Indra Sistemas SA Q1 2022 Earnings Call Transcript

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

Question: Manuel Lorente - Mirabaud Securities Limited, Research Division - Analyst : Welcome Luis to this small Indra's community. My first question is again on company changes, especially on the point of the stake of SEPI, do we have any update on that? Because I believe it was last February when they announced their intention to reach roughly 28%. But do you have any update on that situation?

Question: Manuel Lorente - Mirabaud Securities Limited, Research Division - Analyst : Okay. And I believe Ignacio you have said that the company will stick to the '21, '23 strategic plan that was approved from the Board of the company. I don't know whether that was communicated to the market or do you have any intention of highlight the nature of that strategic plan?

Question: Manuel Lorente - Mirabaud Securities Limited, Research Division - Analyst : Okay. So one question now on defense. It has had a mute revenue performance in the quarter with a flattish evolution versus last year. And seeing your peers reporting and in the current geopolitical context, what do you expect of this division going forward? Because we have seen massive upgrades in terms of defense spends, especially in euro or at least announced of that? And your number doesn't quite much of those potential headwinds that we are seeing across the board?

Question: Manuel Lorente - Mirabaud Securities Limited, Research Division - Analyst : I see. And my last question maybe on Minsait. If I'm doing the math correct, top line revenue in local currency ex-M&A, ex the positive contribution from the election business has been roughly plus 12%, 13% on the quarter. I was wondering whether you can give us some indication on the mix between price, volumes or any remarkable trends that you are seeing there, especially on the pricing regime that I believe that it might be something refreshingly new for your verticals?

Question: Manuel Lorente - Mirabaud Securities Limited, Research Division - Analyst : But you can say that or it is fair to say that the vast majority of the positive trends in revenue in Minsait, is it still coming from volume rather than pricing?

Question: Nicolas David - ODDO BHF Corporate & Markets, Research Division - Analyst : I have 2. Actually, the first one is regarding Minsait profitability. You posted a nice profitability improvement in Q1 already. Well -- I remember well, you were quite cautious regarding the beginning of the year given the timing, phasing of salary increase versus price increase. So and I remember that you were expecting more margin improvement in the back half of the year than the beginning. So what happened there? Should we think differently about the similarity finally? Or is it just because you are outperforming and absolutely will remain also back half, but all the year will be better than what we are expecting initially? And the second question is regarding the defense MK1 Radar contract, in which time frame do you expect it to generate revenue? And could you share also the magnitude of revenue of this contract?

Question: Gregory K. Ramirez - Bryan Garnier & Co Ltd, Research Division - Analyst : I will come back on the topic of the margin with the operating margin, and I talk about operating margin and not EBIT margin. But regarding transport and traffic, I think in the past, you were referring to something around 12%, if I remember well, maybe I'm wrong. But given the coupon margin, do you think that the 12% will be achievable? And what would be, I would say, the levers to go there? Does it imply, I would say, the additional product revenues. And just a clarification regarding the margin expected for Minsait. I think that the 5% to 6% was referring to the EBIT margin and you're in the ballpark in Q1. But is there -- I would say, are there reasons to believe that you could be above that ballpark given the fact that it's Q1? I'm not sure that the election project in Angola is a huge boost to profitability, but -- and you have, I would say, the price versus salary inflation topic to manage. So given all these moving parts, could you maybe elaborate a bit more on that? And how to consider eventually that the 5% to 6% margin scenario, EBIT margin scenario could be cautious?

Question: Gregory K. Ramirez - Bryan Garnier & Co Ltd, Research Division - Analyst : Okay. And just an additional last question. Regarding the -- your customers in manufacturing, have you ever seen any, I would say, negative signs according to which they have been -- they have started to be affected by the rising price of energy or things like that?