Forvia Se Unsp/Adr

Good morning, this is the conference operator. Welcome and thank you for joining the FORVIA 2026 third quarter sales conference call and webcast. As a reminder, all participants are in listen-only mode and after the presentation there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Martin Fischer, CEO of Forvia. Please go ahead, sir.

Yeah, thank you very much. Good morning, ladies and gentlemen, and thank you for joining us today for our Q3 2026 sales call. As usual, I'm presenting together with our CFO, Olivier Durand. For the agenda today, I'll start by sharing our third quarter highlights. Then Olivier will walk you through the details of our Q3 sales. and in the end, I'll wrap up with our outlook for the full year 2026 before going into Q&A. So here we come with the three strategic priorities. The third quarter demonstrated further progress on all of them when it comes to implementing the Ignite roadmap. Despite a market environment that remains challenging, we continue to deliver. Therefore, first of all, best-in-class performance. In the third quarter, We returned to sales outperformance. We delivered around 100 basis points of growth above the market. And at the same time, we maintained disciplined execution and rigorous cost control in an inflationary environment. Second, our business transformation. With all regulatory approvals now being obtained, we are taking the final steps towards the closing of the interiors transaction in the fourth quarter. We are also actively rolling out the lighting transformation plan. And third, I would like to talk about culture. We continue to empower our teams, notably in China, so that decisions are taken close to the market and we enhance our competitiveness over there. Globally speaking, we are embedding AI at the heart of our transformation and we accelerate its responsible deployment across the organization. This commitment is reflected in the appointment of Raphael Viard to the executive committee. Raphael is reporting directly to me as Chief Digital and Artificial Intelligence Officer. Having reached all those milestones in Q3, I am happy to confirm our full year 2026 guidance. Beyond the positive Q3 sales performance, the 4VR businesses continue to build momentum across the portfolio through innovation, new partnerships, diversification, and of course commercial Vince. So when we start with our growth cluster, which means electronics and seeding, it's clear that electronics secured significant awards with two international OEMs in Europe and North America for our integrated energy core solutions. Energy core enables OEMs to simplify their electric vehicles and hybrid architecture by integrating battery management and power electronic functions into a single system. It reduces cost, weight and complexity while improving safety and efficiency. We are also happy to report major serious orders from two leading Chinese OEMs for our latest generation of 77 GHz radar. This very well highlights the competitiveness and quality of our technology in China. In seeding, we made further progress on diversification. In India, we signed a joint venture with Anand to accelerate our expansion. And in commercial vehicles, our presence at the IAA Transportation in Hanover confirmed strong customer interest in our offering. Then when we look into our value cluster, also there we continue to strengthen our position. In clean mobility, we secured further growth in North America, where the market is supportive. We booked a new mid-three-digit million-euro award for a new pickup truck from a major US automaker. Last but not least, Lifecycle Solutions broadened its aftermarket offering, notably through the launch of brake pads for commercial vehicles. This expansion creates new growth avenues across trucks, buses, and trailers. Let me now focus on China, where the automotive market is undergoing a profound transformation. Our first priority is to align our customer exposure with the evolving structure of the market. Chinese OEMs now account for around three quarters of domestic production. While they represent approximately half of our sales in China today, they already account for close to 80% of awards won in the last 24 months. This order intake also reflects a much broader customer diversification than in the past with our biggest customer representing less than 20% of the total. So we have significant new wins with customers such as Cherry, Leap Motor, Geely, and a new tech EV player. This demonstrates that we are moving rapidly in the right direction and progressively strengthen our position with the leading Chinese players. Just as importantly, We are adapting our organization to a market that is moving faster than ever. More than 1000 models were launched in China in 2025 alone. This requires shorter development cycles and more standardized solutions. That is why we are empowering our local teams and increase the use of modular product platforms across multiple programs and customers. This allows us to move faster, remain competitive, and better serve our customers. In general, we continue to deepen our relationships with Chinese OEMs through partnerships, cooperation agreements and joint ventures. Our expanded partnership with Great Wall Motors is a good example for that. It follows a similar agreement signed with Cherry last year. And these partnerships create long-term growth opportunities for Fovea. Last but not least, We are supporting these Chinese customers as they expand internationally. We started to accompany BYD in Thailand already in 2024 and will start production in Hungary in the coming months. We have already secured new opportunities with Liebmoder and CHERRY in Spain and we are also exploring further developments in Brazil. Together, these three priorities allow us to capture the continued transformation of the Chinese market while leveraging China's speed We continue to deliver EU forward. and the implementation of Simplify is progressing as planned. Second, recovering cost inflation is becoming increasingly important as inflationary pressure gains momentum. We are actively mitigating these headwinds through supply chain optimization, raw material pass-through mechanisms and ongoing customer discussions. We are particularly focused on securing appropriate compensation for memory and PCB related costs. Third point, we are maintaining a high degree of cost flexibility. In China, we continue to adapt rapidly to changes in customer demand. In Europe, we are flexing production in response to customer shutdowns when needed. Finally, the lighting transformation plan is actively being rolled out. We deploy actions to be more competitive in the volume segment through product optimization. We also launched key initiatives to improve R&D efficiency and industrial performance. In summary, I can say our teams are fully mobilized to deliver performance in the current market environment. Last but not least, I would like to talk about the upcoming closing of the interiors divestiture. Strategically, it will sharpen our focus on higher growth technologies, and it will streamline our portfolio. This is fully in line with the Ignite roadmap. Financially, it will strengthen our balance sheet and mark another important step in our deleveraging journey. Following the closing, net debt is expected to fall below €4.5 billion, compared with €6 billion at the end of 2025. Leverage is expected to move towards 1.5 times. The transaction will also manually reduce our near-term refinancing requirements with 2027 maturities largely addressed. Overall, the transaction will strengthen our financial structure and give us more flexibility to deliver our 2028 ambitions. It will also prepare us for our next strategic phase, which is lead and grow. I will now hand over to Olivier, who will take you through our third quarter sales performance in greater detail.

