Iveco Group Nv

Good morning, everyone. I would like to welcome you to this webcast and conference call for IVECO Group full quarter and full year financial results for the period ending 31st December 2024. This call is being broadcast live on our website and is copyrighted by IVECO Group. I'm sure you appreciate that any other use, recording or transmission of any portion of this broadcast without the concept of IVECO Group is not allowed. Hosting today's call are IVECO Group CEO, Olof Persson, and our CFO, Anna Tanganelli. In their presentation, Olof and Anna will be using the material published on the IVECO Group website early this morning. Additionally, please note that any forward-looking statements we make during today's call are subject to the risks and uncertainties mentioned in the safe harbor statement, including in the presentation material. Additional information relating to factors that could cause actual results to differ materially is contained in the company's most recent annual report as well as other recent reports and filings with the authorities in the Netherlands and Italy. The company presentation may include certain non-IFRS financial measures. Additional information, including reconciliation to the most directly comparable IFRS financial measures, is included in the presentation material. I would like to reiterate that 2024 financial data shown in the press release and in this presentation exclude Magirus and this refers to continuing operation only, unless otherwise stated. In accordance with applicable accounting standards, the figures in the income statement and the statement of cash flow for 2023 comparative periods have been recast consistently. I will now turn the call over to our CEO, Olaf.

Thanks, Federico, and welcome to all of you joining our call today. I'm pleased to report that the Veco Group ended the year with a solid performance running off a 12-month period that saw several important new products introduced. Financial performance in 2024 benefited from positive price realisation and diligent cost management, which largely offset the impact of a 4% lower industrial activity net revenues compared to 2023. Despite lower revenues, The adjusted EBIT margin of industrial activity stood at 5.7%, 30 basis points higher than the full year of 2023. Our free cash flow generation ended the year at €402 million, the higher end of our guidance. We are reconfirming our full-year 2025 preliminary forecast for heavy-duty trucks in Europe at between 280,000 and 290,000 registrations, signaling a stabilization of the market. For medium-duty trucks, we expect volumes to be slightly down versus 2024, and for light-duty trucks, European industry forecast is mainly flat versus 2024. These forecasts reflect our expectations for a two-speed year, still low in the first half, with a recovery in the second. During Q4 2024, we continue to introduce our model year 2024 product lineup for truck. something we achieved while maintaining a strong pricing discipline. Feedback from customers is positive and confirmed by our heavy-duty truck order intake, which was substantially up, both sequentially and year-over-year. We kept production capacity below the market demand, supporting the dealers with a phase-out of model year 2022, and the transition to model year 2024 is largely completed in medium and heavy-duty trucks, while focus is on light duty trucks that will be largely completed by the first quarter of 2025 as expected. Bus continue to execute on a strong order backlog and ramped up deliveries of electric city buses, which reaches 14.2% of the European market by year end, ranking second in the segment. Powertrain continue managing its cost base, enabling it to the end of the year with an adjusted EBIT margin up year-over-year despite a 21% decline in engine deliveries compared to 2023. Defense saw a double-digit margin as the business unit continued to deliver on its multi-year and full-order backlog. In 2025 and 2026, we will increase the pace of our efficiency program and reprioritize certain investments. in order to reduce our operational spending and save 300 million capex and opex compared to full-year 2024 actions, but without affecting our product plan. In light of our full-year 2024 financial result, which Anna is going to comment in detail later in the presentation, the board of directors of Iveco Group MV intends to recommend to the company's shareholders an annual cash dividend of 0.33 euro per common share totaling approximately 90 million euros. The proposed dividend remains subject to former board approval and approval by the annual general meeting, which will take place on 16th of April 2025. Last but not least, as you may have read in our press release this morning, the board is considering separating the defense business during 2025 through a spin-off. In summary, the Eco Group is proceeding with confidence into 2025 all while maintaining an unwavering focus on quality, operational efficiency, and diligent price management. If you follow me into the next slide, number five, I'm delighted to highlight significant achievements we made with our model year 2024 configuration. During Q4 in 2024, we had almost 100% of our model year 2024 configurations diesel, natural gas, electric, 4x2, 4x4, etc. in production. This comprehensive and powerful range will bolster our leadership position in light-duty truck and further strengthen our brand repositioning in heavy-duty truck, especially given that this product is now at the level of best-in-class. Also, in early November, EVECO completed the transfer of its Nordic distribution and retail operations in Denmark, Finland, Norway and Sweden to Hedin Mobility Group, one of Europe's largest mobility providers. This transfer