Motorways

sector overview

April 2021
Agenda

1. Executive summary
2. European market comparison
3. Italian market overview
4. Italian competitive landscape
5. Italian challenges and opportunities

Strategy& 2
Executive summary (1/2)
European • The European countries with largest annual toll revenues (core activities) are France, Germany and Italy generating respectively 10.6, 7.4
market and 6.2 B€1
comparison • Among these 3 countries, Italian motorways network is the smallest (with 6,000 km versus 9,200 km for France and 13,100 km for Germany)
however is able to generate high annual toll revenues per km (with 1 M€ / km versus 1.2 M€ / km for France and 0.6 M€ / km for Germany)
due to its high average daily traffic (with 43,000 vehicles / day versus 30,000 vehicles / day for France and 17,000 vehicles / day for Germany)
• European countries adopt different pricing mechanisms such as:
‒ availability-based payment: government pays the concessionaries for making the motorways available (e.g. used in in Hungary, United
Kingdom, Poland, etc.)
‒ shadow toll systems: compensation depends on motorways utilization (e.g. used in Spain, United Kingdom and Portugal, etc.)
‒ direct road tolling: users pay tolls to the concessionaries (e.g. used in Italy, Germany, France, etc.)
• In addition to toll revenues, motorways can generate income from ancillary activities (i.e. sale of fuel and food & beverage in rest areas)

Italian market • The Italian motorways total market (core and ancillary) has been growing with a 0.6% CAGR during 2015-19 thanks to:
overview – 3% CAGR2 in core activities, driven by an increase in both customers and tolls price
– -4% CAGR2 in ancillary activities, driven by a reduction in customer spending which more than offset the traffic growth
• Covid-19 strongly impacted the motorways sectors in 2020, causing an average traffic reduction of ∼25% compared to previous year’s
values and the stop of construction sites during lockdown. This disruption caused a drop in stock values, with listed general contractors,
concessionaires and service companies losing 20-45% of their market value in 2020. Engineering companies had the possibility to continue
operating thanks to remote working solutions and long term contracts, which allowed them to recover the loss of their stock value by the end
of the year
• The Italian motorways market is concentrated, with the top 3 concessionaires generating ∼90% of the toll revenues, and mature, with a
motorways network that has experienced slow expansion in the last 30 years with a 0.4% CAGR

Note: 1) Revenues in 2019. 2) CAGR 2015-19.

Strategy& Source: PwC Strategy& 3
Executive summary (2/2)
Italian • Concessionaires are the most relevant players of the motorways values chain as they operate the infrastructure and interact with all
competitive stakeholders:
landscape – In core activities, concessionaires collect toll revenues from motorways users to pay back the investment in design, construction and
maintenance, typically sub-contracted to engineering companies and contractors
– In ancillary activities, concessionaires grant service companies (i.e. catering companies and gas station operators) the possibility to run
rest areas facilities, for which they receive royalties in return
• Excluding ASPI and Spea (highly impacted by extraordinary events), the analysed motorways players presented similar financial
performance within the same group for 2019. Concessionaries have the highest profitability (16-18% net margin, needed to cover the high
initial investments of the concession contract), followed by engineering companies (6%-13% net margin), service companies (2% net
margin) and general contractors (-5%-0% net margin)
Italian • Italy has experienced a weak economic activity for the last 10 years, condition worsened by Covid-19 outbreak. The pandemic strongly
challenges affected various aspects of the society, including people mobility:
and – Covid impact caused an average traffic reduction of ∼25% in 2020 due to mobility restrictions, strongly affecting motorways players
opportunities – Use of some sharing mobility solutions (e.g. car-pooling) dropped as people limited social contacts; nonetheless, in the long-term they are
expected to grow, reducing motorways usage due to a higher car load factor
– Remote working emerged as an alternative to working from the office, potentially influencing future need for transportation. In the
new normal, remote working adoption is expected to remain high, with an utilization up to 9 times higher than pre-pandemic levels
• The construction sector is experiencing structural challenges, such as market size decrease, employment reduction, low labour
productivity and building sites suspension. To address these problems, CDP, the national investment bank, launched an initiative (Progetto
Italia) that aims at consolidating the construction sector
• Technological innovations provide motorways players the opportunity to reduce costs, improve safety, offer value added services and improve
sustainability with investments in infrastructure, communications and payment solutions

Strategy& Source: PwC Strategy& 4

Agenda

1. Executive summary
2. European market comparison
3. Italian market overview
4. Italian competitive landscape
5. Italian challenges and opportunities

Strategy& 5
Compared to FR and GE, IT has a smaller toll road network, yet
it generates similar revenues per km due to high daily traffic

Summary of the key messages from European market comparison

• The European countries with largest annual toll revenues (core activities) are France, Germany and Italy generating respectively
10.6, 7.4 and 6.2 B€
• Among these 3 countries, Italian motorway network is the smallest (with 6,000 km versus 9,200 km for France and 13,100 km for
Germany) however is able to generate high annual toll revenues per km (with 1 M€ / km versus 1.2 M€ / km for France and 0.6 M€ /
km for Germany) also thanks to its high average daily traffic (with 43,000 vehicles / day versus 30,000 vehicles / day for France and
17,000 vehicles / day for Germany)
• European countries adopt different pricing mechanisms such as:
‒ availability-based payment: government pays the concessionaries for making the motorways available (e.g. used in in Hungary,
United Kingdom, Poland, etc.)
‒ shadow toll systems: compensation depends on motorways utilization (e.g. used in Spain, United Kingdom and Portugal)
‒ direct road tolling: users pay tolls to the concessionaries (e.g. used in Italy, Germany, France, etc.)
• In addition to toll revenues, motorways generate income from ancillary activities such as the sale of fuel and food & beverage

