HELLA GmbH & Co. KGaA

Good morning, ladies and gentlemen, and welcome to the Hella Investor Call for the Hella Annual Results Fiscal Year 2025. The call will be hosted by Professor Peter Leier, the CEO, and Philippe Vinay, the CFO. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Professor Leier.

Yeah, good morning everybody and a warm welcome in the name of Philippinea and myself to our 2025 results call. We go at first through the presentation, if you can go to the next slide. With the following agenda, we would like to talk first about achievements in 2025. Then Philippe will have a look to the financial results in 2025 more in detail and will talk about the outlook for financial year 2026. Then I will talk about the strategic priorities for 2026 and the key takeaways and after that we will come to questions. Yeah, let me first talk about achievements in 2025. We had seen an increase of profitability in 2025 and a flattish development of sales, excluding FX, where we ended up with 8.017 billion euro sales. If we consider FX then we have a reduction of sales of 2.1% to 7.855. Our growth continues in electronics, where we grow by 6.9% to more than 3.2 billion, specifically driven by products like radar sensors, battery management systems, car access systems and others. And it's important to say we grow in electronics in all regions. On the other side, lighting sales, our other business group has dropped down in 2025 in comparison to 2024 by 8.2% to a little bit more than 3.6 billion euro. That is related to some phase-out of high volume programs and only partially compensated by new ramp-ups of new business. Our third business group, Lifecycle Solutions, had a reduction of sales of 3.6% down to 975 million, mainly impacted by a declining market of key customer groups like commercial vehicles or off-highway products. Here we had two different half years, the first half year 2025 was characterized by market environment, while the second half year already shows improvement. Yeah, with the Scottish sales, we have operating margin improvement increased to 6%, that means increase of round about 50 basis points. That is the result of an acceleration of our cost reduction measures. We had for example a contribution from restructuring of around 60 million in the OI margin and as well the focus on on R&D expenses by a reduction to 9.3% of revenue R&D expenses on improvement of nearly 70 basis points drove the operating margin improvement. Next slide. Yeah, based on the operating income margin improvement, we had as well a significant improvement of our net cash flow. It increased by 68% to 318 million, prior year was 189. That means our net cash flow to sales ratio increased from 2.4 to 4%. That has to do on the one side with increased funds from operations, but on the other side as well, the strong optimization on CapEx. Related to that, we have a net income of 93 million in 2025. significant difference to prior year, where we were at 371 million, but this 371 million included a book gain of 116 million by the sales of shares of Invest. And we have, for sure, with fracturing costs in there, based on the 93 million net income, we decided to continue with our established dividend policy of on about 30 percent of the net income and based on that we propose to the AGM which will take place on April 30th 22 cents per share as a dividend that means a total payout of around about 24 million. Next slide. Another important figure for 2025 was our order intake. Again, strong order intake in 2025 on the same level as 2024, 10 billion order intake. I think remarkable is that we have more than 50, in detail, 52% order intake from Asia Pacific and North and South America, so non-European regions. which we have identified as a growth arena and we execute now the acquisition as well in that regard to grow specifically in APEC and North and South America. Our growth specifically in electronics will continue over 60% of the acquisition of the 10 billion came out of electronics and here specifically out of our innovation fields. like for example, solar modules, intelligent power distribution modules, smart car access or our radar sensors. And in addition, 18% of our acquisitions in the last year came from Chinese, Japanese, Korean and Indian OEMs, which is another growth arena, which we have identified. For example, over 1 billion of this 18% are coming from Chinese customers, which is showing that we are growing here in this market as well in the future. Next one. Some further highlights of 2025 to show that we are on a strong path to confirm our technological leadership. You see here on the left side that we showed on several areas, for example, in Auto Shanghai, some premieres, for example, our integrated ICON-F ASIC, which is an electronic fuse, the highly integrated electronic circuit module. We showed our next generation four wave 7E radar sensor, and we showed sustainable headlamps and rear lamps so that we have here strong new products in our portfolio. That led to prestigious awards, specifically in China, where we, for example, got the Silu Awards for sustainable exterior lighting, presented by a media group in China, or we got the Gasco Awards for Kofi's interior lighting. or we got for ICON-F our E-Fuses Development and Innovation Award and the Golden Ball Award. So all of that is showing that our innovations are as well highly recognized in China and that will lead in 2026 to further business fits. In regard of lighting, we had a debut of our micro matrix flat lighting as a daylight running light. Introduced last year on the rear lamp side and last year on the rear lamp side and last year on the front lamp side. And that significant innovation on the lighting side led them as well to a Klepper Innovation Award where we are specifically proud about in November 2025. Intelligent power distribution management was launched into production as a first kind of product and that is important because it's a fair operation of power supply in the vehicle which is needed specifically for the new architectures and the new safety regulations in vehicles and the same is valid for our intelligent e-fuses. Next. With that handing over to Philippe to talk briefly about our financial results.

