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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you very much, and good afternoon or good morning to everyone. Okay. 2022 is over. How has been over? The company has over delivered on all the promises that gave to the market.
In the first chart, Page 2, you can see the actual '21. The first guidance that was €1.10 billion, €1.80 billion in March. Then there has been a serious upgrade in August and finally, the 1 of November.
Well, at the end of the story, the actual '22 has closed even better with €1.488 billion EBITDA and €559 million in terms of free cash flow. So outstanding, in my opinion, results of the company that recognizes or reflect the performance of the entire company.
Let's flip to Page 3. The key highlights. This has been the best ever year. €16 billion sales, almost €1.5 billion EBITDA. Our net income of €509 million and a free cash flow of €559.
To be mentioned, although the greenhouse gas emission reduction that has reached 24%, the quantity, the share of recycled materials that is around about 10%. The integrated annual report, okay, and most of all, the dividend that is going to grow further to €0.60 per share. That's to be submitted, of course, to the shareholder meeting and to be approved by the shareholders.
Flipping to Page 4, the financial highlights. As I said, in terms of sales, we reached €16 billion with an organic growth pretty significant of 14.4%. The organic growth has been driven by projects with a 30.3% increase in sales and organic sales and followed by E&I with plus 14.7%. With a PD debt, especially in the second half of the year has improved significantly the speed. Why?
Because after the construction either industrial or residential. Our distribution has to come and is coming. 8.7% has been the organic growth in the industrial network component, keeping a pretty high level for this kind of segment. 10.9% in Telecom. Of course, in Telecom what is growing is the Telecom Optical. Let's move to the EBITDA of those segments. The adjusted EBITDA, as I said, has closed at €1.488 billion, 9.3% of EBITDA margin for the entire company. Let me reminder you that in the cable, 50% of the turnover is basically metal. We buy, we sell, and we have no profit on it.
We may have losses if we are not smart enough to handle the metals. So the margins have to be read properly. 50% increase in EBITDA from €976 million in 2021 to €1.488 billion. The adjusted EBITDA margin of the group overall has been 9.3% versus the 7.7% in the previous year. Finally, there is no results that has no cash attachment.
And the cash have been recognizing or reflecting the result of the company. €559 million free cash flow with a sound deleverage of €343 million driving the net debt to €1.417 billion with 0.95x net debt on adjusted EBITDA ratio.
The free cash flow yield is today at 6.8%. Let's flip to Page 5. The order intake is progressing. And what is progressing mostly is the summary that was the missing or the not so buoyant chunk of the order backlog. Now €3.4 billion have been awarded in '22. And the other backlog has ramped up at €6.6 billion. As you can see from the chart on the right side, other than the big jump of coming from German corridors that are under execution, but it will be a long story. The most -- the part of the business that is most accelerating is the Submarine today with a relevant step up in the backlog.
On the left side of the chart, I wanted to highlight that we have been awarded €3.4 billion, but we have also completed that means the notice to proceed the taking over certificate in our end because it's not only important to get the order, it's also very important they have the ability to deliver in time and with the product quality the project that has been awarded at times alone. So we have completed a number of projects, and that will be recurring information that I want to share with you.
Let's move to Page 6. The IJmuiden, everyone and we too, me, first of all, was very keen in getting the order. Because this is the first 525-kilowatt you see excluded Submarine is a key milestone. It was a key milestone to get it. In reality, the key milestone is to execute it, but that will come in the next years.
In the meantime, we have been awarded of the project. It's a grid connection for 2 future offshore wind farm able to drive or to move 2 gigawatt or more than 2 gigawatt from offshore to the land. That's extremely important. That's my opinion. It's extremely important because it's the first chunk of a number of projects that utilities developing the wind farms are able to leverage on.
It's a pretty huge project, 390 kilometers of route basically offshore. And the first connection is scheduled for 2029. It will not be a very quick game. But it's extremely important to be successful with it for the company. [indiscernible] or better, considering the €1.8 billion of IJmuiden, our order backlog has to be considered right now €8.4 billion. €8.4 billion are a lot of money, but the 3-year goal comes when the project is executed -- is executed without any significant issue and the customer is happy. So some way to go.
Let's move to Page 7 and analyze the performance of the various segments. Performance of various segments projects, for instance, that moved the sales from €1.6 billion to €2.161 billion with an organic growth of 30.3%. Now the projects are growing really. 30% organic growth is a significant amount. I'm not sure that we stay at this rate for the next years. But in the meantime, I believe that it is a very significant [ rate ]. The improvement has been very good in the Q4. I would like to mention even the EBITDA, €243 million versus €210 million the previous year, another €30-plus million improvement as well as the previous year.
What may be negatively noted is the 11.2% margin, EBITDA margin on sales. That's not a very big percentage, I know. But let me remember that the first quarter '22, our EBITDA margin for the segment was 7.6%. So it has been a continuous progression from 7.6% up to over 13%, now if I'm not wrong, having or driving the full year average at 11.2%, okay. Let me say, it's properly progressing.
We have also to consider that in '22, we suffered the inflation on all the costs of the projects and partly but minimally during '22, we have been able to get the recognition of this inflation from customers. We are still negotiating, but a good chunk of the projects already completed are already negotiated or under negotiation. And consequently, this will be another upside for 2023 performance of the segment.
Let's move to Energy. Energy closed at €12 billion sales compared to the 9.6 -- that's rounded €9.5 billion of the previous year with an organic growth of 12.3%, not so bad also the organic growth of energy. If we split in E&I and industrial and components, the organic growth is differentiated, as you can see, 14.7% for E&I and 8.7% for Industrial.
Now the 14.7% of E&I is pretty significant, may not be forever, but the performance is driven today by secular trends by the grid hardening, the data centers, the renewable. I was analyzing especially in the North American market, the grid hardening and the data center projects that we are discussing with customers.
There are many giant projects. And we are part of this game, we enjoy. Of course, what may not be feasible in terms of continuity is to keep the price at the level of today or better of yesterday because the growth has been driven mostly by the inflation and the price increase.
Last but not least, the Telecom. The telecom came from €220 million to €271 million with a solid growing or in Optical, driven mostly by North America. And to be added, the very good contribution of the YOFC to the results. YOFC after 2 years of poor results or limited results has recovered more or less the top level of the past, namely 2019. How long it will stay, that's difficult to say, fairly speaking. Overall, outstanding year with an organic growth of 14.4%, a result that jumped from €976 million to €1.488 billion. And that's it.
Let's flip to the regions. The following page, Page 8, Regions. Regionally, you can easily see that the big driver of the acceleration has come from North America with 18.3% organic growth in sales versus 10.7% in EMEA. Overall, a part of Asia Pacific, where our participation is really limited. All the 3 regions grew very well.
