Porsche Automobil Holding SE

Good morning, everyone. Welcome to our press call on the half-year figures of Porsche AG. This is Sebastian and with me are Oliver and Lutz. Already mentioned, glad to have you here and glad to have you all in the call. Today, we would like to give you a brief insight to our business performance so far this year. Olli will start with a quick look at the most recent developments, challenges that we are currently facing. Afterwards, Lutz will explain our figures for the first half year to you in detail. And he will also give you an outlook for the second half of the year. After that, we will be happy to take any questions. And with this introduction, the floor is yours.

Oliver. Thank you very much, Sebastian. Good morning and welcome everyone also from my side. Thank you for being with us today. As you all know, we are celebrating 75 years of Porsche sports cars this year. And we continue to inspire our customers, not only with the current product lineup, but also with exciting new additions. The past quarter saw the launch of the new Cayenne. Furthermore, we successfully held our first NGO general meeting since the IPO only a few weeks ago. However, the global economic situation remains challenging with an impact on us too, of course. But we can also say we are showing a very solid performance under these difficult and challenging conditions. Financial results turned out accordingly. Group revenue in the first half year was 20.4 billion euros. This is an increase of 14% compared to the previous year. Group operating profit was 3.9 billion euros. This is an increase of 11%, reflecting higher group sales with a stable price penetration, but also the challenges from the supply chain. Group operating return on sales in the first half of this year was 18.9% and 19.5% in the second quarter. Lutz will give you more details on the financials later. Given the economic situation and the ongoing supply chain challenges, these are strong results that give us strong foundation for the full year. We are therefore confirming our full year 2023 outlook statements. At the same time, we're expecting the macroeconomic and supply chain challenges to persist in the second half of the year. Our deliveries on customers in the first six months of 2023 were up by 15% compared to the previous year, despite model cycle changes and ongoing supply restrictions. This is a very pleasant result so far. We posted gains in every sales region, which is proof that our products are in high demand around the world. We are benefiting from a well-balanced share between the regions, 95% in North America, 32% in Europe, 26% in China, and 17% overseas. The launch of the new Cayenne has been very satisfying so far. We have posted over 30,000 orders since its presentation in April, even though the car has not even reached the showrooms of our worldwide Porsche centers yet. And the order mix demonstrates that our customers are making good use of the opportunity to individualize their vehicles. Deliveries to customers have started in several markets. The introduction to China is planned for September. We are benefiting from a recovery of the supply chain for commodities, chips and commodity parts. Major challenges remain in terms of availability and price inflation for many of the components that are differentiating our product and parts that are in high demand for our customers. Therefore, we still have to be very flexible in our day-to-day business and production planning. This is reflected accordingly in waiting times, unit sales, and costs. And we expect these challenges to persist in the future. Once again, to be clear, it's about the special parts that are differentiating our product, not the commodity side of the supply chain. Regardless of these challenges, we keep investing extensively in our development, in innovations, and in our Porsche ecosystems. so that we can continue to offer our customers the products and services they expect from us. We have taken the next step on the way to tailor-made high-performance battery cells. Since May, we have been the sole shareholder of CellForce Group. The aim is to scale up the cell manufacturing process in the medium term, if necessary, also at other locations. And we are prepared for the entry of new investors. So let me summarize. The situation is challenging, but we have a clear plan for the future of Porsche. And we keep putting it into action consistently. For further details, I now hand over to Lutz Meschke.

