- it is clearly -- it's a fact. But this process will require a while. Certain client, they gave us already positive, let's say, indication that they are willing to do so. But based on past experience, like if you want to recall the time of the COVID and the extra cost we incurred at that time, there was a compensation, a partial compensation, but it came, let's say, it's a process that may take six months, seven months. So as I said before in the call, most likely, this restoration of this cost will actually occur in 2027 rather than in 2026.

So the way it works is that now I have to -- have a way in another make clear that there are this possible extra cost in the second half of the year. So possibility to recover is real, but there will be a mismatch of time compared to our reporting exercise as it happened for the COVID.

Regarding the daily rates in drilling, I would say that we are still in a mixed environment. There are signs, good signs, but also some -- it's also true that some clients are postponing right the start-up of their drilling activities. Therefore, it may possible that in 2027, we will see a more clear direction in the daily rates. Today, the environment is pretty steady, I would say.

Next question is from Sebastian Erskine, Rothschild & Co Redburn.

The first one just on the Middle East. I guess beyond the one-off cost, is there a risk that the structurally higher tugboat costs, logistics costs, insurance costs kind of drive structurally lower through-cycle profitability of engineering and construction work in the Gulf? Or is that the wrong way to think about it? I guess the commercial activity is very strong, but I'm just thinking about actually over the medium and long term, what the profitability of that work might look like?

The question is also the question that we are asking ourselves in these days. I would say that as soon as the situation on the Hormuz get clear and we return to the previous, let's say, to the situation that was back in February, there is no reason why the cost should not return at that level. And I would say -- so that's our view. As soon as we are back to normal crossing, for example, insurance premium, they should go back to what they were before the beginning of the conflict, just to give you an example. So I would rather say that this is a localized effect that should come to an end as soon as situation will be similar to the one that was back in February this year.

Then there is -- but there is a different -- there is also a different angle that if it is true, like we see that there will be a surge of activity in the region, there could be some inflation of cost, but not because of the water, but because of a surge of activity. But if there is a surge of activity, then the extra cost is compensated within the new contracts. So I would say that all in all, we do not see a deterioration of marginality in the long term in the Middle East.

That's very helpful. And then just a question on Exxon Energy Carriers. See the margin does remain quite weak at sort of 2% EBITDA. Obviously, Mozambique LNG is kind of restarted. But maybe you could give kind of a sense of the timing of the recovery in profitability. I think, Paolo, at some point, you were talking about potentially getting back to sort of mid-single-digit EBITDA margins. What's the potential kind of timing on that recovery in Energy Carriers?

So we do expect clearly 2027 change to be different and to be definitely better. Many of the project that are keeping the marginality of the anchor pretty low and constant are coming to an end during this year. So that's -- so there should be no reason why in 2027, we should not see an improvement on the marginality.

Next question is from Guillaume Delaby, Bernstein.

Two questions, if I may. The first one is once again on the Middle East. Can you give us maybe a little bit of color about what your logistics -- how your logistic is currently working? What is, I would say, typically the proportion which goes from Saudi Arabia to the Red Sea, the proportion which goes, I would say, through the Omanian coast and maybe as well the proportion from the Strait of Hormuz or are there also some other logistical routes? So this would be my first question.

My second question is regarding, I would say, the offshore/subsea market. I know we need to differentiate a little bit, but the market is super, super, super strong. So my question is currently are your new offshore/subsea contracts, do they still carry higher margin than the contracts you were taking maybe in 2025?

Okay. So I will give you an answer to the logistics. So we operate in three main countries in the Middle East, Saudi Arabia, Qatar and Emirates. So clearly, nowadays, some of the deliveries that we were used to get for Saudi Arabia through Hormuz in the Gulf, now they are coming from the ports of the Red Sea and then having -- and then being transported by lorry into the East Coast of Saudi Arabia. Similar things happens in the Emirates, where deliveries that were expected directly, for example, in Abu Dhabi, they -- now they are landing on the -- in the coast of the Emirates on the Oman Gulf.

So while for Qatar, as I was saying before, delivery of large items like the jackets and the decks that they are built in the Far East to the for to be installed in Qatar waters -- in Qatari waters, they still need to pass through Hormuz. And as I mentioned before, three of them passed within the first week of July and others, they have to pass through in the next months. This is how the logistic works in these days.

Offshore market, subsea. Now it's true that there are many opportunity. Some of those you have seen by our recent acquisition being captured. There are further in our pipelines, especially, I would say, in the Sub-Saharan Africa but initiatives are also in the Far East as well. There are many developments associated they're in all deepwater, for example, in Indonesia. So clearly, we see activity coming up. Now the ability of turning this activity into higher margins has always to be confronted with the ability of our clients and their bargaining power that remains very strong. So their decision of investments are very much linked to get the right price for the development.

So in many situations, when you run a tender and you win a tender, in practice, you do not win a tender, you win the right to negotiate with the client and the client will like to further squeeze your margin prior coming to the assignment of the contract. So margins in the deepwater activities are nice. But I would not rely on the fact that they become nicer because of the increase of the demand.

Next question is from Guilherme Levy, Morgan Stanley.

I have two, please. Firstly, just going back to the provisions related to early retirement. Is there scope to do that in other countries as well? And was that somehow embedded in the one-off cost that was guided at the time of the merger Subsea7 of EUR 270 million to implement various types of synergies?

And then secondly, thinking about your pipeline of new opportunities, there was a jump in Middle East onshore E&C work, particularly between the first quarter and the second quarter of around EUR 3 billion of new projects that you could bid for. Can you talk a bit about the profile of those new prospects? Is that related directly to reconstruction work? Or is that mostly greenfield projects outright?

Okay. I'll take the first one on the early retirement. Well, every country is different from the other. So the way it works in Italy is different from any other jurisdiction. So you should go country by country. Every country has its own schemes, if any. So it applies only to the colleagues employed by Italian companies. And no, they were not included into the cost of the synergies, if that is the question because we would have done it anyway even without the merger. And as I said it many of the colleagues -- a big part of the colleagues will leave the company from the Energy Carriers rather than the offshore. And -- but obviously, the cash cost is included and was included in the cash guidance for 2026. So the guidance is really net of those costs.

And then the other question was on the commercial opportunities, I guess, if you want to take it?

Yes. On commercial opportunities, we still -- as you rightly mentioned, we still see many opportunities in the Middle East. I would say that both offshore and onshore is not only onshore activities. The national oil companies in the Middle East, they are very resilient and strong. So they -- even owing the current circumstances, they are keeping looking at their future for development of reserves and optimize production of oil and gas. So therefore, they are looking to new -- a new project.

The Uthmaniyah project is one of the key of those projects that is to improve ability to produce gas in Saudi Arabia. And on our side, it represent a big change compared to the projects we acquired back in 2018, 2009 in Saudi Arabia, just to make the name [Berri and Marjan]. Those projects that were acquired by Saipem 100% taking the full risk of the project. The new Uthmaniyah project is acquired under the new scheme of the National Champion. So we are 50-50 with, I would say, a main and very reputable local contractor with which we share the risk of the project.

The National Champion project is a program launched by Saudi Aramco to really get growing the local capacity of building EPC contracts. So Saudi decided -- Saudi Aramco decided to give to those new association of an international contractor and a local contractor seed projects to let this activity start up. Under this setup, I would say that our risk profile is fundamentally reduced compared to the previous project acquired in Saudi Arabia and fully satisfied our current risk appetite for project on land and generally speaking, in the anchor division of Saipem.

So this is the rationale for acquiring. So we will be -- we have been and we will be very selective when acquiring project on land and only if the new risk appetite is satisfied, we will get it. Uthmaniyah was fully satisfying this condition.

Next question is from Kevin Roger, Kepler Cheuvreux.

Frankly, everything has been asked, but just to be sure that I well understand the '26 updated guidance. So the EUR 1.75 billion that you are guiding includes the EUR 70 million additional cost that you have booked already now in Q2, but also the EUR 70 million potential additional costs that you're going to see in H2. Just to be sure that I understand well the '26 EBITDA guidance with those Q2 and H2 costs.

That's correct, Kevin.

Okay. So you took a very conservative in a way approach. And just to be sure, the -- let's say, I don't know if you want to provide a number also, but the adjustment in the guidance also relates to the shallow water disposal. Is there any sense to assume what was the, let's say, expected contribution of the shallow water for, let's say, H2 EBITDA at the group level?

Well, Kevin, this is a number we can't share because of confidentiality with the buyer. But we shared the revenues for 2025 for the shallow water fleet. I remember the number close to EUR 170 million of revenues, make your assumption on the margins and you can guess what is missing in Q4.

Next question is from Victoria McCulloch, RBC.

Thanks for detailing the risk -- the derisking of these new awards. I wonder if you could talk to a bit about how much the increase in the tender pipeline, not necessarily year-on-year, but maybe over the previous couple of years has been due to you being open to these new types of projects within sort of the bidding framework? And also in connection to that, how that has changed geographically the split of the tender pipeline?

And then secondly, given the recent escalation this month in the conflict and the volume of cargoes to pass through the strait in the coming months, what kind of assumptions have you made in terms of potential delays within your guidance that you've retained today? Is there an element of that and in the numbers that we see today?

Let's start from the second one. Basically, as we -- as I said before, in the second half, we expect 10 inbound crossing on the -- in the Hormuz to feed our projects activity, mainly to feed our offshore project activities. And I would say, mainly in Qatar because construction activity in Saudi and in the Emirates is done locally. So why we are possibly -- we see this possible extra cost also in Phase 2 because we do expect a similar situation that in Phase 1. So a situation in which you may achieve the crossing. But this crossing will imply waiting time of your cargoes, basically waiting when there are the right safe condition to cross. And this is exactly what we did in the first half. We had the jacket for the urea project in Qatar loaded out in Oman. And basically, this jacket waited almost one month, if not more, the right window to cross safely.

So -- but clearly, while you are waiting, you generate extra cost because you still have to pay your barges longer. Your tax are booked for longer times because some of these heavy equipment like jackets and deck are loaded either on barges that are towed by tax or loaded in heavy transportation vessel on which you pay the daily rate.

So if you're crossing instead of lasting, for example, from China to Qatar 1.5 months is you end up lasting -- the crossing is lasting two months, three months because you have to wait the entrance in Hormuz in the right time to cross, then you generate extra cost. So this is the reason why we say that in the second half, we possibly have extra cost similar to the one we incurred in the first half. You may argue that you did three crossing and then you have to do 10 crossing. So there is no proportion between the two extra costs. But the fact that it is also true that we made some experience, so we need which is the degree of preparation, what to do and how to handle the situation in such a way that when the windows are right, we're ready to cross.

Basically, in the first -- during the first half, we spent lots of time to understand how to make a safe crossing. Now all this is experience done. So that's the reason why all in all, we think that we possibly have in the second half a very similar amount of extra cost than the first half. So -- but then there was another question that I may lost. [indiscernible]

Okay. Regarding the commercial pipeline, now the commercial pipeline is increasing because we see in front of us much more opportunities than we were, let's say, experiencing one year ago. There are plenty of calls for tenders, both onshore and offshore. But I would say we will try to keep fit. So our appetite for new projects will be only if the new projects are within our new company risk appetite. The fact that there is a bit -- that is a wider commercial pipeline ahead of us has to be interpreted in a way that this will allow us to be a bit more choosy than we were in the past.

If I could just ask a follow-up on the first part. And [indiscernible] question. Is there no impact from the revenue recognition on the delays that you experienced in Qatar and the expectations you have for the second half of the year?

Yes, because at the end, those projects are very complex projects. So it's not immediately a late delivery is not -- doesn't -- why a late delivery does not impact immediately the revenues? This is the -- I repeat your question and try to understand whether I got it right or not. So if this is the question, those are such complex projects where in the short term, a late delivery of certain equipment in the overall project schedule is compensated by -- by bringing forward other activities that you can carry out while waiting that kind of equipments. All those equipments, they are not on the critical part of the project. But within the project schedule, in the short term, we normally do -- as we normally do, we continuously update the schedule in order to make progress, although there is some part of equipment for -- in the way when another is late. This is part of normal project management and optimization. There are many reasons why certain deliveries are late in a project. In the most common situation is because the supplier is late on the delivery. In this case, there are no late deliveries because of suppliers, but there are late deliveries because of the difficulties of crossing Hormuz.

But the practical result is the same. While waiting the jacket, we lay, for example, we use the vessel to lay lines that are already in the country. So our installation fleet is not idle. It's simply bringing forward activities that were expected, for example, to be done later that are anticipated. So that's the reason why revenues are constant, while cost are possibly higher.

[Operator Instructions] Next question is from Alejandra Magana, JPMorgan.

I know you said overall, you don't see a deterioration of profitability longer term. But could you help us understand what proportion of the EUR 70 million of costs incurred in the first half could remain relatively sticky in the near term after disruption fees versus those that should unwind relatively quickly such as waiting costs?

If -- as I said before, if situation get back to normal, we do expect that extra premium we will be back to normal, rental of certain tax supporting vessel that now are increased because you have to use only equipment and tax and barges that are within the gulf. So you cannot bring competition from outside the Gulf. So that's the reason why pricing are rising.

As soon as, let's say, Hormuz reopens in full, then all these costs, they are supposed to disappear. As I said before, there could be instead, let's say, an increased logistic cost because there are -- there may be a surge of new projects in the area, the projects that are currently ongoing plus project that are coming from restatement of facilities being damaged by the war or -- so in this case, then you can have some cost, but cost that are associated to the increase of demand. So in that case, normally, there is no effect on margins. I mean, that's why I don't see a permanent deterioration of margins in the area in the medium, long term.

And my follow-up is how did the EUR 70 million of costs evolve through the period? And how is the run rate so far in July versus the first half run rate?

`Now you're asking me a very detailed. What we can say is that -- what I can repeat clearly is that we accumulated EUR 70 million in the first half, so as of the end of June. And we think that we possibly have same amount of extra expenditure in the second half. Clearly, you understand that situation can get better very soon or can get more complicated very soon. It is completely out of our hands. And even for a cutting, as you can imagine, it's not that easy. So I believe that the most linear choice we had and prudent was to say, okay, in the second half, possibly we consider same amount of extra cost we got in the first half.

Some of those that we -- are related, as I said before, extra cost of premium, extra cost of tax, extra cost of barges, extra cost due to deliveries with lorries trucks from the Red Sea and the Gulf of Oman to the East Coast of Saudi Arabia and the North Coast of the Emirates. That's the situation. If you are asking me whether I'm expecting extra cost linked to relocation of expat families like we did at the beginning of March, okay, I would say that that's a cost that I believe will not enter into the second half or more, I hope, will not enter into the second half as well.

Next question is from Christopher Copeland, Bank of America.

I'll try and give you some time back. And just to confirm, very quick one, the EUR 70 million, has that flown through to cash? That's it.

Yes, that's correct. It's money already spent.

Our next question is from Richard Dawson, Berenberg.

Just one question. Of these costs, in a best case scenario, how much of these could be reimbursed if your client negotiations go well? And how much will have to be absorbed regardless of those discussions?