So EMEA, from €5.2 billion to €6.4 billion with an organic growth of 10.7% and a pretty good result moving from €265 million to €311 million. The results have been driven by E&I OEM renewables.
North America. North America, €3.8 billion that moved to €5.13 billion with an organic increase of 18.3%. The EBITDA went up from €338 million to €722 million outstanding the incredible results. But it's better to be in than to be out. And today, we are enjoying a very strong participation in the North American market, and we enjoy it.
As you can see, the EBITDA margin has moved from 8.8% to 14.1%. It may be that this performance is not going to be sustainable. But it will not revert completely. Latin America, from €1.060 billion to €1.275 billion with an organic growth of 8.2% from €99 million to €120 million, keeping the 9.4% EBITDA margin. Again our renewables that have driven the growth. The EBITDA improvement is driven by E&I and renewables again.
Last but not least, I would say, last and least, frankly speaking, the Asia Pac that moved from €66 million to €92 million with a pretty good increase of -- from 6.6% to 8.2%, but largely supported by the YOFC performance.
Let's flip to Page 9 and have a look of the innovation because I'm a fan of the innovation on the product. Grid hardening and energy transitions are driving the growth of the merger and arising the bar of the technology requested to participate to the market.
The energy transition in the subsea system. We have already not commented but touched at the point. The 525-kilovolt at HVDC able to transfer 2 gigawatt is getting ground. We made the PQ test, and we got the first order. Now we have to execute properly the first quarter. That will come in not many years. We developed for the grid hardening, the E3X technology that we reduced the losses other than increase the capacity for customers for utilities to transfer power.
On the renewable side, we launched the PRYSOLAR, that is the new solar cable of Prysmian Group. Why we did it? Because we are seeing that the solar panel generation is growing. It's growing continuously and is becoming as cheap as the offshore wind farm. In terms of energy generation cost. That's the reason why we are in, but we are in with 2 kind of products.
Let me name it Mercedes or Super Mercedes, that is the Texan -- the German style solar cable. And the more modest [indiscernible]. Modest in terms of price, in terms of cost, but also in terms of performance.
Now PRYSOLAR, the attempt of the company is to offer to the customers a cable that has the Texan performance with a cost that is not much higher than the [indiscernible]. The last chapter is the digitalization. The digitalization requires more fibers in lower diameter. And that's the performance we have been able to develop with the Sirocco Extreme. We are the sole, if I'm not wrong, in the world, offering the 180-micron fibers.
And that's the product that has led us to reach extremely high density of fibers in the same diameter. That is get in ground. It will take time to be introduced and utilized in the market, but it's a very sensitive innovation for the customers.
Just a chart on the CapEx. Disciplined Investments. That's the name of the chart. We have to fuel the sustainable growth, to do it, we need of CapEx but must be disciplined. And that's the reason why since 20 years, I'm the one that have the last word in saying yes or no to each CapEx of the company.
Today, we are looking to already this year to €450 million more or less. For the next 2, 3 years, following the growth of the project, we are obliged to invest and our CapEx level is -- has reached €500 million average per year. Okay. I'm not a fan of the capital expenditure, but when it's needed, it's needed and being not available capacity in the market, the sole way to grow and to follow the market growth is to invest. And we are investing -- we are investing largely on projects, keeping a quite good level of investments in energy as well as in telecom.
Not forgetting that part of our CapEx has to be dedicated to the climate change and the digitalization because our responsibility has to be the number one priority. The last chapter is for the outlook. How we see 2023. It's not easy. It is not easy or better. It's not certain, but it was not certain even last year in '22.
In '22, when we gave the guidance, we gave the guidance not assuming surely the boom of the North American market. Today, we are giving the guidance, assuming that the construction market will not be very, very different. Of course, the guidance is a range, and the range means that depending on the conditions of the market, you see an yearly deterioration of the market main driver for €1.375 billion, whereas a substantial stability may drive for €1.525 billion. Why is that? Because in our assumptions for 2023. My friend, Hakan and the projects are already planned to increase quite significantly the results, thanks to the investments and the order book they have in hand. The question mark, it will be the speed of the decline of the stability of the construction market. As a consequence, the free cash flow.
Free cash flow is €500 million [Foreign Language] -- by definition, must be €500 million. And we give a range for €550 million, with a midpoint at €500 million. The -- it was the dream at the time of the acquisition of General Cable. We are there because we did already this year. Okay. I close my presentation, and I leave the floor to Francesco for the financial details.
Thank you, Valerio. Good evening to everybody. As usual, let me recap our results with the profit and loss statement. As Valerio said, organic growth was 14.4% with a very good exit split in Q4 as well, substantially in line with the overall time that we saw in the first 9 months and with a very strong momentum in particular of the -- our distribution driven by the requirement to strengthen our grid, I would say, across most all the regions. And that this is certainly a driver that we keep enjoying into 2023 and most likely also for the next few years. Best year ever in terms of adjusted EBITDA close to €1.5 billion with a significant margin expansion by 160 basis points, up to 9.3%, even more impressive if we think is that we dealt with a pretty high inflation rate in 2022 and this impacted the metal and nonmetal raw materials, of course, inflated our top line without necessarily inflating our EBITDA. And this is meant to say that our EBITDA margin is diluted by high inflation rate.
Despite this plus 160 basis points of margin expansion. On the top right bridge, which is by quarter and by business, you see that all the businesses performed pretty well in the fourth quarter. Projects in line, even slightly better, I would say, than expected. Energy keeping substantially the same exit pad of the first 9 months. Of course, the Q4 is compared with an already improving trend in 2021. So it has a tougher and more challenging comparables, the Energy business, specifically, and in particular, the North American region. Telecom also performed very well with also a strong contribution.
You see €26 million throughout the year coming from YOFC and [indiscernible] coordination and also a pretty advantageous or set of exchange rates, which impacted favorably by €110 million this year and that for the time being, we keep enjoying specifically a quite strong U.S. dollar.
Moving to the lower part of the profit and loss. We are seeing a slight increase of financial charges up to €110 million. Actually, net interest expenses are in line or slightly lower than last year. The reason of this increase is just due to the fact that 2021 was impacted by a positive nonrecurring guidance related to the issuance of the convertible bond at that time was in January 2021. You see the €6 million positive nonrecurring and other effects in 2021 in the bottom right table.
Of course, the financial charges are the net interest expenses, specifically are expected to increase this year in 2023 by a range of €10 million, €15 million, I would say, in line with interest rate increase, but we moved very quickly on that because we moved our overall fixed rate debt or hedged debt up to 75% of the total gross debt more or like, and we also worked effectively to extend our average maturity of the debt facilities, which is now on average 4 years, which is a very reassuring, let me say this more -- in this more challenging financial environment.
