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Good morning. This is the conference operator. Welcome and thank you for joining the Forvia 2025 first quarter sales results conference call and webcast. As a reminder, all participants are in listen-only mode. 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 the 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 and good morning, everyone. Thanks for joining us today. I wanted to be with you today to share some opening thoughts and my convictions. Olivier will then present the Q1 sales performance in detail before we will both answer your questions. Let me start by saying that despite a global environment that remains challenging, for we have delivered a very solid sales performance this past quarter. We have accomplished organic growth of 2.1% and an outperformance of 80 basis points, despite a strongly unfavorable geomix. This demonstrates our robust market positioning and the dedication of our entire team. Looking ahead, we'll continue to navigate particularly uncertain times. So it's only natural to ask the important questions. Where's the industry heading? How resilient is for we as a business? What is for we are putting in place to protect its performance? In my longstanding career in this industry, I've already seen a few cycles and a variety of storms as well. And what I'm truly convinced of is the need to remain pragmatic and agile. We need to focus on what's within our control And that's exactly what we're doing these days. Right now, our focus is on three key areas, operational excellence, tariffs, and the balance sheet. And these measures that we are taking are designed to safeguard our business and position us for sustainable success moving forward. So let me first and foremost talk about the operational excellence. I am challenging the organization these days to step up our operational excellence and to conserve all costs across the board that is possible. The attitude is we can always do more. In Q1 specifically, we progressed on our EU Forward initiative, which is designed to enhance the company's long-term competitiveness in the European market. This plan is well on track. New operations represented approximately 1,100 redundancies that we announced, and it is adding to the approximately 2,900 headcount reductions from 2024. With this, our annualized savings target of 300 million is confirmed by the end of 2025. This past quarter for VRN has intensified efficiency efforts at underperforming plants with interiors in North America. As reported before, they have been impacted by several complex production launches in 2024, and I am leading a dedicated task force to turn around this business. Improvements are happening through reinforcing the local leadership, through the strict application of the for-via accident system, and faster scrap reductions. Second important point, the U.S. tariffs. The potential implementation of tariffs has been a longstanding concern for the industry, but we have taken effective steps to address them. To date, we have already mitigated about 50% of the estimated exposure, and we are on track to cover the remaining. The mitigation measures we take include pass-through agreements, the optimization of our supply chain, and negotiations with suppliers. And should need errors be enacted in future, we will deploy exactly the same approach with the same objectives. Together with our customers, we will also make sure to optimize our available plant capacity in the U.S. To anticipate the risks of volume pressure and to overcome potential consequences, we are maximizing flexibility in direct production costs. Also, we are implementing additional fixed cost reductions and we further limit our investments, prioritizing CapEx efficiency. Last but not least, our balance sheet. You have observed in Q1, we have successfully refinanced several of our upcoming maturities, pushing key deadlines out to 2027. This gives us the flexibility and a longer runway to manage our financial obligations. As you know, on top of that, Our liquidity is robust, which is a great asset in today's uncertain environment. So let me conclude this first section with confirming our guidance. All these efficiency measures that we are implementing and the round-the-clock commitment of our teams enable us to safeguard our performance in the current market challenges, and we will achieve our full-year targets. Olivier will come back in the next step on the confirmation of our 2025 guidance in further detail. Olivier, please go ahead.

