Porsche Automobil Holding SE

to Porsche's full year 2022 annual results call. I'm very happy to have today Oliver Blume, our CEO, and Lutz Merschke, our CFO, who will give a quick intro to this call, but make it crisp so we have sufficient time for your questions later on. Already now, please let me remind you, please one or two questions max. We want to give everybody on this call the opportunity to have the airtime to raise his or hers question. With this, I would also like to remind you, you had already seen the disclaimer, All forward-looking statements that have been given today are being under the IGID of the Safe Harbor wording that you can find either in the disclaimer on our deck or also on the web page. With this, Olli, the floor is yours.

Thank you very much, Björn, for your introduction. And we have prepared a short overview. Good afternoon to everybody from my side and welcome to our financial year 22 investor and analyst call. Within the next 50 minutes, Lutz and I will take you through the major milestones that we have achieved last year and give you an update to our strategy and priorities. It has been a challenging year, but with remarkable progress, innovation and achievements for our company. These achievements are mainly the result of our high level of flexibility and our ability to adapt to challenging situations, as well as our close integration of procurement, production, research and development and sales. Therefore, first of all, I want to thank all Porsche employees for their great teamwork in 2022. And also I want to thank all of our suppliers, Volkswagen and partners who have helped us considerably during the past challenging year. But most of all, we have benefited from the strong trust of our loyal customers and their unchanging high demand for our products. We experience strong demand across all regions and all products, so incoming orders once again exceeded wholesales. Our order bank maintains on a very high level and the mix is quite strong. As it is our primary goal to make our customers happy and keep them excited, we will have a couple of interesting product additions to the already amazing product portfolio this year. Not to forget, we are celebrating 75 years of Porsche sports cars this year.

Thank you, Olli. From a financial perspective, 2022 was an extraordinary year as well. Despite all challenges, we were able to post record levels with our group sales revenues, operating profit and automotive net cash flow. Certainly, supply chain issues had a greater impact on our business than high inflation. However, we have shown that we can manage both issues and we expect to continue to do so in the future. With 37.6 billion euros of group sales revenues, 6.8 billion euros of group operating profit, 18% group return on sales and 3.9 billion euros of automotive net cash flow, we have underlined the desirability of our products and resilience of our business model once more. With 2.7 billion euros R&D spending and 1.6 billion euros capex in the automotive segment, we continue to heavily invest in technology, innovation, digitalization and product. Pushing ahead with our modern luxury strategy. Our investments are the foundation for Porsche's commitment to being a leader in exclusive and sporty mobility. We are sticking to advancing our electrification strategy in terms of attractive product line-up and healthy ecosystem deployment. Let's now take a look at the automotive segment. Here we earned 6.4 billion euros in operating profit at a return on sales of 18.6%. Result of better product mix, improved pricing, volume growth, positive currency effects as well as a stable and lean cost structure. At the same time, we had to deal with higher material, raw material, energy and logistic costs, as well as some extra support for some of our suppliers. Furthermore, we accounted for the one-time costs in connection with the IPO bonus. The automotive EBITDA margin in 2022 was 25.2%. Automotive net cash flow rose to 3.9 billion euros. This equals a margin of 11.2%. Porsche finished the year with 8.3 billion euros of automotive net liquidity. However, please note this number still includes 4 billion euros of cash that will be transferred to Volkswagen in Q1 2023. which, by the way, will be the last payment of this kind as the domination and profit and loss transfer agreement was terminated at the end of 2022. You can find more details on the net liquidity development in the deck on our website. Stringent capital deployment and synergies with Volkswagen remain top priorities for us. In 2022, the R&D costs of the group were 2.7 billion euros. Investment in capitalized development costs amounted to 2.0 billion euros, significantly higher than in 2021. The increase is due to the increasing expenditure on ongoing projects, which are close to being ready for series production. More than half of our R&D expenses in the reporting period were due to the conversion of the product portfolio towards electromobility. Over the next five years, we plan to invest more than 20 billion euros in electrification and digitalization with a focus on vehicle projects. Future-oriented drive concepts are the basis of our success. We rely on a triad of drive types, combustion engines, hybrids and pure electric models. The Group's financial services segment operating profit was 341 million euros in 2022, mainly due to portfolio growth, conservative risk management, better pricing for used cars, as well as positive currency effects. The penetration rate in 2022 was 40.8% compared to 43.0% last year. Let's move on to the outlook for 2023. With its plan for 2023, the Porsche AG Group assumes that average global economic output will continue to grow at a slightly lower level compared to 2022. As detailed in the slide deck available on our website, This is subject to risks, uncertainties and assumptions relating to the development of the economic, political and legal environment in individual countries, economic regions and markets, and in particular for the automotive industry. Based on these above-mentioned assumptions, the Porsche AG Group expects an operating return on sales for 2023 in the range of 17 to 19 percent. This forecast includes assumed Group sales revenues in the corridor of around 40 to 42 billion euros. Our forecast for the automotive segment is a net cash flow margin between 10 and 12% and an automotive EBITDA margin between 25 and 27%. As part of the 2023 sales forecast, the company expects, despite the supply challenges, fully electrified vehicles to account for up to 12 to 14% of total new vehicles delivered to customers. more than last year. For the fiscal year 2022, the executive board will propose a dividend of 1 Euro per ordinary share and 1.0 Euro per preferred share to the annual general meeting. This is to be distributed in early July. In the medium term, Porsche aims to pay out approximately 50% of net income to shareholders. But we wouldn't be Porsche if we were satisfied with what we have achieved. Despite all our achievements, we have set ourselves very ambitious goals to position Porsche even financially stronger. We have a clear plan on how we want to achieve this. We call it Road to 20. The number 20 represents our strategic target of a group return on sales of more than 20%. Porsche is striving towards this very ambitious target in the long term. To this end, we are now putting everything to the test once again. Starting with our product range through pricing to the cost structure. We are putting together a comprehensive package of measures to increase the quality of contribution margins and make our products even more attractive. Above all, we want to make our products even better, even more unique, even more desirable. We want to focus even more on our customers and offer them even more performance and even more luxury experiences. With Porsche-specific technologies and partnerships, we want to fulfill even more individual wishes so that even more customer dreams come true. And all in all, of course, we are sticking to our medium and long-term targets. Group operating return on sales of 17% to 19% for 2023. And in the long term, more than 20%.