Last but not least, the net income. Group net income growing to €504 million, not doubling, but close to doubling from the previous year. Let's move to the balance sheet very quickly. My first comment is on the working capital. As I said, inflation affected our working capital. You see a growth of €130 million approximately. However, in terms of percentage on the annualized sales is quite flat.
It's 4% this year, was 3.5% end of 2021. Main reason is other nonmetal raw material inflation, which drove up our working capital and was partially offset or contained increase by the exceptional performance of the project business in terms of awards, which of course, led to a very high level of down payments, which was close to €400 million, and we have an even more ambitious target for next year, which is for busy year 2023, which is a very key driver of our cash flow target and our cash flow guidance.
The net debt decreased below the level of EBITDA. That's 1 of the first time. So maybe the first time we haven't seen this acquisition -- exactly with the leverage below 1x and net financial debt at €1.4 billion. We move to the cash flow. Record cash flow, highest ever cash flow, €565 million -- €559 million driven by a very strong operating result, EBITDA, despite the increase of working capital by €100 million on a cash base.
And despite the level of CapEx, which is as Valerio said, already not very far from the €500 million that we plan for next year was €452 million. Of course, we discounted also a higher level of paid taxes on the much higher earning before tax results, which were already reaching in particular in North America in 2022.
We may move to the dividend, Valerio already anticipated proposal of the Board to AGM to increase the EPS, the dividend per share up to €0.60, a 9% increase, I believe a very right level of dividend because it is fully consistent with the CapEx requirement to fuel growth in a few segments, starting from projects for next year. But at the same time, also the objective with the objective to deliver fast because delivering fast is key for us to capture the organic and nonorganic growth opportunities in a financial environment, which is more challenging, and that most likely will remain more challenging for the next couple of years, at least.
Let's move to some closing remarks. Number one, the most important, I believe our results clearly show the value of a broad business portfolio. Above all in terms of the ability to self-sustain the CapEx needed for the highest growing businesses like Projects. To sustain that you always need a larger and more mature business, which is delivering a high level of cash flow and which made the company more resilient and more also independent from the volatility or particular conditions of the financial market. That's a very key point for us.
Our results reflect the strong exposure to secular trends, starting from Projects, but not only in Projects. Also Energy and a number of business applications is impacted by secular trends, in some cases, even having lower CapEx requirement and projects, so very valuable as well. And once again, this highlights how important the broader and more diverse business portfolio and also geographical portfolio for us.
We have a proven track record, and we confirm this year as well in terms of cash generation and financial -- the leverage now of utmost importance. And then point number four, the key ambition and the key challenge for the next few years is certainly the growth in the Project business unit, we have a great market. We have very long order backlog visibility. Of course, what is really key and it's stressed here is the impactable or flawless execution, which is the most important objective. Very good. I think I'm over and we can move.
Let's move to the Q&A session.
[Operator Instructions] The first question from Massimiliano Severi from Credit Suisse.
Everyone, congrats on another strong set of results. Three questions for me. The first one would be, again, on the guidance. I was wondering if you could clarify a bit more on what are the assumptions on the lower end and on the upper end of the range? And especially in terms of North America, T&I margins normalization because I understand the assumptions on demand but what are the assumptions on margins and pricing, given how extraordinary 2022 was?
Three questions or -- we'll give you the first one, one at a time.
Yes, one at a time.
Okay. The guidance. The guidance is based, of course, on certain assumptions. The yearly deterioration what it means, it means it covers the lower part of the guidance that the market, especially in U.S.A. that has given us a very strong upside this year may collapse. That is what we don't see right now is softening a little bit in terms of prices, but not collapsing. So I hope that the prices in U.S. will stay really quite a bit high for the next quarters. And this is what we are seeing in the first 2 months at the end of this story. Then the evolution along the year it will be very difficult to predict. But if I consider the IRI and all the investments that the government of U.S. is launching in order to repatriate a lot of strategic production into U.S. We believe that it may be reasonable to have a limited reduction of the margin and the prices. But not very much to be very, very simple. The margins we have seen in the central part of the year and even in the last quarter most probably will be reduced, but not so significantly.
Consequently, we believe that the central point of the guidance is feasible unless there is a collapse -- the higher part of the guidance, vice is assuming that the trend of the market, especially in U.S., will remain more or less stable in line with 2022. It will be the case, I'm not sure, and that's the reason why our center point of the guidance. Did I answer to your question, Max?
Yes. Very clear. My second one would be on E&I. And if you could help us quantifying a little bit the different margins that you see now between PD and T&I. And maybe also, if price cost issues on the old contracts have still weighed on the margins of PD in 2022.
Okay, Max. I try to answer but maybe that one is more skilled than me. Let me say that -- the margins in PD and E&I are different today with an advantage for E&I. Why? Because E&I is asked and where on things. There is some noise --, would you put t on mute? it's someone else -- thank you. So the different margins for PD and E&I are in with T&I having higher margins. But finally, we are passing a lot of price increase to PD due to the fact that the PD market is asking for more. The electrification is ramping up, the need of distribution cables for utilities is huge, and utilities are ready to accept a limited increase of price. I don't know if Juan has significant -- surely more consistent answer than me.
Yes. Thank you, Valerio. I'll expand on a couple of things that I will give you more color into your question. To look at the pricing of E&I we need to divide a short-cycle business from the mid-range and the long-range cycle business. So back to Valerio's answer on your first question, for the short cycle business, we carve out 2 segments for which we expect some kind of price normalization in the second half of the year.
And that would be the nonresidential construction in the U.S. because we have no exposure in residential which right now, we're not seeing any deterioration. And you probably heard that from some of our peer companies. However, if the U.S. Feds continue to increase rates aggressively will not dismissing the fact that there might be a potential spillover of residential into nonresidential in the second half, which is the reason why we're being prudent in the pricing for the second half of the year.
Now in terms of the PD, specifically the medium voltage. We need to break it down into 2 pieces, in North America and Europe. And in North America, there is full saturation -- I mean full capacity utilization right now, which is something that we expect for the next number of years driven primarily by the renewables and the energy transition. In fact, we're a solid book for the next few years. And with regard to your questions about prices, most of that is contractual for a long period of time. With price clauses that will allow us to adjust the margins depending on the volatility of the inflation. And the U.S. and Europe is a lower price, but it's also capacity saturation. So the answer to your question is in the short cycle, we made assumptions in the second half in the construction, primarily in the second half in the U.S. and in the residential in Europe. But in PD, we expect no deterioration of both price and volume in the coming years.