was initially agreed in December 2023 with the signing of the Share Purchase Agreement. This strategic move aligns with our goal of enhancing our distribution network and leveraging the expertise of one of Europe's largest mobility providers. If we now move on to truck industry performance by region and in vehicles market share in Europe, during the full year of 2024, the industry in Europe was, as predicted, resilient for light-duty trucks and down in medium and heavy duty. Latin America saw industry volumes slightly up in light-duty trucks, but medium and heavy trucks saw double-digit increases, confirming the recovery of the region. In terms of our European market shares, excluding UK and Ireland, on a full year basis in the light commercial vehicle segment between 3.5 and 749 ton, we were broadly stable at 13.3%. Within this category, we consolidated our leadership position in both cab chassis and the heavier upper end of the segment at 13.6% and 64.6% respectively. Our medium and heavy duty truck market share in the full year remained solid at 8.9% with heavy duty trucks alone at 7.8% flat versus last year. On slide seven, throughout the year we focused on balancing the needs of pricing discipline with a managed introduction of our new model ranges. For our light duty track segment in Europe, we have carefully managed order intake and consequently our book-to-bill ratio to ensure a smooth transition from model year 2022 to model year 2024 within our dealer network. In South America, the order intake surged by almost 300% compared to Q4 2023 with a book-to-bill ratio of 146, making a 132% year-on-year increase. Turning to our medium and heavy-duty tracks, in Europe, we have seen a significant increase in order intake, up by 15% compared to Q4 2023, with a book-to-bill ratio rising 76% year-on-year to 0.78. Our European heavy-duty order index has also shown strong growth, up by 18% compared to Q4 2023, and up 49% sequentially with a book-to-bill ratio of 0.86, and that is an 83% year-on-year increase. In South America, the medium and heavy-duty order intake rose substantially, up by 81% compared to Q4 2023, with a book-to-bill ratio of 1.16, marking a 20% year-on-year increase. In these first weeks of 2025, we're enjoying a positive order trend, supporting our expectations that the model year 24 truck and van ranges will continue to gain momentum, while at the same time, we maintain a strong pricing discipline. Moving to slide eight, we show the truck channel inventory and production levels. As you can see, our production levels has been deliberately maintained below the retail demand during the fourth quarter of 2024. In light commercial vehicle, our channel inventory was up 3% versus last year, mainly due to increased inventories held by our dealers. While in medium and heavy, it fell by 14% compared to last year, and inventory is now well positioned to meet the forecasted uplift in demand in the second half of 2025. Our ongoing efforts to phase out the model year 22 vehicles and phase in model 24 products In light-duty trucks across our dealer network are progressing well. We are on track to complete most of this transition by the first quarter of 2025. In medium and heavy-duty trucks, this transition was already almost completed at the year end. The next slide shows some highlights within our robust segments during the fourth quarter. As you can see, our commitment to embracing technology and neutrality with a versatile solution and an accelerated zero emission offering is proceeding at pace. At our Annonay plant in France, the electrification ramp-up is progressing well. During the first quarter of 2025, both plants, Annonay and Rotem, also in France, will be running at full capacity in Citibus Furthermore, to meet the increasing demand in the EU, we have introduced battery assembly in Anone. In Q4 2024, we celebrated the first-hand success for our Citabus hydrogen. This groundbreaking product will be used in three cities in France and mark a significant step forward in our hydrogen strategy. On December 3rd, we unveiled the European premiere of the crossway electric during exhibition in France, marking the first major electrical intercity bus in the EU. This event again highlighted our leadership in the electric bus market. As an early Christmas present, on December 18th, we secure a significant tender in Germany for up to 580 buses, including 200 crossway low-entry electric and 180 crossway buses. As we continue to build on this momentum, we remain focused on leveraging our strengths and solidifying our leadership position in the industry. If we then move to next slide, number 11, with bus industry volumes and EV eco-market share. During 2024, we saw further strengthening in our core market segment. In the intercity segment, our leadership in Europe was reinforced, reaching a share of more than half the market at 50.5% market share for the full year, which is an increase of 2.2 percentage points compared to 2023. This position was helped by the introduction of new electric variants in the European city bus segment. We also enjoyed robust growth, reaching number two position with a 19.6 market share for the full year. an increase of 6.9 percentage points compared to 2023. This was supported by acceleration of deliveries in the second half of 2024. Additionally, we saw sound growth in the sub-segment of electricity buses reaching the number two position in the EU for the full year 2024 with a 14.2% market share. And that is an increase of 6.5 percentage points compared to 2023. Our business expansion outside Europe also showed positive results, with our market share in South America doubling from 4% in 2023 to 8% in 2024. With an efficient product offering, a widespread network