CAR Group Limited

go from one point to another point if we look for the environment we believe that this environment still as aftermarket will stay as I see some okay please mute your microphone okay I did it okay perfect Next quarters and the process of the... changing the markets in one body and as well with less players would be something that's a natural goal. If we look for the average growth, we see that in the United States it's not higher than 5% for the players with the biggest growth. In Europe, we see most of the players on the negative or on the zero. intercast is growing on this comparison much more above for half of the year still we have somebody with the non-unmuted microphone and if we look the intercast growth is 11.5 percent for a second quarter, 10.3 for a half a year. Still we see our place to increase our market share. We believe that for the big companies above 1 billion euro we really generate big value. for the customers. If we compare as well to the Western European players, always is the question why we grow much faster and why they not succeeded in Central and Eastern Europe. We are sure that our strategy based on the delivery to the point of fix is the answer. Our market share in the independent garages, fleets and dealers is around 74%. Many players in many countries, this rate is below 50%. The best are around 60%. If we look for Polish distributors, they have spot business around 50% to the Western markets, which means that even if they sell a lot on the Polish markets to the garages, On the end, the stake is limited. We see that our long term growth and market consolidation is effective in comparison to the merger and the acquisition. We see our strategy is valid and it's not only valid for the customers which understand this concept, because if you uh calculate the prices together with add value service we are we have the best and the cheapest service and we are as well the most lean player in the delivery of the goods for our suppliers our investments with automatization and digitalization even more in the next quarters will improve our situation and we can come back on the path with the profitability as we expected Import of the cars, for example, for Polish markets going down, but in place of this we see the sale of the new cars. and as well a lot of the cheap brands which as well exchange the older car to the little bit newer ones but still the car aging is growing and we see as well that the car park is growing which is as well something which support our future and as well giving us knowledge that our investments are on the right process and based on the right assumptions. Currently electric vehicles is only 2% of the entire vehicle fleet and we believe that what we predicted that up to 2030 will be safe harbour as a combustion engine. We believe that the hybrids, even if we check the sales of the Chinese brands in Europe, the domination is based on the hybrids. solution which mean with the combustion engine and up to 2035 we believe that this will be dominant uh support supply of the of the car and this is giving as well as the possibility that we can think on a bright way the demand which is still not visible on a short period will come and big demand can only be used by the big players because they have the right logistic to solve it and giving as well additional value on the margin or on the profitability.

Now it's time for the comments on the financial results. In the second quarter of 2025 Intercast Group revenue reached the level of 5.3 billion zloty, representing an increase of 9.5%. However, in the first half of 2025, revenues reached the level of slightly above 10 billion zloty, representing an increase of 7.6%. When we compare it to the phase dynamic measured in units, after the first two quarters of 2025, the group achieved sales growth in units of around 11.4%. The difference between 11.4% in units versus 7.6% in nominal terms shows more or less what kind of price competition we have to face. We have to face in the first half of 2025. The share of domestic sales continues to decline. I mean domestic in Poland continues to decline compared to higher growth of sales of our foreign distribution companies. In the first half of 2025, Intercast revenue in Poland from domestic market accounts for approximately 39% of sales, compared to 40%, which on one side shows that the group is diversifying geographically. On the other hand, it's showing that the growth rate of our distribution companies outside of Poland is higher, coming from generally lower market share. on many of the markets and also because of the implementation of our strategies in various segments which allows those companies to grow faster. Over the last six months, we opened 19 new branches abroad and we closed three branches in Poland. At the end of June, we had 670 branches. In our opinion, intercast groups' ability to maintain higher sales growth, which was commented by Krzysztof, versus competitors, was of particular importance for our results, and it was possible thanks to two, we would like to distinguish two factors, one being full computation of spare parts, for a given vehicle type. It is worth noting that many of our competitors specialize in certain suppliers or in product groups, while Intercast provides outstanding service for the workshops in terms of the offer, which outperforms the market and drives our site. The second factor would be the distribution network of 670 branches and efficient logistics. Regarding gross margin, the consolidated second quarter 2025 gross margin decreased to 28.4% compared to 30% after eliminating the impact of exchange differences. When comparing half year to half year, gross margin decreased slightly, only slightly, from 29.2 down to 28.9. The key factor negatively impacting the first quarter gross margin was primarily the need to adjust the selling prices to market conditions. on selected product groups due to increased competition and we carried an expected demand for spare parts. Furthermore, in Q2 2025, we faced price reductions from various suppliers, which also translated into downward pressure on prices. However, at the end of Q2 2025, we began the process of increasing gross margins. The process was continued throughout And what is worth noting is that the gross margin increases did not affect negatively our sales growth, which you can see in our monthly reports regarding sales growth in July and September. Regarding the cost, the share of selling in general and administrative costs to sales revenue for the second quarter of 2025 was 13.8%, which is a decrease and improvement compared to the same period of the last year when it was 14.4%. The improvement in this ratio is due to the actions taken by Intercast Management in recent months, including a number of cost optimizations and reductions. particularly in the area of IT and logistics, and it's also related to the implementation of robots in the first phase of the entire robotization process. The improvement in the cost-to-save ratio was the key to achieving a 3% improvement in operating profit in Q2 2025. It is also worth noting that there was an increase in financial cost in Q2. The financial cost amounted to 54 million zloty compared to around 42 million for the same period of Q2 2024, which is primarily due to increased scale of investment while maintaining the turnover Inventory rotation, more or less on the same ratio. Because of the net profit, the group achieved the net profit of $188 million, which is basically on the similar level to previous year, which in our opinion is a good result, considering the price pressures and the decline in the first quarter in the gross margin. Regarding the inventory rotation, as it was mentioned earlier, the inventory rotation remained on a similar level as in the prior year, which is 143 days. And now I would like to make two additional comments regarding one of the events. On September 5, 2025, Intercars management received information about the fire. It has destroyed the Intercars Ukraine warehouse located in Dnipro. After determining the cause of the fire and estimating the value of destroyed goods and fixed assets, we will recognize the interment loss in the third quarter of 2025. The initial estimated losses amounted to around 21 million zlotys. And the second one-off event, which is a positive one, on the 2nd of July 2025, the Provincial Administrative Court in Gdansk issued a judgment concerning our The order concerned irregularities in waste management, in particular the classification of used parts course undergoing the remanufacturing process. The court decision, as I said, is positive for us. Generally, the court indicated that the remanufacturing process could be classified as a reuse, not recovery. which would preclude automatic recognition of this part as waste. So we can say that this court judgment actually closes the case, which is very positive for us, and Lauder will be able to continue its operation. So I think this is all from my side. And I will pass the voice now to Krzysztof. Thank you. Okay.