Okay. And my last question would be on projects. So you put -- you put up CapEx versus what you guided last year. So I was wondering if you could give us an update on what do you expect in terms of capacity additions in kilometers of revenues for the coming years? And also in terms of phasing, how much can we expect to come already in 2024 versus what would be more back-end loaded?
Okay, a general remark. Once we talk about increase of capacity in projects that takes at least 2 years to come into turnover. Consequently it is something that is not going to act next year. But I let Hakan to give you more color on it.
Okay. Good afternoon. The project overall that we are following for the capacity increase we have already presented I mean, it's been grown for, let me say, the high voltage sub -- land part. The other projects are on the [ Icala ] for submarine Part. and the breaking point, which is also additional capacity.
These capacities are going to be majority coming along after the '25, let me say this. But we will have a portion, a small increase is also at the end of '24, we will see some. In kilometers, it's very difficult to give you the numbers. But I can tell you overall, why is it difficult to give because we don't want to give the details about all the, let me say, ramp-ups and the efficiencies. But I can tell you that the total capacity is going to be about double after '25 and '26. So, this is the idea of the investment.
As Valerio said, it's not an immediate impact. But I can give you a little bit of count that these projects are going well in Arco Felice, we are on time. Finland is on the time. And in breaking point, even where we are seeing a difficult procedure, let me say, legal environment, we are on time. So in the third quarter this year, majority of these projects will be starting to be implemented.
But overall, after '25 is going to be the significant impact, but that does not mean that we are not going to improve our results until '25. So what Valerio was saying for the long term, we will already start improving our results before these capacities were going to come along because we have now also have Leonardo da Vinci, which is in here. So the performance of Leonardo Plus, also Jules Verne is also giving us full speed advantages. On the other hand, of course, when we talk about capacity, installation capacity, the second vessel is also going to be in 2 years. We have already done the steel cutting. The key is going to be relayed soon in a month's time. So everything is going according to the plan.
Just a very quick follow-up. So if I got it right, it will mean that our submarine capacity will effectually more than double and land will grow significantly, and then you will have more or less doubled the capacity in 2025, 2026, but the additions are more Submarine than land.
Both. They are both. I mean, Submarine and land, definitely, we are doubling the capacity overall. It's not only Submarine, but also land. I just want to remind you that every submarine project has a significant portion of land, and this is growing. Major TSOs are now not splitting the land part, like in the German corridor. For example, it was completely land. The submarine portions are connected to the grid with significant land. So therefore, if you increase the Submarine if you don't increase the land accordingly all your installation than you're offering is going to be not complete.
The next question is from Miguel Borrega from Exane BNP Paribas.
I've got a couple of questions. The first 1 on the outlook message and maybe a follow-up to the previous question. So the upper end basically assumes a stable construction market, can you elaborate a little bit more? So does it mean basically the same result as 2022. So I see that over the last 9 months, if we exclude Q1 of 2022, your margin was basically 9.5%. So can you confirm that the higher end of the range would imply 9.5% margin. And if that is the case, it kind of implies a stable performance everywhere else, but you said that you expect a higher profitability in Projects, so does that mean Industrial and Telecom down in 2023, I'll start there.
Juan, would you...
Miguel, this is Juan Mogollon. I will answer the first part of your question in regards to the assumptions made on the T&I and the construction market. You are correct. The upper end of the range assumes some level of stability in the nonresidential construction market as well as the residential in Europe in which we have a lot of exposure. The normalization that we deal with the pricing in the second half, again, is because it affects the U.S. continue with the aggressive interest rates. We're not dismissing the fact that there might be a spillover from residential into nonresidential in the second half of the year. In regards to the assumptions in the Project business, I'm going to pass it on to my colleague, Hakan, for '23.
Okay. The growth -- and the outlook for '23 for projects is going to be definitely in the -- in growth versus this year. And we are gradually increasing our position versus what Valerio already disclosed in the past to reach the EBITDA of €500 million in the next 5 years, but I can already say the figures look good in the 4 years, we may be already there. And gradually, especially when the capacity hits is going to be the biggest, but we will see already a growth starting also from '23. So we are fully booked. That is on 1 side is good. On the other side, it's [indiscernible] but we feel very comfortable that we will gradually come to the results -- expected results from you and also from our investors and Board.
Maybe if I may, Francesco speaking, to be a bit more precise on the guidance, the shape of the construction market that we comment to explain the range of the guidance is actually commented versus the current trade. It's not commented versus Q4. Valerio said correctly during his presentation that specifically in North America, the level of pricing is already slightly softer than the peak, which was reached end of Q3 and during Q4. So this is just to reassure that compared to the peak the top of our guidance if the peak was Q4 is already slightly lower. And this explains why there is room in the top of the guidance for the growth of the project, in particular. Otherwise, it may be a bit misleading.
Practically in the top of the guidance, the Projects will grow. Then there is a higher or lower softening of the construction markets, take your choice.
But some softening compared to [indiscernible].
But some softening anyway.
Okay. I think that's clear. And on the other hand, the rapid deterioration, what would be the magnitude of the decline in sales and what level of profitability you see? Because you said before, you don't see a complete reversal of your margins. So it basically implies what? Half of the tailwinds we saw in 2022 reversal of that?
Listen, it is like to play a roulette. We don't have a clear view. What I can tell you is that today, today it means February, March 2023. Prices, the margins on E&I are scaling down a little bit. If it stays where it is, the -- more or less the top of the guidance may be reachable. If we'll turn back to the level of, I don't say, 2019, but something like that. we are going to suffer much more. And the bottom of the guidance is the most probable landing point.
Yes. In principle, Miguel, they think that the start of the margin expansion in the nonresidential construction market in U.S. actually started end of 2021. To cut it short, I believe that the bottom range of our guidance is assuming a drop, which is going halfway in between the peak that we reached in Q4 2022 and the starting point that we had, let me say, in mid of 2021. So basically, it means to lose more or less half of the upside that we had during 2022. Then the other question is if this will happen. And as Valerio said, we are not seeing this. How fast or how early this will happen. And in this case, the assumption of the bottom range of the guidance is that this would start happening in, let me say, in Q2 -- end of Q2, something like this.
The next question is from [indiscernible] from Goldman Sachs.
I just sort of wanted to understand a bit more kind of what you're assuming sort of for the EBITDA for projects in '23. If maybe you could talk a bit about sort of the mix of maybe Submarine versus land in '23, is it very different to '22 and sort of how it looks in terms of installation versus production and this sort of stuff.
Hakan, the floor is yours.