Thank you, Martin. Good morning, ladies and gentlemen. I would like to briefly give you more colors on our Q1 performance, starting with the revenues. In this respect, we had a good start of the year, as Martin said. We recorded sales of 6.7 billion euros. up 2.6% compared to Q1-24, which came out ahead of our initial forecast. Inside this number, the organic growth, i.e., excluding forex and scope, was up 2.1% in the period. This was driven by seeding, which benefited from acceleration of programs launched in Q1-24, notably in Europe, as well as strong sales development with BYD that recorded a strong production increase in Q1. The electronics business grew at double digits and surpassed volume production in all regions. Its momentum is also reflected in the order intake, as electronics accounted for nearly 40% of the business awards we got in Q1. Interiors recorded light growth being penalized by strong comparables from last year, given the level of tooling cells in the context of the high level of production launches that we had a year ago, as you know. On the other side, clean mobility cells were down 7.4% on an organic basis. The decline was contained in North America and in China and was more pronounced in Europe as activity was penalized by the commercial vehicle segment, as well as the small disposal of first engineering, which was closed in Q2 of 24. Sales in 19 were penalized by the end of production with a major U.S. carmaker in China and in the U.S., while sales were up in Europe. And finally, life cycle solutions continue to be impacted by the underinvestment in segments such as agriculture and construction. On the foreign exchange level, we had a small tailwind in Q1 related to the beginning of the year appreciation of the U.S. dollar and the RAND. As you know, this movement of currency has reversed in the past few weeks. So we can expect under today's exchange rate, in particular for those currencies, that the impact of currencies would be negative for the rest of the year. If I turn now to the perspective in revenues by region on our Q1 sales performance. We recorded organic growth in all regions in Tuan, with one exception in North America, where sales were down mid-single digits, which is related in particular to the level of cooling sales I mentioned, which concerns interior North America, and in particular interior Mexico in the beginning of last year. Europe has a strong start to the year. All divisions except in mobility posted growths. resulting in a significant outperformance of more than 10% versus market. Cities and electronics were particularly dynamic, benefiting from their strong market positioning, and some projects ramped up. Europe was driving the outperformance of 80 basic points that we achieved at group level in Q1, which in fact is quite a good performance considering that the geographical mix that we have was a headwind of more than 400 daily points. In this context, China posted an organic sales growth of 2.6%. Its performance was a mix of strong growth with Chinese OEMs, now representing more than half of the group sales in the country. and continued sales decline with international OEMs that, as you know, are losing market share. Given our customer mix, our sales didn't match the speed of the market in Q1. But considering the pipeline of a dozen of startup productions, mostly with Chinese OEMs, and the acceleration of already launched programs, in particular with Sherry, we confirm our ambition to outperform the market in Q25 most, in fact, concentrating on H2. Finally, on the Asia region, I would like to highlight that we have a double-digit growth in the rest of Asia, i.e., Asia excluding China, which is driven by strong momentum with our Japanese OEM in the electronic field. Now, coming back to the balance sheet and the maturities of our debts that Martin alluded to, you can see on this slide the activities that we had in the period. We have done two refinancing, one in Eurobonds and another one in the U.S. bond market, which improved our debt profile and reflected the market trust in Corvia Signature. Specifically, we issued a total of more than 1.2 billion euros of that in the period. A classic 750 million euro senior note due 2013, which is at 5.47% including the pre-edge arrangement that we had, which was significantly oversubscribed. And our first issuance in the U.S. dollar bond market for 500 million U.S. dollars due also in 2030 with a coupon of 8%, which represents a good diversification of our funding sources for the future and replaced financing that was actually above 8% given what we had before. All those proceeds are used to repay short-term maturities and allow to clearly clear our 26 maturities Let me remind that 25 maturities are, of course, already cleared, and extend our average maturity to 3.4 years on the pro forma basis compared to 3.1 years at the end of 2024. Our next significant maturities are now due in February 2017. As Martin mentioned, we do confirm our 2025 guidance. Yesterday, S&P released its monthly estimate update. It shows a significant correction of the level of production expected for 2025 as a consequence of the U.S. tariffs from 89.5 to 87.9 million vehicles for the year. It means that the global production, which was previously expected to be overall stable, is now expected to decline by 1.7%. Most of this division, of course, is attributable to North America production locations. Considering our regional exposure, the expected cuts as envisaged by S&P, will represent an impact of around a bit over €200 million on our 25 sales. Given the solid start of the year, above initial expectations, and the large and cautious range we took for our annual 25 sales guidance, we confirmed our sales guidance, provided that there is no other major disruption in our key markets. Let me highlight in this context that the guidance has been given and reiterated as constant exchange rates. As for operating margin and net cash flow, Martin explained all the efficiency measures that are being implemented, not only for mitigation of the tariffs, but also for improvement in the performance, in particular in areas that have been underperforming in the past. These measures are designed to calibrate and calibrated to safeguard our 25 performance and show improvement compared to last year. We therefore confirm our objectives, an operating margin between 5.2 and 6% of sales, a net cash flow at least at the level of last year, i.e. at least 655 million euros, an organic damage rating of at least 20 basic points to 1.8 times, or below at the end of this year. Finally, Forvia continues to make progress on the front of disposals and stay fully committed to restore a solid balance sheet and reduce its leverage, i.e., net depth to adjust EBDA ratio to below 1.5 times by the end of this year.