Strategy& Source: PwC Strategy& 6

European toll motorways market analysis focuses on the key
drivers – Italy has high toll road penetration and daily traffic
European toll market drivers (2019)
Toll motorways network length (‘000 km) Motorways network length (‘000 km)
13.11 15.5 13.1 11.6
6.9 3.8
9.18
Spain Germany France Italy United
Kingdom
Annual toll revenue (B€) 6.03 x
3.35 Toll road penetration (Toll network / total network)
10.6
0.04 100% 87% 79%
22% 1%
7.4
Germany France Italy Spain United Germany Italy France Spain United
6.2
Kingdom Kingdom
x
Annual toll revenue / km (M€ / km) Annual toll revenue / km / vehicle
1.9
2.50 (€ cent / km / vehicle)
14.9 10.6 9.2
0.1 6.6 6.1
1.15
1.03
France Germany1 Italy Spain United
United France Germany Italy Spain
Kingdom
Kingdom
0.57 0.55 x
Average daily traffic (‘000 vehicles / day)
46 43 30 25 17

United France Italy Germany1 Spain

United Italy France Spain Germany
Kingdom
Kingdom

Note: 1) Revenues from German motorways network include revenues from federal roads (approx. 37,900 km of roads).
Conversion constant2
Strategy& 2) Conversion constant is equal 365. Source: Eurostat, Aiscat, Asecap, PwC Strategy& 7
In 2019, Italian toll revenues were ∼6.2 B€, the third largest
market in Europe, after France and Germany
Annual toll revenues by European country (2019, M€)

10,603

7,444

6,207

2,239
1,854
1,205
856 687 587 467 426 419 274 224 105 36
France Germany1 Italy Austria Spain Portugal Hungary Greece Denmark Slovenia Croatia Czechia Poland Ireland United Netherlands
Kingdom

Note: Data refer only to network included in Asecap association (for Italy Aiscat network is considered). 1) Revenues from German motorways network include revenues from
Strategy& federal roads (approx. 37,900 km of roads). Source: Asecap, Aiscat, PwC Strategy& 8
Italian motorways network is one of the largest in Europe and
is mainly based on toll mechanism
Toll motorways network length by main European country (20181, 20192, ‘000 km)
15.5
Tolls apply only to vehicles with Non-toll motorways Toll motorways

13.1 a weight ≥7.5 tons

11.6

2.4
12.2

6.9
13.1 0.9

9.2 3.8
3.1 2.8
6.0 0.5 2.2 2.1 1.9
3.8 1.6 1.3 1.3
3.3 0.7 1.2 0.9
2.5 2.7 2.2 2.1 1.2 0.8 0.6
1.2 1.3 1.3 1.2 0.6 0.8
0.1 0.5 0.3 0.6

Spain Germany France Italy United Portugal Netherl. Austria Greece Hungary Poland Croatia Denmark Czechia Ireland Slovakia Slovenia
Kingdom
Toll road penetration
(Toll network / total network)
22% 100% 79% 87% 1% 82% 1% 100% 100% 64% 29% 100% 3% 100% 36% 100% 100%

Strategy& Note: 1) Total motorways network data is from 2018. 2) Toll motorways network data is from 2019. Source: Eurostat, Asecap, Aiscat, PwC Strategy& 9
Italy is the fifth country in terms of value generated per
kilometre
Annual toll revenues per km by European country (2019, M€ / km)
Includes only 2 bridges (i.e.
17.3
Storebæltsbroen and Øresund)

2.5

1.5

1.2
1.0 1.0

0.7 0.7 0.7

0.6 0.6 0.6
0.5
0.4 0.3 0.3 0.3

Denmark United Netherlands France Italy Austria Slovenia Hungary Ireland Poland Germany1 Spain Portugal Slovakia Czechia Croatia Greece
Kingdom

Note: Data refer only to network included in Asecap association (for Italy Aiscat network is considered). 1) Revenues from German network include revenues from federal
Strategy& roads (approx. 37,900 km of roads). Source: Asecap, Aiscat, PwC Strategy& 10
Italy has the second highest average daily traffic in Europe,
driven also by a large number of heavy vehicles
Average daily traffic in European toll roads (2019, ‘000 vehicles / day)
Number of light vehicles / day Number of heavy vehicles / day

46
43
7 40

10 5
34
31
5 30
3 29 29 28 28
4 3 Tolls apply only to Average = 26
25 vehicles with a
7 7 5
weight ≥7.5 tons
4 21
39 2
36 17 17 16
33 2 Light vehicles
1 13
30 28 data not
25 26 2 available
22 22 23 21
19
15 15 5
11

United Italy Austria Slovenia Ireland France Denmark Poland Slovakia Hungary Spain Netherlands Croatia Germany1 Portugal Greece Czechia
Kingdom

Note: Data refer only to network included in Asecap association. 1) Traffic from German motorways network include revenues from federal roads (approx. 37,900 km of
Strategy& roads). Source: Asecap, PwC Strategy& 11
Italian concessionaires have a moderate ability to generate
revenues per vehicle and per kilometre of motorways network
Annual toll revenues per vehicle per km of the network by European country (€ cent / vehicle / km)
163.9 Does not represent the amount
spent by motorways drivers

19.5
17.9

14.9

10.6
9.2
8.0
6.9 6.8 6.6 6.6 Median = 6.8
6.1 6.0 6.0 5.6 5.2
3.8

Denmark Netherlands Czechia United France Germany1 Portugal Hungary Austria Italy Greece Spain Slovenia Ireland Poland Croatia Slovakia
Kingdom

