Dr Ing H C F Prsche U/Adr

Ladies and gentlemen, thank you for standing by. Welcome and thank you for participating in the media analyst and investor call regarding Porsche AG's Q3 2026 results. This call will be hosted by Dr. Jochen Breckner, member of the Executive Board of Frau Finance and IT. During the intro statement at the beginning of our call, all participants will be in the listen-only mode. After the intro, we will jump into the question and answer session. Anyone who wishes to ask a question may press star and 1. At this time, it's my pleasure to hand over to Björn Scheib, Head of Investor Relations. Please go ahead, sir.

Thank you very much and good morning to everyone. This is our media and analyst call of Porsche AG on the Q3 2026 results. My name is Bjorn Scheib and I am the Head of Investor Relations and with me today is Anja Wassertheurer, our Director of Corporate and Product Communications. Before our CFO Jochen Bregner will give you an overview of our business performance in the first 9 months of 2026, just a couple of words on the procedure. After the intro statement by Jochen, we will start the Q&A session with the analysts. Our separate Q&A session for journalists will be held in German and start at 9 am CET. You can find further detailed information online in the Porsche newsroom as well as on the Investor Relations website. And as always, we would like to remind you that all forward-looking statements are subject to the risks and uncertainties mentioned in the Safe Harbor Statement in our documents.