Thank you, Olli. Good morning and welcome also from my side, everyone. In the next couple of minutes, I will share the major milestones we've achieved in the first half of 2023 with you. Overall demand for personalized, well-equipped Porsche cars remains satisfying and cancellations are low. This is reflected in the number and the mix of incoming customer orders in the first half of the year. Unchanged, the 911 has the largest order book, strong mix, and longest waiting time around a year, the average across all derivatives. The first two quarters, Of 2023, we posted very satisfying wholesales and deliveries to customers. This success is a great team accomplishment of procurement, production, and sales. All of them are dealing with significant challenges on a continuous basis. Deliveries to customers increased by 15%. Germany, Europe, as well as the area overseas and emerging markets are growing over proportionally, making our regional mix more balanced. The sales increase was led by all product lines at Taycan, where we continuously face significant supply disruptions. In consequence, the BEV share was 10.8% in the first half year. From now on, we expect Taycan sales to benefit from improving parts availability and higher supply. However, achieving our best target of more than 12% for 2023 will be challenging. In the first half of 2023, at the group level, we achieved a revenue of 20.4 billion euros. This represents an increase of 14% compared to the same period last year and is mainly due to higher group sales with a stable price penetration. The group operating profit increased by 372 million euros to 3.9 billion euros in the first half of 2023. This translated into an operating return on sales of 18.9%. The first half, we had to digest higher costs compared to last year, resulting from an inflationary environment, as well as intensified sales activities, digitalization and increased motorsport engagement. The earnings per preferred share amounted to 3.04 euros. At 3.7 billion euros, the automotive segment's operating profit in the first half of 2023 exceeded the prior year figure by 392 million euros. This accomplishment was a result of higher sales, stable pricing, and continued beneficial product rates, slightly upset by higher costs, as well as spending and investments into our product and innovation portfolios. With automotive sales revenue of 18.9 billion euros, the operating return on sales for automotive was 19.3%. Automotive EBITDA rose by 480 million euros to 4.8 billion euros, corresponding to an automotive EBITDA margin of 25.6%. In the first six months, we were able to produce more vehicles than in the same period of last year. In this context, let me comment on our balance sheet and the increase in inventories and finished cars. At Porsche, this is a normal course of business as our production shuts down for the summer holidays. Furthermore, the vehicles and transfer of the new Cayenne to our dealers also had an impact. Despite our high level of investment activity into product, innovation, plants and our ecosystem, we achieved a net cash flow in our automotive business of 2.2 billion euros in the first half of 2023. The net cash flow margin for automotive was 11.7%. Please note that we also had seasonally higher cash outflows in the second quarter for bonus payments and a pro rata delayed tax payment in addition to the increased inventory and investments. Revenue from the financial services segment increased to 1.7 billion euros. The operating profit in the financial services segment amounted to 174 million euros in the first half of 2023. The result was impacted by evaluation of interest rate hatches and derivatives outside of hedge accounting. This is a part of regular refinancing activities. Our financial services penetration in the first six months was 40.8%, which was more than 200 basis points lower than at the end of 2022. This development reflects that we pass on the market terms in our offers. As of June 30, our automotive net liquidity decreased by 1.9 billion euros to 6.4 billion euros compared to the end of the fiscal year. This is the result of the positive contribution of net cash flow and, on the other hand, of the cash outflow of the last payment in context of the profit and loss agreement and domination agreement with VW, which were terminated in the meantime. Investing in product innovation to better serve our customers is one of our key priorities. Thus, in the first half of 2023, we spent 1.5 billion euros on research and development, 18% more compared to last year. Most R&D expenses in the reporting period were due to the conversion of the product range towards electromobility. The R&D ratio was 8.2%. Own work capitalized amounted to 1.2 billion euros in the first six months of 2023. The increase is due to the rising expenditure for ongoing projects which are close to being ready for series production. Depreciation and amortization of capitalized development costs amounted to 427 million euros. Let's move on to the outlook for 2023. Porsche AG Group continues to be confronted with a challenging macroeconomic environment. challenges in securing supply chains and parts supply, as well as generally rising cost levels and various geopolitical tensions. At the same time, the Porsche AG Group is investing extensively in its development, innovations, and the entire Porsche ecosystem of future products and services. Despite a challenging overall global situation, the Porsche AG Group confirms its forecast for the full year 2023, published in the Combined Management Report, also regarding the conditions, provided that the global and supply situation does not deteriorate significantly. 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%. 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 percent and an automotive EBITDA margin between 25 and 27 percent. As part of the 2023 sales forecast, the company expects fully electrified vehicles to account for up to 12 to 14% of total new vehicles delivered to customers. However, this target requires a far better supply situation for Taycan in the second half of 2023. Thank you very much for your attention. We are very much looking forward to answering your questions now.