of dealers and service partners, plus home-built batteries made a partnership with Micro West through FPT, the race in the electric sector is far from over, and we have the ambition to become its leader. Moving to the next slide, number 12, Our deliveries of buses were up 8%, and the order intake increased by 6% compared to full year 2023, and thereby the book-to-bill ratio stood at 1 at the end of full year 2024, which is roughly unchanged from full year 2023. This strong book-to-bill ratio provides significant future visibility, enabling robust supply chain management and the ability to address potential challenges proactively. We then move to page 14, and let's focus on the significant achievement in our ICE multi-energy platforms and the e-powertrain launched in Q4 2024. The highlight here is the Cursor 13-liter hydrogen engine, which was elected as the alternative energy engine of the year. On November 11th, the Cursor 13-liter, our pioneering multi-fuel single-base engine, optimized to run on multiple fuels, won the first alternative engine award. This recognition underscores our commitment to innovation and position us at the forefront of the future of internal combustion engines. Throughout the year, we continue to expand the number of third-party clients we have in both the on and off-road industries. This supports our long-term business growth and strengthen our market presence, as well as offering improved profitability as a result of cost containment actions that lower our break-even points. Next slide, 15. During the year, we continue to experience the knock-on effect of a slowdown in demand across the industry coupled with ongoing customer destocking. This was more pronounced in off-road compared to on-road. As a consequence, our engine volumes for the full year was down 21% versus full year 2023. To counter the impact of this market situation, Powertrain diligently executed on its efficiency program. It enacted additional cost containment measures and adapted production to meet the market demand, thereby lowering the break-even point and strengthening its resilience to industry cycle. This measure led Powertrain to close the year with an improvement in profitability of 30 basis points compared to 2023. Our focus continues to be not just managing short-term challenges, but building a stronger, more resilient future for our powertrain business unit. The next slide, number 17, shows the main achievements in our defense business unit. First of all, despite an increase in deliveries, our order book remained robust, fueled by a solid order intake during the period, confirming our strategic business plan trajectory. On the 11th of November 2024, IDV signed a preliminary agreement to supply functional parts for future contracts within the Leonardo and Rheinmetall joint venture. IDV's participation will be 12 to 15% of the JV total activities for the development and production of tracked combat ground vehicles for the Italian Army. A month later, IDV signed a contract with the Italian Army to supply 1,435 tactical logistic trucks to be delivered from this year until 2038. And on 31st of December 2024, the Vico Ottomilare Consortium signed a contract for the supply of 76 VBM Plus, again for the Italian Army. These achievements demonstrate our strategic focus on innovation and collaboration, ensuring we remain at the forefront of the defense industry. We then move to slide 18. As mentioned in our press release this morning, in view of the different trends in the commercial vehicles and defense markets and the increasingly different requirements for a long-term success of both businesses, the Board of Directors of EVECO Group is considering separating the defense business compromising the IDV and Astra brands and related activities during 2025 through a spinoff. The separation could simplify our group structure, increase management focus, and create strategic flexibility for both businesses. The board will provide an update on the outcome of these assessments in the coming months. Any steps post the assessment remain subject to the required internal and regulatory approvals. On page 20, we have our usual focus on electric product deliveries, showing figures for full year 2024. Let's start with our e-daily range. Here, deliveries continue to ramp up visibly during the period, reaching more than 1.7 thousand units with an order backlog that continues to grow. That is along with our market share. We began introducing the model year 24 e-daily range in the third quarter of 2024, and this will continue throughout 2025. We are starting to deliver the first units of the e-rigid heavy-duty truck in the European market and filling the order book. That said, the widespread adoption of electric heavy-duty hinges not only on our own effort, but also largely on the decision and action taken by policymakers and infrastructure investments. Moving to the electric buses, we have a solid order book that now covers production up to the second quarter of 2026. Deliveries are growing visibly and will continue to do so, boosting market share and positioning vehicle bus solidly as the number two in Europe. Our e-axle products deliveries have increased quarter over quarter, reaching more than 2.9 thousand units by year end, and we expect this trend to continue, supported by the progress I mentioned in the electric bus deliveries. The success our products are having in the markets is a testament to the effectiveness of our business units in developing their technology roadmaps as per our strategic business plan. We are on track to increase output for all our electrical products, and we are well positioned to meet the upcoming European emission standard regulation. And I will now hand over the call to Anna.