Okay. So the extra cost, now it's difficult to say the exact percentage in which we can recover. Certainly, I will tell you what we will not recover for sure are the margins. Normally, when we bring cost to the clients, then on top, we have margins of those cost. In this case, clearly, there will be no margin associated to this cost. So that's we can say it for sure. But I believe we can recover a good part of those projects -- of those cost because they are all very well documented, but it requires then clearly clients to go through their own procedures for variation orders. And so I'm expecting spending a good time in the second half to negotiate this and maybe get results in the first half. I would consider myself very much satisfied if we can recover half of those.

Gentlemen, the floor is back to you for any closing remarks.

Okay. We don't have closing remarks. So I believe that we can thank you all and close the Saipem Q2 2026 results call.

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

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Saipem First Quarter 2026 Results Conference Call. [Operator Instructions]. At this time, I would like to turn the conference over to Mr. Alessandro Puliti, CEO of Saipem.

Good morning, and thank you for joining the presentation of Saipem First Quarter 2026 results. I'm here in Milan today with our CFO, Paolo Calcagnini, and with the other members of Saipem top management team. The agenda for this session is the following. I will start with an overview of the key operational and financial highlights of the quarter.

Paolo will then deep dive in the financial performance, and I will conclude the presentation with a few closing remarks. We will then open the floor to your questions. Let me begin with the key highlights of the first quarter. Saipem reported revenue of EUR 3.5 billion, in line with the same period of last year. Despite the conflict in the Gulf, we made strong progress on all our projects in the region, recording EUR 1.1 billion revenue in Q1 in the Middle East.

EBITDA in the first quarter stood at EUR 434 million, a year-on-year growth of 24%. EBITDA margin stood at 12.3%, representing an increase of 2.3 percentage points year-on-year and an increase of 0.9 percentage points quarter-on-quarter. The strong performance at EBITDA level is the result of the strong level of utilization of our construction fleet as well as the improved project mix. Thanks to the generation of almost EUR 200 million of cash flow, our balance sheet has further improved in Q1.

We ended the quarter with a net cash position of EUR 1.2 billion on a pre-lease basis. Order intake for the quarter amounted to EUR 1.7 billion, corresponding to a book-to-bill of 0.5x. As previously mentioned, we expect our order intake to accelerate in the coming quarters as already demonstrated by the awards announced in the last few days. The performance recorded so far this year, notwithstanding the conflict in the Middle East has been one of the key elements will led us to confirm our 2026 guidance.

We will come back to this in more details later in the presentation. In the context of the typical seasonality of our business, our delivery in Q1 has continued to be very consistent and resilient. As already mentioned, the conflict in the Middle East has not had a material negative impact on our operational and financial performance in Q1. While revenue growth is moderating, the growth trajectory remains very evident at EBITDA and cash flow level, also reflecting the improved quality of our portfolio.

Also, EBITDA margin has more than doubled in the quarter since the beginning of 2022. Notwithstanding the very strong cash flow generation in 2025, we continue to generate a substantial amount of cash in Q1 with operating cash flow reaching almost EUR 400 million. Let us now turn to the recent EPC awards. A big portion of our order intake to date has come from the Middle East, confirming the resilience of the commercial activity in the region. Since the start of the year, we have been awarded by Aramco 3 CRPOs for a total of $900 million.

These projects are aimed at maintaining the production level of Safaniya, one of the largest offshore oil field globally. The offshore operation for this project in Saudi Arabia will be carried out by construction vessels that are currently dedicated to the Middle East. We believe that fabrication activities will be executed at Saipem Saudi fabrication yard in Dammam, minimizing the risk of potential disruption in the traffic through the Strait of Hormuz.

In addition to the award from Aramco, we have recently announced a further project for Eni in the biorefinery space, this time in Sicily. This contract strengthened the collaboration launched in 2023 between Eni and Saipem for the development of biorefinery in Italy. The new Priolo biorefinery will have a capacity of 500,000 tonnes per year, offering high operational flexibility to produce SAF-biojet fuel and HVO-diesel fuel. All in all, since 2023, we have totaled more than EUR 1 billion of EPC awards in biorefineries.

Lastly, Exxon has assigned us Longtail, the eighth project in a row in Guyana, confirming the trust in our deepwater EPCI capabilities. We expect our order intake to accelerate further in Q2, in particular, with additional activity in the operating and maintenance space. Let me now turn to the recent commercial activity in Drilling Offshore. In the first quarter, we managed to sign contracts aimed at filling several gaps in our schedule for 2026 and to start building visibility for 2027 and beyond.

For the Saipem 12000, we secured 3 contracts, ensuring high level of utilization for the next 2 years. In particularly, we signed an extension of the contract with Azule in Angola, a new contract with Rhino in Namibia and a new contract in joint venture with Eni in Mozambique. For the Santorini, we have signed a contract with Eni in Ivory Coast. In the first quarter, we have also finalized the extension of the contract with Aker BP for the Scarabeo 8, which will now operate in Norway until March 2029.

Lastly, we extended the operation of the Perro Negro 4 that will continue to work for Petrobel in Egypt till the end of 2027. Let me now take a closer look at Saipem's operations in the Middle East. At the end of Q1, Saipem backlog in the region amounts to EUR 11.5 billion, mainly in the offshore segment. As you know, we have a dedicated fleet of construction vessel and drilling jackups in the Gulf.

It is important to note that this fleet is largely dedicated to the area, meaning that there is no need for additional vessel to enter in the Gulf nor for these units to transit through the Strait of Hormuz to execute projects outside the area. Project execution in Q1 has been steady with only minimal and temporary disruption being recorded. Considering the progress made in Q1 and the expectation that the traffic on the Strait of Hormuz will normalize in the coming weeks, we decided to confirm the 2026 guidance.

It should be noted a further prolonged closure of the Strait of Hormuz could impact the delivery of certain components, which are critical to Saipem project globally in addition to disrupting worldwide logistics and potentially driving up inflation. However, the current crisis is also likely to further reinforce the already positive outlook for energy investment globally on top of requiring additional investment needed to repair certain energy infrastructure in the Middle East. Let me now give you an update on Courseulles-sur-Mer.

We are making steady progress on the project. To date, we have successfully drilled 24 sockets and installed 15 monopiles. This means that since our last update late in February, we drilled further 6 additional sockets and installed 5 additional monopiles. We confirm the completion is expected in Q1 2027. Let me now give you an update on our commercial activity. As you can see from the numbers, our pipeline remains robust.

In terms of mix, we continue to see a solid set of opportunity in offshore E&C across both conventional and deepwater. At the same time, we are seeing encouraging prospect in FPSOs, upstream as well as in fertilizer, biorefinery and operating and maintenance segments. Geographically, our pipeline is largely concentrated in Middle East and Africa, while we see attractive potential for growth in the Far East. And let me now hand over to Paolo to cover the financial results in more details.

Thank you, Alessandro. Good morning, everyone. I'll begin with Slide 12, which provides an overview of Saipem's main results for the first quarter of 2026. Revenue was largely unchanged from the same period of last year at EUR 3.5 billion, while EBITDA grew by 24% to reach EUR 434 million. The EBITDA margin showed notable improvement year-on-year, rising to 12.3% compared to 10% in last year's first quarter and 11.4% in Q4.

The strong performance was mainly due to the expanding margins in the Offshore E&C segment, which more than compensated for reduced profitability in the drilling business line. Net result and operating cash flow stood at EUR 78 million and EUR 392 million, respectively, broadly in line with last year. The growth of the chartered fleets year-on-year across all business lines increased lease-related D&A, offsetting EBITDA gains and keeping EBIT flat.

This effect is more pronounced in Q1 due to the typically lower volumes in the first quarter of the year. The increase in the lease component of the D&A was both driven by the growth of the fleet of construction and support vessels, but also due to the DBD lease account treatment change in 2025. Let me now turn to the performance of our 3 business lines, starting from asset-based services on Page 13. Revenue in the first quarter of 2026 exceeded EUR 2 billion, representing a 2% increase year-on-year.

Such performance was mainly driven by strong progress of our projects in the Mediterranean Sea. In terms of specific projects, the most relevant ones that materially supported the top line were COMP3 in Qatar, Bouri in Libya and Neptune in Romania, which more than offset the impact of the completion of Sakarya II in Turkey. EBITDA stood at EUR 333 million in the first quarter, an increase of 33% year-on-year with a margin expansion of 3.7 percentage points versus the same period of 2025 and 80 basis points quarter-on-quarter.

The margin expansion was mainly driven by a better utilization rate of the owned construction fleet. The growth in EBITDA more than compensated the increase in the lease portion of the D&A, leading to an expansion of the EBIT margin of 50 basis points year-on-year from 5.8% to 6.3%. Now, assuming no major disruptions in the Middle East or Strait of Hormuz, we expect low single-digit revenue growth and double-digit EBITDA and EBIT growth for 2026, along with improved margins year-on-year.

Let me now move to Drilling Offshore on Page 14. The year-on-year decline in both revenue and EBITDA mainly reflects: first, the reduction in the size of the fleet following the exit of the Pioneer and the Perro Negro 12 jackups in 2025. Second, a lower activity by the Perro Negro 7 and Perro Negro 8, the latter undergoing ordinary maintenance in Q1 2026. Third, marginally lower day rate for the Saipem 10000, Santorini and Scarabeo 9.

These were partially offset by a higher day rate for the Scarabeo 8, higher utilization of the Saipem 12000 and the Perro Negro 10. All in all, we continue to believe that 2026 will be a transition year for our drilling offshore business, and we anticipate double-digit decline in both revenue and EBITDA compared to 2025 with EBITDA margin declining year-on-year. This is mainly due to the concentration of maintenance activities; some white spaces related to floaters and lower day rates on selected rigs.

Let's now conclude the review with Energy Carriers on Page 15. Revenue remained broadly stable in Q1. This was the result of an increased contribution by projects such as Mozambique LNG and biorefineries in Italy, fully offset by lower contribution by projects such as Berri, Marjan, and Jafurah in Saudi Arabia as well as Bonny in Nigeria. EBITDA margin almost doubled compared to the same period of last year and grew by 20 basis points quarter-on-quarter, reflecting the improved project mix.

Assuming no major disruptions in the Middle East or Strait of Hormuz, we expect revenue to decline slightly, while EBITDA margin to improve in 2026 compared to 2025. The restart of the Mozambique LNG project will contribute positively to the results, while project completion in various regions will partly offset the gains. Let's now look at the figures below EBITDA as shown on Page 16. D&A increased by more than 40% in 2026 compared to 2025.

As discussed, several times already, this reflects the growth of the fleet on a chartered basis. In particular, D&A related to the leases almost doubled year-on-year from around EUR 90 million to around EUR 170 million. The overall level of D&A recorded in Q1 2026 is a good proxy for the following quarters for a total of approximately EUR 1.1 billion expected in 2026.

Financial expenses stood at EUR 41 million in Q1, a decline of EUR 14 million year-on-year, reflecting mainly a decline in the net financing costs ex-IFRS 16, partially compensated from the higher interest due to leases and exchange differences as well as lower hedging costs due to a reduction of the interest rate differential between the euro and the U.S. dollar and lower volume of traded derivatives. Financial expenses for the full year 2026 are expected to be slightly lower than 2025.

Income taxes rose year-on-year by 15%, implying an effective tax rate of 37% compared to 34% a year ago. Tax rate is expected to decrease in 2026 from 40% reported in 2025 towards the 33% to 38% area. Let's now focus on cash flow and net financial position on Page 17. In Q1 2026, the pre-IFRS 16 net cash position improved by EUR 218 million to more than EUR 1.2 billion. This is primarily due to the cash generation totaling EUR 199 million.

Cash flow was especially strong in Q1 because it was not aided by advanced payments, which actually fell by EUR 80 million since the end of 2025, following a better-than-expected and above budget performance in 2025. Lease liabilities declined by EUR 31 million in the first quarter and are expected to continue to decline in the next few quarters as we release some chartered support vessels back to the owners with the expected completion of some specific projects.

Lease repayments in Q1 2026 amounted to EUR 138 million, broadly stable compared to Q4 2025. We expect lease liabilities to decline to approximately EUR 900 million at the end of 2026 from approximately EUR 1.3 billion at the end of 2025, whilst we expect lease repayments to be around EUR 650 million, EUR 700 million for the full year 2026. To wrap up, let's quickly look at the Saipem debt and liquidity position at the end of March.

Our liquidity position is very solid and stands at EUR 3.6 billion. This is made of EUR 1.4 billion of available cash, EUR 1.6 billion of cash in JVs and EUR 600 million related to the undrawn RCF. As anticipated 12 months ago, we are looking to reduce gross debt by repaying all maturities that fall in 2026 for a total of EUR 271 million.

We are, in fact, repaying using the available cash, EUR 30 million related to ECA facilities today, and we are planning to repay EUR 241 million worth of EMTN bonds at maturity in July. We also have a clear target to achieve an investment-grade credit rating in the medium term, a target which is well supported by the conversation we are having with the rating agencies. I'll now hand it back to Alessandro for his closing remarks.

Thank you, Paolo. And let's wrap up with some closing remarks before we turn into the Q&A session. In Q1, we clocked another strong quarter of delivery, growth and cash flow generation. The Middle East activities are currently running with limited disruption. The guidance for 2026 is confirmed based on the performance in the first quarter of the year, the steady progress on the execution in the projects in the Middle East since the start of the year, the supportive attitude of clients toward project execution and the expectation that the traffic through the Strait of Hormuz will normalize in the coming weeks.

As previously mentioned, it should be noted that further prolonged closure of the Strait of Hormuz could impact the delivery of certain components, which are critical to Saipem's project globally, in addition, disrupting worldwide logistics and potentially driving up inflation. However, in the medium to long term, the current crisis is also likely to further reinforce the already positive outlook for energy investment globally on top of requiring additional investments needed to repair certain energy infrastructure in the Middle East. Thank you for your attention, and we are now happy to take your questions.

[Operator Instructions] The first question is from Alessandro Pozzi, Mediobanca.

And let me start by saying that we all know that the situation is very volatile, and it's very difficult to provide any forward guidance, and I appreciate that you are reiterating the 2026 guidance. Having said that, there are 3 topics that I would like you to discuss in more details. And the first one is the short-term impact you mentioned delivery of critical components.

When -- if the situation doesn't improve, when is the timing of those critical components that will be delivered and that need to go through the Strait? The second question is, of course, higher oil prices will -- as you pointed out, will further support the outlook for orders. Are you really seeing a change in attitude from oil majors? And do you think there is going to be an even more focus now on deepwater projects outside the Gulf than before?

And last question on repair. You mentioned potential opportunities there. But also, I guess it's more onshore E&C. So you have a lot of competition from domestic players as well in the Middle East as well as from maybe Indian or Chinese. Can you quantify the size of the opportunity for repair work in the Middle East on the back of the conflict?