Note: Data refer only to network included in Asecap association (for Italy Aiscat network is considered). 1) Revenues from German motorways network include revenues from
Strategy& federal roads (approx. 37,900 km of roads). Source: Asecap, Aiscat, PwC Strategy& 12
The majority of Italian motorways adopts a direct road tolling,
with a pay per use pricing mechanism
Motorways payment mechanisms
Selected
Payment mechanism Description Evaluation countries1

• Concessionaire collects tolls from ✓ User pays / polluter pays principle is adopted
motorways users to pay back the ✓ Motorways usually do not require State subsidies
investment for the design and
Direct road tolling construction and to cover maintenance
! Motorways users might need to pay high tolls, for the investment to 2
be financially sustainable to the concessionaire
costs

• State compensates the concessionaire ✓ Mechanism supports the development of infrastructure where the
for making the motorways available to investment is not financially sustainable (e.g. low expected traffic)
Availability-based public use ✓ Concessionaire is not exposed to traffic and revenue risk
payment • Concessionaire bears penalties in case ✓ Investment is lower due to the lack of tolls systems
of infrastructure unavailability
! State does not generate revenues from its assets
• The motorways is typically free for users

• State remunerates the concessionaire ✓ Mechanism supports the development of infrastructure where the
on the basis of the motorways utilization investment is not financially sustainable (e.g. low expected traffic)
Shadow toll • The motorways is typically free for users ! State does not generate revenues from its assets
system ! State could pay substantial amount in case of high-utilization of
motorways

Note: 1) Countries have typically more than 1 payment mechanism. 2) Germany charges only trucks of 7.5+ tons weight
Strategy& Source: Asecap, World bank, PwC Strategy& 13
While road charging is a national choice, a new EU regulation
is under negotiation to extend Eurovignette applicability
Eurovignette regulation
Potential impacts to
Previous regulation Regulation under negotiation1 concessionaries

• Not mandatory
Applicability • If applied, it requires to define • No changes • Revenues:
minimum taxes levels
– Change of tariff
schemes included in the
financial and economic
• Passenger cars, vans, buses and plan (FEP) of the
Vehicles • HGV (>3,5 tons) concession contract
trucks
– Change of the number
of vehicles according to
price elasticity
Charging mechanism
• Time-based and distance-based • Distance-based
method
• Operations: Increase of
investments / operative costs
to verify vehicles’ emission
Emission • Charged by emission class • Charged by CO2 emissions documentation

Note: On December 18th 2020, the EU agreed on a negotiating mandate for the reform
Strategy& Source: European Commission, ANSA, Asecap, PwC Strategy& 14
Across European countries there are high variations in motorways
network length, toll road penetration and toll revenues generated
European toll market drivers summary (2019)

Annual toll revenue 10.6

7.4 6.2
Revenues drivers

(B€) 2.2 1.9 1.2 0.9 0.7 0.6 0.5 0.4 0.4 0.3 0.3 0.2 0.1 0.0

Annual toll revenue / 17.3

km (M€ / km) 1.2 1.0 1.0 2.5 1.5
0.6 0.6 0.5 0.7 0.3 0.8 0.3 0.3 0.4 0.6 0.7

Annual toll revenue / 163.9

km / vehicle 19.5
10.6 9.2 6.6 6.8 6.1 8.0 6.9 6.6 6.0 5.2 17.9 5.6 6.0 14.9
(€ cent / km / vehicle) 3.8

Toll motorways 13.1

9.2
Motorways network

network length (‘000 6.0

2.2 3.4 2.5 1.2 2.2 0.6 1.3 1.2 0.8 0.5 0.3
km) 0.0 0.0 0.0
drivers

Motorways network 13.1 15.5

11.6
length (‘000 km) 6.9 3.8
2.2 3.1 1.9 2.2 1.3 0.6 1.3 1.2 0.8 1.6 0.9 2.8

Toll road penetration 100% 87% 100% 100% 100% 100% 100% 100%
79% 82% 64%
(Toll network / total 36%
22% 29%
network) 3% 1% 1%
Traffic
driver

Average daily traffic 43 40 46

30 25 28 29 34 28 29 31
(‘000 vehicles / day) 17 16 13 17 21
5
France Germany Italy Austria Spain Portugal Hungary Greece Denmark Slovenia Croatia Czechia Slovakia Poland Ireland United Netherl.
Kingdom
Strategy& Source: Asecap, Aiscat, PwC Strategy& 15
Agenda

1. Executive summary
2. European market comparison
3. Italian market overview
4. Italian competitive landscape
5. Italian challenges and opportunities

Strategy& 16
Italian motorways market is concentrated and mature, with
revenue growth mainly driven by traffic flow and toll price increase

Summary of the key messages from Italian market overview

• The Italian motorways total market (core and ancillary) has been growing with a 0.6% CAGR during 2015-19 thanks to revenue
increase in core activities (3% CAGR1) that more than offset the revenue decrease in ancillary activities (-4% CAGR1)
• Toll revenues (core activities) growth was driven by both traffic flow increase (2% CAGR1) and toll price increase (1% CAGR1)
• Revenues decrease in ancillary activities was mainly focused on fuels sales (-6% CAGR1), while food & beverage and other sales
decreased by only 1% CAGR1. Fuel sales reduction was driven by customer spending drop (-6% CAGR1), a results of
technological improvement (e.g. advances in combustion engine efficiency and autonomy, and increase use of navigation systems
which help the customer optimize both travel length and fuel refill cost, etc.)
• Covid-19 strongly impacted the motorways sectors in 2020, causing an average traffic reduction of ∼25% compared to previous
year’s values and the stop of construction sites during lockdown. This disruption contributed to a drop in stock values, with listed
general contractors, concessionaires and service companies losing 20-45% of their market value in 2020. Engineering companies had
the possibility to continue operating thanks to remote working solutions and long-term contracts, which allowed them to recover the loss
of their stock value by the end of the year
• The Italian motorways market is concentrated, with the top 3 concessionaires generating ∼90% of the toll revenues, and mature, with
a motorways network that has experienced slow expansion in the last 30 years with a 0.4% CAGR

