Mota Engil SGPS SA

ELI:EGL

Q2-2025 Earnings Call

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to Mota-Engil Half Year 2025 Results Presentation. [Operator Instructions]

I would now like to hand over to Pedro Arrais. Please go ahead, sir.

[Pedro Arrais, executive]

Thank you, and good afternoon. Thank you all for attending this call where we will present the first half 2025 results. With me, I have here Carlos Mota Santos, the Chairman and CEO; and Mr. Jose Carlos Nogueira, the CFO of the company. As usual, the CEO will start the presentation with some key highlights, then I will present the bulk of the presentation. Mr. Carlos Mota Santos will present the final remarks and outlook. And at the end, as usual, we will have the -- all the time available for you to put all your questions.

Please, Carlos, the floor is yours.

[Carlos António Vasconcelos dos Santos, executive]

Thank you, Pedro. First of all, welcome, good afternoon. Welcome to the first half 2025 results from Mota-Engil. I would like to start by Slide #4, with the key highlights of the deserving release and stating that we had a record turnover during the first half of the year.

Even though the increase year-on-year is slightly positive 0.5%, I have to mention that this was done in a very challenging context. First of all, with the decrease in Europe due to the effect of the sale of the Polish operation. And after that, also with the decrease of Latin America, that was the expected effect of the finishing of the [Tren Maya] project in Mexico. But even though we were able to maintain or slightly -- have a slightly growth with the increase of Africa, not only of the infrastructure, engineering and construction segment, but namely or mainly with the industrial engineering, namely the contract mining in which we have an increase of 87% being able to maintain the same EBITDA margin of 30%.

We had a solid backlog of EUR 14.7 billion in the first half, even though this does not account with EUR 1.4 billion of contracts that in the meantime have been awarded and signed. So if we will account with this contract, we will be around EUR 16 billion, so we will be with a new record in terms of backlog. But more important that the size of the backlog is the quality of this backlog. We've been able to achieve and contract new contracts with higher profitability and margins as we are showing with the results of this first half.

So moving to the EBITDA, we have a record of 16% in the first half of the year, so this is the biggest EBITDA margin that we achieved during the first half of a year. That is always characterized by some more difficulties in the beginning of the year. But this is the proof, not only that we've been achieving higher levels of profitability but also a proof of the quality of our backlog.

Regarding net profit, we achieved almost EUR 60 million with a very solid growth of 20% also increasing the margin, the net margin to 2.2% track or paving the way to the 3% that we announced to the market to -- that was our goal for the end of 2026.

In terms of financial figures, not only in terms of net debt but also in terms of gross debt we presented reductions when compared with the end of 2024. And also, we improved the goals that we've been stating to the market that is to be -- always be below 2x in terms of net debt over EBITDA and always below 4x in terms of gross debt over EBITDA. Actually, in terms of gross debt over EBITDA for the first time in the recent past, we achieved to be below 3x.

In terms of CapEx, as mentioned in the guidance in the end of the year last year, we decreased significantly the CapEx when compared with the first half of 2024, with a decrease of almost 40% and in line with what has been the guidance of 7% in terms of turnover. We increased also our cash flow coming from operations in almost EUR 100 million when compared with the first half of last year. And in terms of the ratio of equity over assets, we maintained the 10%. That was the same ratio that we presented in the first half of last year, being able to do it in a context of dividend distribution in this first half of the year.

So moving on to the next slide and looking to the main events since the beginning of this year. We've been awarded several contracts in our main strategic markets, not only here in Portugal with the high-speed train that was signed already in July and is not accounted in the backlog that we presented for the first half of the year, but also several other projects in other important markets for us that is Brazil, Mexico and also in the industrial engineering and contract mining that we've been awarded a new contract for one of the clients that is one of our main clients in this sector.