Olivier. Thank you, Martin, and good morning, everyone. Group sales reached 5 billion and 79 million euros in the third quarter, representing a reported growth of 1%. On an organic basis, sales are broadly stable at minus 0.6%, despite a 1.6% decrease in global automotive production this quarter. This represents an outperformance of approximately 100 basic points. It marks a notable improvement in our sales momentum when we compare with the underperformance we faced in H1. Currency movements have turned positive, contributing 1.6% to reported growth, mainly reflecting the strengthening of the RMB against the euro. Currency effects are expected to remain a tailwind in the fourth quarter. After nine months, sales reached 15.6 billion euros on a reported basis and 15.8 billion at constant currencies. If I turn now to the growth cluster, sales amounted to 2 billion 637 million euros corresponding to an organic decline of 1% and a slight outperformance versus production volumes. Electronics continue to deliver strong growth with an organic evolution of 7%. This performance was driven by sustained demand for radar technologies and energy management solutions, particularly in Europe where electrification is accelerating. Seating recorded an organic decline of 4.4%. The underlying trend improved comparatively to the first half, supported by solid growth in Europe and Gradual Progress in China. The overall picture for the cluster is therefore encouraging, electronics being a strong growth driver for the group, while sitting is progressively moving towards a more favorable sales trajectory. If I move now to the value cluster, sales reached 2,442,000,000 euros, and were broadly stable organically, outperforming the global automotive production. Clarion delivered another strong quarter with organic growth of 22%, supported by continued commercial success with Japanese OEMs. Life cycle grew by 3.8%, benefiting from robust activity in the special original equipment business and continued growth in the aftermarket side. Clean mobility declined by 3%. The strong growth in North America has partly offset the impact of rapid electrification in China, while the European business has proved resilient thanks to market share gains. Lighting declined by 7.8%, broadly in line with the expected trajectory towards stabilization in 27. Overall, the value cluster demonstrated good resilience, with the strengths of Clarion and Lifecycle Solutions, largely offsetting the decline in lighting. Let me turn now to our regional sales performance. The picture is broadly positive, with strong market outperformance across most key regions. In Europe, organic sales grew by 4%, outperforming In Asia, excluding China, which now represent 8% of our turnover, organic sales increased by 14%. It represents 7 percentage points of our performance, driven in particular by Clarion. In China, we saw gradual improvement in Q3, supported by BYD recovery and our increasing customer diversification. Our underperformance, therefore, narrowed to 11 percentage points from 14 points that we faced in H1. Overall, the quarter showed better momentum with encouraging progress across several areas. Martin, I'll let you do the outlook.