Note: 1) CAGR 2015-19

Strategy& Source: PwC Strategy& 17
Motorways sector generates 9 B€ in revenues - growth in core
activities is offset by a decline in ancillary ones
Motorways main activities
Italian sector revenues by activity (2019, B€) Motorways operators

+0.6% • Design infrastructures and prepare feasibility studies

Engineering
1 • Optionally supervise construction operations, inspect the
8.8 8.9 9.0 9.1 9.0 companies
CAGR infrastructure and perform maintenance design
(2015-2019)

General • Manage the construction, project planning, design, execution and

2
contractors inspection of the motorway infrastructure

5.5 5.7 5.9 Core

6.2 6.2 3%
activities
• Operate the motorways and ensure their maintenance, in addition to
3 Concessionaires
the design and construction of the infrastructure

Catering
4 • Manage restaurants and bars along the motorways
companies
3.4 3.1 3.0 Ancillary
2.9 2.8 -4%
activities
5 Gas stations • Manage gas stations along the motorways

2015 2016 2017 2018 2019

Strategy& Source: Asecap, Aiscat, PwC Strategy& 18

In 2020, Covid-19 caused a motorways traffic reduction of
∼25% vs. 2019 values, with a 75% decrease during lockdown
Observed mobility index in Italian motorways (Traffic change during same month in 2020 vs. 2019, %)
31/01/2020: Italian Government 22/03/2020: Stop to 15/06/2020: Start of “Phase 3” with 06/11/2020: Government adopts further
confirms the discovery of the first 2 all business opening of extended activities (e.g. limitations with regions classified with
Covid-19 cases in Italy activities cinemas, theatres, etc.) three levels of restrictions (Yellow,
orange and red)

31/12/2019: Chinese 09/03/2020: Italy is 04/05/2020: Start of “Phase 2“ with 19/10/2020: In October, a second wave
authorities report to WHO in lockdown opening of some business activities hits Italy and Government starts
cases of a viral pneumonia in 18/05/2020: Bars and restaurants movement restrictions
the city of Wuhan, China open to the public

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
2%
-2%
-8% -8% -8%
-18% -15% Ø 24%
-32% -30%
-42%
-55%
-75% Phase 2 –
Phase 1 - Covid- Reopening of Phase 3 - Easing of
Pre Covid-19 19 outbreak businesses lockdowns Second-wave

Strategy& Source: BBC, Il Sole 24 Ore, ANAS, PwC Strategy& 19

Stock values of motorways players were strongly hit by the
Covid-19, with the exception of engineering companies
Stock price by clusters of motorways players1 (2020, %)
Phase 1 - Phase 2 – Comments
Pre Covid-19 Reopening of Phase 3 - Easing
Covid-19 outbreak businesses of lockdowns Second-wave Stock value
loss (%) • In 2020, the stock values of all
Webuild and Fincantieri
motorways players were strongly
100 Engineering companies -1% hit at the beginning of the pandemic,
complete Genoa’s new bridge
FTSE MIB -7% with an average value decrease of
90 25% in March

80 • By the end of 2020, FTSE MIB

General contructors -22% recovered most of the lost value,
70 achieving a net loss of ∼-7%

Concessionaires -40% • Engineering companies over-

60 performed FTSE MIB, registering a
Service companies -46% stock value decrease of only -1% in
50 2020; Design firms can benefit from
remote working solutions, allowing
40
them to continue operating during
30 lockdown
Governments issue norms for • General constructors,
20 social distancing and use of concessionaries and service
personal protective equipment companies were the most affected
10 in construction sites by the pandemic, mainly due to the
limitation in the transportation and the
0 stop of construction sites
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Note: 1) Reported stock prices are the arithmetic average of stock values of major listed motorways (or comparable businesses) players in Italy and Europe: Engineering
companies index includes DBA group, Jacobs and Arcadis; General contractors index includes Webuild, Astaldi and Vinci; Concessionaries index includes Autostrade
Strategy& Meridionali; Service companies index includes Autogrill and SSP group. Source: Google Finance, PwC Strategy& 20
 1 2 3 Core activities

Italian concessionaires revenues reached 6.2 B€ in 2019

thanks to growth in both customers and price
Italian toll revenues and average toll increase (2015-2019, B€)

Comments
+3%
6.2 6.2 • The Italian market grew with a 3% CAGR
5.9 during 2015-2019 period thanks to:
5.7
5.5
– 2% CAGR in traffic flow
– 1% CAGR in toll price
• The average annual toll price increased
between 0.8% and 2.7% during 2015-2019
while it increased between 2.7% and 4.5%
during 2010-2014 (not shown)
• The Italian market is composed by 6
motorways operators, with the largest,
Autostrade per l’Italia covering 50% of the
Italian motorway toll revenues

2015 2016 2017 2018 2019

Avg. annual toll

price increase 1.3% 0.9% 0.8% 2.7% 0.8%
(2015-2019, %)

Strategy& Source: Aiscat, Il Sole 24 Ore, PwC Strategy& 21

 1 2 3 Core activities

Market is concentrated, with ASPI accounting for ∼50% of the

market and top 3 players for ∼90%
Italian motorways toll revenues by concessionaire group (2019)

Cumulative annual toll revenues Annual toll revenues

3.6 99% 100%
96%
3.2

Cumulative annual toll revenues (%)