In terms of financing, I would like to highlight the issuance of sustainability-linked bonds here in Portugal of EUR 95 million with a very high demand, this was done in May. And also to highlight several other operations, namely the one from Africa Development Bank. That is the first operation that this institution does with a private company and also the finance that was agreed with IFC from World Bank that has already -- is already -- has already been approved in the Board of Directors of IFC and is to be now disbursed during the second half of this year.

In terms of sustainability, we issued the first annual report of last year that is compliant with the directives. We've been certified by the First Rainforest Alliance in our Mamaland project in Africa. And also, we've been -- we've just been awarded the best place to work in the Infrastructure & Construction segment by a new ranking. Also, I would like to highlight two other things. First, one of the things that has been already announced in the past that was we acquired the 50% stake that we had in ECB. That is our main vehicle in Brazil. That is, let's say, the proof of how Brazil is going to be important for us in the next years to come.

So there's been a very -- it's been a strategic market for the group and is going to be one of the drivers for the future. And also, I would like to highlight that just recently last week, it has been published the ENR250 in which Mota-Engil achieved new records, namely, it's been ranks in #2 in Latin America. It's #6 in Africa, but is the first one, non-Chinese company. We've been listed #11 in Europe, so increasing from the position 14 and 66 worldwide from 79 last year. Also, in terms of the most international company, we've been ranked number 24 that also was an improvement when compared with the year before.

So moving on to Slide #6. As you can see, like in December in the first half of '25, the company is being able to capably assuring a sustainable growth, focus in profitability and in cash flow generation and achieving that with the execution at record levels of turnover, EBITDA and net profit with the preparing of the upcoming cycle. So this was the best ever first half in terms of turnover, but also it was the best first half in terms of EBITDA and net margin, with an improvement in terms of cash flow and also an improvement in terms of the debt ratios, like I mentioned before.

We are paving the way to the 2026 calls in terms of all these dimensions, profitability, turnover and also to cash flow improvement and also with the improvement of the ratios of the balance sheet. And we are now preparing the new strategic plan that, as I mentioned before, we are going to announce in the first trimester of next year, that is going to be the new strategic plan until 2030 and preparing the company for a new cycle that the main issue or the main driver will continue to be the profitability.

So I'm going to pass now the presentation again to Pedro and I will finish the presentation with the final remarks and also the guidance for 2025. Thank you.

[Pedro Arrais, executive]

Thank you, Carlos. We will move now to the Slide 8 to see the breakdown of the P&L in more detail, and I would like to start to highlight that the company achieved not only the record level in turnover and EBITDA, that's already said by our CEO in the first half, but also the EBIT level showing that the company is being capable of extracting added value from its operations.

Regarding the financial results, here, we can see the impact of a higher amount of financial costs related with the investment made in the recent years and also a low figure regarding the contribution from associates reflecting the early stage of some concessional assets. But at the end, the company proved to be able to increase the net margin and achieve the best ever result in the first half, achieving an increase of 20% year-on-year in net profit to a record amount of EUR 59 million.

Moving to Slide 9. And here, the detailed performance by each business unit, we can see here in Europe we must consider in firsthand that without the contribution from the Poland of last year, has any contribution of EUR 79 million for the turnover and the operation was sold last September. The turnover here and related only with the Portuguese market, the performance shows an 11% growth year-on-year. And nevertheless, it's important to comment that the company considers that the recent elections in Portugal promoted some delays in the tenders and the signature of relevant contracts that impacted in the dynamic of the Portuguese market this year.

But without any -- with any doubt, we expect a significant growth of public investment in Portugal starting next year in terms of execution and in a region with stable margins that improved in the case of Mota-Engil in the first half of 25% to 8%. Africa presented a very strong performance with 59% growth year-on-year in turnover and 77% in EBITDA, impacted by the very positive performance in the industrial engineering, a specialized segment in which Mota-Engil is nowadays important to mention, the leader in Africa and top 5 globally, supporting the continuous improvement of EBITDA margin that achieved 24% in the region in the first half of '25 and with also a positive contribution from the core markets like Nigeria and Angola.