So I would -- I mean, I cannot say exactly what the growth is going to be in terms of number because we have to -- but I can give you a range saying that it will be more than the growth that we had this year. So this I can say, versus last year, what we have done, it will be better. Hopefully, we will be beating, let me say, the result, the improvement that we have done this year. The mix of overall definitely because the capacity is not coming along, that means there are 2 effects why the margins are increasing.
The first part is because we are having more installation on the, let me say, summer impact. And the second improvement is going to come because the older projects are leaving the portfolio, which has lower profitability and newer projects are entering into the execution. So this is -- but I cannot say that all the old projects are out and everything is new, but there is still, let me say, a time lag between the orders taken some years ago, still they have some tails that we will enter into '23 and then the other part is about the HV part, so the land part.
And the land part, the installations are still not put in for '23, especially for the German corridor. But there are very good, let me say, evolution that we are trying to anticipate the installation in some of the German corridor projects because the necessity of the energy requirements in Germany. And so I can say that overall, we see a growth better than what we have done. But how better we will see during the course of the year.
Okay, cool. And I just had another question on -- I mean you talked earlier about some large electrification projects in E&I. So kind of just wondering if you touch a bit on sort of the CapEx increases there? Like what is it for? And sort of how much contracted visibility do you have?
In terms of visibility, in terms of months or years is always pretty short term because it goes through the distributors. But I have on my desk, the list of the mega projects in the U.S.A. and -- are unbelievable. I don't know if all those projects will be realized, but there are many data centers, many solar parks and that require clearly cables. I'm pretty confident that the IRA will drive an increase of the demand that at least should compensate or partly compensate the reduction that we are expecting.
The next question from Akash Gupta from JPMorgan.
I have 3 as well. The first one I have was related to a press article last month where Valerio, I think it was you or maybe somebody citing the company that after €1.5 billion, €2 billion could be the next target. I'm just wondering if you can talk a bit about that and also the timeframe over which it could be achieved more like what I want to know is that is €2 billion level is something that can be achieved in the medium term? Or will it be more in the long term? So any commentary on that would be great.
Valerio speaking. I was sure to have created some turmoil with the assumption, but each company has to have a target in front of it, in front of them. And having reached €1.5 billion that years ago was not in the -- rather I gave for the team here, but also I transferred not voluntarily to the newspapers, to the Bloomberg our target that is €2 billion, but €2 billion, having today, €1.5 billion that may scale down this year, who knows, is not an unreachable level. Of course, not tomorrow morning, but even not within 10 years. Why? Because my friend at Hakan stays committed to reach €500 plus million EBITDA, doubling almost the EBITDA of Projects. And I'm sure that he'll be able to do it.
In addition to it, and assuming the telecom for the time being at the level of today or a slight improvement. There is the real problem of how to reach the €2 billion. How of reach €2 billion, there is, of course, the Project contribution but there have to be also some bolt-on acquisition. We have cash. We generate €500 million per year free cash flow, part of it goes to the shareholders, but part of it has to be dedicated to further consolidation of the market.
I'm not talking about the giant acquisitions and big transactions. But market by market, where is more interesting getting us at the level of dominant or, let's say, relevant player with our customers. It may happen. Then it's a matter of negotiation, it's not a one-way deal. But that's our focus for the next 2, 3 years in order to reach the €2 billion. €3 billion is the next one.
Yes. And the second 1 was also connected with your answer, which is dividend. So you're raising dividend by only €0.05 despite significant increase in earnings per share. So I wanted to ask this €0.05 increase is something that we should be looking forward as well. So it is -- it may disconnect with EPS growth or payout ratio and we should look for more like flat or $0.05 increase in dividend? And then just connected with this question, as you said, M&As are also on the agenda. Shall we assume that the reason why you are paying 30% payout ratio in 2022 is also because you want to have more money for M&A and therefore, timing-wise, it could be more this year than next year. That's number two.
Akash, this is clear. I don't want -- 2 reasons. First of all, the money may be used -- first of all, you have to generate it. Once you generate, you have the choice to distribute to shareholders via dividend or buyback or to utilize for CapEx for projects because there is no capacity available in the market or acquisitions. That's the rule of the company. So today, we are keeping a position that is balanced. We remunerate our shareholders with a dividend that is 2% of the value of the share. But we utilize the rest of the cash generated for foreseeable acquisitions. Once we don't see any more, the potentiality of integrating other companies, it -- the dividend may grow from us.
And my final question is on Projects. We had very strong growth in 2022 in revenues 30%. Shall we expect more revenue growth in 2023? Or could it be more like a year of digestion on revenue side? And also on the margins, in the past, you told about 13% margins for Projects could be doable in 2023. So yes, do you still think it could be possible with inflation that we have seen last year?
Akash, turnover is vanity. Cash is king. That's our motto. And consequently, okay, the turnover has grew very much this year in Projects is going to grow more or less at the same part next year, that's our idea. The result is what comes. The cash generation is the real result, one way or the other.
Akash, maybe you asked about also the percentage.
I'm sorry, I missed it.
And in the percentage part we will improve the percentage this year because of the change of the project as we have said, the volume is increasing and also the percentage is going to improve. But I would not give you the number of 13%. The 13%, 14% is a good target once we reach to, let me say, midterm equilibrium. I don't think -- let me say something beyond 15% is sustainable. And most probably, you're experiencing and seeing that also in the market. But there is still room to grow on the percentage side, and you will see also an increase in the sales value.
Then Akash, honestly speaking, I'm a fan of the euros, much more than the percentages. Consequently, because the percentages in the banks, you cannot put -- that's the answer I give to my colleagues once they challenge me on the percentages. What I count is euros.
Yes. No, I guess it makes sense, given, as you said, half of the revenues are coming from commodity where you don't make any margin. So thank you.
The next question for George Featherstone from Bank of America.
A few questions for me. I wonder if you could start off by breaking out again for us, the Energy Products division. In terms of what's secular versus what short cycle in percentages just to try and help us out there? And what the contribution from each of those was the growth in EBITDA in 2022?
Josh, this is Juan Mogollon. I'll address your question. So -- the secular segment is part of the Energy division is, as we indicated in the last 6 months, it's more than 50% of our portfolio, 50% to 60%. And those are the segments that follow the energy transition, digitization, that includes renewables, data centers, OEMs, mining, in which we anticipate no contraction in volume and price in the coming years. Now for the short cycle business, which is the other part of your question, we have about 30% of the portfolio of T&I in the U.S. is in the nonresidential construction. And that is enjoying like Valerian we have been saying for the last hour high margins right now because of the conditions of the market. And then the other piece of it is the T&I in Europe, which is about 35% is residential. That we also expect some price normalization in the second half for all the reasons that you and I know. Does that answer your question, George?