We are the fastest growing distributor among the largest players on the market despite weakening demand in Europe. In comparison for the half a year, 10.3% of the grow. LKQ minus 6.4, GPC around 0.6, MECO 4.1, including the merger of Elite Poland. and total these biggest players around 0.9%. We believe that still the independent aftermarket is the safe harbour, the vehicle power distribution and repair market is undergoing consolidation, and in the near future we can expect smaller players to gradually lose importance, with intercars remaining the growth leader among large distributors. We are open to the changing environment, technologies and social and geopolitical challenges facing the world today. Thanks to our internal culture focused on development, we are ready to further expansion, setting increasingly higher standards of customer service. We expect an improvement in sales dynamics in the coming months, in the coming quarters, or 2025 due to expected competition of postponed repairs by the drivers. We see the potential for further growth in 2022. Fifth, in the aftermarket, still is a solid foundation. The vehicle fleet in the past and aftermarket has proven to be strong even during economic downturns. The uncertainty that exists in the market is paradoxically good news for us as such a situation may lead to further market consolidation and the expense of less agile players. Furthermore, the growing pressure to improve efficiency and effectiveness resulting from rising operating costs may contribute to faster market consolidation and Intercars is a leader in the area thanks to the robotization of the process and as well as digitalization, what we mentioned, especially that our main customers, mention is the point of fixing the garage and we believe that is unbeatable offer lean offer for the producers to go to this last mile and as well best solution how to repair cars especially that we see that is lack of the people And as well, we have the new narrative, which we as well present in September regarding the powering progress and saving time. It's exactly connected with the garage and the last mile. We currently operate in 21 markets, but we are still developing our logistic network. We recently opened a new fully robotic warehouse in Zakrotem. scheduled for early 2025 and robotics is now a necessity. We already know how to achieve this using existing modern technologies. The robotization of another warehouse in Brasov is nearing completion and the end of the September with the investment completed including a 100% transition to the new warehouse and the termination of the lease agreement for the old warehouse. Our logistic footprint currently covers 660,000 square meters, 670 branches, ensuring we are close to customers as possible and able to deliver goods to the workshop multiple times, as I mentioned before, as a leading company on the last month. and thanks to our network especially based on this technology we could say solution one stop shop we are present in central eastern europe but as well we're going more and more on the west and we believe that based on this we will expand and build the franchisor model system not only on on existing markets but as well on the new one like austria and germany Thank you very much and we ask for the questions.

You can ask the question also on the chat if you would like to put it on the voice, so please unmute yourself.

Are there any questions?

I would like to inform you on the meantime that the presentation was uploaded to our new website, so you can take it from our investor website.

The question is about Germany. As we discussed before, the first stage was to onboard the customers which bought from Poland directly to IT solution in Germany. This phase is like on a finishing. Now it's making the relation with the customers in each town, in each land. And then based on the knowledge of our team, it will be the proposal of converting them to the franchisor partner. Nowadays it's not yet as a step. We need to remember that in Poland it took us 10 years from changing from the distributors to the franchisor partners in Greece 5 years, which I believe that we will see how fast we can do this in Germany. But as Piotr mentioned as well that we develop our logistics network. Next year we will start to development of the new warehouse near the border of Germany. And it is as well the part of our plan for supporting the customers in the first phase. And the second phase, of course, is the opening the first branches. then based on the number of the branches, when we will be satisfied and the partners will be satisfied, is building the local warehouse, then the warehouse similar as we have in Zagrocim or Sosnowiec or the future near the Poznań, which means that we have the plan, but as well something which we use always as a phrase, every day, small spoon. we have quite nice grow to the western markets and we believe that it's not only based on the offer but as well about the next stage as well this what we can deliver to the last mile exactly to the need of the garage any more questions

Thank you for the question.

So if there are no more questions, I would like to remind you that our recording from this teleconference will be uploaded to our website. And see you after the third quarter results. Thank you very much.

Yes, we would like to invite you to the next conference. Thank you for your time and for listening to us.

Thank you very much and see you next time. Goodbye. Goodbye.