Regarding the performance in LatAm, this is perfectly expected and in line with what we -- the company explained at the beginning of the year after the conclusion of relevant projects in Mexico and with Tren Maya as the most relevant example. It's also important to comment with you the very positive performance of the environmental business with double-digit growth both in turnover with 15% and in EBITDA with an increase of 20% year-on-year.

At the end, it's worth to mention that the OpEx 50 that I would like to remember that is an internal program focused on cost reduction and has the target of OpEx reduction of EUR 50 million in 2025 and more EUR 50 million in 2026 is having a very positive results, mainly impacted by a higher scale of the procurement procedures that we are managing.

Moving to Slide 10. Here, we can see here, the company is being able to maintain the renovation of record levels of backlog, but relevant to highlight that the company where you can see here at the left that the company has EUR 1 billion more comparing to June of '24, and that will be even higher reinforced with relevant contracts amounting EUR 1.36 billion signed after June with the first stretch of the high-speed train in Portugal as the biggest contract with EUR 800 million, guaranteeing a positive outlook for 2026 and beyond with the Portuguese market increasing its importance in the next years.

Moving to Slide 11. I will not elaborate on that, but we can see here the major contracts in 15 different countries with the industrial engineering segment increasing in the recent quarters, representing roughly EUR 4 billion of the total backlog of the company.

The Slide 12, here you can see the CapEx that the company made in the first half of '25 with a total amount of EUR 194 million, representing a 37% reduction year-on-year with a very selective criteria for new investments allocated in the segments of higher margins with industrial engineering in Africa as the most relevant example. Here, you can see also the full alignment with the target of CapEx for the full year of '25 that I remember that is achieving a 7% ratio of CapEx to turnover. Something that is for the company, a top priority to maintain the second half of '25 and to continue to increase the cash flow generation and focusing on debt reduction in 2025 and beyond.

Moving to Slide 13. And considering that historically, the company achieves every year best performance in the second half, not only the company, but I would say, the industry. And considering the impact of seasonality, we can see here that in the first half of '25, the company sustained the positive trend regarding the reinforcement of the balance sheet, reflecting the results of the strategy of focusing on cash generation and a strong commercial discipline.

Moving to Slide 14. And in firsthand, I would like to highlight the positive increase of 22% year-on-year of operating cash flow to EUR 536 million. And to explain in more detail the waterfall graphic that you can see here in this slide, each caption is aligned with positive performance in the first half of '25 regarding the operational performance, combined with the financial discipline reflected in the reduction of CapEx and that at the end allowed the company to achieve a debt reduction of EUR 64 million, this including leasing, factoring and confirming.

In conclusion, we can see here that the cash flow generation is being reinvested in the business units with higher margin and with the debt at control levels as established in our strategic plan and as our CEO mentioned, for the first time with the gross debt to EBITDA less than 3x.

Moving to Slide 15 and looking to the more detail in the debt levels. We can see here the reduction of EUR 37 million in the net debt without leasing, factoring and confirming with consistent improvement of both ratios in net debt-to-EBITDA and gross debt-to-EBITDA better in June than the targets established in the strategic plan that I remember is below 2x and 4x, respectively.

Moving to Slide 16. Here, you can see the liquidity position of EUR 895 million that surpassed the nonrevolving financial installments due for over the next 3 years. And from the debt with maturities with less than in 1 year, the company established recently several financing operations described here that allowed the company to increase the average debt maturity to 2.8 years.

Regarding the average cost of 7.6% in this figure reflects the mix of local currency debt in Africa and LatAm with higher rates comparing to Europe and with the expected reduction of the interest rates expected for the second half and for next year, globally speaking, in this average cost.

