Forvia Se

Good morning, this is the conference operator. Welcome, and thank you for joining the Forvia 2026 Q1 sales conference call. 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 their telephone. At this time, I would like to turn the conference over to Mr. Martin Fisher, Chief Executive Officer of Forvia. Please go ahead, sir.

Yes, thank you very much, and good morning, ladies and gentlemen. Thank you for joining us today for our Q1 2026 sales call, which I am presenting as usual together with our CFO, Olivier Durand. I'll start by sharing our first quarter highlights, and then Olivier will walk you through the details of Q1 sales. In the end, I'll wrap up with the outlook for the full year 2026. So let's get started looking at our three strategic priorities. We started executing on our Ignite program that we presented at CMD, and I am pleased to report progress in all three priorities that support the plan. So let's start off with performance. In the current situation, our business portfolio proves to be really resilient because we are in a context of declining market volumes across all regions, and we experience unfavorable customer mix. You'll be seeing from Olivier's presentations how our sales hold up. Also, we continue to manage our business with discipline in terms of fixed cost reduction and offsetting our cost inflation. Second pillar, transformation. We make further progress when it comes to the interiors divestitures, which we expect to materialize in the near future. And also, we expect the metrics of the deal to be in line with what we presented at CMD We heard about the net debt reduction of 1 billion euro and a gross debt effect of expected to be 1.4 billion euro. The second one that has been very important over the last months is the attention of the HALA leadership team to the lighting turnaround, both in terms of top and bottom line. And I will explain more details in just a moment. Last but not least, invigorating our culture. Also here, good progress. Our project Simplify is on track. the processes are being streamlined and waste is being taken out. Here, our finance team around Olivier sets a strong example by simplifying our reporting week over week, month over month, and by taking unnecessary loops out of our approval processes. Along the same lines, we have also eliminated layers out of our organization and we optimized the span of control of our leaders. Last but not least, We also push our new leadership model, Guide and Power Recognize. The new management principles and the behaviors that go with it are now being out by leaders that are getting into trainers' roles. So that turns out to be very effective in terms of driving that culture throughout the entire organization. SNLs at CMD, we target geographic and customer mix expansion to drive the scale of our strong businesses. And here are some important wins that I want to report out from the first quarter. Looking at India, our objective remains to double the sales by 2030 from the $0.45 billion that we had in 2025. And the first very good award to mention is seeding. Remember, we have already been present in selling and building mechanisms in India, and now we have secured the first major complete seat program with an international OEM in the Chennai region. Also, in the clean mobility business group, we can report two exhaust system wins. One is for a Korean OEM, and a second one is for Mahindra in India, And the latter one is particularly positive because it's in the commercial vehicle segment. So we have basically a double diversification, once into India and again into the commercial vehicle segment as well. Looking into China, we keep diversifying our customer base with significant orders from six major Chinese OEMs. And I want to give you a couple of examples. So we secured lighting business with Geely. feeding business with Shangan, and various businesses in Cherry. And Cherry is going to take us both for their Chinese operations and their new operations in Spain. In fact, we just signed another strategic cooperation agreement with Cherry that is now expanding the scope of our collaboration also to the Hela businesses of electronics and lifecycle solutions. Third column here, let's Focus on the product side. We scored with interior monitoring systems, which we explained to be an important element of our in-cabin electronics and therefore belongs to our free growth drivers in electronics. So here we secured two contracts, both for a major OEM in Europe and another one in the United States. I can say Ignite is on the move, and the growth drivers that we presented at the CMD started to materialize in the quarter one order intake. Let's have a look at the transformation program in lighting. Hella4via is and remains the undisputed tech leader with a complete product range. However, the organic sales declined by around 7% in Q1, 2026, extending the trend that was observed since H2, 2024. And this development has obviously implications on profitability as well. The transformation program that we started is now under implementation with the new management. You got to know Peter Leier, the new Hella CEO during CMD, and Juan Mola joined as the new management board member in charge of lighting since March the 1st. He comes in with a broad experience in automotive lighting and puts that to work right away. The program that he is pursuing is built on two pillars. We want to drive top-line growth, and that is enabled by streamlining our cost base. So first of all, we can leverage our premium tech position, and then we reposition the business to address the volume segment and to further diversify the client base. All this is, as I said, strongly enabled through a performance plan that optimizes both the R&D cost and the plant performance. We had in Q1 already again, we reported out also for Q4 last year, we had again key awards for headlamp packages, and these are reflective of mass market models, both in the United States and in Europe, as well as 4GV. So we can confirm the effectiveness of the approach already through these order intakes. We will be seeing a progressive recovery across the business, and beginning with H2 2026, we'll also see that in the bottom line. Today is, in fact, the first time that we structure our actual numbers into growth and value clusters. And I just want to briefly remind you what we have done. We structured the portfolio into growth and value divisions. So on the growth side, we have electronics and feeding. Remember, those are well-growing market segments, and we have strong positions with a good right to win. So for electronics and feeding, the priorities are to lead through technology, intensify the growth through diversifying the customer base, and work with partners to also push growth forward. So on that side, we are ready to invest in a disciplined manner. And then on the other hand, There's a good complement in the value cluster where we collect clean mobility, lifecycle solutions, lighting, and clarion. And the focus clearly goes towards performance, cash, and value generation. So clean mobility, lifecycle solutions remain to stand for an outstanding cash quality. And with lighting and clarion, we are in turnarounds with subsequent growth opportunities. So again, this segmentation gives us clarity and focus for our future capital allocation and therefore also for an optimized value creation. So with this structure in mind, I would like to hand over to Olivier for the Q1 sales presentation.