Thank you, Olivier. Thank you. Let me wrap up this Q1 presentation with an update on the three strategic priorities I laid out during our February call. It's performance, transformation, and culture, as you remember. So best-in-class performance, which will lead to deep leveraging our company. We posted a solid Q1 sales performance, first of all. And the actions on operational excellence, cost savings, and cash generation are already yielding results. Number two is business transformation, meaning we will from now on focus on our core portfolio. As on the VSS, the disposal processes of assets are ongoing. It is a key priority to lay the foundation for a more profitable future. And at the same time, we are actively building a long-term value creation strategy on the core portfolio. This one we will present during our capital market stage. The dates for that market day will be announced when we present our half-year results on July 28th. And finally, invigorating our culture, I am preparing for a simplified structure and operational model with clear P&L responsibilities and streamlined decision-making. This one I intend to present during our H1 results call. So, looking beyond Qual1, I... I want to emphasize that we are not merely focused on managing short-term challenges. We are also building long-term momentum. Working consequently on these three priorities, performance, transformation, and culture, we are laying the groundwork to position VIA for sustainable growth. With that, I want to open the floor for your questions.

Excuse me, this is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. To remove yourself from the question queue, please press star and 2. Please pick up the receiver when asking questions. Anyone who has a question may press star and 1 at this time. We will pause for a moment as callers join the queue. The first question comes from Christoph Laskawi with Deutsche Bank. Please go ahead.

Good morning. Thank you for taking my question. The first one would be just, could you comment please on if you saw any pre-production by the OEMs in either Europe or the US ahead of the tariffs and following on that, is the activity level that you see into Q2 basically confirming the run rate that you had in Q1 or is it slowing down the volatility is increasing and then if you could comment on potentially just the cash flow that you would expect for for h1 if you can comment already or it might be too early considering the working capital moves and then just one confirmation question um based on on your guidance So the tariffs that should come through on May 3rd, are they fully reflected in the guidance, or is that not yet, and there will be an update on those to come? Thank you.

Yeah, morning, Christoph. Thanks for being with us. Let me take your questions concerning the market, and then I would pass over to Olivier on the financial questions. First of all, what do we see right now in terms of production and call-offs? Indeed, looking into the rearview mirror, the OEMs in the U.S. have done pre-production. So we could see early in the year that they prepared for the potential tariffs coming in then, and everybody produced a bit more than was needed at the very point of the market. We have gone through that. So then how is it looking into the next months right now? we see very good stable call-offs and EDIs. There were a number of singular announcements from OEMs of plan shutdowns. You have heard about that. You have read about that. Not even all of them for the reason of tariffs. But right now, our call-offs present themselves stable. And also, some of the conversations with the OEMs show that they are not panicking. but are relatively continuous now in building vehicles. So for European OEMs in particular, that can be volumes that have been on order, and the OEMs want to execute these orders. And again, there's calm reaction to the tariff installment in the U.S. itself. So I say for now and for the first half, we see stability. S&T, with their guidance, confirms that as well. stable situations in half one, and S&P projected the 1.6 million fuel vehicles into half to May 3. And then I would like to take your question also on the tariffs as of May 3. This is still an ongoing discussion in the administration and also between the industry and the administration what to prepare for in May. So I was in the States last week and could witness firsthand what are the arguments that are being brought forward to the administration. And I sense a certain understanding that the U.S. administration knows if they want to pull out the USMCA exemption and only grant U.S. exemptions, that it would have a tremendous impact again on the industry. So as of now, we model all enacted tariffs and we are carefully observing how this may potential tariff is going to develop.

And to echo what Martin mentioned, our confirmation of guidance is on tariffs enacted, i.e. announced and implemented. And because we cannot... We cannot project what will happen in the coming weeks. Coming back to your question on the cash flow, I expect a seasonality of cash flow H1, H2, fairly similar to what we had the last two years. So H1 being lower than H2, and I would say if the activity is – which is what currently we see on H1. This is, it means a normal seasonality between the two semesters.

Thank you. The next question comes from Steven Benyam with BNP Paribas. Please go ahead.