Now looking to the business units and moving to Slide 20 to make a brief overview and outlook from each business unit and starting by the European division in Engineering & Construction, we can see here; then without the effect of the Polish operation, we increased 11% year-on-year in Europe and improving the margin to 8%. That, I would say, a positive performance from the Portuguese market despite the promoted by the -- the delays promoted by the unexpected elections already comment that impacted this schedule of the tenders and the award of relevant projects.

Looking to the future, we are optimistic with the Portuguese market considering the strategic projects that are in pipeline with the new stretches of high-speed train, relevant projects in ports and logistics and new hospitals like the Algarve, as an example. And of course, the expected award in the recent tender of -- for the violet line, a tender of EUR 600 million in which Mota-Engil presented the most competitive proposal.

Moving to Slide 22. And flying to Africa, we can see here a growth of 59% in turnover and 77% increase in EBITDA. Important to mention that Nigeria, Angola and Mozambique, the core markets in the African division together represents 47% of total turnover in Africa and 53% in EBITDA, with industrial engineering showing a very impressive contribution, namely with the 87% increase with a 29% EBITDA margin, allowing the region to achieve globally an impressive margin of 24%.

With the higher backlog ever in the region with EUR 9.4 billion, Mota-Engil is nowadays, as we mentioned, the leader of the segment of contract mining in the African continent, a region where Mota-Engil was recently appointed as the main European construction company in all the African continent, showing in this sense, the long-term commitment with -- from the company with the development of several African markets where the company started almost 80 years ago and is a very recognized and considered reliable brands and partner in Africa. Important to mention that we expected to resume the LNG project in Mozambique in the next until the end of this year, and that is a very relevant project for the development of Mozambique.

For last, also important to comment as a recognition of several financial institutions that Mota-Engil signed very different kind of financial -- with financial entities in Africa, different frameworks with some of the most repeatable multilaterals and with some operations having the curiosity of being the first nonsovereign agreement of African Development Bank that was made with Mota-Engil on the financing agreement also with IFC allocated to projects of Mota-Engil.

In Slide 23, we can see here the contracts in a total of EUR 3.8 billion. That is the total amount of the backlog in this segment with all Tier 1 clients and an average extension of 5 years with expected renewals and extensions of the contracts, considering that the company is executing in several cases, the first -- the initial contract, guaranteeing for medium and long term predictable cash flows after the initial investment.

Moving to Slide 25, Latin America. We presented in the first half of '25 a decrease in line with the expected turnover, considering the conclusion of some relevant contracts in Mexico with Tren Maya as the major flagship project as comment -- as I commented before. In this sense, Mota-Engil expects for the near future to increase the activity in other markets with Brazil as the main focus for business development in 2025 and already with good news with the recent awards by Petrobras work being coordinated by the Deputy CEO, Manuel Mota to compensate the delays on the market -- on the Mexican market due to the global uncertainty related with tariffs and the first year of the mandate of the Mexican President.

Moving to Slide 27, in the environment, the turnover and EBITDA was up 15% year-on-year with an increase of 20% in EBITDA and with the margin increased to 22%, impacted by the positive performance in all the segments between Waste Collection to Treatment and the International companies. Important to mention that after a very challenging new regulatory period of '25, '27, we expect with EGF foreseen increase in activity for the next years.

Slide 29 for last, we can see the contribution from Mota-Engil Capital, Mext and Energy with EUR 61 million of turnover and a stable margin as EBITDA margin of 6% with the usual activity related with the development of real estate projects in Portugal and new projects from Mota-Engil Energy that are only in the beginning related with the biomethane production to start.

Important to highlight here the investments we made in diversification in new projects, namely in concessions, as a good example with the New Lisbon Hospital that is already starting the construction and the projects regarding the first stretch of high-speed train in Portugal that was awarded to the consortium of Portuguese construction companies leaded by Mota-Engil. In pipeline, Mota-Engil will be active in the Portuguese market, preparing the tender for the second stretch of the high-speed train that we expect to be tendered in the second half of '25 and the concessional program that includes ports and logistics with Portos 5+ plan in Portugal, a new hospital in PPP scheme in Algarve to be tendered also in the second half of '25 and two Tagus river connections to be development in the upcoming years.