And with that, I hand over to Jochen. Jochen, thank you very much. Good morning everyone on this call. Ladies and gentlemen, warm welcome. And thanks for joining us today for Analysts, Investors and Media Conference. As outlined at our Capital Markets Day three weeks ago, we continue to execute our strategy Spottwagen Schmiede 35 with clear focus and discipline. And we are beginning to see the first benefits in our financial performance. We are sharpening our product portfolio and focusing on our core business. We are improving our cost structure and reducing capital intensity. We continue to sharpen our focus on the core business and have reached two important milestones. First, the divestments of our stakes in Bugatti Rimaz and Rimaz Group were completed in the third quarter. Second, a sale agreement and foundation of a strategic partnership for MHP has been signed. At the same time, we delivered a solid operating result and generated strong net cash flow in the first nine months, despite the challenging market environment. Combined with a strong balance sheet, this gives us the financial resilience and the strength to continue executing our strategy with discipline. And we confirm our outlook for the full year 2026. Let me now turn to our financial performance in the third quarter and the first nine months of 2026 in more detail. Looking at the first nine months of this year, Group revenue came in at 25.3 billion euros, down approximately 6% year on year. While vehicle sales were lower, strong pricing and positive mix effects continue to support the quality of our revenues. This results in a significantly more resilient revenue development compared with unit sales. And this reflects the strength of our value over volume approach, our pricing discipline and the quality of our sales mix. At the same time, our geographically balanced sales footprint continues to provide resilience across different markets. As you know, we have significantly reduced our exposure to China. This makes our overall business less dependent on developments from this challenging market environment. With the successful launch of the all-electric Cayenne, BEVs account for 22% of our vehicle sales year to date. Automotive revenues per vehicle sold increased to around 126,000 euros. This is an increase of approximately 6,000 euros against last year. In addition, revenues in the financial services segment continue to grow. Ladies and gentlemen, you also know that we maintain to operate in a challenging cost environment. This is characterized by inflationary pressures, costs associated with the slower transition to electric mobility and elevated development expenses and depreciation. Despite these headwinds, we've made tangible progress on costs. The disciplined execution of our push-to-pass performance program contributed to a reduction in our underlying cost base. Turning to cost of sales. In the first nine months of this year, cost of sales declined by €3.2 billion to €20.4 billion. This development mainly reflects substantially lower expenses related to our strategic realignment. And it includes the release of provisions following successful negotiations in connection with the realignment of our product strategy. This improvement was also clearly visible in the third quarter. Cost of sales declined by approximately 2.2 billion to 6.6 billion euros. Strategic realignment expenses amounted to around 300 million euros, mainly related to the Zukunftspaket. Compared to this, in Q3 last year the expenses in connection with the strategic realignment measures amounted approximately 1.9 billion euros. Overall, we achieved a clear improvement in profitability. For the first nine months, group operating profit reached 1.7 billion euros, up significantly from 40 million euros last year, resulting in an operating return on sales of 6.9%. This development was also reflected in our third quarter performance. Strong pricing and mix, improved cost of sales and substantially lower strategic realignment expenses supported an operating profit of 387 million euros and an operating return on sales of 4.8%. What is also important, we continue to deliver strong cash conversion reflecting our disciplined approach to capital allocation and cash management. In the first nine months of 2026, automotive net cash flow increased significantly to 2.5 billion euros. This corresponds to a strong net cash flow margin of 11.3%, compared with 5.6% last year. This increase was supported by lower cash outflows from investing activities and, in particular, the proceeds from the completed Bugatti Rimaz and Rimaz Group transactions. This strong cash generation continued in the third quarter. Automotive net cash flow increased significantly to around 1.5 billion euros. This includes a net extraordinary cash contribution of around 500 million euros, mainly related to the more than 900 million euros from mainly Bugatti rematch transactions. On the other hand, this was partly offset by cash outflows for the strategic realignment and pension contributions. Excluding these extraordinary effects, automotive net cash flow remained broadly in line with the prior year quarter. Now this brings me to our capital allocation. We remain disciplined in our investment approach and continue to focus resources on strategic priorities. Year to date, capex amounted to 1.2 billion euros, including around 300 million euros of license payments to Audi, slightly below the prior year level. We also continue to manage R&D spending with discipline. R&D expenditures decreased to 1.5 billion euros year-to-date compared with 1.8 billion last year. At the same time, we maintained our conservative R&D accounting approach with a capitalization rate of around 43% year-to-date. This continues to support the quality and sustainability of our earnings and cash flow generation. This is fully aligned with the directions we outlined at our Capital Markets Day. Our strategy, Sportbank Schmiede 35, is about stronger cash generation and a structurally more capital-efficient business model. We are becoming more focused and disciplined in how we allocate capital. But let me be clear, this is not about investing less. It's about investing better. We will continue to invest in our products, technologies and innovation leadership. But with an even sharper focus on value creation, capital efficiency and returns. As a result, automotive net liquidity stood at 8.2 billion euros at the end of Q3. With this, we see Porsche in a very strong financial position. Our healthy balance sheet gives us both the resilience to execute our transformation and the financial flexibility to continue investing in Porsche's future. With that, let me turn to the outlook. Again, first and foremost, despite the continued challenging market environment, geopolitical uncertainties and external headwinds, we confirm our guidance for the full year 2026. Our guiding principle remains unchanged. Value over volume. Vehicle sales are expected to decline significantly compared with 2025 due to several reasons. The phase-out of the 718 and the IS Macan model lines. Base effects, especially from the first full BEV Macan year 2025. The impact of changes to US tax incentives on demand for electric vehicles, as well as our conservative outlook for the Chinese market. Based on our current assumptions, second half volumes are expected to be broadly in line with first half levels. At the same time, the ramp up of the all-electric Cayenne is expected to drive a significantly higher BEV share in the second half of the year. We continue to expect a group operating return on sales of 5.5 to 7.5% for the full year. As I previously outlined, our profitability guidance includes approximately 8 to 900 million euros of net extraordinary burdens related to our strategic realignment. With this, let us turn to cash flow. We continue to expect an automotive net cash flow margin of 5.5 to 7.5%. This includes several extraordinary effects. First, around 1.3 billion euros of cash outflows related to the strategic realignment. This includes the Audi license payment in the high triple digit million euro range. Second, around 500 million euros of pension contributions. And third, around 900 million euros of net cash flow relevant inflows related to the Bugatti-Riemann transactions. Together, these extraordinary items are expected to result in a net cash outflow of around 900 million to a billion euros. Now let me come to the end with following conclusion. Overall, we remain firmly on track with the execution of our strategic and financial priorities. While the environment remains challenging, our focus is clear. Strengthening profitability, improving cash generation, and building a more capital efficient spot Wagensmiede. With that, after a short break, I look forward to your questions. Thank you very much.