Thank you, Olof. And good morning, everyone. Let's now take a look at the highlights of our full year 2024 financial results on slide 22. Before we start, let me please remind you that, as was the case for the previous quarters, all the financials shown in the next slide refer to our continuing operations only, as our firefighting business unit has been classified as discontinued operations since Q1 2024. As a result, in accordance with the applicable accounting standards, also our 2023 figures have been recast consistently. In this regard, please note that the transfer of ownership of the firefighting business unit to listed private equity holding company Mutares was closed and completed as planned on the 3rd of January 2025. One-off effects from the transaction are excluded from all adjusting metrics. Full-year 2024 closed with consolidated net revenues of €15.3 billion and net revenues of industrial activities of €14.9 billion, both contracting by approximately 4% year-over-year, mainly due to lower volumes in truck and powertrain, partially offset by continuously positive year-over-year price realisation across all business units, also in the last quarter of the year. Financial services net revenues totaled €558 million in 2024, up 13% compared to prior year. Group consolidated adjusted EBIT closed at €982 million with a 6.4% margin, while adjusted EBIT of industrial activities reached €851 million with a 5.7% margin, both up 30 basis points versus last year. Net financial expenses amounted to 211 million euros compared to 443 million euros in 2023, an improvement of 232 million euros versus prior year as a result of the series of actions implemented during the course of 2024 to contain our foreign exchange exposure and to reduce our cost of hedging in Argentina, combined with a positive hyperinflation accounting impact during the period. For 2025, we are forecasting net financial expenses to remain broadly in line with full year 2024. Reported income tax expenses were 69 million euros for the year with an adjusted effective tax rate of 26%. As a result, consolidated adjusted net income totaled 569 million euros, up 181 million euros compared to prior year. With an adjusted diluted EPS, of 2.09 euros, up 74 euro cents compared to previous year. The adjusted net income attributable to IVECO Group closed broadly in line with the consolidated figure, up 198 million euros versus last year. Moving to our free cash flow performance, we closed full year 2024 with 402 million euros in free cash flow generation, thereby meeting the upper end of our previously communicated guidance. Finally, available liquidity, including undrawn committed credit lines, stood solid at 5.5 billion euros on the 31st of December, up almost 1.1 billion euros from September end. Let's now focus on net revenues of industrial activities on slide 23. As you can see from the chart on the top right-hand corner of this slide, all regions contracted compared to prior year, excluding South America, which was up 18% versus prior year, marking a positive exit speed into 2025. Looking at our net revenues evolution by business unit, bus and defense were solidly up versus prior year at plus 13% and plus 15% respectively, while truck and powertrain decreased versus full year 2023, with powertrain in particular posting a minus 17% net revenues contraction compared to previous year. More in detail, truck net revenues totaled just short of €10 billion, down 6.2% versus 2023, due to a positive price realisation and discipline throughout the year, both in light commercial vehicles and in medium and heavy-duty trucks, which partially offset the expected contraction in volumes in H2, as well as the impact of the year-over-year adverse foreign exchange rate evolution mainly in Argentina. Bus net revenues were up 13.3%, reaching 2.6 billion euros, driven by higher volumes, a better mix given the ramp-up in the second part of the year of the electric vehicle production and deliveries, and a positive pricing trend. Net revenues for defence continued to grow substantially throughout the year, ending the year at plus 15.1% versus 2023, and reaching 1.1 billion euros. through higher volumes and a positive mixed effect. Powertrain net revenues were down 16.7% year over year to 3.5 billion euros, mainly as a result of a decrease in off-road volumes, with sales to external customers accounting for 47%. Turning to slide 24, let's now briefly comment on the main drivers underlying the year over