So at the end, and as comments with you, I will pass to Carlo Mota Santos, to the Slide 20 to the final remarks and to 2025 guidance.

[Carlos António Vasconcelos dos Santos, executive]

Thank you, Pedro. So as final remarks. We can say that we've been walking the talk. So basically, we've been delivering what has been our guidance in the last years. And we did achieve our overall stable activity with Africa delivering a significant growth and being able to overpass the reduction that was already mentioned by me, and by peers doing Europe and also in Latin America. But more important than that, the overpassing that reduction and being able to have at least stable turnover was the fact that we did this increasing the profitability, not only in terms of EBITDA but also in terms of net profit, as was in the guidance and the goals that we've been establishing.

I would like to stress that this was done with the increase in industrial engineering, namely in contract mining as was stated in the previous call we expected to double the turnover of contract mining maintaining the same levels of EBITDA there and that was done in the first half but also, we've been increasing the profitability from our Waste Treatment projects from our environmental units. And I'll also like to stress that is foreseen a very ambitious plan for the next years in terms of investment in Portugal.

And that will find here a window of opportunity of renegotiating the contract that we have in our Waste Treatment concessions. So we have a very solid backlog that recently has been reinforced with the announcements that we made. And this not only secures a strong 2026, but also the years after that. But more important than the volume, like I stated, is the quality of this backlog projects with a bigger dimension, projects with a bigger profitability profile and also with a more positive cash profile that is one of the things that we've been looking to do.

So we can continue our very selective commercial policy in trying to secure more and more contracts with this profile. We have a positive cash conversion during the first half, driven basically by not only the profitability but also by a reduction in CapEx, as we announced, and improvement on the working capital.

The debt profile remains well controlled, not only with the net debt over EBITDA below 2x, but also the gross debt over a EBITDA below 4x. And as I mentioned, the first time since a long time ago, that has been below 3x and we expect to have an upside from some revision in interest rates in the next few weeks and also with the extended maturities and this new financing debt facilities that we just announced.

Concerning 2025. What can we expect? A stable turnover. So we are not going to grow this year as we've been announcing. And this is still very dependent on the impact of some projects that's been delayed namely here in Portugal and also in Mexico due to different reasons. Here in Portugal, as you know, we face elections this year in May. That was unforeseen in the beginning of the year. And that's not -- did not only impact in the award of new contracts, but also impacted in the signing of these contracts like the one of the high-speed train that's just been signed 1 month ago.

So this has an impact in the -- what was foreseen for this year in Portugal, and we hope that we can recover during the first half -- the second half of the year. In Mexico, as you know, there is a new government in place. It took -- the new President took place in the first of October of 2024. And we already foreseen a decrease in these markets. But what we didn't foresee is the impact that this tariff war or tariff policy from the United States adding the delaying of some investments, namely investments that are linked to nearshore phenomenon.

Even though I'd like to stress that we feel now in Mexico, a very positive interest coming again from American investors, namely with this nearshoring theme, with the decoupling from China. So the investments that we expected, not only in terms of industrial investment, but also the investments that are related with this for the energy capacity, energy production and energy distribution. We expect now to be fully speed in the next months to come.

One positive thing about also Mexico has been the award of this new contract of railway that is the first contract of public investment in this new government. So we can expect the EBITDA there to remain around 60%. We want to increase it. But more important than that or as important as that is the improvement of net margin for the end of the year.

As you know, we had the goal of 3% net margin by -- by the end of 2026, so we'll continue to pave the way to reach the 3%. We are not going to reach 3% at the end of this year, but we are paving the growth to achieve the 3% by the end of 2026. We will continue to have this disciplined investment policy, so we can expect a CapEx of around 7% of the turnover that will positively affect our cash flow and also our debt profile.