90%
3.2
Annul toll revenues (B€)

2.8 72%
2.4

2.0 52%

1.6
1.3
1.2 1.1

0.8
20% 18%
0.4 0.3
0.2 0.1
6% 3%
0.0 1%
Autostrade per l’Italia ASTM - Gavio Italian Governament Abertis Italia Toto holding Brebemi

Geographic
Northern Italy ` ` ` ` `
coverage of Central Italy ` `
` `
concessionaire
groups’ network Southern Italy

Note: ASPI = Autostrade per l’Italia. Revenues were allocated to the concessionaire group with the majority stake in the concessionaire company
Strategy& Source: Aiscat, Factiva, Companies websites, PwC Strategy& 22
1 2 3 Core activities

In the 70s’, Italian motorways network experienced a notable

expansion, that slowed down in the last 30 years
Length of Italian motorways network (km)

+0.3%

7,000 +0.6%

6,500
+2.9%
6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
’71 ’72 ’73 ’74 ’75 ’76 ’77 ’78 ’79 ’80 ’81 ’82 ’83 ’84 ’85 ’86 ’87 ’88 ’89 ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19

Strategy& Source: Aiscat, Anisa, PwC Strategy& 23

4 5 Ancillary activities

Rest areas revenues have been decreasing for the last 5 years,
reaching ∼2.8 B€ in 2019…
Italian rest areas revenues by segment (2015-2019, B€)

Comments
3.35 -4% CAGR
3.13 (2015-2019)
3.01 • Rest areas revenues were approx. 2.8 B€ in
2.94
0.88 2.83 2019 and have been decreasing with a CAGR
2015-2019 of -4%
0.85
0.85 0.85 • The weak economic conditions present in
Food & Beverage
0.86
and other sales1
-1% Italy increased price sensibility of car
drivers that reduced spending for food and
beverage and fuel
• Additional reasons for the fuel revenues
decrease include also:
– Improvements of combustion engine
2.48 efficiency and autonomy
2.28 2.15 – Integration of fuel prices in navigation
2.09 1.97 Fuel -6% systems which help the customer optimize
both travel length and fuel refill cost (e.g.
Waze)

2015 2016 2017 2018 2019

Note: 1) Includes revenues from products under royalty (except magazines, tobacco products and lottery)
Strategy& Source: Figisc, Anisa, Aiscat, PwC Strategy& 24
4 5 Ancillary activities

… the decrease is driven by a reduction in customer spending

and partially offset by a growth in traffic
Italian traffic flow (2015-2019)
Customer spending by product category
Traffic flow by vehicle type (2015-2019, M vehicle-km) (2015-2019, € / 100 vehicle-km)

+2%
CAGR CAGR
83.8 84.1 84.7 (2015-2019) 4.22 (2015-2019)
82.0 -6%
79.4
3.82
Heavy 3% 3.59
18.5 19.2 19.6 20.0 1.10 3.49
17.9 vehicles 3.34
1.04
1.02 1.01 Food &
1.01 beverage, -2%
and others sales

Light
61.5 63.5 64.7 64.5 64.7
vehicles
1% 3.12
2.78
2.57 2.48 2.33 Fuel -7%

2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Strategy& Source: Aiscat, PwC Strategy& 25

 4 5 Ancillary activities

Revenues per business have been decreasing, while the number

of restaurants, bars and gas stations has remained stable
Italian restaurants, bars and gas stations number and revenues
Number of restaurants / bars and sales per business Number of gas stations and sales per business
(2010-2019) (2010-2019)

Number of Sales per restaurant Number of Sales per

restaurants, bars / bar (M€) gas stations gas station (ML1)

1,000 2.0 1,000 8

900 900 7
CAGR CAGR
800 (2015-2019) 800 (2015-2019)
1.5 6
700 Sales per 700 Sales per
-2% -9%
restaurant 5 gas station
600 / bar 600
Number of
Number of -0.4% gas stations -0.6%
500 1.0 500 4
restaurants,
400 bars 400 3
300 300
0.5 2
200 200
1
100 100
0 0.0 0 0
’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19

Note: 1) Million of litres

Strategy& Source: Aiscat, PwC Strategy& 26
Agenda

1. Executive summary
2. European market comparison
3. Italian market overview
4. Italian competitive landscape
5. Italian challenges and opportunities

Strategy& 27
Among the motorways operators, concessionaires are the main
stakeholders, playing a key role both in core and ancillary activities

Summary of the key messages from Italian competitive landscape

• Concessionaires are the most relevant players of the motorways values chain as they operate the infrastructure and interact with all
stakeholders:
– In core activities, concessionaires collect toll revenues from motorways users to pay back the investment in design, construction
and maintenance, typically sub-contracted to engineering companies and contractors
– In ancillary activities, concessionaires grant service companies (i.e. catering companies and gas station operators) the possibility to
run rest areas facilities, for which they receive royalties in return
• Excluding ASPI and Spea (highly impacted by extraordinary events), the analysed motorways players presented similar financial
performance within the same group for 2019. Concessionaries have the highest profitability (16-18% net margin, needed to cover
the high initial investments of the concession contract), followed by engineering companies (6%-13% net margin), service companies
(2% net margin) and general contractors (-5%-0% net margin)

