CAR Group Limited

teleconference will be recorded and recordings will be uploaded to our Relation website as the same as the presentation for the investors with our current results and information. We would like to welcome you in the name of our board. Today's teleconference will be provided by Krzysztof Soszyński, vice president, and Piotr Zamora, member of the board. All questions you can ask after the presentation. So please, Krzysztof, the stage is yours.

Thank you very much, Magda. Good afternoon, ladies and gentlemen. We will traditionally start by presenting information regarding our position in independent aftermarket. At the end of third quarter 2024, we achieved dynamics of 7.6% in Polish zlotys, Polish currency. However, if one compares the dynamics at the constant Euro-ELN FX rate, Intercars achieved 14.5% sales dynamics, almost twice the sales growth of our European competitors. In 2024, the group strengthened its overseas expansion further in countries where it developed sales based on a subsidiary network and in the countries where it sells directly to the customers. In the last 12 months, 34 new subsidiaries were opened in foreign companies. As can be seen, intercalsogranny growth path is an effective way of consolidating the market and is currently outperforming the M&A path, which is bound with the risk of at least realizing synergies. Intercalsogranny from the domestic market accounted for approximately 40% of the total income of the entire group, the same as in the same period of previous year. the Polish market remains the primary sales market for Intercars Group. Many suppliers which sell the products on OEM to the production plants experiencing problems due to the lack of demand from automotive manufacturers. To the largest extent, those suppliers which are directly as well in the shipments to EV manufacturers in Europe. One example is Volkswagen. And this exactly is showing that stopping subsidies for new electric cars does not help sales and industry transformation. The assumed pace of change is too fast of the Green Deal and has a negative impact on competitiveness if we touch as well the producers from China or from United States. Sales of cars in the medium segments have fallen significantly and while only the luxury segment is defending itself. Tier 1 manufacturers will fight for the aftermarket and for the big players. This is a good news for the intercars company. If we look on our biggest market, the Polish, which is always showing us the next trends, If we look to the summer report, the campaign with Richard, the Polish market from the side of the sales of the new and used cars, we see quite good sales and imports of the used cars. If we look for the cumulative 10 months, we are on the level 820,000 cars. which prediction for the whole 2024 is up to a million imported cars, which is naturally after a few quarters our customers on the beginning for products like lubricants and the brakes, but in the future for more advanced repairs. The age of imported cars has established on the level of 12 years old cars, which naturally is in our sweet spot. And we see that most of these cars are with traditional, we could say, internal combustion engine, petrol and diesel. As well, something which is interesting is that We see quite a big growth as well of imported cars with alternative supply of the traction, but 66% is still with the hybrid, which means with the combustion engine connected with EV engine. The dynamic of registration of pure electric vehicles is quite big. 38% in comparison year to year. But if we look to the new registration, it's only 0.6%, which means that it's still very limited numbers. Interesting conclusion can also be drawn by analyzing data on registration of new electric vehicles in Poland, Tesla, and the brands from China dominating this list. And this is something what I mentioned before about the European industry and the face, the problems of the competitiveness, which may be now will be touched by EU new governments. From the side of our data about the segments, this 14.5% of the growth in Euro consists many segments of Intercast, the best performance for Passenger part segment, 16% of the growth, 24% of the growth in the battery segment, 14% in the tire segment. The lowest growth rate is in the truck part segment, around 10%. But if we compare the economy in Europe, this is like above the market, which always we try to grow faster than the market or even on the market, which is declining. as well have better performance above the decline. We expect the dynamic of the track segment will come back as well based on the EU funds, which probably will be adopted next year. If we look to our map, as well you will see it on our presentation, we are the leaders in the sales dynamic in most Central Eastern countries. in the truck business and as well in all products connected with the body repair. We are a leading company in Europe. It is also worth noting the market consolidation in Europe and Poland is progressing, which in our view also contributes to increased competition, but in the long term improves the industry profitability. We try always as well to have this comparison to markets outside the Europe in US. The consolidation rate is around 75 to 80% by 10 players. In Europe, it's less than 30%. Now I give the voice to Peter. He will explain and provide the data about financial performance of Intercast.