So we'll focus on the free cash flow generation and also maintain the commitment of being below 2x in terms of net debt over EBITDA and below 4x in terms of gross debt over EBITDA. Also, as you remember, we have a goal to achieve equity to asset target above 15% by the end of 2026 and that is going to continue to have a steady and positive progress to achieve that goal by the end of 2026, driven by the improved profitability and also more and more optimized asset management with some policies in terms of asset rotations to be done during the second half of this year and also in 2026.

So overall, a very positive outlook for the end of 2025 and preparing what is going to be the next strategic cycle that is going to be foreseen in the new strategic plan that the main focus, again, will be profitability and improvement of our balance sheet and our debt profile. So thank you very much for attending the presentation, and we are now available for your Q&A. Thank you.

[Operator]

[Operator Instructions] Our first question comes from the line of [indiscernible] from JB Capital.

[Unknown Analyst]

I have 2 questions, if I may. So the first one is related with the working capital evolution in the first half of the year. If we exclude the EUR 209 million of delayed payments from Q4 2024. Effectively, there was an outflow EUR 95 million, if I'm not mistaken, in the first half of the year.

This compares with the inflow of EUR 95 million last year in the same period. So should we expect a change in the working capital profile of first half of peers going forward? Or was simply a one-off phenomenon in first half 2025? And the second one is if you can quantify the upside for the backlog of the projects that you mentioned in Portugal, namely in the construction backlog.

[Carlos António Vasconcelos dos Santos, executive]

Thank you for your questions. If you allow me -- Can you again rephrase the second question because I'm afraid that isn't quite understood.

[Unknown Analyst]

No if we if you can give us an idea of all the pipeline of new -- potential new works in Portugal, what could it represent in terms of the construction backlog.

[Carlos António Vasconcelos dos Santos, executive]

Okay. Thank you, [indiscernible]. So I'll answer the second question, and then I will ask Jose Carlos to talk about working capital. So as I explained, the backlog that we announced doesn't have within some contracts, namely contracts in Portugal, that was the high-speed train that we signed 1 month ago. But if we can, let's say, have a projection for the end of the year concerning Portugal, I'm very, let's say, very well -- very positive of being awarded still some contracts by the end of the year, namely, we are very positive in the violet project in the Metro Lisbon, as we know -- has been announced -- has been publicized in the media.

We presented an offer is -- I would say, the most competitive offer that was presented, so we are very positive of being awarded that contract. That is around EUR 500 million. Also, we expect the second stretch of the high-speed train to be relaunched the tender next month, next September. We are very much focused and very committed with this project, as you know. And we have -- we are going to be present and we're going to give an offer that will be very competitive because we have the advantage of being awarded the first stretch, and we can have some upsides of having some synergies between the two stretches.

Alongside with these 2 projects, we expect also that has been announced recently the launch of the new tender of the Faro Hospital in Algarve that will be through a PPP scheme very similar to the one that we've been awarded in Lisbon and also some other projects, namely the ones related with the ports plan that was just recently presented.

So I would say, I don't know if the second stretch of the high-speed train is going to be awarded this year. But one thing that is for sure that we are going to be present and we are going to be very competitive. And we are very much positive, not only to be awarded the project that I mentioned about the Metro of Lisbon, but also some other private building projects. And also one very important in this project we are working already in that, that is a plant of electrical batteries in finch that we are already working the preliminary works and we are going to present an offer for the rest of the project.

That is the [indiscernible] plant that, as you know, is a multimillion euro project that is going to be done in the next years in finch. So I'll ask -- I don't know if I answered your question. But I will ask Jose Carlos to answer about the question that you made about working capital, okay?

[Jose Carlos Barroso Pereira Nogueira, executive]

Thank you, Carlos. Thank you, everyone, for being here today with us. Good Afternoon. Thank you, [indiscernible], for your question. Regarding the working capital evolution, I would say the following. First, it's true that without the inflow of EUR 209 million from the Nigerian project. The figures would be different, but it was part of our operations like we stated in February. It's true that the working capital would be EUR 63 million excluding the new investment on this milestone based events that we have regarding the rolling stock contract in Nigeria.