Almost. I just wanted to know also what the contribution in terms of the growth, that step change in EBITDA you've seen which -- what was the relative share of each in terms of the growth in EBITDA?
In terms of '22, in terms of the future?
Just for '22 to start off with, and then maybe we can talk about the future.
'22, clearly a step change in T&I in North America because of the supply-demand tension in '22.
Maybe George, Francesco speaking, I may add. I would say that 2/3 ballpark number is certainly driven by the non-resi construction market, in particular in North America and 1/3 from the secular drivers, if you want -- but let me stress 1 more important point. Within the nonresidential construction market, I will call it, in our view, there are some drivers, which are maybe not secular. Secular is a big word, but certainly a bit structural, fairly structural than -- let me give you the example of industry activities reshoring in the U.S. Our T&I business in U.S. is very much exposed to industrial construction. By the way, the way General Cable called it before we acquired General Cable to remember for everybody was really industrial construction. And U.S. other than data centers, as Valerio was saying, is also very positively impacted by a huge number of reshoring projects, ensuring our industrial activities.
This is a driver which is maybe not secular, but certainly not cyclical. And that will stay in place for certainly a few years. So if you treat this in between secular driver and the conjunctural driver. You understand that our growth in 2022 is pinned in North America by pretty structural trends. Again, maybe not secular, but certainly structural.
For instance, all the repatriation of cheap production, Production that require investments of billions of which the cables account for 1% to 2%, but 2% of €1 billion are a lot of money.
If I may add to Francesco's point, George, is also in terms of the onshoring of the -- bringing manufacturing to the U.S., which is part of the IRA, by the way, basis. We enjoy probably the largest footprint of production in the United States with 24 plants, production plants in cabling, which I strongly believe that's going to help us leverage that onshoring or repatriation of production or manufacturing to the U.S. So to Francesco's point, maybe it's not secular, but it's certainly not cyclical either.
Okay. Then maybe just talking again, just back on the secular point for this year and beyond. What do you think the underlying growth rate for the market? Obviously, it looks like you had a bit of a step change last year. But going forward, what should we think the underlying growth rate is.
I think that, George, there is a, let me say, are drivers which will allow the Energy business, in particular, the 1 driven by this secular trend to grow a few points above the GDP level. Historically, the Energy business always grew in line with energy consumption and GDP. Now energy consumption is growing, starting to grow and to strengthen much more than GDP growth. It's difficult, frankly speaking, to quantify. What I can say is, for sure, the most important driver out of it is electrification, which is impacting on the necessity to strengthen the power grid. So grid hardening maybe not in terms of percentage of growth because of some drivers impacting the, for instance, solar farms. Maybe even stronger, but the size of the business or the power distribution business and also our headline business is such that a growth of even a 1 single-digit growth, mid- 1 single-digit growth will largely impact our revenues and also trigger a very positive operating leverage.
Okay. And then Francesco, just a couple of clarification points, if that's the right to answer to the other things I think you mentioned. On the free cash flow for this year, did I understand right that you expect the down payments from projects at a slightly higher level than last year to be the biggest contributor to free cash flow. I didn't quite understand that.
No, you understood well, George. You understood well. One of the most ambitious but certainly feasible targets that we have within our cash flow guidance for 2023, especially if you take the high-end part of that is to achieve a level of down payments, which will be even higher than last year. Just to quantify this, last year was close to €400 million, this year consistently with the market and that the -- and with the awards that we are targeting, we set an ambition and the target to rise to a level of close to €500 million. It's visible because the market is strong and our objectives in terms of project awards and market shares are very clear.
Then of course, we are always subject to a potential delay even by 1 or 2 months of a notice to proceed or a project award, which can affect this target. But then we have the largest energy division and the large -- very large amount of working capital employed in the Energy division that we may use to recover or to offset any lack in the project. if any. So I think that overall, the midpoint is certainly feasible. Also the high end is not to be excluded at all in terms of free cash flow guidance consistently with the high end of the EBITDA guidance, by the way.
In principle, the high end of our EBITDA guidance is an EBITDA in line or slightly above the level of this year. Then we have another positive, which is the fact that last year 2022, the free cash flow was negatively impacted by a working capital increase driven by inflation. I hope that this will be more stable this year. And that's a big positive in the worth around €100 million. But unfortunately, or fortunately, we don't have to forget the highest CapEx by €50 million approximately.
The -- and the highest financial expenses, I was mentioning €10 million, €15 million at least and also a further step up of the paid taxes because some of the taxes reflecting the record results of 2022 will be paid as a balance in 2023. Some have been paid in 2022 already. Pay as you earn specifically in North America, but in some countries, the balance is postponed by 1 year. So all these makes the €550 million free cash flow guidance, very much in line with the high end of the guidance in EBITDA and you should assess the feasibility in line with the visibility of the high end of the EBITDA guidance.
Okay. That's really helpful. And the last point is just to understand the depreciation charge you're expecting this year because obviously, you've had a big step up in CapEx even last year. And then obviously, that's going to continue going forward. So how should we think about depreciation.
So don't expect a big increase, I would say, a pretty modest increase in the range of €10 million max in 2023 for the simple reason that this CapEx will still be under construction in 2023 and even '24, by the way, when this investment will start to come to fruition in terms of capacity really available and for instance, the [ breaking ] point new plant rather than the increase of capacity in the peak calendar of which we come to fruition, then you will have a more material step-up in depreciation, but this will take place between '25 and '26, let me say.
The next question from Monica Bosio from Intesa Sanpaolo.
I would like to focus on the Telecom business. How do you see the margins evolving in 2023? And I was wondering if you have some feelings about the China Mobile tender and the potential usual competitive pressure in Telecoms in Europe and inflationary pressures due to the energy cost. That's why I'm just wondering -- sorry, what could be the margins for Telecom in 2023 if they can go up or keep stable. And also for Telecom, in Slide #10, I've seen a significant step-up in CapEx for the Telecom, if I'm not wrong, in 2025. And I was wondering if you can give us some flavor on this. And very, very last is on a general question.
In a scenario, which is characterized by high interest rates, are you seeing any postponement of some projects that are -- that need the financing from the customers. For you, it's not a problem because you have fully booked, but I was wondering if you are seeing this and what could be the impact on the competitive -- on the -- amongst the players. Thank you very much.
Thank you, Monica. Valerio speaking. Let me start from the third question. It's clear that the increase of interest rates is putting pressure on the choice of, especially the financial customers to give the green light to the investment. If we are partly seeing taking into consideration that most of our customers are TSO.
