Half Year 2022 Indra Sistemas SA Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ben Castillo-Bernaus - BNP Paribas Exane, Research Division - Analyst : Can I come back to the cost base in IT. To the point earlier, I think it looks like costs were up around 20% year-over-year in Q2 despite IT revenues up around 14% constant currency. So I guess if this cost base we are seeing in Q2 with salary increases and so forth is that what we should be looking out for the rest of this year? And I guess, is there any change to your confidence in achieving those margin targets for the IT business? And I have a follow-up on the guidance? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 27, 2022 / 4:30PM, IDR.MC - Half Year 2022 Indra Sistemas SA Earnings Call

Question: Ben Castillo-Bernaus - BNP Paribas Exane, Research Division - Analyst : Got it. And then just to follow-up on the guidance raise on the top-line I guess, it seems to imply the revenue growth would slow down to sort of around 3% giving you just growing 10% in H1. I guess, what are your assumptions in their -- the baking in that slowed down in H2? And perhaps expand that to the macro, those assumptions things remain the same, improving from here or some deterioration. Interested to hear what you're baking in there?

Question: Manuel Lorente - Mirabaud Securities Limited, Research Division - Analyst : My first question is on security and the plans right. I believe that among the companies that I'm follow you are the exception in terms of no growth on security and especially in the current backlog. So do you see there is something wrong in your commercial front, in your go-to-market strategy, in your portfolio mix or this is just a material demanding comps to the escalation in backlog? So look strange, these mute performance in security and Defence in the current backdrop. And as you were saying, there is some massive improvement in Defence batches so why you have not been able to jump into this new trend? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 27, 2022 / 4:30PM, IDR.MC - Half Year 2022 Indra Sistemas SA Earnings Call

Question: Manuel Lorente - Mirabaud Securities Limited, Research Division - Analyst : I see. So just a follow-up then on margins on T&D, right, you were mentioning that Eurofighter the contribution is lower than in previous year. My understanding is that Eurofighter is one of the largest contributors in terms of profitability of the division. So, how do you explain then the increasing in EBIT quarter-on-quarter or versus last year in the context of milled sales evolution and lower contribution from Eurofighter?

Question: Manuel Lorente - Mirabaud Securities Limited, Research Division - Analyst : I see so just moving then to Minsait. Can you give us the revenue and operation margin contribute from Angola. And free cash flow, if it is possible as well? It was EUR 40 million that was correct?

Question: Manuel Lorente - Mirabaud Securities Limited, Research Division - Analyst : Mainly in Q2? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 27, 2022 / 4:30PM, IDR.MC - Half Year 2022 Indra Sistemas SA Earnings Call

Question: Manuel Lorente - Mirabaud Securities Limited, Research Division - Analyst : Yes okay, I understand that. You were mentioning that these EUR 40 million revenues on Q2 was at low margin. So it is fair to assume that the EUR 60 million revenues from the second half of the year is going to be with let's say nice margin because my understanding was that previous election in Angola was a very relevant project revenues and profitability wise.

Question: Nicolas David - ODDO BHF Corporate & Markets, Research Division - Analyst : I would like to come back on the ITP story. You mentioned that you're not interested in the minority you're financial investment into ITP. Does it mean that -- would you be interested in kind of a more strategic investment like, I mean investing 30% having Board member as -- at the Board or would you only be considering maybe a majority investment of 51%. So it will be interesting to understand how we define what, is a minority investment for you and would you be interested in a more strategic or even a majority investment there?

Question: Nicolas David - ODDO BHF Corporate & Markets, Research Division - Analyst : Okay. And how do you find minority investments from your standard for instance. Maybe just to understand better, what we're talking about, I understand that you can't comment and you put your interest for that, but how do you define financial investment? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 27, 2022 / 4:30PM, IDR.MC - Half Year 2022 Indra Sistemas SA Earnings Call

Question: Nicolas David - ODDO BHF Corporate & Markets, Research Division - Analyst : Okay. And my second question is regarding mid side backlog and order intake. H1 has been solid, but nevertheless backlog is going down. What do you see currently in terms of commercial activity for H2? Do you think that backlog as a specific of revenue which -- could you put down or do you think that you can fuel again this metric and to fuel the growth for '23?

Question: Nicolas David - ODDO BHF Corporate & Markets, Research Division - Analyst : Specifically for Minsait right?