Okay. So I will try to answer. So let's start from the short-term possible impact. Basically, we will start to see some impact if Hormuz does not reopen by end of May, July. That's where we have some let's say, important crossing for the Strait of Hormuz for equipment that are -- some of them, they are going out from the region of the Gulf, and some has to be imported in the region of the Gulf. So our other reason is for your -- regarding your question is late May, July.

Then regarding the deepwater possible increase in activity, it's early, let's say, to comment on that. Clearly, if we recall the past cycle of the industry, high price of commodity has always driven high demand in terms of deepwater activity. So I believe it's fair to except that continuing the high price of the commodity, then there will be an increase of the demand for deepwater activity. Regarding the repair on the offshore, as you all know, there are certain facilities that has been damaged.

Yes, true, that as far as we know, although this information, as you can imagine, are strictly confidential, are located onshore. Regarding our position in terms of competitiveness -- of being competitive, let's say, sorry for not being able to pronounce it properly, being competitive on those kind of activity, yes, there will be competition, but we also have to recognize that several of those facilities have been built in the past by Saipem.

And so this gives us clearly an advantage in terms of knowledge, in terms of understanding of the plants and coupled with the fact that in several cases, we are already mobilized in the region. So for us, it will be easy to add this additional scope of work to our current activity. So we believe that we are well positioned in case that we are called from our clients to do this kind of activity.

Okay. And I guess you're also having maybe an increase in costs, maybe in insurance as well. And potentially, we'll see more inflation coming through. Do you think you can sit down with your clients and say, hey, this is not our fault. Potentially can we renegotiate some of the terms of the contracts?

So let's start from inflation. It is possible to predict there will be some inflation. Clearly, the high cost of the commodity drives on one side, the demand for infrastructure projects. But on the other side, clearly an increased inflation. Some of the contracts that we signed recently, they have provision to take care of increased inflation.

So part of that, that will be for sure covered. Insurance cost, yes, will be increased, but they are, let's say, to date manageable within the contingencies we normally carry for the -- within the projects that we are doing. So inflation can be an issue on the long run, on the very long run, but not in the medium term.

You have also to consider that most of the activity in the Gulf in 2026 is supported by materials already present in the area that they were purchased in the previous years. So we are not depending on, let's say, largely on items that should be purchased now. What we are going to install in the next 6 months is definitely already in the area. That's something that has to be taken into account also.

Next question is from Mick Pickup, Barclays.

Can I just follow on from Alessandro? Sorry to be on the same subject. Can you just talk about a few practicalities? So maybe for Paolo, milestones on contracts likely to slip. How does this affect working capital? Are your clients still paying? And secondly, on the pipeline, obviously, 34% of your pipeline is in the Middle East, and it's good to see you winning stuff for that Saudi captive work. But what's happening on those conversations and the projects to be awarded later this year? And do you, at some stage, decide to refocus some of your efforts elsewhere?

Mike, thank you. So I would say that our clients are very strong and resilient in the area. And definitely, we didn't recall any problems in payment, zero. So we -- and this is reflected also in the very positive cash flow figures we presented. And the signals that we are collecting is also that the pipeline of expected award is going ahead as per plan.

To date, we are not recording situation of project awards incurring in delay because of the situation, commercial activity, all the signals we have on commercial activities that commercial activity is going ahead normally, apart maybe some meetings being postponed between a few days in certain situation and maybe difficulties in traveling that we experienced during the month of March, but that is now over because even commercial flights are fully back operational in the area.

So beyond that, we didn't see any change of attitude of the client. And I personally made a trip 10 days ago in the Middle East, visiting our major clients, and I can confirm they are all very strong and resilient.

The next question is from Guillaume Delaby, Bernstein. Mr. Delaby, we cannot hear you, maybe the line on mute. Yes, now we can hear you. Please go ahead. Mr. Delaby, we cannot hear you again. Please check your microphone please.

Sorry. In fact, I'm going to pass it over because the questions I had have already been answered. So no reason to keep the mic open.

The next question is from Mark Wilson, Jefferies.

I'd like to ask Paolo, actually, specifically regarding the onshore E&C, the Energy Carriers. Only 8% of backlog in the Middle East for Energy Carriers. You spoke last quarter about finishing the remaining or most of the remaining legacy contracts. Mozambique has restarted. I just wondered about your guidance for slightly improved margins this year and whether there is any inflation cost within that expectation. I'm just wondering where you think Energy Carriers margin could be going to given new set of projects starting up and finishing the other ones versus that guide you talked about?

Yes. Thanks, Mark, for the question. So the first comment is on the projects in Saudi. Yes, it's true that most of them will be completed by this year, well, all of them actually. And this is also what drives up the margins for the business line. As you can remember, 2 of the big projects in the area were behind the profit warning. And yes, obviously, the new projects are being acquired with better contractual terms and better conditions.

We remain convinced that the business line can deliver at least a mid-single-digit margin, provided that the risk profile of the projects is very different from the old lump sum turnkey type of contractual agreements. So with contractual terms that provide us protection against certain risks. So to answer your question on price escalation, et cetera, many items today are protected against those cases.

Then a general comment is that large EPCI projects, especially onshore, tend to suffer if there are disruptions in the global value chains, late deliveries of critical items, et cetera. So even though today, we don't see any major problems coming from the situation in the Gulf and from the logistics worldwide, this is a comment that we have made a few times.

Obviously, we are hoping and we assume that the situations will get better soon as deliveries of items on site remain for any EPCI contractor, quite an important precondition to execute the projects. But when it comes to the Middle East, I mean, having most of the projects completed or very close to completion, we think that we already have all the materials needed at site. So we foresee limited disruptions even if the situation in the Middle East remains as it is today.

Okay. And if I may have one follow-up. Could I ask of the 3 large Qatar projects, the first of those, the first gas compression, is that platform now inside the Gulf? Or is that one of the large pieces or transit items you're talking about?

Sure, I will give you an answer, Mark. So in Qatar, as you know, we have basically 4 main projects. The EPCOL project is in the final stage, and so we are doing commissioning. So activity is all being carried out within Qatar. EPC 2 is mainly being under construction out of the country.

And this is the same that goes for COMP3, while EPC 5 has just started basically the engineering and procurement. So it's not affected by the situation on the Gulf. So the first crossing of the Hormuz, as I said before, with some jackets and decks for EPC 2 and COMP3, they will be across, as we said, June, July time. So that's the -- by that time, we are all assuming that the Hormuz Strait will be cleared.

The next question is Massimo Bonisoli, Equita.

Two questions I will ask. One on the pipeline. Your commercial pipeline has increased to EUR 58 billion from EUR 54 billion at the time of 4Q results. Can you elaborate on how the attitude of clients of a few end markets like fertilizer or maybe gas storage, the ones that were mostly affected by the Strait of Hormuz closure, how this attitude has changed over the past months considering the new strategic evidence of these industries? And the second question is on Mozambique. If you can just elaborate on the current status of the project execution? And when do you expect full normalization?

Okay. So I would say that in the last months because we are -- this is what we are speaking. To be honest, we didn't see any particular change of attitude of our clients towards the commercial pipeline. We expect that, as I said before, that the price of the commodity that will drive maybe potentially a further extra demand. You mentioned specifically fertilizer.

Clearly, the current price of urea is likely to drive more demand for fertilizer. We don't have -- we have no doubt, let's say, about that. And as well as I was commenting before, we expect a further, let's say, step-up in the demand for deepwater activity. This is typical whenever oil price is going above $70 per barrel, then the demand there is getting bigger. But it's also, as we said before, infrastructure are critical.

So we do expect also an increased demand for infrastructure that are linked to diversification of the source of supply, a bit like same that happened in the second half of 2022 as a consequence of the war in Ukraine, it's possible that this situation in the Gulf will also drive demand for new infrastructure devoted to diversification of the supply.

Regarding Mozambique?

Regarding Mozambique, sorry. Regarding Mozambique, regarding Mozambique, we are, let's say, progressing and activity at the site is going ahead. We have around 3,500 people already more normalized, we will become soon 4,000. So I would say that the project is going ahead. Activities are ramping up in terms of civil and mechanical works. And as I said before, we are ramping up in activities together with the people.

The next question is from Kevin Roger, Kepler Cheuvreux.

I have 3, if I may. The first one, you commented in the remarks that you have seen some lower day rates in drilling activities. So I was wondering if you can comment a bit on that, the lower day rate in the drilling environment. The second one is on Courseulles. So just to be sure that everything has been on track in Q1 because you have drilled only 6 sockets.

So just to be sure that it's just, let's say, a kind of seasonality effect with Q1 activity in winter being very slow and that nothing materialized. And the third one, sorry to chase you on that again. But this quarter, we have a move in the provision again and quite a big reversal this quarter of EUR 130 million. So any color on this reversal in provision, please?

So I will start to give you an answer on Courseulles. Yes, there is clearly an improvement of performance on the last sockets being drilled, especially in the time required to move from one location to another location, and this goes straight in line with the improvement of the weather condition in the area that is typically of the spring and summer season.

So we should expect in the coming months this improved, let's say, improved conditions that are leading to less time required to move from one location to another location. In terms of drilling time, we now reached a steady performance. It takes no more than 3 days to actually drill each location. And regarding the provisions, Paolo?

On the provisions, what happened is the following. We didn't account for any new provisions, while we used actually the part of the provisions, roughly EUR 130 million to execute mostly Courseulles. So the number you see is a decrease in the funds because of the use on Courseulles without any new provisions being accounted for in Q1.

And then I mean, just to make it clear, the 6 sockets that we drilled, those are -- it's an update since the last update we gave you with the full year results. So it's not 6 sockets from January the 1st. It's actually 6 sockets from the last presentation we gave you. Just to make sure -- otherwise, it would have been quite problematic, right?

Sorry, Paolo, let me elaborate. This is really from end of February to, let's say, last weekend. That's the -- so we are speaking in 1.5 months. Regarding the daily rates of the drilling rig, yes, they are slightly reduced.

But then when you get this kind of short-term activity, basically to make sure your schedule is fully booked. Normally, in this case, drilling units are offered with a reduced, let's say, rate to the clients that is partially compensated to the fact that being all this activity very close to the operational -- to the previous operational areas, normally, they are associated with no mob/demob cost. So there is a part of compensation for that.

The next question is from Sebastian Erskine, Rothschild & Co Redburn.

Hopefully, you can hear me. I just want to return to the asset-based services performance. The margin in particular, far in excess of my expectations, I think also consensus, so 16.5%. But can you kind of give us any indication of where we might expect this to sort of plateau?

And I'm thinking because, of course, Saipem versus other pure-play E&C providers has a very successful shallow water conventional business that might put a ceiling on those margins. So perhaps you could venture a little bit and give us a sense of where you're expecting a natural ceiling.

Well, I guess that I mean, the reasonable assumption is to have high double-digit margins for the asset-based services as a whole. And as a result of the mix between deepwater and shallow water activity or conventional activity.

Obviously, I mean, the number can change a bit over time from one quarter to the other based on the mix of the project that are being executed in the 3 months because obviously, when we execute more SURF deepwater activity, you get typically higher margins when the weight of the conventional activity is higher, it's the other way around.

So -- but all in all, I think that somewhere between high double digit is a fair assumption as a medium-term expectation for the business line. We still see an opportunity to increase the margin further compared to Q1 2026, Q4 2025. But we hardly see the margins going higher than the high double digit in the medium term.

Really appreciate that color. And just a sort of slightly boring accounting question on the D&A. So if I look at -- if I take FY 2025, you sort of initially guided, I think, sort of EUR 800 million. It came in at EUR 1 billion. I think you guided at full year '25 for FY '26 at EUR 1 billion, you're raising it slightly.

Is the stickiness or the kind of stubbornness and how high D&A has been? Is it accounted for both the accounting treatment change and then also the lease impact? Or is there any color you can give on why D&A has proved kind of slightly stubbornly high versus perhaps our expectations in the initial guidance?

Well, I guess the reason is that, I mean, as we have a lot of work being executed, especially the installation phase, we front-loaded the leased vessel fleet in 2025. And so now you see the full impact of the new vessels entering the fleet. And especially in quarters like Q1 when the overall volumes are a bit lower, the relative weight on the -- of the leased vessels is obviously higher because the lease payments don't change over time based on the volumes because they remain relatively constant over time.

So that explains a big part of the increase in the leases. Then as we said a few times, over -- where we reached the peak already in terms of lease liabilities, they will start decreasing this year with a big decrease in the lease payments starting from 2027 as certain projects come to completion and we'll release the leased vessels. That's the first effect. The second relates to Courseulles. I mean, many of the vessels working on Courseulles are leased.

And having been a project behind the profit warning, it doesn't bring any margins. But then you add up the lease -- the D&A connected to the lease payments back to the margins. And so they increased a bit depreciation compared to the, say, plain EBIT that doesn't get any benefit from projects like Courseulles. Those are the 2 big elements behind the lease and connected D&A's numbers.

The next question is from Richard Dawson, Berenberg.

The first one is just a follow-up on Sebastian's question and looking at asset-based services, is the mix in Q1 considered favorable? Or is that sort of a more normalized mix when you look at the deepwater versus more shallow water? And I appreciate that some of the margin strength in Q1 was given very high vessel utilization in ABS. Is there any sort of utilization reductions we need to think about across the rest of the year, so any maintenance of key vessels?

So the mix in Q1 has been a bit favorable in terms of relative weight of the deepwater activity compared to the conventional. I think it was roughly 50-50, which is a bit better than the historical average. So there's been a bit of benefit from the mix. And also certain projects got to the, say, final stage and therefore, releasing contingencies and margins.

But as I said, I think that going forward, it's very fair to expect a performance that will remain in the high double digit for the asset-based services as a whole, regardless of the mix. So you can expect high teens going forward. On the vessel utilization -- yes, on the vessel utilization, no, I mean the 2026 will benefit from higher utilization compared to 2025, especially for certain vessels that have been a bit less utilized in 2025. They have good expectations of utilization this year. So it's a trend that we expect to continue for the next 9 months.

That's great. And maybe just a quick follow-up on CapEx, given you did about EUR 40 million of CapEx versus guidance of over EUR 400 million. So do you expect a ramp-up from Q2? Or is that more back-end weighted?

Well, I guess that -- I mean we confirm the expectation to have a CapEx in the EUR 450 million range, which is what we shared with the guidance. And they've been a bit below the, let's say, plain division by 4 in Q1. So you can expect them to increase a bit in Q2 -- from Q2 onwards, especially in the drilling offshore where there are going to be a number of vessels undergoing cyclical maintenance in the next few months.

Let me add on CapEx. Really, the reference point is the yearly estimation from quarter-to-quarter, the CapEx expenditure are really affected from the timing where the vessel can actually enter into the maintenance yard that are affected by the previous projects. So there is a high degree of variability. That's what we expect from a quarter to another quarter. But this will be within the projected CapEx of the year. That's...

The next question is from Guilherme Levy, Morgan Stanley.

Firstly, you touched on the reconstruction of the Middle East of the damaged infrastructure. So I was just wondering, given that a lot of that infrastructure is on the sort of projects that you have walked away recently, like stuff of onshore, refining, gas infrastructure. How should we think about the margin profile in case you are called by the clients to help fix that sort of infrastructure?