But I would say as well the following. You know that we all know that. It's not only for Mota-Engil it's for the -- it's for the sector that typically the first part of each year, it's more challenging or demanding in terms of public investments and even budget execution everywhere. And we can see more pressure -- we can feel more pressure typically in Africa first and LatAm as well. So even having the same pressure that we typically used to have in the first quarter, we can see it very positively. And if we can, I would say, transpose or transform this EUR 63 million into a day to be an evolution of less than a week, it would be 4 days of working capital without Nigerian effect, which in reality it occurred. In terms of perspective, what can I say is that we -- it's, I would say, a golden rule of the group, a main principle for us to still continue to improve our working capital evolution.

We've been consistently being during the last periods below 10%, improved now for 7%. And it's the guidance that I can share with you that our perspective, our goal, our aim is always to be below -- maximum 10% of the turnover regarding the working capital investment or needs. So I would say in a nutshell, in fact, we improved our working capital without Nigeria, it would be an impact of 4 days, increasing -- but in the end, we are always talking about the first half, always very demanding in terms of budget execution, namely from our severance and public contracts.

[Audio Gap]

[Operator]

Our next question comes from the line of Filipe Leite from CaixaBank BPI.

[Filipe Leite, analyst]

Yes. I have 3 questions, if I may. The first one is actually a follow-up on working capital question. Just to understand if the EUR 32 million that you mentioned is related with the milestone-based impact if it will be collected in second half of this year or not?

The second question on the Environmental Services, because after the breakup of assets with Urbaser, the idea or the goal was to speed up the international expansion of this unit and it was something that it was not witnessed yet because international activity is still below 30% of the unit. Are you still betting on the international opportunities of Environmental Services activity should be this done by new contracts, M&A, basically, to understand where are these international opportunities and why it takes so long to materialize?

And last one is on industrial engineering, the mining activity. And if you can share with us your strategic view for the unit. Could you see the close to EUR 4 billion backlog at a stabilized level for this unit and now you will be focused on perhaps profitability, cash-flow generation, extension of current contracts? Or do you expect additional awards, additional contracts for the future? And if you are already looking at something in short term?

[Carlos António Vasconcelos dos Santos, executive]

Filipe, thank you for your questions. I will answer the second and third questions, and then Jose Carlos will do the follow-up questions on working capital. Beginning by the last one about industrial engineering and focusing in contract mining, our goal now is to focus on profitability and to focus on the -- our -- let's say, our -- the synergies that we can have from every contract and to improve the procedures and to improve our performance in each and every contract.

So we are not focusing on having new contracts. Even though we can have new contracts because nowadays, as we've been mentioning, we are today the biggest African operators in terms of contract mines. And what is happening is that the clients are seeking us and not seeking the client.

So I'm not saying that we'll not have more contracts in the future. But for the meantime, we have these 10 contracts with the clients that we are working with. And our focus for the remaining of the year and for next year is to extract more value coming from these contracts, not only in terms of profitability but also extracting more value in terms of being able get new awards or to renegotiate the contracts in order to extend the period of the country. As you know, and as we already explained, we believe that the biggest even these contracts is in the second life of the contract so in the extension of the contracts, in which for that extension, even though we need to negotiate the price, we don't have to do the same amount of investment as in the beginning of the contract.

So basically, with 10% of the initial amount of the investment we can have an extension for another 5 to 7 years. That will allow us have much bigger profitabilities and also with -- because these are very cyclical activities, that's why we call it industrial alongside along with the cycle of the project, we can gain efficiency of this process of doing -- performing the contracts.