Strategy& Source: PwC Strategy& 28

Motorways players operate to provide users a functioning
infrastructure, food & beverage and fuel
Motorways business model with direct tolling mechanism
Payment Service Activities: Core Ancillary
Comments
The Government grants long-term rights to concessionaires
to design, construct, maintain and operate the infrastructure • In the motorways market with direct tolling
mechanism there are two main business
Infrastructure and maintenance activities:
design and feasibility studies – Core activities: linked to the motorways
usage by drivers
Payment Engineering – Ancillary activities: Related to the sale
Concessionaires
companies of products and services in rest areas
Access to
motorways Tolls • Concessionaires are the main motorways
players as they operate the infrastructure
and interact with all stakeholders (i.e.
Payment users, engineering companies, general
Sub-concession General contractors, catering companies and gas
of restaurants, contractors stations and the Government)
Motorways users Royalties
bars and gas Infrastructure
stations • Concessionaires use toll revenues to pay
construction
back the investment in design,
construction and maintenance of the
motorways, typically sub-contracted to
Food & beverage engineering companies and contractors
Payment
and fuel
Catering • Catering companies and gas stations
companies and charge the users for food & beverage and
gas stations fuel and pay royalties to the
concessionaires for the use of rest areas

Strategy& Source: PwC Strategy& 29

The 4 motorways players have a different coverage of the value
chain and a broad range of capabilities
Competitive landscape Core activity Ancillary activity Potential activity

Design Construction Maintenance Management Catering and fueling

Engineering companies Service companies

Design infrastructures and Operate the restaurants, bars
prepare feasibility studies. and gas stations along the
Optionally supervise motorways network
construction operations and
inspection of the infrastructure
and maintenance design

General contractors
Manage the construction, project planning, design, execution and
inspection of the motorway infrastructure

Concessionaires
Operate the motorways and ensure their maintenance, in
addition to the design and construction of the infrastructure

Strategy& Source: PwC Strategy& 30

 Profitability is driven by type of players and concessionaires
are the most profitable companies in the value chain
Italian motorways operators revenue, revenue CAGR and net margin
15%
1 B€ Revenues (2019)
Comments
Contractors Italconsult
Impresa • Engineering companies present a high
10% Engineering companies Pizzarotti & C.
Chef express profitability and a small size, typical
Concessionaires Italferr characteristics of professional service
Service companies Contractors Autostrada
Engineering businesses
5% Service companies Brescia - Padova
companies • On average, contractors show a negative
Toto Costruzioni Concessioni
profitability, suggesting that the sector is
Revenue CAGR

Generali Webuild Autostradali

under pressure
’15-’19 (%)

0% Venete
Autogrill1
Itinera Autostrada del • Service companies have low but positive
Brennero profitability
-5% Autostrade Pavimental Concessionaires
per l’italia • Autogrill is the largest player, having the
Proger largest network of restaurants in Italy, both in
motorways and in airports
-10% Spea Engineering
Atlantia’s subsidiaries • Chef express experienced notable growth
impacted by Morandi bridge (CAGR ’15-’19 of ∼6%) also due to
collapse due to: Astaldi acquisitions (e.g. Percassi Food & Beverage
-15%
• loss of work for Spea in 2019 and Bagel Nash in 2018)
• additional investment and
maintenance for ASPI • Concessionaries have the highest
-20% profitability, needed to cover the high initial
-35% -30% -5% 0% 5% 10% 15% 20% investments of the concession contract
Net margin (2019, %)
Note: Toto Holding and ASTM were not included because of their diversified business. 1) Autogrill Italy SpA
Strategy& Source: Orbis, Capital IQ, PwC Strategy& 31
 Concessionaires have high profit margin to pay back the large
investments made during the motorways’ construction phase
Illustrative financials for a typical concession contract

Amount
Toll revenues CAPEX OPEX Operating cash flow
Comments

• In Italy, motorways concessions operate

with the direct road tolling business model
where:
– The government assigns to a
Years concessionaire the design, construction,
maintenance and management of the
motorway
– The concessionaire collects tolls from
motorways users to compensate the
investment in the construction of the
Extraordinary Extraordinary Extraordinary infrastructure and to cover the
maintenance maintenance maintenance maintenance (i.e. extraordinary CAPEX)
and management costs (i.e. OPEX)

Construction Operating
phase phase

Strategy& Source: Asecap, PwC Strategy& 32

Agenda

1. Executive summary
2. European market comparison
3. Italian market overview
4. Italian competitive landscape
5. Italian challenges and opportunities

Strategy& 33
Market dynamics, new customers habits and technology
innovation will shape the motorways sector

Summary of the key messages from Italian challenges and opportunities

A• Italy has experienced a weak economic activity for the last 10 years, condition worsened by Covid-19 outbreak. The pandemic strongly
affected various aspects of the society, including people mobility :
– Covid impact caused an average traffic reduction of ∼25% in 2020 due to mobility restrictions, strongly affecting motorways players
– Use of some sharing mobility solutions (e.g. car-pooling) dropped as people limited social contacts; nonetheless, in the long-term
they are expected to grow, reducing motorways usage due to a higher car load factor
– Remote working emerged as an alternative to working from the office, potentially influencing future need for transportation. In
the new normal, remote working adoption is expected to remain high, with an utilization up to 9 times higher than pre-pandemic
levels
B• The construction sectors is experiencing structural challenges, such as market size decrease, employment reduction, low labour
productivity and building sites suspension. To address these problems, CDP, the national investment bank, launched an initiative
(Progetto Italia) that aims at consolidating the construction sector
C• European Commission reached a provisional agreement to release the Next Generation EU, a stimulus package that could include
investments dedicated to infrastructure projects, with the objective to boost economy thanks to their high impact on GDP
D• Technological innovations provide motorways players the opportunity to reduce costs, improve safety, offer value added services and
improve sustainability with investments in infrastructure, communications and payment solutions

Strategy& Source: PwC Strategy& 34

 A Mobility Challenge

Italian GDP has been growing slower than that of other EU

countries and Covid-19 caused a 10% GDP decrease
Italian Real GDP growth (2010-2022, %)
Real GDP growth - Actual Real GDP growth - Forecast