And how should we think about that also in context of the certain degree of urgency from the client? And then secondly, it's been a while since we last spoke about Thai Oil. Are there any updates on your arbitration? I think that last year, if I have that correctly, the expectation was for the whole process to take like 1, 2 years before conclusion, meaning that we could still have a year from now. Would you still agree with that time frame?

Okay. So let's start from the activity may potentially expected in the Middle East for restoring damaged facilities and expected margin associated to that activity. I believe that we will be fair. Our clients have been hit. And I would say that the expected margins are the normal margins. I believe that none of us wants to exploit a situation in which our clients were hit. And we have a long-term relationship with them, and it's a relationship based on fairness.

So this would be fair on both sides. I mean -- so that's something that I would like to stress. On the Thai Oil arbitration, just -- would like just to update activity -- preliminary activity is progressing as expected. And we do expect the arbitral tribunal to issue a calendar for the arbitration in July. So at that time, we will have a precise time schedule for the arbitration.

Can I just ask a very quick follow-up on accounting. How frequently do you have to assess the profitability of your whole backlog? Meaning how frequently do you have to go project by project and look, there is additional inflation here and there. These logistics constraints are going to take a toll here and there. Just -- I think that's done quarterly, but I just wanted to make sure.

Well, we review the performance of the important projects, the most relevant ones on a monthly basis, and then there is a big review project by project on a quarterly basis where we go through the -- all the assumptions behind the project status review, which is the say, the balance sheet of each project, and we go line by line and it's done on a quarterly basis. But then on the critical projects, it's done even on a monthly basis. So it's -- I mean, it applies to any -- almost any project. So either large or with decreasing margins, et cetera. It's not only the legacy portfolio.

The next question is from Anna Kishmariya, UBS.

I have 2. One regarding the provisions and the reversal of the provisions. Do you expect with the Courseulles ongoing now at a faster pace to have more reversals? And by how much you expect maybe it could impact or support the performance of the segment this year? And my second question will be around working capital. So when we discussed your guidance for 2026, the comment was that the bridge between EBITDA and free cash flow accounts for some of the working capital drag. Do you still expect this for the year because first quarter provided for a large release?

Okay. So on -- the first question was on the provisions. Well, we don't typically disclose provisions for project by project. But what we can expect in 2026 as a whole for the portfolio is a decrease in the overall funds. So a bit of a reversal of the provisions going forward. So we will utilize the provisions, as the projects get executed.

On the working capital, well, we expect a bit of a negative contribution from the working capital from Q2 onwards, even though Q1 has been especially positive when it comes to working capital. In fact, excluding the use of the provisions for the funds, the rest of the working capital decreased quite remarkably, which we see as a very strong signal of the fact that we've been able to invoice and getting paid everywhere well in time.

The next question is from Matt Smith, Bank of America.

Just one left around order intake. I think the commentary is consistent with what you said last quarter in terms of the cadence and for the pace of that order intake to pick up from the second quarter onwards. I guess my question is really, do you still expect the full year to pan out in a similar fashion to full year '25, full year '26? And within that, just be interested to come back to your conversations that you're having with IOCs sort of outside the Middle East, deepwater projects.

Do you get the sense that the plans are being accelerated because of the current commodity price environment? Or is that more of a medium-term expectation that you would have perhaps players or even pausing those conversations given the volatility in the world at the moment? Any additional color around that would be useful, please.

So in order intake, we do expect the same trajectory than last year that now it's proved to be consistent throughout 2024, '25 and now we'll see it in 2026. So we see a ramp-up throughout the year of the order intake having a peak in the last quarter of the year. This happened in 2024 and it happened in 2025 as well. It's basically linked to the cycle of the final investment decision of our client within their own, let's say, governance and they tend to take their final investment decision around the middle of the year and so coming to conclusion of tendering and awarding in the second half of the year.

We see, let's say, activity, commercial activity going on, both for -- on all the segments, I would say, we are actively participating in several tenders offshore, onshore drilling and even sustainable infrastructure around the world. The demand is sustained. And as you know, there are many tenders out that they are expecting to come to a conclusion even before the summer in West Africa, East Africa, Far East are the main areas for, let's say, deepwater. Deepwater, we just -- we signed off just yesterday a further project in Guyana.

Then onshore, still, Middle East, as I said before, very active. Irrespectively of the situation there, I can assure you clients are still very resilient, looking forward to increase activity and to achieve their target in terms of production capacity, both on gas side and on oil side. And as we said before, we keep seeing also opportunity on fertilizers rising and FPSOs.

The other areas where we see a positive outlook is also operating and maintenance. And we hope we can -- we will be able to announce soon positive news in that area. So all in all, as we presented, the commercial pipeline is arriving kicking. This is in a way another, if you want to have a colored description of the situation.

The next question is from Kate O'Sullivan, Citi.

First, related to offshore drilling. So previously, on Slide 33, the Scarabeo 9, it was identified as entering an optional period around now and the Santorini later this year. And these are now referenced as ongoing discussions. So just wondering if you could give a bit more color on whether these discussions are with the same client or new counterparties and whether there's potential upside to current guidance should the discussions convert?

Just secondly, a follow-up on the Middle East, and you talked about June, July being an important crossing for equipment. So even if the situation resolves in the coming weeks, could you potentially see a knock-on impact based on logistics normalizing following the shock, potentially shipping backlogs based on disruption so far?

Okay. So regarding the drilling rig, and I understand your question is specific for the Santorini. Santorini is -- and Scarabeo 9. So both rigs are participating to tender and are in -- sometimes in advanced commercial discussion with clients. So we are pretty positive we can increase their -- and confirm their utilization throughout '26 and '27. In particular, we see opportunities in West Africa for both -- yes, in West Africa for both drilling units.

Regarding the transit to the Hormuz, yes, I confirm we will have transit starting from end of May, June, July. And regarding logistics, yes, we can predict that logistics are -- will be in a certain situation maybe in Gulf, especially because the current situation has already accumulated late delivery, accumulation of goods in the ports that have to be cleared.

But our activity is very specific and is linked to -- mainly linked to the utilization of heavy transportation vessels or barges. The barges are owned by ourselves from fabrication point to installation point. So there is no -- what we need is to be able to freely cross Hormuz, but we do not depend on logistic linked to ports activities around the world because basically, we load out in the construction area, and we install in the location of the field of the client without need of, let's say, interim transit in ports.

And if this is needed, we have also to take into account that we can leverage on our facilities in Karimun in Indonesia that are strategically located on the way from the Far East to the Gulf. So if there is any waiting to be accounted for, this can be done in our own facilities in Karimun, where we have a large construction yard associated with loading area ports and also possibility to wait there. So that's the way we are managing the situation.

And the last question is from Alejandra Magana, JPMorgan.

Just one for me on offshore drilling. Can you update us again on the progress on the previously mentioned white space in your deepwater fleet in the context of your broader strategy to increase your focus on deepwater, is this mainly a question of timing with the strategic direction unchanged? Or has the near-term market affected how quickly you can make that pivot?

So regarding, let's say, commercial activity for the drilling, as we were mentioning during the presentation, we are actively and also, we are successful in covering, let's say, the white tools that remain in 2025 -- in 2026, sorry, and we are ensuring activity for 2027. And what it is not already covered is associated to tendering and negotiation activity that is ongoing.

So we are pretty confident that we will come to the desired level of utilization of the vessel. In terms of overall strategy for Saipem in the drilling, clearly, we see our deepwater D&A getting stronger, and that's the area for sure, in which we would like to consolidate in the future. We believe that in deepwater activity, we can still provide our clients a quality service that is appreciated by them.

We also own some of the most, let's say, state-of-the-art seventh-generation drilling units that are particularly fit to drill also in conditions that are not used normal like certain area of West Africa, where high tides and seas, they require a very powerful drilling unit as the one that we have like the Santorini.

So besides being able to offer quality service to the client, we believe also that we are equipped with certain unique -- with certain units that they are -- that they have the right power and the right equipment to serve in areas where sea conditions are particularly demanding.

That was the last question. I turn the conference back to Mr. Puliti for any closing remarks.

Okay. Really, I don't have any further closing items, and I thank you all for the attention.

Ladies and gentlemen, this concludes our conference call. Thank you for joining. You may now disconnect.

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Saipem Full Year 2025 Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Alessandro Puliti, CEO of Saipem. Please go ahead, sir.

Good morning, and thank you for joining the presentation of Saipem Full Year 2025 results. I'm here in Milan today with our CFO, Paolo Calcagnini, and with the other members of Saipem's senior management team.

Today's session will be structured as follows. I will begin with an overview of the key operational and financial highlights of the fourth quarter. Paolo will then provide more details on the financial results. And then I will wrap up the presentation with few closing remarks, including the guidance for 2026. We will then open the floor to all your questions.

Let's begin with the key highlights of the fourth quarter. In Q4, Saipem posted revenues of EUR 4.5 billion, growing by 2% year-on-year and almost 20% sequentially. EBITDA in Q4 stood at EUR 515 million, growing 21% year-on-year and 18% sequentially, corresponding to an EBITDA margin of 11.4%.

Our balance sheet remains very strong. At the end of 2025, we recorded a net cash position of almost EUR 1 billion, thanks to a free cash flow generation of more than EUR 200 million in Q4.

The order intake in the fourth quarter stood at EUR 5.4 billion, representing a book-to-bill of 1.2 and a strong acceleration compared to the previous 3 quarters.

Let's now look at the Q4 results in the context of what has been achieved by Saipem in the last 4 years. Since 2022, on the back of a strong order intake and a steady execution, we have delivered consistent growth, improved margins and a significant cash flow conversion.

In Q4 2025, Saipem delivered once again the strongest quarter ever in terms of revenue, EBITDA and operating cash flow. EBITDA has increased by a factor of 5x since the beginning of 2022, with EBITDA margins doubling in the same period. This trend reflects the shift toward offshore E&C and the steady progress made in the execution of the legacy backlog.

EBITDA margin expansion has also accelerated in 2025 compared to the previous years. We are also very pleased to report that the EBITDA growth has translated into cash flow with an 88% conversion rate in 2025.

Let's now focus on the recent awards. As expected, we have seen a strong acceleration in order intake in Q4 with activity concentrated in the offshore E&C segment. The order intake in the quarter also reflects the resilience of the investor plans of national oil companies, in particular, in the Middle East.

In Qatar, we were chosen again by Qatar Energy LNG to deliver the EPCI contract for the COMP5 package of the NFPS compression project. These awards builds on the COMP2 and the COMP3 packages, which are currently under execution by Saipem.

The offshore campaign COMP5 is planned for 2029 and 2030, further enhancing the visibility on the utilization of our construction fleet.

In Saudi Arabia, Saipem secured 2 offshore contracts under our long-term agreement with Aramco. The fabrication activity related to the 2 projects will take place in our Dammam facilities, supporting the growth of local industry and reinforcing our long-standing relationship with Aramco.

In Turkey, Saipem was awarded an add-on contract for the additional work related to the third phase of the Sakarya gas field development. Our CastorOne pipeline vessel will execute the offshore campaign in the second half of 2027 in continuity with the activity already planned.

And let me now turn your attention to our commercial pipeline. Despite the softness in commodity price experienced in 2025, our commercial pipeline remains robust. We currently see EUR 54 billion worth of opportunities ahead of us. These include EUR 32 billion in offshore and EUR 22 billion onshore. Gas Upstream projects continue to be an important component of our pipeline.

In terms of geographies, we see several opportunities in the Middle East, Latin America, Far East as well as in East and West Africa. 2026 is likely to be a strong year in terms of order intake.

As you recall, the last year started slowly, but in Q3 and Q4, we experienced an acceleration in order intake. This phasing is likely also to be replicated in 2026 as many clients are planning their final investment decision in Q2 and Q3.

Now I'd like to provide an operational update on 2 important projects for Saipem, Courseulles and P-79. Looking at Courseulles to date, we have successfully drilled 18 sockets with 46 remaining to be drilled. The drilling machine is performing well and in line with our expectations.

In the coming months, we expect the pace of drilling to accelerate due to a combination of 3 factors. First of all, better weather condition that will reduce the weather downtime.

Second, the largest sockets in terms of the emitters have been already drilled. And third, there will be a continuous learning curve in the execution. We remain confident that the drilling campaign will be completed in a time line current with the expectation of our client.

Let me now spend few words on the delivery of the P-79 FPSO to Petrobras. As you might recall, the project was awarded by Petrobras to Saipem back in 2021. The P-79 FPSO is one of the largest globally with a storage capacity of around 2 million barrels of oil and a production capacity of 180,000 barrels of oil per day.

The construction of the FPSO was completed in 2025 with the sale away from South Korea taking place last November and the FPSO arriving at the Buzios fields 2 weeks ago. The construction of the FPSO involved almost 30 million hours of work on the Saipem side. The FPSO was delivered in a time line current with the expectation of the client.

And now let me hand over to Paolo for more details on the financials.

Thank you, Sandro. Good morning, everyone. Let me start with Slide 11, which shows the main highlights of Saipem results for the full year 2025.

Revenue stood at EUR 15.5 billion. This is a 7% increase compared to 2024. EBITDA grew by 29% year-on-year from EUR 1.3 billion to EUR 1.7 billion. EBITDA margin grew by 2 percentage points year-on-year from 9.1% to 11.1%. This is mainly driven by the margin expansion of the offshore E&C business.

Net result remained broadly stable year-on-year, mainly due to one-off nonmonetary items below EBITDA and higher financing costs and taxes. Operating cash flow stood at EUR 1.5 billion compared to EUR 1.1 billion in 2024.

Let's now look at how the 3 businesses performed, starting from asset-based services on Page 12. Revenue exceeded EUR 9 billion in 2025, a growth rate of 12% year-on-year. This was mainly driven by our SURF and conventional operations with a slight shift in mix in favor of conventional projects compared to the previous year.

EBITDA almost reached EUR 1.3 billion in 2025 with an EBITDA margin of 14.4%, up by 2.6 percentage points compared to 2024. In particular, EBITDA margin in Q4 stood at a solid 15.7%, also due to a marked increase in the utilization rate of our fleet in the quarter.

EBIT margin also grew year-on-year from 5.7% to 6.1% with 7.5% in Q4, but the increase was less pronounced than at the EBITDA level due to the growth in D&A associated with the leasing contracts.

Looking at 2026, we anticipate low single digit growth in revenue and double digit growth in EBITDA compared to 2025, with a further improvement in EBITDA margin. The year 2026 will be more than 90% covered by the execution of projects already in the backlog.

Let's now move to the Drilling Offshore segment, as outlined on Page 13. Revenue from -- for 2025 declined by 10% compared to the previous year. EBITDA declined by 5% with the EBITDA margin improving by 170 basis points versus 2024.

Such performance mainly reflects the reduction in fleet size by 3 units following the suspension and termination of contracts by Aramco as well as the costs associated with moving rigs to new locations.