Hello, everyone. Thank you, Krzysztof. And so traditionally, we move on to the financial section in which we would like to highlight a few important elements contained in our financial statements that present our performance. During three quarters of 2024, Intercars generated consolidated sales revenue amounting to 14.3 billion zloty compared to 13.3 billion zloty in the same period of the previous year, which means an increase of 7.6%. However, the group sales dynamics when converted to euro shows a solid increase of 14.5%, which in our opinion, more realistically reflects the sales dynamics, especially of the companies whose functional currency is euro. And in our group, we have almost 25% of turnover is generated by such companies. I would like to emphasize that in terms of sales dynamics measured in units, the group generated sales increase of slightly above 10%, exactly 10.4% increase, which in our opinion, is in line with the guideline, with the guidance that we provided to you at the beginning of 2024. So in other words, we are very good on track what we have guided, how we guided the market or what we promised to the market. We have not met so far the volume of sales in terms of the value. However, in terms of the units, Yes, we are right on track. According to our assessment, in our opinion, the following factors have an impact on sales dynamics in the entire period of 2024. The first factor being a change in the pricing policy of parts manufacturers after a period of large price increases. Price reductions followed starting from the beginning of 2024. Also, the second factor was the reductions in prices of goods purchasing, especially in euro, resulting from strengthening of polio Zloty, which also affected goods or spare parts that we purchased in Zloty, because some of the products purchased in Zloty also are, we can say, substitutes or products that could be used for the same... Basically, we may have for the same product line the spare parts purchased both in Euro and Polish Zloty. And the third element would be the postponement of repairs resulting from high inflation, in our opinion, which led to the temporary weakening of the purchasing power of the drivers. so to conclude our sales results we are satisfied nevertheless with the revenue line and sales dynamics especially with the increase in the number of units so just over 10 percent and also especially regarding the revenue line when we compare our sales results to the competitors we would like to underline that Okay, maybe we have not met the target that we set to ourselves being 15 to 17, the range between 15 and 17% of sales growth for 2024. However, we have managed to outpace our competitors and on majority of the markets we are growing faster than our competitors. So of course we believe that the key to better results in 2025 is of course further sales growth and cost optimizations, of which I will discuss a little bit later. Regarding the gross margin, the consolidated margin on sales for three quarters of 2024 was at the level of 29.3%, while in the same period of last year it was 29.6%, which means that in 2024, for three quarters, there is a decline in the gross margin. of 0.3 percentage point. After eliminating the impact of exchange rate differences, the margin would amount to 29.5% for nine months of 2024 and 29.8% for nine months of 2023, also meaning a decrease. The key factors influencing the level of the first margin in the whole period of nine months, 2024, in our opinion, are similarly to sales, reduction in purchase prices of some of the suppliers or no price increases as well. B, reductions in prices of goods purchased in euro resulting from the strengthening of Polish złoty, which also impacted goods purchased in other currencies. Consequently, and where we see the impact also of the gross margin is that consequently the average selling price also dropped because in most of the cases the sales price on the market are based on the suppliers purchasing price lists. The third element would be the declining margin that we mentioned earlier. as a result of smaller players defending themselves against consolidation, especially in the situation when the market was a little bit slower. And the fourth element that we think had impact on gross margin, especially in quarter one and two of 2024, was the need to sell out the surplus of inventories by distributors. and we are thinking about inventory which was purchased... during the period of increased inflation... or goods which were purchased at higher prices... either due to the exchange rate... or goods were acquired before price reductions. However, what we would like to emphasise... In the third quarter of 2024 alone, the impact of exchange rate differences on the exchange margin was insignificant. And when compared to the prior year, the quarter-to-quarter gross margin was on the same level, being 29.9%. This is very important because in our opinion it is worth noting that this is an improvement over the previous periods. In our opinion, what we see is that the gross margin improved on the majority of the markets, including Poland, which during the previous teleconference we discussed as the most competitive market. We see the increase of the gross margin and the driving forces that we see here are slightly improved competitive situation on the market and of course the effect of our sales activities, including our high quality of service, which is appreciated by the workshops. Therefore, we believe that the consolidation of the market will accelerate and small players will be put under pressure because they must grow to stay on the market. Now regarding the operating costs, the share of sales and general management costs in the period of nine months of 2024 in relation to sales revenues was 14% and is higher by 0.4 percentage point compared to the same period of the last year. This result is of course comparable to the ratio that we that was calculated for the let's say for example for for the first half of 2024 we focus on improving operating margins of course we continually focus on process optimization and continuous assessments of initiated and ongoing projects But what we would like to emphasize here is that we expect that throughout entire 2024, we will be able to achieve a cost to sales level close to the level of 13.6%, which happens to be the level that we achieved back in 2023. And this certainly is an improvement. especially over our results effectiveness of costs in Q1 and Q2 2024. This is certainly below our ambition that we made public at the beginning of 2024. However, I think we should stress here that maintaining costs in relation to revenue despite enormous wage pressure or lower than expected nominal sales is we think is still quite a big achievement. Regarding the profit, the group generated a net profit of 552 million zloty, which means a profit decrease of 5% compared to the same period of the last year. In this case, the cumulative impact of exchange rate differences is similar in both periods, so it's actually neutral. In case of stock rotation, the inventory turnover ratio was 137 days, and it's two days better than when compared to Q3 2023. However, this is an increase of ratio versus rotation measured at June 2024, where it was 133 days. But the increase in the rotation should be considered in terms of forecasted sales for October, November and December 2024. We've already reported the sales for October showing sales dynamics of almost 14%. So from our point of view, it was necessary to invest in increase the working capital, especially in this case, inventory in order to prepare for increased sales in the quarter three to quarter four, 2024. With costs, of course, in our investments, our capex and expenditures are somehow related. So we would like to give you some update on the status of the robotization. Regarding the robotization of one of the warehouses in Zakroce, the value of investment in works was 20 million euro, half of this investment was already incurred in 2023 and the second part was incurred in 2024. We are now two months after the production launch and during the stabilization period and we have not encountered any critical errors that would negatively impact service. The system works simply reliably. Currently, we are preparing another warehouse area for the installation of the second stage robots in Zakrotim, which is due at the beginning of quarter four, 2025. Regarding the new robotized warehouse in Brasov, the value of investments in robots is around 50 million euro. The warehouse will be financed with funds obtained from banks with the support of KUKE, which is a guarantee from, in fact, the state of Poland, which is the guarantee for the foreign investments. The investment is located in Brasov, in Romania, and it will be a completely new facility. We plan to store the warehouse in the fall of 2025. There are three main elements of these investments. Automation system, conveyors and racks structures. We are going to use the same automation, sky-pot system, that will handle approximately 70% of warehouse processes. The rest, 30%, will be handled with the use of human. The building will be rented. Currently, 95% of the work related to the adaptation of the building has been completed. Installation works and other internal warehouse installations are in progress. And we plan that this warehouse will be fully operational at the beginning of the quarter for 2025. Now I pass the voice back to Krzysztof to summarize our teleconference. Thank you very much.