Yes, good morning. Thanks for taking my question. I have three questions. The first one is about cost savings. So it seems that you've accelerated your efficiency program. Can you please give us more color on what we should expect in terms of additional cost savings this year as compared to what you have initially planned? I'm not sure to have well understood what Martin said about the 300 million euros of savings. The second question is about China. Is the objective of above 300 bps of outperformance in 2025 still achievable? And how confident are you to mitigate the decline of legacy OEMs in the country with greater exposure to local OEMs? And the last question is about the guidance. So you confirmed the guidance despite the lower GLVP assumptions. Does it mean that the lower end of the guidance is no more realistic or you're still comfortable with the full range of the guidance? Thank you.

Yes, Kevin, thanks for your question. Let me start on the cost savings and the mitigation of the risks that arise from the tariff side. So there's obviously the very direct tariff mitigation actions, right, where we have to pass through negotiations, where we work with the suppliers and so on. This is not enough. We want to really prepare for more risk. And that's why with these additional savings measures, we now tap into the obvious ones. So there's a strict hiring freeze implemented We significantly reduce our travel costs. Any external costs, any cash that runs out of the company is under scrutiny right now. And last but not least, also market expenses, marketing expenses are going to be reduced. We have made decisions not to go beyond the Shanghai Auto Show next week, where we will be present, but we have made the decision to cancel our IAA Munich presence in fall. and we are also not going to be at CS next January. So you can see we pull all levers there, and we pull all levers all around the world. Yes, the problem arises from the U.S. naturally, but all units are expected to contribute to these additional cost savings. How do we read them into the forecast? I mean, it's really a matter of risks and offs, and we let us confirm our guidance, and we use these additional measures to be always on the safe side. to guarantee we make our targets. And then you were asking about China outperformance. Yes, we still believe into half to China outperformance, and this is based on the new launches that we have with Chinese local OEMs, Cherry being one prominent of them, where we now have since last year a new joint venture under which we are going to launch numerous products. And this way our dependency on the Western, on the international OEMs is going to . And this is why we are confident in the half to all performance in China. And then I'd also take your third question concerning the guidance and what does that volume mean. I'm very good now that we guided in a broader range in February. And some question why you have that broad sales range. It was exactly an anticipation of that uncertainty around the tariffs. So with that, we can now say we remain in our sales band also if those 1.6 million vehicles go out according to S&P.

And just to complement what Martin mentioned, you had a question on the 300 million related to UFOs. The 300 million means annualized savings based on the headcount that will go out by the end of the year. So in other words, it's more a 26 value than a 25 value. For 25, we should have here on your savings a 120, 150, 100 million, 25 versus 24, and then a further benefit coming from the headcount. coming out this year. So the idea of the 200 million is to give you are we on track on the pace that we have to fix completely the profitability of Europe, which means an improvement of 500 million by 2018.

Thank you so much. So you've said 120 to 150 million of cost savings this year, right? Yes.

But from you forward, plug the additional measures that Martin mentioned. So, in fact, the total will be earlier than this.

Okay. Okay. Very good. Thank you so much.

As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Charles Henry with a bet. Please go ahead.

Hi, good morning. I didn't see any disclosure of order intake in the release, so if you wouldn't mind, please, giving us some clues on that. Yeah, good point, Charles.

So order intake is on track. We shoot another year for $30 billion, and the Q1 order intake is slightly above what we expected for that quarter one. And it is a good mix, again, across the regions. Also, for China, we have, again, significant order intake. So, yeah, on track. Thank you.

Once again, if you wish to ask a question, please press star and one on your telephone. The next question comes from the line of Ross McDonald with Citi. Please go ahead.

Yes, morning. Thank you for taking my questions. I have three questions, please. Firstly, Olivier, thank you for providing that color on the first half free cash flow sequencing. Would you be able to confirm if you expect first half operating margins to be within the guidance range also? And then secondly, On Europe, obviously very strong high performance in Europe. And I see S&P yesterday taking very limited cuts to the European market, I think just 12,000 units for the full year. Could you maybe talk a little bit about what you're seeing in the European market, maybe give some color on the programs within seating and electronics that are supporting that very strong growth? And then finally, just noting the performance of lifecycle solutions and clean mobility in the first quarter. Given the margin profile of those businesses, could you maybe talk a little bit about expectations moving forward for those businesses? I know some of that's linked to commercial vehicles, so any green shoots in those segments would be of interest. Thank you.

Yeah, Ross. Good morning, Martin. Thanks for pushing this question out. Let me quickly comment on the performance of lifecycle solutions and clean mobility. We see them well on track with regard to our budgeted targets. So that's good news, as you state, because those are certainly good margin contributors.