In particular, Q4 was impacted by the one-off cost related to the mobilization of the DVD to the Indonesia from West Africa and the related preparation costs. However, these negative factors were partially offset by higher day rates and better utilization for certain vessels.

Looking now at 2026, we anticipate a double digit decline in both revenues and EBITDA compared to 2025 with EBITDA margin declining year-on-year. This is mainly due to 4 factors: the concentration of various maintenance activities in the year related to the Perro Negro 4, Perro Negro 8, Perro Negro 11 and Scarabeo 10.

Some white spaces related to the deepwater fleet, lower day rates on selected rigs and the release of Pioneer and Perro Negro 12 jack-ups in 2025, which contributed to both revenue and EBITDA for the first part of the last year.

Let's now conclude the review with Energy Carriers on Page 14. Revenue remained broadly stable in 2025 versus 2024, while profitability more than doubled in 2025.

On one hand, this is due to the lower impact of legacy projects compared to the previous years, coupled with the results of the turnaround activity of the division started in 2022. On the other hand, however, as you may recall, the performance in 2025 has been negatively affected by Thaioil.

Looking at 2026, we anticipate a low single digit decline in revenue and a marginal improvement in EBITDA margin versus 2025. This is mainly due to the restart of the Mozambique LNG project, partially offset by the expected completion of several projects in the Middle East, West Africa and other regions.

Let's now take a look at the figures below EBITDA, as shown on Page 15. D&A grew by more than 40% in 2025 compared to 2024, surpassing the EUR 1 billion mark. This increase was mainly due to the growth of the fleet on a chartered basis, while the addition of the -- with the addition of the Bold Tern, the Shen Da and the Normand Frontier in 2025.

D&A in 2025, in particular in Q4 was also impacted by certain one-off write-downs. For 2026, we expect D&A to remain around EUR 1 billion as we will continue to deploy a sizable fleet on a chartered basis.

Financial expenses totaled EUR 189 million in 2025, an increase of EUR 104 million year-on-year. This was largely driven by higher project hedging costs and exchange differences, which increased year-on-year by 25 -- by EUR 52 million, sorry, and EUR 43 million, respectively.

Higher hedging costs were the result of an increase in derivatives trading volumes, combined with an adverse shift in the interest rate differential between the euro and the U.S. dollar.

Financing costs increased by EUR 9 million as the increase in the interest component of lease of EUR 20 million year-on-year was partially compensated by a reduction of net financing costs by EUR 11 million.

For 2026, we expect financial expenses in line with 2025. Income taxes for 2025 stood at EUR 207 million, an increase of EUR 17 million year-on-year. The implied tax rate stood at 40% in 2025, representing a 2 percentage points increase versus 2024.

This is mainly due to certain one-off items recorded in Q4 2025. Tax rate is expected to decrease in 2026 compared to 2025 towards the 33%, 38% area.

Let's now focus on the cash flow and net financial position on Page 16. In 2025, our pre-IFRS 16 net cash position improved by EUR 316 million to almost EUR 1 billion. This is mainly the result of cash generation for EUR 792 million, partially offset by the EUR 333 million dividend as well as EUR 40 million of share buybacks.

Lease liabilities saw a net increase of EUR 611 million to almost EUR 1.3 billion at the end of 2025, largely due to the expansion of our chartered vessel fleet. In 2025, we signed new leases for EUR 1.2 billion, including the extensions of existing vessels and repaid EUR 449 million of them.

In addition, our net debt position has been further impacted in 2025 by the DVD purchase transaction whose accounting impacts of EUR 2026 million are accounted for within lease liabilities. We expect lease liabilities to decline to approximately EUR 900 million by the end of 2026 from approximately EUR 1.5 billion at the end of 2025. This is a reduction of around 40% year-on-year.

The reduction reflects the return to the owners of certain chartered vessels deployed on offshore projects in the Middle East as those projects reach completion and the expected completion of the purchase of the DVD, which would reduce the lease liabilities, but also reduce the available liquidity. Lease repayments in 2026 are expected to grow towards the EUR 650 million, EUR 700 million area.

To wrap up, let's quickly go over Saipem debt and liquidity position at the end of 2025. Our liquidity position is solid, stands at EUR 3.4 billion.

This is made of EUR 1.3 billion of available cash, EUR 1.5 billion of cash in JVs and EUR 600 million in undrawn revolving credit facilities. As anticipated 12 months ago, we are looking to reimburse all gross debt that is due in 2026, which amounts to EUR 271 million. We also have a clear target to achieve an investment-grade credit rating in the medium term.

I'll now hand it back to Sandro for his closing remarks.

Thank you, Paolo. In the last 3 years, Saipem has generated more than EUR 1.4 billion of free cash flow, of which EUR 1.3 billion between 2025 and 2026. On the back of such cash -- strong cash flow generation, we have distributed EUR 333 million in dividends already last year.

For 2026, we are confirming the same dividend paid in 2025, i.e., EUR 0.17 per share. Therefore, in aggregate, between 2025 and 2026, we would have distributed to shareholders an average of approximately 50% of the cash flow generated, which is in line with our dividend policy of distributing at least 40% of free cash flow post repayment of lease liabilities.

The total distribution to shareholders for 2025 and 2026 will therefore be EUR 663 million, representing about 1/3 of the equity capital raised back in July 2022.

Let's now look at our guidance for 2026. We expect revenues to remain broadly stable at around EUR 15.5 billion. Adjusted EBITDA is expected to be approximately EUR 1.9 billion.

After accounting for the repayment of lease liabilities, operating cash flow is expected to remain stable around EUR 1 billion. Excluding the envisaged purchase of the DVD drilling ship, CapEx is expected to be around EUR 450 million.

Let me also remind you that approximately EUR 100 million CapEx that were expected to be spent in 2025 have shifted in 2026. Lastly, for 2026, we expect to generate a free cash flow after leases of around EUR 600 million.

Let me further recall that our 2026 guidance is almost entirely supported by projects already in backlog as well as by a very high utilization rate of our construction fleet.

Now before we take your questions, let me wrap up the presentation in few closing remarks. First of all, in 2025, we delivered another year of solid results and strong execution. Second, for the second year in a row, we confirm meaningful distribution to shareholders.

Third, our backlog remain at close to record high levels, providing us with exceptional visibility and confidence for the years ahead. And the fourth, our construction vessels are fully booked for 2026 and we are steadily increasing the level of utilization for the following years.

Thank you for your attention, and we are now available to answer to your questions.

[Operator Instructions] The first question is from Alessandro Pozzi, Mediobanca.

I have 3, if I may. The first one is on the outlook for orders in 2026. Based on your opening remarks, I believe you remain quite bullish about the prospect of the overall level of order intake. Maybe you can maybe give us a bit more color on seasonality that you expect in 2026?

But also, I was wondering if you can give us more color on the order intake, in particular for the offshore E&C, given that the orders in 2025 were a little bit below '24 and whether you assume a recovery in orders in the offshore E&C as well?

The second question on the DVD vessel. Can you give us the -- maybe some thoughts about economics, maybe the payback that you expect following the acquisition of the DVD and the charter do you expect to sign with Eni in the longer term? And finally, maybe some additional colors on the write-offs that you've taken in Q4?

Okay. I will answer to the first question and then I will hand over to Paolo for more details. So outlook for orders in 2026, we can confirm that we are expecting in total a very -- a figure that will be very close to the order intake of 2025.

Basically the same amount probably we expect to have in 2026 than we had in 2025 and almost with the same, let's say, shape throughout the year.

So we expect certainly the third Q and the fourth Q stronger than the first 2 quarters of the year. This is a trend that we saw in 2025 and we expect also to see in 2026, since many clients are expected to take their own final investment decision in Q2 and in Q3. That's the reason.

In terms of offshore backlog, yes, I can confirm we can expect a good order intake in the offshore sectors. There are many projects in the pipeline. Some of those awards are also expected in the, let's say, in Q2.

So we should see some good news on this side as well. Okay. Regarding DVD, I will now hand over to Paolo that can give you more color.

Yes. Okay. On the DVD, the proposed acquisitions that as you may have read in the press release was approved by our Board yesterday is based on what we feel are solid financials and the disciplined approach when it comes to CapEx.

We think that at the price that you saw in the press release, the return on the vessel is below our investment hurdle rate, which is, as you can imagine, is higher than the cost of capital. And so we think that, that would be an accretive transaction for the shareholders.

And then there was a question on write-offs. Yes, in Q4, there have been certain write-offs. There have been also certain write-ups. The way I would summarize the -- what happened in Q4 is that we had out of a portfolio of 90 projects, we had a number of very good ones and that is reflected in the margins.

We also had some write-offs as always. And -- but all in all, I mean, as you may have seen from the Q4 numbers, both the EBIT and EBITDA have been growing compared to Q4 and the average of the year.

All right. And just going back on the order intake for the offshore, do you expect a recovery in '26 versus '25 in terms of overall volumes for the orders?

The total order intake, we expect at the same level of 2025, but there will be a substantial part of order intake linked to the offshore activity, I would say, in line again with 2025.

The next question is from Richard Dawson, Berenberg.

Two from me, please. Firstly, how do you view the medium-term outlook at this point in time? Do you expect any major changes to the 2028 targets provided this time last year, for example?

And then moving on to the ABS segment. So margin is very strong for Q4. What drove this? And where do you think margins can go into 2026, presumably, there's a lot of scope for better priced projects to be delivered over the year?

Okay. So the medium-term outlook remain, as I said before in the presentation, I would say, very good. We confirm what we said last year for -- as a trajectory to 2028.

Signs in the last, let's say, in 2025 and they are confirmed in 2026 are such that 2025, we were very much supported by demand from national oil companies, especially in the Middle East that are far less subject in their internal investment decision to the volatility of the price of the commodities.

In 2026, we still see, let's say, demand coming from the national oil companies, but also coming back of international oil companies that they -- and we saw that many of those, they have been postponing their final investment decision from 2025 to 2026.

So the outlook is really promising and I don't see any -- why we should not deliver with the information we have today, the expected targets we announced last year for 2028. Now on margins, I leave to Paolo a more color answer.

Yes. So on the margins, I think, yes, you can expect margins to keep increasing in 2026, especially in the asset-based services. Q4 had almost 16% EBITDA margin, actually 15.7% to be precise.

And we expect the margin to keep growing in 2026 for the reason you mentioned. So the fact that there is a number of old projects that have typically an average margin, which is lower than the most recent acquisition. So yes, you can expect asset-based margins to keep growing.

And just a follow-up to that last one. Is that growing versus the Q4 margin figure or the 2025 margins overall?

I think you can expect the growth compared also to Q4.

The next question is from Sebastian Erskine, Rothschild & Co Redburn.

Congratulations on the results today. I just want to kind of narrow in on the guidance for 2026 and particularly on the coverage because you called that out, you kind of, I think, 90% covered on ABS.

If I look at it last year at the group level, so you had about 78% backlog coverage on the EUR 15.5 billion you ultimately went on to achieve. And if I take your backlog for execution and apply that same coverage, that would imply you coming in at sort of EUR 16-and-a-bit billion on group revenue. Am I just missing the fact that you are so busy now and you talked about the fleet being completely booked up, is that really the driver? Any color there would be helpful.

Okay. Yes, I confirm that our -- let's say, our guidance for 2026 is fully supported by projects that we have already in our backlog. And what I can say is also that the 2027 is getting project after project that we gain as much as fully booked as well.

So this is really the situation and that's the key of the 2026 figures. They are based on projects that are already in execution and that they will start execution because they are already in our backlog mostly. Now Paolo can give you also some more details on that.

Yes. Just a few pieces of information on the revenues covered by the backlog. 90% is a number on the entire company. But if you break it down by business line, it's actually above 90% of the -- for the asset-based services, while it's a bit lower for the Energy Carriers.

The reason being that for the Energy Carriers, we see quite a few contracts that have not been signed, especially changes on existing projects. So you don't see the amount in the backlog, while we expect to sign those changes during 2026 and therefore, contributing to the revenues. That explains why the coverage for 2026 looks a bit lower than the number we presented 1 year ago for 2025.

That's really helpful. And just my second question is just following up on the provision comment. So just backing that out, and I get sort of EUR 170 million in provisions taken in the quarter.

Obviously, you did take some large provisions in the second quarter of this year. Are you now comfortable that that's the level that would support some of the kind of legacy projects? And if any kind of color on what drove that in the fourth quarter? Any specific projects, I presume part of it Courseulles, but any details would just be helpful as I look to 2026.

Look, I mean, we are very confident that the provisions on the portfolio will be more than sufficient to get the projects to completion. And it's also fair to say that in such a big portfolio, I mean, there is always certain extra provisions to be made on limited number of projects whose margins may turn out to be a bit lower. But on the other hand, there is a pool of very good ones that deliver higher margins than expected.

I think all in all, I mean, the company is in a better position than it was 1 year ago or 2 years ago because as a matter of fact, the -- what we used to call legacy portfolio, which is getting very close to being fully delivered accounts for less and less on the total. So it's like if we are cutting the bad tails of the portfolio.

The next question is from Matt Smith, Bank of America.

I wanted to touch upon the strength in cash flow conversion really that you mentioned. You've come in far and away above your guidance for 2025.

I just wondered whether you could talk to any sort of structural drivers or whether there's any one-offs we should be aware of, particularly asking given I think the '26 guidance on operating cash flow is relatively stable year-over-year despite sort of EBITDA pointing up 10%, I think, on the guidance. So is there anything we should take into account in terms of the strength in '25 and thinking to '26 already?

And then perhaps if I stick to the same topic, but on leases, thanks for the information for the '26 guidance. I think we've spoken to lease payments peaking this year. So wondered if you could speak to perhaps where those cash outflows will eventually decline to and perhaps what the cadence might be beyond '26?

So on the cash flow conversion, I mean, that's an interesting question actually which is we have consistently experienced a very good conversion, not only lately, but also in 2024 and the entire 2025.

I think that the reason -- you asked about structural changes and one-off items. So on the structural changes, I think we commented on the different commercial approach when it comes to cash flows that we adopted that since 2022, whereby we have internal rules that basically say that projects should be cash positive throughout their entire lives and that obviously reflects in better cash flows for the entire portfolio.

And as the new projects entered into execution, we experienced the benefits of the new policy and that's a structural change.

On the one-off, actually, if you look into the net working capital, the net working capital is almost stable year-on-year. So we don't see one-off components that we enjoyed in 2025 or in Q4.

We actually expected a negative impact from the net working capital in Q4 because we were a bit too prudent on certain projects. It turned out that certain payments came in late in Q4 and that explains the performance way above the expectations in 2025.

But then if you make one step back and look at the working capital, you don't see any major changes. So we don't see one-off effects.

Perfect. And then could I just come back to the lease outlook beyond '26 then, please, in terms of cash outflows?

Yes. So on the difference between the increase in EBITDA and operating cash flow, I think that the big part of the difference is explained by the lease liabilities because they increased by almost EUR 200 million -- sorry, lease payments because they increased by almost EUR 200 million in 2026 compared to 2025.

And then there is a bit of working capital items for -- that explain basically the difference. That's most of the explanation.