year performance in our adjusted EBIT margin of industrial activities for the full year. Net pricing continued to be positive for 2024, including in the last quarter of the year, and contributing €480 million to the adjusted EBIT, and more than offsetting the impact of the volume contraction in truck and powertrain. The operational and product cost improvement actions implemented in Europe during the course of 2024 contributed positively for more than €90 million. largely compensating one of costs associated with the launch of the new model year 2024 track range, as well as the negative impact on raw materials of the still severe inflationary trend in Argentina. As a result, full year 2024 adjusted EBIT margin of industrial activities closed at 5.7%, up 30 basis points versus last year. Let's now take a look at each industrial business unit adjusted EBIT margin performance for the full year on slide 25. TRAC closed with a solid 5.6% adjusted EBIT margin due to, as mentioned, a consistently positive price realization maintained throughout the year, combined with substantial product cost improvement, especially in Europe, but more than offset lower volumes and an adverse foreign exchange rate impact compared to prior year and mainly linked to Argentina. As for defense, adjusted EBIT margin posted a 230 basis point uplift versus prior year, reaching 10 percent through higher volumes and a positive aftermarket contribution. Bus adjusted EBIT margin closed at 5.5 percent, up 70 basis points year-over-year as a result of higher volumes, a positive mix due to the ramp-up in the second part of the year of electric vehicle production and deliveries, and a positive pricing trend. Powertrain adjusted EBIT margin closed at 6.2% in 2024, up 30 basis points compared to prior year, despite the severe volume drop suffered across the period. This reconfirms the remarkable resilience and flexibility of this business unit, which was able to rapidly adapt production levels to a changing market environment and implement a series of internal cost containment actions to counter the minus 17% year-over-year top-line contraction while still improving its profitability. Let's now have a look at the performance of our financial services business unit during the year on slide 26. Full-year 2024 adjusted EBIT closed at €131 million with a managed portfolio including unconsolidated joint ventures of €8.3 billion at the end of the year, of which retail accounted for 40%, and wholesale 60%, flat compared to December 31, 2023. Once again, important to be highlighted here is that the stock of receivables past due by more than 30 days as a percentage of the overall on-book portfolio remained constant at 1.9%, including in the last quarter of 2024 and compared to the 2% of Q4 2023. Return on assets remained solid at 2%. Finally, during 2024, we renewed the two JVs with Santander and BNP Paribas for the management of our retail business, as well as the partnership with CNH for the management of their receivables in EMEA. Additionally, as planned, we scaled up gate market coverage, adding two European countries, France and Germany, in line with our business plan. Moving to our free cash flow and net industrial cash evolution on slide 27. Full year 2024 free cash flow of industrial activities reached the high end of our previously communicated guidance, totaling €402 million. Full year 2024 adjusted EBITDA was €1.9 billion, up €82 million versus prior year. Provisions and similar contributed positively for €279 million compared to 2023, mainly driven by substantial improvement in financial charges. The variance in changing working capital versus previous year was primarily impacted by 2024 sales volume contractions, and as a result, lower production levels compared to prior year. Investment in 2024 totaled 932 million euros, substantially in line with last year. Moving now to my last slide for today, page 28, our available liquidity as of the 31st December 2024 stood solid at 5.5 billion euros, with 3.5 billion euros in cash and cash equivalents, up 815 million euros compared to last year, and 1.9 billion euros of undrawn committed facilities. Looking at our debt maturity profile, we confirm that the majority of our debt will be maturing beyond 2026, and that our cash and cash equivalent levels continue to more than cover all the cash maturities foreseen in the coming years, and totaling 2.4 billion euros. Thank you. I will now turn the call back to Olof for his final remarks.