And regarding volume, clean mobility, we have a better H2 than H1 in terms of the year-on-year comparison from the benefit of the transfer activity from H2 from one customer that transferred his production capability to us. So it's an additional business that will have an impact in the volume of activity of H2, which will ensure, in fact, that the overall evolution year-on-year is better in H2 than H1. Maybe you want to continue on the financial one. So you have two other questions. One on the the European unit volume, which indeed S&P did not change materially for the year. It's probably the combination of two factors. One, which is that, yes, there is a flow of exports from the production in Europe to the U.S. market, and this one is expected to be impacted by the tariffs overall. And vice versa, I would say that the fact of the smoothing of the capture regulation over three years has enabled the car makers to have a more solid projection of activity. So I think it's the combination of the two that is leading to a net expected by SMP being flat. Now, related to our Q1, indeed, sitting and electronics are posting a good start of the year. This is related to several programs coming into play. We expect that to continue. Maybe not to the same extent, but yes. Of course, you can have a bit of a... short-term effect on the level of tooling that we are normalizing, which can play a little bit. The tooling is not the margin center of our activity. Related to operating margin, you were asking, if I understand correctly, the question whether H1 would be in the range that we gave for the guidance for the year. So let me first say that the guidance is for the year 5.2 to 6 that we expect to be within this range, but probably on the low side of this range even implementation of the cost savings action, as well as the difference in volume, including China with the Chinese New Year in Q1, which means that H2 will help more than H1.

And let's take that as the ambition, right? And that is one of the drivers for me to inspire the organization, to motivate the organization to say, push on these cost measures that I described. Let's prove that H1 can be good And then half-coup, we obviously, as Olivier said, always have a bit of a tailwind in terms of even better margins.

That's very clear. Thank you very much. Maybe one more question, if I can squeeze that in. Martin, you mentioned in your opening remarks some of the tariff mitigations. One of those was obviously reducing capex. Could you maybe talk around that? how much open road do you have to trim capex over the medium term and what regions you're making those big capex cuts given, obviously, there's potentially some need to increase capex if tariffs do come at the more hawkish end. Thank you. Yeah.

No, absolutely. That's a good point, Ross. I mean, I'll show you a number first of all. We want to go from an initial 100 million euro reduction goal from 2024 into 2025, now to 150 million reduction goal. So that's a clearly quantified target to the organization. And where we are chasing that is across the board. So when we need new equipment, we are very cautious of what we design into those equipments. We are very aware that we can repurpose existing equipment, and we are also very keen on buying equipment where it's the cheapest. It's quality, but the cheapest. So this is really for new equipment. And then we have our internal marketplace, where due to the capacity in Europe that we have open, and we run EU forward on the cost side, we look carefully also into that existing equipment. How can we use that? How can we reuse that? How can we repurpose that? How is new business, for instance, in the defense space going to be able to reutilize that CapEx that is existing? So all eyes on CapEx reduction and CapEx reutilization in the short term.

And I think potentially you have also a question about U.S. capacity utilization. we have some, I would say, possibility of a larger use of our capacity in the U.S. with the existing plants and existing footprint and capacity we have. I don't know if there are other questions. There was one question by email. Should I take it? Sure, that's correct. So the question is, what is the size of debt refinancing left for 26? And does it imply that you could still look to come to the bond market or would you use existing cash on the balance sheet? So we have 550 million remaining in terms of debt in 26. And in this context, we will continue, we will look at two things. We will continue to look at the bond market and But as we mentioned at the beginning of the year, we intend to better use the cash that we have to reduce our growth debt. The objective is utilization of 500 million for the year. And so we are focused on looking at the combination of the two options if it were possible, but privileging the cash utilization.

Ladies and gentlemen, there are no further audio questions at this time. I will now give the floor over to Mr. Martin Fisher for any closing comments. Thank you.

Yeah, thanks, everybody, for having joined this morning. In summary, good start into the year from the sales side that we reported on. It's good to have that in the back. And for the rest, I hope you sense that all efforts are there. to deliver on our committed 2025 guidance. I feel I'm having a very strong organization behind me. The sense of urgency is there. All units, all regions participate in the efforts. So I go with confidence into the next months, and I look forward to updating you again around our AGM, and then just to have one call in July. Thanks again for your attention.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect yourself.