For the TSO, that's much less visible, are the financial sponsors that are sometimes having doubt to go ahead with certain projects. Having said that our €8.4 billion of backlog is secured, and there is no choice to postpone it from the customer point of view, the risk of the increase of the cost of demand is in. We have seen a project that was awarded to us, the Lake Erie interconnection, where due to the increase of the interest rates, the customer has a reviewed his internal rate of return and suspended the decision.
He didn't cancel, but suspended the decision. That's our warning, of course, but it is what it is. We cannot avoid it. And frankly speaking, as of now, we even don't need because our order backlog is extremely high.
Yes. Correct.
Having said that I leave the floor for the Telecom to Philippe, he is much more documented than me.
First comment. The market is showing for the next years as a robust growth. I think everybody agrees to say that the telecom market should be a growing market in the coming years globally as a trend. The margins are linked to do things to our ability to pass through our cost increase. And to the mix of customers and geographies that we have in the portfolio.
We, of course, manage these 2 things in relation to each other. So we try to improve the mix of our customers when we have to face inflation as we have been facing -- sorry, in the last months. How do we see the margin, I would say the basic assumption is flattish in percentage year-on-year because we have been able to pass through a significant part of our cost increase in 2022, but not everything.
Our business in telecom is essentially a business made of multiyear contracts. So it takes time to discuss the pass through costs to these customers. And the same applies to 2023 as we mentioned in our presentation, we took a serious hit on the energy cost in Europe that we are trying to pass to our customers, and that's the rule of the game. So flattish margin is our assumption today. We are trying to do better, but flattish is the assumption as a trend.
China Mobile, no news, apart from the fact that it seems China Mobile has postponed the tender to March. We are in March. So we are expecting -- we -- I should pose that it will be end of March. And I suppose it might as well be postponed to April. What is expected by the whole industry here is to have an increase of volume and also an increase of price. The big question is how much will the price increase be? It can be 1%, it can be 10%, but makes the world trend different. So we are all waiting for that.
What, Monica, you have never to forget is that Telecom is "unstable" market. You may remember the issue of 2019 with the [indiscernible] the sharp drop of the demand, the sharp drop of the price and the consequent rebound 6 months, 1 year later. This is a characteristic.
It is not [ small ] volatile than the energy market in the short term. Globally, I think we can talk about also secular trends. In terms of need of infrastructure globally.
It's an up and down in terms of demand on our medium-term growth of 10%. But some times maybe minus 5%, some year maybe plus 20%. And we have to deal with it.
So China Mobile is going to come, I think, in the next 2 months. My summary is that we -- and then competitive pressure in Europe, yes. Europe is still the place where the competition is the toughest in my business, no doubt, with many different players. I think we have proven as a leader in this market that we are able to cope with that with certain resilience, and we -- helped by our capacity to innovate as well. The game remains the same in '23 compared to '22 and I think that's where we stand. And I think I have answered nearly all your questions, except that -- so the CapEx that you see in '20 -- in the next year for telecom is what we think we need to maintain our positions in the telecom market. It's made of 2 big blocks. One block is capacity to follow our market shares to be able to maintain at least our market shares. And the second block, of course, is we invest also to improve our processes and save cost in order to be able to cope with the price pressure.
The next question from Sean McLoughlin from HSBC.
I have 2 questions. Firstly, on your backlog, you've clearly seen submarine ramping up. If you -- just wondering about the opportunity mix over the next 12 months for projects under tender. I mean how does the land/submarine split look like? And in particular, just wondering how quickly some of these large U.S. opportunities are going to kick in? Second question is on the 525 kilovolts subsea cable. I'm just wondering about technical challenges on that. It's obviously a new technology that you'll be using in a German corridor, but in a subsea environment, I mean, what preparations are you taking to minimize those risks. And yes, any comments there?
Thank you, Sean. I leave the floor to Hakan for the -- at least for the first answer.
Okay. Sean, let me tell you that our backlog is strong, but we are not -- let me say, stoping to acquire orders. we are still in the market, and we have still opportunities and we are following them. And as also Pier Francesco said, there is a big expectation from the cash side that is coming from the advanced payments that is also related to new order entry as well. So there are significant, let me say, projects underway for this year. And I can say that if everything goes right, we may have a significant further increase in the backlog. We are the main player in Europe. And the European market, as we were discussing also in the other meetings is that it is growing. And also in the U.S., the market is growing and also outside the Europe is growing.
So we have good opportunities. You will soon hear hopefully another good, let me say, outcome, but it's always we first do and then as we say, we [Foreign Language] -- you will see some good news from us. And hopefully, we will see also severe, let me say, discussions about big projects in Europe. I can already tell them to you, which is also official. All the TSOs in Europe that are trying to do frame agreement for long term. And of course, this brings a significant chunk of business into question. And we are -- and I have to say a majority of these projects are 525 KV, 525 is becoming the standard of the future, and we are the major player in this arena on the land side and also on the submarine side.
And therefore, these contracts that will be potentially up for award during the year. We are expecting also to be part of that supply. The only thing which I would like to say here, whatever order entry that you're going to see also this year, especially from the TSOs is going to be longer-term orders because all the TSOs are afraid of losing the capacity. And this is giving a great opportunity to premium like companies to be able to plan their capacity for the long term with the partnership of the TSOs. Some TSOs are very, let me say, prepared at the beginning.
Some TSOs are rushing up currently, and there are some followers which are coming. So overall, we will see further, let me say, order acquisitions during the year, and we will not stop being in the market for the long term. And coming for the technology, I'm sure, Valerio would like to say a few words. I'm just going to tell you that we are in the German corridors. We are experiencing significant, let me say, experience with the production of the German corridors, and we are having a very good team that is taking care of, let me say, everything that is happening during the production and testing. And this will significantly contribute to the submarine production and also the experience that we need in order to install those.
If you're going to ask me, are we ready, I would say we are always ready. But I can only say that we are more ready than the rest of the market, and we are the only 1 that really can do this with the requirement. Is there any experience? No, there is not. But I feel with my colleague here, Srini, our Chief Engineer, that we are taking all the precautions to make it happen.
Srini, would you like to add your R&D view.
Sure, sure, Valerio. Thank you, Sean. Thank you for the good question. I think as a company, we're a little bit wiser now than before. and we're introducing new technologies. We take industrialization very seriously. And I agree with what Hakan said. I think there are 2 portions to this. You've got obviously the cable industrialization, the flexible factory [indiscernible] industrialization. The cable industrialization, we've been successful.
We started the production for SuedLink as we've told before, and it's going reasonably well. And for the flexible factory joints, we started a journey already 3 years ago. So yes, we've been preparing both as R&D and operations together in anticipation for this award. And so we're going to focus on the execution part.
Then, Sean, have to be clear. There is no 1 factimeter of 525 energized under the water or under the land. So it's a challenge that we accept -- and we took every precaution in order to -- not to have surprises. That's very clear.