Thank you, Martin, and good morning to everyone. In the next few minutes, I will show you the main Q1 performance takeaways. But let me start by a reminder that all the numbers that we are showing are under the application of the IFRS 5 accounting standards, which is requiring, in fact, the reclassification of Interior as discontinued activity, given the planned diversification that we are into. So, consequently, The Q1 sales that we are showing, whether it is for 25 retrospectively or 26, are presented without interiors. Moving to the numbers themselves, we report first quarter sales of 5,135,000,000 euros. This is fully in line with our full year guidance of 20 to 21 billion euros at constant exchange rate. and it's confirming a solid start of the year. The Q1 numbers includes a significant forex exchange headwind of 4.3%, which is primarily driven by the depreciation of the U.S. dollar, the renminbi, and the yen compared to Q1-25. Now, we expect, given the evolution of exchange rates, that those currency effects will ease significantly in the second quarter. And let me remind you that, in fact, our business operates basically locally. We buy and sell basically the same currencies. So, therefore, changes in currencies have very limited impact on margin. Now, on an organic basis, sales have been lowered by 2.2%, which compares favorably to the underlying automotive market volume, which has been estimated to be down by 3.4%. with the major regions impacting contraction. So in short, we have achieved an outperformance of 120 basic points in the first quarter. Now looking at the performance by region, Forvia delivered growth and outperformance across all geographies, with the exception of China. In Europe, our growth was primarily driven by electronics, Clarion, and clean mobility, reflecting both solid commercial momentum and a favorable product mix. In North America, we also recorded strong dynamics, particularly in electronics and clean mobility, given the evolution in terms of electrification. Asia presents a more contrasted feature, On the one hand, in China, we recorded an underperformance of 14 points versus market volume, probably driven by our customer mix with the 30% decline of BYD production. BYD volumes are expected to stabilize from the second quarter, and we have already taken the necessary measures to adapt our cost base and protect our performance in the country and we continue the diversification of our presence in China. On the other hand, we continue to expand in the rest of this big region with an increase of 11 points year-on-year, supported by a very solid quarter in electronics and clarion, and to a third extent in seating. As you know, we have big ambition in the region, in particular with the development of India. Now I will move, in fact, to the performance by businesses, starting with the growth cluster. As Martin mentioned earlier, the group strategy is now built around two clusters with a different capital allocation accordingly, value and growth. We have updated as a consequence our presentation of sales and you will see in the final shows in the semi-annual and annual results also the totality of the presentation adjusted for this. ELA Electronics and Clarion are no longer reported as a single segment given the different approach taken for the different parts of the business. The Ella Electronics business has been allocated to the Growth Cluster and named Electronics. Clarion has been allocated to the Valley Cluster and will be shown in the next page. So now on the Growth Cluster, as throughout 25, Electronics remained a key growth driver for the group in Q1, delivering 8.2% organic growth, i.e. more than 10% outperformance versus the market, well balanced across Europe, North America, and Asia. Performance was driven by radar sensors, energy management components, and low voltage management systems. Looking at sittings, the organic sales decline of 11%, which was expected, was essentially driven by the unfavorable customer mix in China that I mentioned earlier. we expect a gradual improvement over the year. In all, the organic evolution of this cluster, which stood at 5.8% negative in Q1, will also improve in the next quarter, given the evolution in seeding and the continuation of the growth in electronics. Moving on to the value cluster, sales increased by 2.1% in the quarter on an organic basis, which is a good performance clearly compared to market volume, which I remind you were lower in Q1. Our two strong cash contributors, Clean Mobility and Life Cycle Solutions, both delivered a solid start of the year. Clean Mobility continues to benefit from renewed opportunities in the ICE segment in North America, as well as the ongoing ramp-up of a business takeover that we did last year in Europe, which annualized in the second quarter. Lifecycle Solutions delivered strong growth, driven by solid performance in specialty original equipment markets, notably in trucks, buses, and agriculture. Activity was also supported by the expansion of its spare parts offering to the thermal management business. Looking at the two other activities, we have a mixed picture. Lighting recorded a sales decline of 7.3% organically in Q1 as the business continues to reposition its product offering and strengthen its competitiveness to return to growth, as highlighted by Martin earlier on. Conversely, Clarion recorded a major double-digit growth across all regions, primarily driven by Japanese OEMs. Now, let me go a bit further on the progress of our interiors diversification. As Martin alluded to, discussions with several buyers for the sale of our entire business have kept processing with terms fully in line with what we shared and committed at the CMD. We confirmed an expected net net production of at least $1 billion. And given the cash position of certain subsidiaries within this business group and the simplification from the cash management that this operation will entail, we expect the gross debt reduction actually to exceed 1.4 billion euros. And this is the relevant metric when we consider the reduction in financial costs because it will allow to eliminate, in fact, gross debt at this level. On a run rate basis, we expect the transaction to allow a reduction of 50 to 70 million euros in financial expenses on an annual basis, i.e. starting from next year. Combined with the expected organic cash flow generation in 26, we expect the net debt reduction to get to a situation of 4.5 billion at your end, i.e. a reduction year-on-year of 1.5 billion euros. This will support the restoration of the four-year financial structure with a leverage ratio at 1.5 times at the end of the year, i.e. a division of the leverage by two compared to the time of the acquisition and the same in terms of net debt evolution. And on these notes, I turn back to Martin. Thank you, Olivier.