Real GDP
growth Eurozone crisis Covid-19

7% Forecasts
6%
5%
4.1%
4%
3% 2.8%

2% 1.7% EU average1: 1.7% 1.7%

1.3%
1% 0.7% 0.8% 0.8%
Italian avg.1: 0.3% 0.3%
0.0%
0%
-1%
-2% -1.8%
-3%
-3.0%

-10%
-9.9%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Note: 1) Average of real GDP for the 2010-2019 period
Strategy& Source: IMF, Eurostat, PwC Strategy& 35
A Mobility Challenge

While many sharing mobility solutions are available, only car-

pooling can be considered a substitute to motorways usage
Selection
Traditional and sharing mobility
Common activity Potential activity

Trip length
Mobility type Mobility service Operators
Last-mile (<5km) Short-Med (5-30 km) Med-long (>30 km)

Bus, metro and tram

Traditional
mobility
Train

e-scooter, bike, moped

scooter sharing

Autonomous shuttles

Ride-hailing
Sharing
mobility
Ride sharing

Car sharing

Car pooling

Strategy& Source: PwC Strategy& Motorways use 36

alternatives
A Mobility Challenge

Covid-19 accelerated remote working adoption, potentially

affecting future need for transportation
Number of Italian employees adopting remote working (2017-2021, M)

Over 30% of overall Italian employees Comments

worked remotely during the peak of
the pandemic
6.6 • Covid-19 pandemic has caused an 11-
fold increase of remote working
adoption, due to the need to continue
5.4 business activity during lockdown
• Large companies and the public
administrations were able to involve
large part of their employees (54% and
58% of the workforce respectively) in
11 times remote working activities; adoption in
SMEs was lower, with 19% of the
workforce involved
• In the New Normal, remote working
utilization is expected to decrease to
approx. 5.4 million people, 9 times the
+19% pre-pandemic levels
0.5 0.6
0.4

2017 2018 2019 2020 New Normal

Strategy& Source: Osservatorio del Politecnico di Milano, PwC Strategy& 37

B Government and private initiatives Opportunity

CDP, the national investment bank, launched an initiative to

sustain general contractors and the broad construction sector
Italian construction sector consolidation: Progetto Italia
Drivers for change Progetto Italia Expected benefits
• In August 2019, CDP2 and Salini Impregilo
1 • Revenue decrease: From 2010 to 2019
turnover of the broad construction sector launched “Progetto Italia” to foster the • Create a national
decreased by ∼21% Italian construction sector
champion through M&A
• The goal is to consolidate the sector, activity
2 • Employment reduction: The number of supporting the creation of a national
construction sector employees decreased
Champion to compete in international market
by almost 26% from 2010 to 2019
and contribute to the development of the
3 • Low labour productivity1: In 2019, labour whole sector
productivity in the Italian construction sector • In October 2019, Salini Impregilo approved the
was 33 k€, which is 27% lower than Italian capital injection of 600 M€ from important • Protect up to 500k
manufacturing one (45 k€) and 34% lower stakeholders (CDP, Salini Costruttori and workers
than EU27 average (50 k€) banks) to finance the project
4 • Building sites suspension: In 2018, major • In May 2020, Salini Impregilo became
infrastructural projects (36+ B€ of value) Webuild
were suspended for company bankruptcies,
lack of public fundings or bureaucratic • In November 2020, Webuild acquired
issues Astaldi, a major Italian construction company • Reactivate construction
sites

Note: 1) Gross value added per person employed. 2) Cassa Depositi e Prestiti
Strategy& Source: European Commission, Webuild, CDP, PwC Strategy& 38
C Economy Opportunity

Infrastructure investments were and will probably be put in place

to recover from recession thanks to their GDP multiplier effect
Infrastructure investment benefits

GDP multipliers and additional employment for Ten-T infrastructure projects Comments

9 24 • Ten-T is a European Union project that

GDP multiplier Additional employment
aims at building a modern integrated
8 trans-European transport network
20 through funds and dedicated financing
7
• Economic multipliers evaluate the

Additional employment
(FTEs per M€ invested)
6 16 impact of infrastructure projects on the
GDP multiplier

economy; in general, money spent on

5 4.7 infrastructure projects has a high
4.0 12 impact in GDP
4 3.9
3.6 3.6 • Additional benefits of infrastructure projects
3.3
2.8 3.0 include productivity, employment and
3 2.6 2.7 8
quality of life increase
2 • European Commission reached a
4 provisional agreement to release the Next
1 Generation EU, a stimulus package to
boost the economy
0 0
Ten-T Orient Rhine Rhine Scan. Mediterr. North North Atlantic Baltic
average East Danube Alpine Mediterr. Sea Sea Med Adriatic
Med Baltic
Note: EBC = European Builders Confederation, FIEC = European Construction Industry Federation
Strategy& Source: EBC, FIEC, European Commission, PwC Strategy& 39
D Technology Opportunity

Infrastructure, communication, payment and vehicles are the

key technological areas that motorways sector can benefit from
Technology innovations clusters

1 Infrastructure 2 Communication & payment 3 Vehicles

Technology focused on the design, construction Innovation on the connectivity among vehicles, Advancements in connected car, autonomous
and operation of the motorway infrastructure devices, construction workers, and payment vehicle, and electrification technologies
systems

Strategy& Source: PwC Strategy& 40

D Technology Opportunity
Selection

Technological innovations unlock the possibility to reduce

costs, improve safety and offer value added services…
Technology innovations overview Sustainability
Cluster Innovation Description impact