Great. And then I was just trying to get to the bottom of where you expected your lease payments on a cash flow basis to trend post 2026?

Post 2026, we expect lease payments to go down from EUR 660 million of 2026 to EUR 450 million, somewhere between EUR 450 million and EUR 500 million in 2027 and possibly below EUR 400 million in -- from 2028 onwards.

The next question is from Guilherme Levy, Morgan Stanley.

The first one, just thinking about your CapEx guidance for this year. Of course, you mentioned that EUR 100 million reflects just CapEx that has been shifted from 2025.

But if I look back at the past couple of years, the company has executed less CapEx than initially guided for. So I just wanted to pick your brain in terms of how confident you are on this number for this year? And what has driven this shift from 2025 to 2026?

And then secondly, just going back to the acquisition of the DVD drillship. I was just wondering if you could say a few words about other opportunities to exercise purchase options that you still have and your appetite to do more of this type of activity from here?

Okay. So on CapEx for 2026, you see there is a slight increase compared to the 2025. As I explained before, the increase is mainly due to the fact that some cyclical maintenance to the vessel that was planned toward the end of 2025 actually shifted at the beginning of 2026. This is the explanation.

What you said is also true that we, let's say, in a way, in another, managed to reduce CapEx in the -- when we do to actual compared to budget in the last years. But this is an effect due to the fact that throughout the year, we try clearly to be very disciplined on CapEx and to optimize our CapEx expenditure and take advantage of certain situation that are determining during the year so that then actually we can spend a bit less than was planned.

Having said that, this is the figure we see today. And clearly, we will work throughout the year to optimize this number and to reduce this number as much as we can as normal in the process of our cost optimization and capital discipline in, let's say, in the company.

Regarding DVD, what I can say, I can say that it's not a secret that there is an overall strategy for Saipem to be -- to concentrate its operation on the deepwater activities. DVD, what I can say is not the sole option we have. But clearly, I cannot disclose more at this stage on this matter. But the trajectory is to be more a deepwater operator than we are today.

The next question is from Mark Wilson, Jefferies.

Great to see the continued offshore commentary and projects. What I would -- and specific to that, the Courseulles point on 18 sockets. So what I'd like to ask about is, could you just tell us what we should consider to be a legacy contract today?

Taking Courseulles out of the discussion, we know about that. Is it Mozambique? What other ones are still to be completed? Is there anything in terms of the backlog or the names you can talk to on the time line when we don't have to speak about them any more?

Okay. So I can be very clear. So we do expect to complete Berri and Marjan in Saudi by mid of the year. P-79 was one of the legacy projects. And as you saw from the presentation, is already sitting in the Buzios field and so will be really completed in the next weeks.

So those are really the main legacy other than, as you said, other than Courseulles. But those are really coming to an end. By mid of the year, we for sure, we will close Berri, Marjan, P-79 in the next weeks and by the end of the year or the very beginning of 2027, the Courseulles.

That's excellent. I really appreciate that commentary. My second question, if I may, is if there's any commentary you could give on the seeming differentiation between drilling markets at the moment and I particularly mean the deepwater and the E&C market? We've seen a very strong visibility for development of subsea projects.

Clearly, you're fully booked. Drilling is lagging. There's white space, et cetera. It suggests there's plenty of things to develop out there. You guys are in the sweet spot that E&C manufacturers. Is that a good way to talk about it? What would you say regarding the recovery of deepwater drilling or utilization there?

Okay. So the 2 markets are pretty different by the fundamentals. The drilling is sold on a daily rate basis, while the E&C construction, the offshore E&C is sold on a project basis.

So they have very pretty different fundamentals. The drilling market, it is -- it has been historically more -- if you allow me this term, more volatile than the E&C market for a very simple reason that the drilling activity is really very strong linked to the exploration and the development activity, while the E&C is linked only to the development activity.

So the drilling, it is subject to the swing in the exploration appetite of mainly of the international oil companies. And what you have seen, many of those, they have announced that they will refocus on exploration activity during 2025.

We saw statement for at least 3 to 4 clients confirming that they will reinforce their exploration activity. And then exploration is then followed by development. So we see in the midterm, a good outlook for sure, for the drilling on the wake of this new exploration activity that will bring new development activities.

And together with the offshore E&C that is now leveraging on the discovery and the development plans done in the past. And the outlook positive because there are, for example, many countries, new countries that are coming and becoming more and more important for the offshore industry.

The first one that I can tell you is clearly in Namibia, where we got -- where there are tenders out in a place that 3 years ago was without, let's say, without any major activity. So I would say positive for both, taking into account the fundamental difference between the 2 markets.

The next question is from Kevin Roger, Kepler Cheuvreux.

I would, first of all, come back on the provision that you took in 2026. So it's a total of roughly EUR 0.3 billion that you have booked.

I would like to understand if you have some release of contingencies to offset this negative effect. And at the end, what's the net impact on the EBITDA? Because if I make a stupid calculation, your adjusted EBITDA in '25 will have been EUR 2 billion, excluding those negative effects.

And so then the linked with the '26 guidance with an EBITDA of EUR 1.9 billion. So to understand the full effect of the provision in '25 and then how we should think about the guidance for '26 based on those impacts in the reported number for '25?

The second one is just to be sure, the EUR 1.5 billion order intake in the onshore space that you had in Q4, is it Mozambique or the variation orders that you were expecting or something else?

And then just to understand the cash flow guidance that you have for '26, just to be sure because to be honest, I'm struggling to reconcile the numbers that you're providing, EUR 1.5 billion EBITDA, where we subscribe the lease, the CapEx, the tax and the financial interest that you mentioned during the conference call, I'm struggling to get to the EUR 0.6 billion number that you provided. So do you include some positive working capital movements in this guidance, please?

So on the -- let's start from the provisions. Actually, the numbers you should look at is the net provisions for 2025 because as you can imagine, there have been additional provisions on certain projects, but also the utilization of the provisions that we had beginning of 2025. I think I mean, the bad number is that the net of the 2 is like EUR 150 million, if I'm not wrong.

So you may argue in theory that without the EUR 150 million, the EBITDA would have been EUR 150 million higher, even though that's a pretty tough call to make because it's the nature of the business.

And there are certain years where you provision more than you use and others when you make more provisions than utilization of the funds. So it's -- possibly the way to look at it is that we made a very good EBITDA margin and EBIT margin, notwithstanding a net increase in the provisions that we have made.

On the backlog, part of the acquisitions and the backlog, especially in the Energy Carriers is the effect of the lifting of the suspension from -- in Mozambique because what happened in the backlog in numbers for Mozambique is that we decreased the value of the backlog over time, starting from 2021 because as you know, we were making certain activities and we deducted the value of those activities from the original contract value.

Now that the suspension has been lifted, we are basically bringing back the number in terms of contractual revenues to the numbers that we had just before the suspension in 2021. And that explains a big part of the difference between the announced acquisitions for the Energy Carriers to the increase in the backlog that you can see. I think there was a last question on the EBITDA.

On the cash flow.

On the cash flow. Yes, go ahead.

Just if I take the EUR 1.9 billion guidance that you provide as an EBITDA and then we remove the EUR 450 million CapEx, the EUR 650 million lease, the EUR 200 million tax and maybe EUR 200 million financial charges, I'm struggling to get to the EUR 600 million.

Yes. There is a bit of positive contribution from the working capital expected in 2026. And certain numbers around it. So I mean it's -- I guess for you, it's not very easy to reconcile all the numbers. But yes, there is a positive contribution by working capital.

The next question is from Massimo Bonisoli, Equita.

Two questions from my side. One on the Mozambique project restart. What assumptions are embedded in your 2026 outlook in terms of activity ramp-up and profitability? And once the project is fully restarted, would it be reasonable to expect a high single digit margin for this project?

The second question regarding Venezuela, given the recent geopolitical developments in the country, are you assessing any potential opportunities over there?

So I will start from the last one, Venezuela. Clearly, things, as you said, are changing pretty quickly in Venezuela. And that's a country in which we worked a lot in the past.

And we are ready to come back as soon as clients ask us to do jobs and works in Venezuela, both on offshore and if any, onshore. So we just wait international and U.S. clients to call for bids and we are ready to participate in Venezuela.

Regarding Mozambique project restart, let's say, what we can say is that the force majeure have been lifted. The project suspension have been lifted by our clients.

And what we are currently, we are cooperating with the client to ensure an effective and efficient restart of all the activities on the ground with all the support of all the -- let's say, of all the vendors. So that's where we are really concentrated today.

I mean, speaking about numbers, margins and something like that, today is pretty early. And this is maybe, let's say, a question that should be better answered at the end of Q2. What I can give you is in broad terms, we expect margins that are in line with the LNG business segment. That's what we are clearly targeting and expecting in Mozambique.

The next question is from Guillaume Delaby, Bernstein.

Two questions on my side. First, I would like to come back on the cash flow -- the 2026 cash flow guidance. I understand from your answer to Kevin's question that there is no amount in your EUR 600 million free cash flow guidance, which relates to potential provision for the merger or potential remedies in Brazil or elsewhere. So I just would like to be sure that this assessment is correct.

I mean, the guidance is 100% on a stand-alone basis.

Okay. Okay. Okay. Second question, just in terms of the recent awards in Q4 and the awards you expect to gain in 2026, is it fair to assume that the likely potential EBITDA margin embedded in those current and future awards, should they continue to be accretive to the entire backlog? Or have we already reached some kind of a plateau globally?

Okay. So we need to put your question in the context. So clearly, our aim is to continue in the trajectory to privilege the acquisition offshore.

So this is on its own, brings an improvement of the overall Saipem margins. If we dive into the -- instead of the activity onshore, the anchor activity, the new backlog we are taking for sure, is giving better margins than the past backlog because as we explained in many of our calls, we are much more disciplined now in the new acquisition onshore, especially in terms of derisking of the projects.

So the portion we are -- the portion of the contracts that are protected in terms of pricing, in terms of cost increase, in terms of many, let's say, many variable of the projects are bringing us to a much more reimbursable portion rather than a pure EPC portion on those projects.

So all in all, margins are expected, let's say, to improve, both because of the effect of the increasing volume of the offshore activity and the effect of a better portfolio onshore.

The next question is from Alejandra Magana, JPMorgan.

My first question is on Mozambique LNG. It sounds like the margin should be in line with similar projects, but how should we think about the revenue and margin phasing through '26 and '27?

And then my follow-up -- my second question is on your 2026 guidance. What are the main levers that could drive outperformance? Do you still expect a turning point in offshore drilling in the second half of '26 and onwards?

So on the Mozambique, I mean, obviously, we cannot disclose any numbers on margins for projects or products. But we said a few times that the target margin for the Energy Carriers business is somewhere in the high single digits, which remains a target also for new acquisitions.

In terms of revenues, we expect an increase year-on-year as the suspension has been lifted, even though you must consider that the remobilization of suppliers, people on the ground, et cetera, take a bit of time. So you cannot expect the company to be working at full steam just a day after the suspension has been lifted. So it's going to be increasing over time.

Then the upside on the overall numbers, as you can imagine, the E&C Offshore is already covered 90-plus percent in terms of revenues. So we don't see material upsides in E&C Offshore.

There might be upsides in the drilling, though, because it's -- as you know, the market has been a bit soft lately with a bit of white spaces and a bit of pressure on the rates. That's an area where you might see a bit of upside going forward.

The next question is from Anna Kishmariya, UBS.

I have 2. First, around the taxes. You mentioned that there were some one-offs in fourth quarter. Can you please give us a little bit of color of what type of one-offs did happen?

And my second question is also around Mozambique. There were backlog revisions. Do you expect to have further revisions or additions to the backlog from Mozambique LNG in the first quarter?

Let's say, as I said before in the previous -- in the previous -- let's say, the previous question on Mozambique, in the first quarter, we do not expect any, I would say, any backlog revision increase.

You may see something in the -- at the end of the second Q where we will complete the process of, let's say, restart and with all vendors and subcontractors and with the client as well. But for the time being -- at the end of the first Q, I'm not expecting any change because the process that is ongoing now is that with the client, we are revisiting any purchase order and subcontracts to take into account escalation and resumption cost.

But this -- let's say, this process will not be completed for sure at the end of the first Q. So now I'll leave to Paolo for the question on taxes.

Yes. On the taxes, there have been a bit of write-offs on certain DTAs, largely compensated by positive deferred tax assets in other geographies. The net was a bit on the negative side, but we see it as a one-off event. And as I said, the tax rate will be -- will move down in the 30% to 35% area going forward.

The next question is from Mick Pickup, Barclays.

Can I just take you back to what you said about the Middle East confidence on new awards? I just look at it and it looks like that urgency of '22, '23 has gone.

What we're seeing today is a bit more caution out there, tender dates slipping, a few more people on bidding lines, lots of awards pending, but nothing really big coming. So it just feels a bit more delay at the moment than about to see big awards. Can you just tell me -- just talk through what you're seeing? Are we just about to get through this pregnant pause that it feels like we've had?

To give you more color on the Middle East, you have seen the trend. The trend we can -- the trend, I believe, is very clear. In the Middle East, the national oil companies, they are keeping a steady amount of bidding, certainly in Saudi Arabia and Qatar.

We are participating to those -- they are very different kind of projects, I mean. The activity, we are participating to those bids and we are keeping getting awards, especially on the offshore.

As you have seen, all the most of the order intake of the Q4 was entirely offshore. We are very cautious onshore. But I believe that there will be good opportunities coming within Q1 and Q2 also for the onshore. I cannot disclose it now with more details, but we are -- let's say, we are pretty confident that this will occur.

The kind of work we are awarded is also encouraging in a way of another because the works that we are getting are not linked to new field development, but basically what I call as production maintenance of existing fields and that are generating a sort of constant demand.

So many works we get awarded are replacement of old pipelines, replacement of old platforms, all decks, upgrade of the decks, for example, to include facilities for water injection or artificial lift or like the main Qatari projects, they are compression projects on clearly on existing fields.

And so this is generating a sort of constant demand because all those facilities have been developed basically from the '70s and they are now aging and they need maintenance and sometimes they need full replacement. And that's where we see a steady demand in the Middle East.

Okay. And can I just follow up on the 12,000. She's got white space in the middle of this year, it looks like before stuff later in the year. I don't think I've seen the 12,000 with that much white space before. Is there anything planned for in that space issue maintenance or anything? Or is it up for work and grabs short term?

Clearly, our commercial department in the drilling has nothing in mind other than covering the white spaces. And what I can tell you, I cannot be more precise, but we have opportunities for the 12,000 certainties that they may come in the next couple of months in becoming -- maybe becoming public in the next couple of months.

[Operator Instructions] Gentlemen, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Okay. Thank you, all, and this close the conference call for 2025 results of Saipem. Thank you.

Ladies and gentlemen, this concludes our Q&A session and our call. Thank you for joining. You may now disconnect.

Good morning. This is the conference operator. Welcome, and thank you for joining the Saipem 9 Months 2025 Results Presentation. [Operator Instructions].