Also, I would like to mention that also in industrial engineering, we are -- we have this contract mining, but also we have some other activities, namely activities related with oil and gas in which we are pursuing those opportunities in Brazil, as we -- was mentioned in the presentation, we have been awarded several contracts in Brazil, namely with Petrobras, but also we are looking to expand those activity and those opportunities in other markets, namely in Africa and to being more focused in Nigeria and also in Angola.

Concerning the second question that you asked about environmental -- it's true that we did the operation with Urbaser. One of the things that were underneath the strategy was to grow in our international activity. We are still pursuing that. But also one of the things that we had underneath that strategy was to extract more value coming from this operation and we are already doing that. We just announced in the presentation that we have 5 projects here in Portugal of biomethane units. These projects are financing through the CRR. And these projects are related with our own activity of the Waste Treatment because these projects are to -- the objective is to purify the biogas that comes out from the Waste Treatment process in order to convert it biomethane or to methane. And with that, we also want to be part of the -- the commercial part of the business, that is to sell this biomethane to the industry, namely the [indiscernible] industry, that is the glass industry, the cement industry and the -- metallic industry.

So when we did this transaction with Urbaser, there were 2 main drivers. One is the international part that we are pursuing and the other one is to extract more value that we are also pursuing, not only these energy projects that are related with Waste Treatment activity, but also with the thing that I just mentioned in the presentation that is with this new investment plan that is foreseen for next year's Portugal to pursue the goals for 2035.

There's a window of opportunity to renegotiate the contract -- the concession contracts that will allow us, hopefully, more time, more extension of the contracts so that we can pursue this investment plan. And of course, that will lead us to an increase in the activity and also in the profitability.

In terms of the follow-up question about the working capital, we'll ask Jose Carlos to answer the question that you made.

[Jose Carlos Barroso Pereira Nogueira, executive]

Thank you, Filipe. Regarding the EUR 32 million that you were asking regarding the milestone-based event, just for us to remember what is it about? We are talking about supply and implementation of rolling stock trains in our main contract, Kano-Maradi , Nigeria. What happens in this kind of contract is that we need to pay to our supplier in China, which is CRRC to produce the trains in a recurrent basis.

But the contract that we have with our clients, it has a different way of being invoiced and collect. It is marked by milestones. When we achieved the first 3 wagons, the first 4 wagons, the first this or that, we are able or authorize it to invoice. This is what causes this mismatch between what we have to pay into our supply -- Chinese supply, CRRC and what we are collecting from our clients based on that milestone scheme.

Regarding this EUR 32 million in particular, what happens is that it's correspondent roughly to 1 month of this -- of the new milestone that we have -- that we are now executing. The first one was -- roughly EUR 210 million, corresponding to 6 months of production. We are expecting, particularly EUR 32 million to be collected, but it doesn't mean that if at that time, when we closed the accounting or in September, if we are in the middle of another production stage, which can be more or less relevant in the end of the year. It will depend on the speed construction from our supplier as well.

We can have the same effect, which can be half of a month, it can be a month, it can be 1.5 months, it will depend. So it's not up to us with regards to Mota is to pay on time to CRRC in order to -- for us to meet with the timing on the requirements of our main contracts since we achieved the milestone based on that scheme, we are able to invoice and to collect from our clients.

So to conclude, the EUR 32 million for sure, will be collected in the next cycle, which will be for sure in 2025. We expect because we are knowing better the cycle and adjusting with the supplier as well the expectations and the rhythm, we are trying to fine-tune and to be able to be more, I would say, criterias and more keen to adjust the timing of production with, of course, the effects on our main events in terms of accounting.

[Operator]

[Operator Instructions] We have [indiscernible] no further questions from the conference call at this time, so I hand back to the management team. Thank you.

[Carlos António Vasconcelos dos Santos, executive]

Thank you. So let me thank you again -- your attendance during this conference call. And to say that our Investor Relations team is always available to answer some further questions that you might have, not only regarding this first half of the year 2025 results, but also some other information that you might want from us.

So thank you again for attending and hope to see you soon and talk to you soon. Thank you.