Next question is from Massimiliano Severi from Credit Suisse.
Just 2 questions on projects. Maybe, Hakan, you had mentioned previously that 14% to 15% is a reachable midterm EBITDA margin target. One clarification would be is it -- do you think that it is achievable with your current capacity? Or do you need the additional capacity that you put on to get there? And my second question would be -- if you think about doubling capacity to over €4 billion. €500 million EBITDA looks quite undemanding, is there a little bit of conservatism? Or am I missing something?
Okay. The first question about the EBITDA margin. Looking to the order portfolio, the EBITDA margin to increase the EBITDA margin has 2 elements, either you increase the price and relative to costs or you increased your margins not increasing as fast your fixed costs. So there are 2 ways in mathematically that you can do this. So if you look from the price perspective, yes, the portfolio has better price.
So 1 element is there. The other cost element is always a question mark, as Pier Francesco said about the inflation. There is a stability now expected, and we are seeing a stability in the price. So that looks also promising. And if we look on the fixed cost, we have no intention to increase our fixed costs beyond our growth of the margin.
So can we reach the 15% what we were talking about, Yes, we need definitely the capacity that should come along, with the capacity, we will do more margins, and we will keep -- we will grow our fixed cost, but not as fast as the contribution margin. So we are opting for it. And can we go beyond 15%? Yes, but not according to the conditions as of today. The conditions may change. And of course, the pricing structure may change the technology may give us opportunities to go further. But I would not anticipate as of today, creating a dream for the long term. but 14%, 15% is really -- is a doable level.
And the second question about doubling the capacity. Yes, let me explain this. We are having, of course, the balance of -- everything has to be utilized in fullest. As Valerio said, the €500 million we will reach, but we will not stop with the €500 million, we will go further. The other element is definitely the installation.
We are not doubling our installation relative to the increase of our, let me say, cable capacity we are using third-party installations in our forecast. So therefore, when you look about the €500 million for a limited period of time, 4 years or 5 years, I'm sure we prefer earlier to reach the €500 million in 4 years rather than 5 years.
There is the element also of third-party installation and there is the element that we have to evaluate during the course of the year if we are going to further invest in installation capacity to go beyond. But our expectation is that we will reach about maybe €3.5 billion. The €4 billion is a good proxy, but it will have the effect of the third-party, let me say, installation insight. Therefore, the €500 million is a solid number, but it can go up definitely, there is no question.
The next question is from Alessandro Tortora from Mediobanca.
To everybody. I have 3 questions, if I may. The first 1 is related on the adjusted EBITDA maybe in the North America. If you can just help me to understand how much of it comes from the E&I and would also help the comparison with last year's data. Then I know you already, let's say, elaborated something on this, but if you take into account the around 19% adjusted EBITDA margin you mentioned before on the E&I and you already stated that the profitability of the T&I and PD are today different, is it possible to have an indication like, I don't know, T&I being, for sure, if I understood well, above 9% and PD lodging -- should be high single digit, let's say, with a margin or lead by single digit and let's say, T&I should be much more mid-single-digit.
And the last question is for Francesco, just to understand better, let's say, a normalized level of tax rate for 2023. I don't know if there is any matter on some different country mix, you have in mind. and also EBITDA adjustments, which were, let's say, pretty high in 2022. First of all, if you can explain a little bit what is inside this number and also, say, an indication for 2023?
Thank you, Alessandro. The first question, the North America EBITDA having been Massimo in North America for -- since the acquisition of General Cable, even if today is not anymore there. I would like to listen to him answering to your question.
Thank you, Valerio. Alessandro, the growth that occurred in North America in 2022 over '21 in terms of E&I, account for, let me call it, 70% of the increase that you see in the relevant slide of the presentation. So out of the €350 million, we must confirm probably €270 million, €260 million coming from E&I growth, and aside from this E&I, 90% came from T&I. These are the reason for the spiking results in North America in 2022. Then when it comes to the second point about the T&I margins versus the PD margin as a whole, in the group, the PD margin is more or less around 6, 7 points of EBITDA. Of course, in North America, the story is much different, in margin in PD in North America is pretty high, and they will remain pretty high given the strong demand in the market following the electrification of revalued on T&I has seen this is back in '22, which we believe will continue at least for the first half '23, and hopefully, only softened from a soft production in '22, second half. That T&I margin in North America in '22 have been probably in the double-digit range, so 3 or 4 percentage points higher than PD. The evolution will bring a little bit more of normalization in PD versus margin in North America, but this will be more a case of 2024 than 2023 situation.
Yes. Let's say that the question was also across region, honestly, and not only on North America because I know that North America is probably a bit more, let's say, skewed the situation now. But just to understand across the region, this gap between as you said before, T&I and PD that, if I understood well, let's say, probably we can expand the comment that should.
You have to consider that the margins for T&I and PD in North America are completely different from the ones in Europe. So it's a comparison that is a little bit unfair.
So in the other regions, Alessandro, there is not that big of a difference between the margin on T&I and PD. But of course, also here in Europe, we have different situations in the north of Europe, where we have a very high margin in T&I. In the South Europe, we have heavy margin in France, lower margin in Italy. So -- but there is definitely less gap than that you see in North America between T&I and PD in European space. And LatAm, almost similar similarly followed of the logic of Europe.
Okay. Alessandro for the third question, the normalized level of tax rate, I would ask to Francesco to answer it.
Yes. So Alessandro, I don't expect any major change in tax rate in 2023 versus 2022. So I think that we will stay in the 30%, let's say, now it's 31% maybe treat 30% as a realistic level for 2023. Then you had a question on the adjustments. It's basically our adjustments are related to Antitrust, which is the only nonrecurring item that we have are related to restructuring costs related to the impact of hyperinflation accounting on our operating profitability.
And namely, we have 2 countering inflation, which are Argentina and Turkey. With Turkey, which came in this year with an incredibly high level of inflation, and this is also one of the reasons of the increase other than Antitrust. And the other reason of the increase was that last year, we had some positives in terms of gains on some disposals. For instance, we finalized our restructuring -- footprint restructuring in South Europe and we sold 1 plant after this restructuring -- one site, actually, on London building, realizing quite a significant gain. These are the main reasons.
And Francesco, if I have, let's say, to put the number on 2023.
You put a certainly lower number certainly lower number, I would say, by approximately €40 million, something like this. €40 million to €50 million lower, I would assume.
There are no further questions at the moment. I will hand back the conference for closing remarks.
Thank you very much to all of you for having been participated to this conference call. And we are going to see you at the end of the first quarter. Thank you very much again to all of you. Bye-bye.