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

Thank you, and good morning. Thank you for joining us for the presentation of Saipem's results for the first 9 months of 2025. I'm here in Milan today with our CFO, Paolo Calcagnini, and with the rest of the Saipem senior management team.

During today's session, I will begin by presenting the key operational and financial highlights from the third quarter. Paolo will then examine more closely the financial results. And at the end, I will offer a few closing remarks before we open the floor to your questions.

Let me begin with the key financial highlights of the quarter. In Q3, Saipem delivered revenues of EUR 3.8 billion with a growth of 1.6% year-on-year and 2.1% sequentially. EBITDA stood at EUR 437 million, growing 28.5% year-on-year and 5.8% sequentially. In Q3 2025, we posted the highest quarterly EBITDA since 2012.

From a balance sheet perspective, we ended the quarter with a stable net cash positive pre-IFRS of EUR 844 million, in line with the guidance communicated. Order intake stood at EUR 3.2 billion in Q3, representing a book-to-bill of 0.9 and an acceleration compared to the previous 2 quarters. We expect this momentum to continue into Q4.

Let's put the Q3 results in a broader perspective. Revenue has kept on climbing up over the last 4 years on the back of the growth in backlog and supported by our steady execution. EBITDA has also constantly increased due to the quality of the new awards and to the reduced weight of legacy projects. The shift in mix toward offshore E&C and the progress made on the legacy backlog have resulted in EBITDA margin more than doubling and getting close to the 12% mark. As seen in previous years, we expect the fourth quarter to be seasonally strong also in 2025. In the first 9 months of the year, cash conversion remains close to 90%, having generated an operating cash flow almost equal to what we delivered in the full year 2024.

Let's now deep dive into the order intake of the quarter, which is anchored on 3 projects in Turkey, Guyana and Azerbaijan. These 3 projects confirm our strong relationship with Turkish Petroleum, Exxon and BP and our continuation of previous projects developed for these 3 clients in the recent years.

In Turkiye, we will continue to develop the highly strategic Sakarya field. Saipem has already successfully completed the first phase of the Sakarya field development project, which was awarded back in 2021, and we are currently finalizing activities related to the second phase. The offshore campaign for the third phase will be conducted by Saipem's Castorone pipelay vessel in 2027.

In Guyana, the hammered development marks the seventh projects we are doing for Exxon in the country since 2017. Saipem will carry out the offshore operations, mainly using the FDS 2 vessel as well as the Shanda, which is now part on our fleet on a chartered basis. Both Sakarya III and Hammered contribute for further extending the visibility of the utilization of our construction fleet from 2027 onwards.

In Azerbaijan, the Chinese compression project follows the signing of a framework agreement with BP in 2024, and it further consolidates Saipem's presence in the Caspian Sea, where we have been operating since the late '90s.

Let's now focus on our drilling offshore activity and the recent awards. The DVD will start operating for Eni in Indonesia towards the end of 2025. This is the beginning of a new chapter for the unit, which has operated in West Africa for about 2 years. We see strong potential for long-term drilling campaigning for DVD in Indonesia.

The Scarabeo 9 semisub remains focused in the Mediterranean Sea and has recently moved from Egypt to Libya, where she has started operating for Eni. The Santorini drillship will continue to operate in West Africa for Eni in Ghana and in Ivory Coast before moving to the Mediterranean Sea to work for Energy.

Lastly, the Scarabeo semisub received a 12-month extension from Aker BP in Norway and will now continue to operate in the country until end of 2027. We believe that we are approaching the turning point in the offshore drilling market, particularly in the deepwater activities, and we expect to see a significant ramp-up in demand from the second half of 2026 onwards. In shallow water, we are also engaged in constructive discussion with ENI in Mexico on the Perro Negro 10 unit.

Let me now give you an update on Kurcell. Following the successful transfer of the drilling equipment from the Vole Au Vent jack-up to the Bold Tern jack-up in Q2 2025, we resumed drilling activities in late August as per plan. We have now successfully completed 4 new drilling sockets, sockets # 5, 6, 7 and 8, and we are shortly start working on the socket # 9. We are very satisfied with the performance of the drilling machine and with the pace achieved in our operations. As such, the project timetable is confirmed. Drilling operations are expected to be finalized by end of 2026.

Let's take a moment to review the utilization of our construction fleet. We have been operating at full capacity in 2025, and we are also fully booked for 2026. Looking ahead, the level of utilization for 2027 and 2028 has strengthened significantly in the last few months, mainly driven by the recent order intake. We expect to become fully booked for 2027 soon as we secure additional orders in the coming quarters.

And let me now turn your attention to the commercial pipeline and the ongoing bidding activity. Despite recent market volatility, our pipeline remains robust. We have an opportunity set of EUR 54 billion worth of projects in front of us with around EUR 33 billion in offshore activities. We expect EUR 37 billion worth of upstream oil and gas projects to be awarded in the next 18 months, representing close to 70% of our total pipeline.

Within that, infrastructure maintenance and upgrade projects remain significant, especially in the Middle East. We are also seeing growing momentum in LNG, fertilizer plants, CO2 management and biorefineries, which together account for around 20% of our pipeline.

We are currently awaiting feedback on bids submitted totaling EUR 13 billion, and we are anticipated submitting additional EUR 21 billion in bids between Q4 2025 and Q1 2026. With this level of activity, we are well positioned for continued success in the medium term.

With that, I will now hand over to Paolo, who will walk you through the financial results in more details.

Thank you, Sandro, and good morning, everyone. Let's begin with Slide 12, which provides an overview of our financial performance for the first 9 months of 2025.

We achieved an 8% year-on-year increase in revenue, reaching almost EUR 11 billion. Our EBITDA grew by 33% to EUR 1.2 billion. The growth was primarily driven by our offshore E&C operations. EBITDA margin continues to strengthen now at 10.9%, up from 8.9% in the same period last year. This improvement reflects the growing contribution of our offshore E&C activities and the reduced impact of the legacy projects.

We closed the period with a net result of EUR 221 million, marking a 7% increase compared to the last year. The operating cash flow stood at around EUR 1.1 billion, mainly supported by the growth in EBITDA year-on-year.

Let's now review the performance of our 3 businesses, moving to Page 13. For the Asset-Based Services, revenue for the first 9 months of 2025 reached EUR 6.3 billion, reflecting a robust 15% year-on-year increase. This growth was primarily driven by our SURF and conventional operations with a slight shift in mix in favor of conventional projects compared to the previous year.

EBITDA rose to EUR 875 million, reflecting a 38% increase, while the EBITDA margin improved to 13.8% up by 230 basis points year-on-year. The increase in profitability is mainly driven by strong project execution in the Emirates and Qatar, the conclusion of the IPA project in Norway as well as progress on other initiatives in West Africa.

Looking ahead to Q4 2025, we anticipate mid- to high single-digit growth in revenue compared to the third quarter of 2025 and a marginal improvement in the EBITDA margin.

Turning to the Drilling Offshore on Page 14. Revenue for the first 9 months of 2025 amounted to EUR 638 million, reflecting a 5% reduction compared to the same period last year. EBITDA increased by 4% year-on-year to EUR 258 million with a solid EBITDA margin of 40.4%.

The year-on-year performance of Drilling Offshore was primarily impacted by a reduction in the fleet size by 3 units following the suspension and terminations received from Saudi Aramco as well as the additional mobilization costs incurred relocating rigs across different regions. These negative effects have been partially offset by the increase in the day rate of the Saipem 10000, the higher level of activity of the Scarabeo 9 and the Perro Negro 13 and the one-off termination fee received for the Perro Negro 12.

Lastly, please note that the extension of the Saipem leasing agreement for the DVD introduced a change in the accounting treatment starting from April 1, 2025. Leasing costs, which were previously netted at revenue level are now capitalized and recorded as amortization below EBITDA. This has a positive impact both for revenue and EBITDA. For the fourth quarter of this year, we expect a mid-single-digit growth in both revenue and EBITDA compared to the third quarter of 2025, supported by the new contracts signed recently.

We will now conclude the review of business segments with Energy Carriers on Page 15. Revenue increased by 2% year-on-year, reaching EUR 4 billion. The EBITDA margin also improved compared to last year, reaching 1.7% in the first 9 months of 2025, thanks to the lower impact of legacy projects compared to the previous years. For the last quarter of 2025, we expect double-digit increase in revenue compared to the third quarter.

Turning to Page 16. I would like to highlight to you a few items below EBITDA. First, D&A reached EUR 737 million, representing an increase of EUR 249 million compared to last year. The growth of D&A is mainly due to the expansion of our construction fleet on a charter basis, in particular, with the Bold Tern, the Sendai and the Normand Frontier, entering the fleet in 2025 and to the accounting impact of the extension of the DVD drillship lease. We expect D&A in Q4 to be broadly in line with what was recorded in Q3.

Financial expenses totaled EUR 141 million in the first 9 months, increasing by EUR 37 million year-on-year. The increase in financial expenses is a result of the growth of the interest component related to the medium- to long-term leases. The higher project hedging costs driven by the widening interest rate differential between the U.S. dollars and the euro as well as the effect of FX movements, partially offset by lower net interest costs.

Last but not least, income taxes declined by EUR 14 million year-on-year, standing at EUR 117 million for the first 9 months of the year. The effective tax rate also decreased from 39% last year to 35% this year.

Let's focus now on the cash flows and net financial position on Page 17. Our net cash position pre-IFRS 16 has improved by EUR 161 million. growing from EUR 683 million at the end of December 2024 to EUR 844 million at the end of September 2025.

The positive development is mainly attributable to strong operating performance, favorable working capital trends, in particular in the first half of this year and the proceeds from the sale of our stake in KCA Deutag, partially offset by CapEx and by the dividend payment. Lease liabilities have increased by close to EUR 600 million in the first 9 months of the year, driven by higher volume of vessels chartered and the accounting impact of the DVD lease extension.

Looking ahead at Q4, as already anticipated, we expect positive but limited cash flows generation, mainly due to the impact of the expected capital and lease repayments.

I will now hand back to Sandro for his closing remarks.

Thank you, Paolo. So, before we open the floor to the questions, let me summarize our key messages. First, we are consistently delivering strong results with sustained growth in revenue and EBITDA and a strong cash flow conversion.

Second, our backlog provides us with a strong visibility. Our revenue for 2026 is already almost entirely secured by contracts we have already in place today.

Third, our construction fleet is fully booked for 2026 and getting very busy for 2027.

Fourth, our commercial activity is expected to drive an acceleration in new contracts awards in the coming quarters. Therefore, we confirm our guidance for 2025. Thank you for your attention, and we are now ready to take your questions.

[Operator Instructions]. The first question is from Alessandro Pozzi of Mediobanca.

I have 2 questions. The first one on outlook for the orders in the coming quarters. In your opening remarks, you mentioned that the pipeline remains very robust. And also, we know that you have a guidance of about EUR 50 billion for new orders over the next 4 years, maybe EUR 12 billion to EUR 13 billion per year. To achieve that this year in Q4, you need to have a good order intake beyond the quarterly variation in order intake, do you see any change in the attitude from your clients? And if we need to go back to the guidance of the EUR 50 billion, how do you feel about that and whether you would make any revision either positive or negative?

The second question on onshore E&C. I believe, Paolo, you mentioned an increase in double-digit revenues in Q4. If you can give us more color and maybe I have missed the guidance for EBITDA in onshore E&C in Q4. And also maybe remaining on the same topic of onshore E&C, can you give us a split of -- in the backlog between legacy projects? And I mean those with 0 margin, but also low margin versus the other one?

I will take the first one, and then Paolo will provide you on the answer on the second question. So with reference to the outlook for orders, the dynamics we are seeing is the same dynamics of last year with a concentration of orders that are coming between the third and the fourth quarter of the year. What we can say that these dynamics this year is more stronger than -- even more stronger than last year as the effect of all the uncertainties being generated in the world in the first 6 months of this year. And so many clients having postponed by a few quarters their final investment decision.

Second comment that we can do is that what we are seeing is a bit of a shift in the type of clients and the awards. So we see the national oil companies more prone in awarding new contracts than the international one in this space that they seem a bit more prudent. As you see, the largest new award we got in Q3 was the one awarded by Turkish Petron.

And what we are expecting in the present quarter and in the following one is this trend maybe being even further consolidated with instead a major international oil company or new orders maybe appearing more starting from second to 2026. This is the trend we see.

In the -- regarding the pipeline ahead of us, as I said before, we have EUR 13 billion of tenders that are out waiting for let's say, the awarding process. So we are pretty confident that we can get a slice of those. And so therefore, we -- this is the basis why we confirmed our guidance for 2025. And now I will leave the floor to Paolo.

So on the revenues onshore, we expect quite a few projects that are in the final, say, construction phase to accelerate in Q4 as the activity is progressing nicely. And some of them are the old ones, what probably you would call the legacy ones. So there isn't a specific reason why we expect -- there isn't a single name to point out when it comes to the increase in revenues. It's more a general trend across the entire portfolio. And in addition to that, there are certain projects that have been acquired last year that are entering into the phase where you -- the delivery accelerates because you're moving from the first phase of the engineering to the purchasing of materials and then possibly the construction. So it's a general trend across the entire portfolio.

Then the legacy projects accounted for -- in terms of revenues accounted for 13% of the revenues of the onshore business. That's the number for the 9 months 2025. The margins for the last quarter will be in line or slightly better than the margins that you saw in Q3 this year. And when it comes to the legacy portfolio going forward, keep in mind that as those projects are in the very final stage of the construction, the relative weight on the revenues will decrease materially because it's only the remaining pieces of the project. So they will weigh less and less when it comes to the overall revenues.

And in terms of EBITDA for Q4, should we assume in line with Q3?

I think you will keep seeing the improvement in the margins that you observed in Q3 and Q2. So it's-- you're going to have a further increase in the margins of the business. Obviously, as you know, in onshore, you cannot expect to jump from close to 2% to 6%, all of a sudden, but you will keep observing the positive trend that we've been experiencing this year in onshore.

The next question is from Mick Pickup of Barclays.

A couple of questions, if I may, on the fleet. So you mentioned that your fleet is fully booked for '25, '26 and you're hoping for '27. But the footnote is that's your owned vessels. Given that you charter in some fairly significant and sizable vessels, where are we on those as well? And then the follow-up on that, and it's the same subject. Obviously, depreciation has been growing significantly faster than EBITDA for the last 2 years, given that, that's effectively CapEx in the fleet. Where are we on major assets in your fleet? Can you take any more? Or are you hitting capacity of engineers and people?

We are not planning to take any further vessel in the fleet in long-term charter, maybe some opportunistic activity, but for short-term activity, this is always of course, but this is business as usual. While long-term chartering like we did for the JSD6000 and Sendai, this is not foreseen to occur. At the very end, what we have to say that we have been the sole operator in the offshore that was, let's say, was-- let's say, introducing new tonnage on the market. So yes, what we can say on the fleet utilization that the chartered units are all started to work in full with this quarter. And we expect to completely fill their schedules between the scheduled in 2027, I'm speaking, within the last quarter of this year and the first 2 quarters of next year.