Yeah, so in terms of sales, so we are, sales are relatively stable if we exclude the FX impact. So you see we have published 7.8 billion of sales of which 154 is related to FX impact, so relatively stable. And again, this is combining sales including electronic as it was already mentioned on several segments in radar, car access system and battery management system. when life cycle was relatively stable when mining was also down versus last year due to several projects which are ramping down in most integer. So lighting specifically, here lighting is excluding FX rates at 6.7% down in terms of sales at 3.6 billion. Operating margin at 2.9 versus 3.4. So here again, we have suffered from various large programs which have run down, especially in Asia, and not fully offset by ramp up in North America or in Europe with other programs. So the volume has impacted the gross margin, not fully offset by fixed cost reduction, but we were able to reduce the SG&A and R&D, offsetting a bit this impact from the volume to leading us to the 2.9% operating margin. Going to electronic, without exchange rate impact, the electronic grew by 8.7%, 3.2 billion, with an operating margin of 7.8%, 6.9 last year. So here we are benefiting from the volume increase and the sales increase. And we have also been, in electronic, able to reduce the R&D cost also in the DNA, so this is leading to the strong improvement in the revenue margin for electronic. Life cycle, so minus 0.6% on sales, which is mostly coming from H1, especially on the commercial vehicle linked to agriculture and the construction business. H2 was back to a more stable sales or even slight increase versus last year. But we know also it's sales production and leading to an operating margin of 11.1% versus 9.6%. So here also we have some benefit of the restructuring and cost down that were implemented already during the year. And we also have the profit of building sales that is counting for 7 billion in this result. So the full P&L, so here we have the sales decreasing by 2%, gross margin, gross profit at 23%, that is 22.2%. So here we have a slight decrease in the gross profit again, the volume was not fully offset at the gross profit level by fixed cost reduction. So this is coming from rating. We have also suffered from some guaranteed costs that were already highlighted in previous calls. We have been able to reduce the R&D cost, so 9.3% versus 10% last year, so that's the consequence of the measures which have been taken on cost down reduction. NSG&A are flat reducing in terms of absolute value to be stable relative to the sales which are going down. So OIVM was at 6% versus 5.6% last year. EBIT at $303 million versus $469 million last year. So here we have the combined effect of last year. We had a profit linked to the BHTC itself for $119 million in the EBIT. And this year we don't benefit from this one of the positive effects. And on top we have also restructuring measures which have been booked. close to 140 million, 45 million for this year, 25. And we have also some impact on the taxes with different taxes impacts with different effects by countries which are also contributing to higher tax effectively than last year. So leading to 92.7 million of net income versus 370 last year. In terms of cash, So I said we generated 318 million of cash, so it's a strong increase versus 24, 29 million more than in 24. So here we have the combined effect of better phone phone operations, which is contributing to these results. on the working capital as well thanks to payment terms which are better in terms of accounts payable in payments. And we have also a strong decrease in our capex reducing by nearly 24% versus last year with a higher efficiency on the capex. Also linked to the volume reduction that has contributed to this cash generation. Now for 2026, so this was based on the global mobility of February, so we were anticipating a decrease of 0.2% in terms of sales with a decrease in the whole market. So with this we have the guidance. So the guidance is in terms of cells between 7.4 and 7.9 billion of cells. Here we still expect a decline in cells in lighting, still suffering from the mix. product mix and customer mix, so still a deterioration is expected on the lighting, while the electronic and lifecycle are expected to show moderate growth versus 2024. OEM margin is guided between 5.4 and 6%. So here we also expect lighting to be still deteriorating versus 2024. Electronic and recycle should be more at the prior level. So lighting, we are starting the transformation plan. Restructuring are taking place, but the full effects will be really visible in 27. And this is also why we have a cash flow which is guided at 1.8% offset, so lower than what we have been generating in 24, because we're going to have much more cash out in terms of restructuring in 25, to the tune of more or less 15 million more. And we also have capex which are expected to be not as low as in 24 because we need to start to build an event for the growth which is expected in the coming years. So that has led us to kind of cash flow at a minimum 1% of sales. With that, I think we can move to the strategic priorities, Peter.