Innovative cement
Reduces noise and increases durability, sustainability (manufacturing process and
ingredients) and safety (through water-saving properties)
Simulates spaces, situations and experiences for workers, allowing them to train without
`
VR training assuming risks
Supports collection of unique and objective information without the need of physical site
Satellite imaging access
Develops virtual representations of assets to understand and predict the physical
Infrastructure Digital twin counterparts' performance

Drones
Enables real-time view of the construction site, supports process monitoring and allows early
warning on critical situations `
Enables advanced data analytics and unlocks predictive maintenance capabilities due to the
Big data elaboration of large volumes of real-time sensor data
Advanced electric vehicle
charging
Provides dynamic wireless charging in frequently-travelled freight routes `
Communication
Remote diagnostic and
assistance
5G connectivity and IoT
Allows the exchange of real-time information with remote experts to inspect, diagnose and
troubleshoot complex issues, reducing machine downtime, achieving higher resolution rates
Enables vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) connectivity. Collects
`
& payment platforms and shares KPIs on assets (e.g. stress level, vibrations, etc.), weather conditions, etc.

All-electronic payment Enables customers to avoid stopping at toll stations, while reducing labour costs

Enables vehicles to use electric motors for propulsion. e-mobility is driving the introduction of
e-mobility charging stations along motorways
Vehicles Allows new mobility opportunities to groups of people that were previously affected by
Autonomous vehicle mobility restrictions (e.g. elderly)
Sustainability impact:
Strategy&
`Low `High
Source: PwC Strategy& 41
D Technology Opportunity

…with applications on different parts of the value chain

Technology innovations value chain
Cluster Design Construction Maintenance Management Catering and fueling

Innovative cement

VR training

Satellite imaging

Infrastructure Digital twin

Drones

Big data

Advanced electric vehicle charging

Remote diagnostic and assistance

Communication
5G connectivity and IoT platforms
& payment
All-electronic payment

e-mobility
Vehicles
Autonomous vehicles
Impact on value chain: Low High
Strategy& Source: PwC Strategy& 42
D Technology Opportunity

The 4 principles of circular economy can be applied to the

motorways sector…
Circular Economy framework and business models

Principles for motorways sector

Minimise the employment of scarce, volatile resources
by replacing traditional construction materials with
Renewable
Design 1 supplies
recyclable alternatives (e.g. recyclable concrete, low
Procurement Construction carbon materials, natural fibre composites) and using

Recycling
and renovation renewable energy sources
1
Renewable Valorise resources contained in waste streams by
Resource
supplies 3a 2 recovery
generating secondary raw materials for new
Lifetime production cycles through recycling processes
extension

Reuse
2
Recycling 3b Prolong infrastructure utilization through value-
Operations Lifetime
and usage 3 extension
retention processes as renovation (3a) and repair
and maintain (3b)
4

Reduce
Disposal and Decrease resource usage by implementing energy
Optimize
demolition 4 resources
efficient operations (electricity use, motorway cleaning,
etc.)

Minimum waste

Strategy& Source: PwC Strategy& 43

D Technology Opportunity
Selection

…with numerous case studies implemented by both Italian and

international players
Case studies on sustainability
Technology
innovation Renewable supplies Resource recovery Lifetime extension Optimize resources

Vegecol is a plant-based cement Iterchimica, an Italian company

with no petrol chemical specialised in sustainable Red Hill Valley Parkway, a Canadian motorway, was built with a
Innovative cement ingredients and produced through solutions for asphalt, developed a “perpetual pavement”, a high-quality asphalt with an expected lifetime
low-carbon manufacturing noise reduction additive made of of 50 years, 15-20 years more than the traditional technology
technologies recycled rubber from used tyres

In 2020, ASPI invested 60 M€ on

Drones IBM and Fincantieri NexTech
technologies to monitor over 4,500
infrastructures. IoT sensors, 3D
digital modelling and drones will
collect data on motorways,
Remote diagnostic tunnels and bridges that will be
and assistance analysed and monitored

In Sweden, an inductive
Advanced electric
charging system has been tested
vehicle charging to charge trucks at 90 km/h

Note: ASPI = Autostrade per l’Italia

No case-study available
Strategy& Source: Sitemag, Rock to Road, Green Car Reports, PwC Strategy& 44
Motorways players need to establish a clear strategy to take
advantage of the market opportunities and emerging trends
Potential strategies
Type of player Potential strategies

• Expand the solutions portfolio to become a integrated mobility player

• Launch initiatives to reduce operating costs (e.g. through automatic tolls)
Concessionaires
• Enhance maintenance investments to mitigate risk exposure
• Monitor and apply to European funds allocated to the construction sector

• Continue consolidation to capture economy of scale synergies

General contractors • Invest in technology to increase efficiency, productivity and safety
• Increase focus on sustainability and position the company as an environmental-friendly player

• Build a task force to benefit from the increase of infrastructure maintenance spending
• Try to increase and diversify revenues through international expansion
Engineering companies
• Identify potential consolidation opportunities and possibility to establish a captive business
• Increase focus on sustainability and position the company as an environmental-friendly player

• Evaluate potential investments in value added services (e.g. charging stations) to attract
Service companies additional motorways users
• Lobby to reduce concessionaries royalties on food, beverage and fuel

Strategy& Source: PwC Strategy& 45

Reference contacts

Stefano Bianchi Fabrizio Maria Guidi Stefano Del Fabbro

Partner Strategy& Manager Strategy& Senior Associate Strategy&
Industrial Products & Operations
practice Leader Rome – Italy Milan – Italy
Milan – Italy M: +39 340 7590882 M: +39 347 6162398
M: +39 334 624 5193 E: fabrizio.guidi@pwc.com E: stefano.del.fabbro@pwc.com
E: stefano.bianchi@pwc.com

Feel free to contact us in case you need further information

Strategy& 46
Thank you

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