As you recall, those, as I said before, those vessels, they are more linked to operation that are awarded by international oil companies around the world. And as I said, most of their awarding process is expected between Q1 and Q2 of next year. Tenders have been already launched. We are discussing now technical aspects with clients, but then the clients, they have to take their final investment decision prior coming to the award. And we expect this to become effective between Q1 and Q2 2026 with the information we have in our hands. And now I will give over to Paolo.

Yes. Mick, thanks for the comment on the D&A. I think that it's true that they've been running fast. That's a fact you can see through the numbers. Now one comment on this. When you lease a vessel, you need to account for the lease from day 1, even if the vessel will start working, say, 3 months later. So you can argue that to a certain extent, the lease treatment of those assets, it's actually an anticipation of cost because you have to start accounting for the depreciation before the assets enter into operation. So to some extent, we are anticipating certain costs that we would have faced later if the item was treated as an operational cost. And second, if you go through the numbers that are disclosed in the press release, you will also see that part -- one of the reasons is the DVD. In fact, you can see in the Drilling Offshore segment reporting that there, you see the larger difference between the EBITDA and the EBIT because of the DVD lease treatment. And it explains a large part of the increase in the gap between EBITDA and EBIT basically.

Then if I'm just thinking logically, obviously, you talk about improving margins, but your asset-backed services EBIT has basically been flat now for 2 years at the EBIT margin level. So what you're saying is as those vessels come in, I could start assuming you see an improvement at the EBIT level, not just the EBITDA level.

I think it's a fair assumption, yes.

The next question is from Mark Wilson of Jefferies. He withdrew his question. So the next question is from Massimo Bonisoli of Equita.

I have 2 questions. One on the offshore drilling day rates. If you can comment on the latest trends you are seeing in offshore drilling day rates, both for deepwater and jack-ups and how this is feeding into your commercial negotiation for 2026? And the second question is on offshore E&C margin, which has improved significantly at the EBITDA level. With the current backlog mix, do you believe the margin level is now close to a fair run rate? Or is there any room for further upside as legacy contracts roll off and pricing remains supportive?

So I will answer to the first one, and then Paolo will comment on the second one. So offshore drilling rig day rates, as you know, it's always a very tricky question for us because disclosing rates that are confidential with clients it's always a problem. Generally speaking, what we have seen in the second part of 2025 is that a general decrease of the offshore E&C day rates apart certain drilling unit as we commented like Saipem 10000, where we managed then in the last job awarded to slightly increase the daily rate, it was rented. The others, the market became definitely more competitive. And certainly, at Saipem, we do privilege long-term relation with the client more than shaving the peak of the demand with very -- with a request of very high daily rates.

As I said, so general comment for me is that daily rates deep offshore are almost flat since the second half of 2025, but we do expect picking up this market in the second half of 2026 as per the fact that many clients they have postponed their drilling campaign in the second half of the year. So what we see, we see a concentration on new tenders coming requesting rigs starting working in second half 2026. So at that point, you can expect also daily rates picking up again. Instead, what we can say for the jack-ups and so the shallow water, we see definitely a trend of decreasing of the daily rates, especially in the Middle East. They do remain daily rates with which we can make a living. But certainly, they are no longer the daily rates of 2 years, 3 years ago. That's something although again, in the Middle East, in the very recent weeks, in the last couple of weeks, we have expectation of reactivation of several rigs, especially in Saudi Arabia. So this, I believe that in the medium term will bring to the jack-up drilling rates picking up again towards the levels we were seeing in a couple of years ago. Paolo?

On the offshore E&C, I think you will see the margins -- the margins will keep improving in Q4. We expect both EBIT margin and EBITDA margin to increase further compared to Q3. And as you may have noticed from the -- in Q4, sorry, from Q3, we are already close to the 15% EBITDA margin, which we feel as an average of the portfolio is a good assumption for the medium term. But you will see the margins improving in Q4, both the EBITDA and the EBIT margin. Also because there is still a bit of legacy projects under the asset base, not as many as the onshore, but there is a couple. So as we progress on those projects, the margins will increase.

The next question is from Guillaume Delaby of Bernstein.

To be honest, all my questions have been answered.

Next question is from Victoria McCulloch of RBC.

And for the color that you were able to provide on the offshore E&C fleet utilization. I was wondering if you could give us some color on how this looked 12 months ago. What did 2026 utilization look like 12 months ago? And on the same vein, if we look at the backlog phasing on Slide 32, 2027 or backlog for execution in 2027 is down 12 months ago, if we look at it compared to 2026, 12 months ago. Is this to do with phasing of contracts or some sort of delay in awards from this year that you had anticipated versus, I guess, the healthy tender pipeline having remained that way? And secondly, I noted in the quarter, an agreement was reached -- an agreement in principle was reached with Petrofac. Given the delay to the refinancing, can you give us any color as to what the agreement was?

So starting with the first question and regarding generally how it looks like our backlog 2025 compared to the end of 2024. We have to -- when we comment this, we always have to recall that at the end of 2024, we recorded a record level of backlog and that the awards that we achieved in fourth quarter 2024 was at the level that no one could even think to be replicated in, let's say, in a quarter of 2025. So we are -- I mean, the general -- I would comment is that we are comparing an exceptional year with a normal year. So -- but with the same trend. As I said before, at the beginning, the first 2 quarters of 2025, we were expecting to be lower than the end of 2024, because as we said before, this was exceptional high. So we could not expect clients keep awarding with the same piece.

What we have seen in the second and third quarter, we are recording a bit of effect having delayed final investment decisions, mainly from the international oil companies that are pushing on the right several, let's say, several awards. And so you see that in Q3, for example, we received awards that at the beginning of the year, we were thinking being closed within Q2. That's the magnitude of the shift we are seeing.

Nevertheless, as I said before, national oil companies that are less affected in their final investment decision, let's say, general economic trends, but more driven by strategic needs of energy of their own countries, they are keeping the pace. And I believe that soon you will see how this will turn into new awards that they will bring our level, let's say, in line with the guidance we gave. And then for 2026, like it happens in many situations of our industry that is going ahead a bit on a stop-and-go mood, we are also expecting the second half of 2026 to replicate a bit what happened in 2024 as effects of slowdown we saw in the first part of the year. So, I'm trying to give you a clear color of our expectations and what is going on, on the market.

Now, the next one Paolo will address.

I guess I can't say much about Petrofac because the agreement with Petrofac is protected by very tight confidentiality agreements. What I can say is, what they press released a few days ago. We didn't like the original restructuring plan. You are aware of what happened. Then we found a possible agreement. Then we understand that there are other disagreements with certain stakeholders that might change their plans. So I think I can share that we have found a possible agreement that worked for all the parties. And now that we can wait and see if they can fix the latest problems that seem to have come up in the recent days. And this is where we stand today.

The next question is from Guilherme Levy of Morgan Stanley.

I have 2, please. The first one, during the quarter, we had some headlines regarding a potential sale of your subsidiary Muni to Fincantieri. And I would be interested to see if you can say a few words on that front. How big is your current business? If you can also remind us of your current collaboration agreement with Fincantieri. Also, if a disposal at this point, considering the ongoing merger process makes sense?

And then the second one, if you can provide us with any color, or if there has been any update on the arbitration proceedings with Thai oil?

Okay. So, regarding your first question, I believe that the starting point is that we signed with Fincantieri an MOU in 2024 that is; covering possible commercial cooperation between Saipem and Fincantieri in the area of subsea drones that have been developed by Saipem. So that agreement is still valid. It is a commercial agreement.

On the other hand, you know that in the process of clearing the golden power from the Italian state, we got a certain number of prescriptions that are in line with what we did and what we were planning to do, but they are pretty strict on the fact that we have to keep and continue developing that kind of technology. So I believe that this is the situation. So we will keep the technology according to the prescription. We will continue to develop the technology. And if there is any possibility, and as I'm expecting that the MOU will bring some fruit, then we will get that through it together. That's the way we see. So we have in place a commercial collaboration. And definitely, we will progress on that line.

In terms of the size of the business, it's a business that it is very sensitive, as you can appreciate from, let's say, the defense point of view and the fact that whatever is around drones, even if in this case, we are speaking about subsea drones is becoming very sensitive, very important in terms of strategy and strategic view.

In terms of business size, we have to recall that this business is very small compared to the overall Saipem business because we are speaking about a few tens of million-euro-value in this kind of activity, because we have always recalled that this activity is within Saipem as a natural evolution of what we developed for serving our clients in the oil and gas. Everything starts with the conventional ROV, that then they were developed into drones to serve the demand of autonomous inspection for maintenance that is coming from our clients who are the major oil and gas companies. So this part is really a new coming business, but very much rooted within the oil and gas sector.

And the second one is Thai oil, and Thai oil, there are no updates basically. This is what we can say compared to the previous quarter. So I really don't have any further comment.

The next question is from Christopher Kuplent of Bank of America.

Just 2 quick ones, if I may. The first one, I think I heard a lot of positives around what you expect from Q4. And please tell me that I'm nitpicking, but I think your 9-months EBITDA margin is already running at a level that is above your full year guidance. So, to me, I guess, the cheeky question is, why not raise your guidance with all the comments that you've given us today on Q4?

And then secondly, again, please, if you can't answer, then just say no comment, but I did want to check what you can say about the progress on antitrust processes regarding the Saipem 7 merger.

Paolo will answer to your first question, and then I will address the second one.

Well, this is a question we receive almost every time we present the Q3 results. Why don't we raise the guidance? Yes, if you run some very simple math, obviously, expecting a good Q4, you may come to the conclusion that we might do something better than what we guided for. But if you think through the numbers carefully, even if that is going to be the case, it's not a big difference. So we will keep working to overdeliver in Q4 compared to the expectations based on the guidance. But we feel that give or take, this is where the company will deliver end of the year.

And it's also true that in the first half of this year, we have already done all the cash flows that we guided for, for the entire year. But we also anticipated it happened, that in Q3, the cash flows would be slightly negative or neutral, which turned out to be the case. So we, as a management team, feel that the guidance remains what we expect to deliver.

Okay. Regarding the antitrust process, I would say that things are going basically as planned. We submitted our filing to all the relevant and competent antitrust authorities around the world. And this is pretty standard following our merger agreement announcement on July 23, and things are, let's say, going as per expectations. We submitted files. We received queries. We answered your queries. So the process is ongoing as expected and in line with expectations so far. So this is what I can comment on.

The next question is from Sebastian Erskine of Rothschild & Co Redburn.

I have a question on the cash generation. So obviously, very strong free cash flow so far, but expecting kind of an outflow in the fourth quarter. But of course, being that is lease repayment dynamic. Where do you see that kind of plateauing and kind of limiting as a drag on free cash flow into next year, with the underlying profitability of the business improving? Will that continue to be a drag, but are you optimized now in the sense that you don't foresee further leasing and further impact on that side?

And then kind of second or linked to that on the CapEx budget, you're running well below that so far. Could you help us understand some of the dynamics behind that, and if there's a scope for slippage into next year as well?

So, on the lease payments or lease liabilities, we think that we're getting very close to the peak in terms of overall lease liabilities. So you won't see the lease liabilities growing any further in Q4, and then neither in 2026. The lease payments will remain in Q4 and next year to a similar level to Q3 2025. So that's what you can expect.

Understood. And just on the CapEx side?

So our level of CapEx, are CapEx that are, let's say, relevant to the stay in business. So we are not planning any acquisition, and any capital expenditure for new vessels, new equipment, new drilling. So they are all mainly linked to the periodical recertification of the fleet, both drilling and E&C. So that you will see, and we are not expecting any change there within the guidance.

The next question is from Alejandra Magana of JPMorgan.

Two from me. On the EUR 13 billion of bids you're waiting for customer feedback on, can you share when you expect decisions on the main ones and whether any are particularly close to conversion? And my second one is on Mozambique. Do you still expect the project to restart by year-end? And I understand it should come with additional backlog to reflect the increase in costs since the original award. Could you maybe give us a sense of the scale of the additional order intake, whether that uplift is modest or more meaningful relative to the original award size or to your current backlog?

Okay. I will start answering directly on Mozambique, and then Paolo will give you give more color on the first question. So, on Mozambique, really, we stay with what recently total commented on their last Capital Market Day. They are very positive about the close restart of the projects, and what we can say is that we share the positive view. So that's what I can say. The final say is, however, clearly with the clients and the JV that is grouping the clients. Clearly, when the official restart and the lift of the force majeure will become a reality, there will be an upgrade on our backlog on Mozambique. I can't disclose the numbers now, but that's a consequence. Paolo?

Yes. On the EUR 13 million of offers submitted to clients, we think that like, say, EUR 4 billion, EUR 5 billion will get the answers by the end of this year, and with the others coming in 2025. Now making any guess on the success rate, it's actually a very hard call because it's not a diversified portfolio made of small bids. I mean there are some big ones. In those cases, it's either nothing or the entire value. So it's really hard to say. But we're pretty confident that out of the EUR 5 billion of answers we will get, some of them will be positive in any case. And the others will come in Q1 and Q2 2026.

The last question is from Anna Kishmariya of UBS.

I have a quick follow-up around Mozambique. Were there any impairments that you booked for Mozambique, which follow the restart, you can reverse? And one question around depreciation for the next year, given that several vessels were returned to the owners on the offshore drilling side, like should we expect some minor decrease year-on-year in this line?

No. On Mozambique, there are no impairments done in the past. The only thing that we did is, obviously, as you know, we did some preservation and maintenance work on site that has been partially deducted on the backlog. So when the project restarts, we will add that piece of the backlog back to the original contract value. It's kind of an accounting magic, but what is going to happen is that the backlog on Mozambique will increase because in the last few years, we made some revenues on Mozambique, part of which have been accounted against the backlog. But if you are referring to impairments, so impairments of contract value, margins, et cetera, there haven't been any. And so you cannot expect any one-off components because of the restart.

Then the other question, I think, was on the D&A next year. I think that if you take the numbers for Q3 as a proxy of the run rate when it comes to the total D&A, so, including both D&A of CapEx and D&A coming from the lease payments, they will remain broadly in line with Q3.

We have one more question from Francesco Sala of Banca Akros.

Just a quick one on the net working capital, which has been pretty volatile in the last 3 quarters. So I wonder whether you can share with us your expectations on Q4 and possibly on the first 2 quarters of 2026.

For Q4, we think that there is going to be a negative contribution for the net working capital, even though it's going to be a small number, which is what we anticipated already in the Q2 results call. The increase in the working capital is not going to be the same size that we experienced in Q3. It's going to be a smaller number. So you can argue that, given our business volumes, it's going to be something almost negligible. What we do like about the working capital is that the increase in the working capital in Q3 and Q4 reflects a remarkable decrease in the advanced payments from clients. which you may see as an increase in the quality of the working capital and the strength of the balance sheet because, as a matter of fact, we are consuming cash that we received in advance and that was accounted as a negative component of the working capital. And so the composition of the working capital increases compared to the past.

This concludes our Q&A session and our call. Thank you for joining. You may now disconnect.