Iveco Group Nv

Good day ladies and gentlemen and welcome to today's EVACO Group 2025 first quarter results conference call and webcast. We would like to remind you that today's conference call is being recorded. After the speaker's remarks, there will be a question and answer session. To ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. At this time, I would like to turn the call over to Federico Donati, Head of Investor Relations. Please go ahead, sir.

Thank you, Razia. Good morning, everyone. I would like to welcome you to this webcast and conference call for the Iveco Group's first quarter financial results for the period ending 31st March 2025. This call is being broadcast live on our website. It 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 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 earlier this morning. Additionally, please note that any forward looking statement we might make during today's call are subject to the risk and uncertainties mentioned in the safe harbor statement included in the presentation material. Additional information relating to factors that could cause actual results to differ materially is contained in the company 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 measure, is included in the presentation material. Finally, let me please remind you 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 the corporate 2024 adjusted metrics. I will now turn the call over to our CEO, Olof.

Thanks, Federico, and let me add my own note of welcome to all of you joining our call today. As expected, the business context of the first quarter was marked by a lower industry demand levels across European truck segments. As such, we acted fast to protect and reaffirm our business perspective and full year guidance. I'm proud of the organization's decisive response and long-term focus. We made tough calls early. We adjusted production levels and realigned inventories both within the company and throughout our dealer network. We also completed the phase-out of previous generation models while completing the introduction of our new model year 2024 in light commercial vehicles. These actions had short-term impacts on financials but they were absolutely necessary, putting us in a solid position for the rest of the year. Throughout the truck sector, we had to face market softness. Our European production was down 32% year over year, which also reflected our transition to the new vehicle generation and preparations for the ramp up in demand that we expect later this year, coupled with progressive increased production. These actions affected margins and free cash flow, but they were embedded within the full year planning and aligned with our overall strategy. Order intake in Europe and Latin America was strong for both light and heavy duty. Our book-to-bill ratio was well above one in Europe for the first time since first quarter of 2023. This came together with our proactive steps to adjust our production capacity and realign dealer inventory. We are now increasing our production level and are well positioned to capture every future opportunity. Powertrain continue to operate in a tough market in general for both off and on-road applications. Nevertheless, strict cost management and the execution of the group's efficiency program produce a leaner cost base and lower break-even point, position the business for an agile response when the demand recovers. Spas and defense segments continued to deliver strong results following their specific market cycles. They saw continuous margin improvements on a year-over-year basis backed by solid order books and favorable industry momentum. What's equally important is that we didn't pause our forward momentum. We sealed two strategic partnerships in our truck business with Ford, Ottosan, and Stellantis. In this second quarter, we have entered a joint venture to accelerate green mobility through Gates, and we secured a major contract with the Dutch Ministry of Defense. Finally, as you have already seen from the press release earlier this morning, following the detailed assessment announced on the 7th of February 2025, the Board of Directors decided to proceed with the separation of the group's defense business via spinoff. This is expected to take place within 2025, subject to final approval by the board and the shareholders of IVECO Group and the required regulatory authorities. At the same time, IVECO Group has recently received preliminary expression of interest from potential strategic buyer for its defense business. The board has therefore mandated the management to continue the preparation for the spinoff while exploring such preliminary interest. In short, during the first quarter, we did what had to be done in a timely manner and with discipline. With strong order books, operational agility, a diversified business model, and strategic partnership firmly in place, we laid strong foundations for future growth. Our full year guidance remains intact, our liquidity position is solid, and we are confident that our actions in Q1 have laid the groundwork for a stronger second half and a successful year. If we then move to slide five, let's take a closer look at our truck business, summarizing the two partnerships we formed during the first quarter of 2025. On the 11th of March, we signed a binding agreement with Ford AutoZone for the design and engineering of next generation cabin for our heavy duty trucks lineup. The joint development agreement is a contractual framework for co-development of a new heavy duty truck cabin, as well as common sourcing where applicable. Both companies will make and assemble the cabins at their own facilities, customizing specific styling design concepts and selling the products under their respective brands, Ford Trucks and Iveco. This solution enables compliance with the forthcoming EU direct vision standard and will result in significant savings in investment, providing us also with a competitive advantage in terms of total cost of ownership. The focus will be on cabin comfort, safety, aerodynamics, and modularity, and also on cost efficiency, and the cabin will be prepared for all powertrains. Then, on 14th of March, we entered into a partnership with Stellantis for the commercialization in Europe of the two Iveco-branded electric vans, of which a rendering is shown in the slide, which will be produced by Stellantis ProOne. This collaboration will make us the only company with a full lineup of electric vehicles in both the midsize and large van segments. The launch is scheduled for mid-2026, and the partnership is based on a 10-year agreement. These partnerships were not included in what we presented at our Capital Markets Day and will further solidify our position as a leader in the light-duty truck segment while improving our position in heavy-duty truck. Now, with slide six, I'll explain more about the joint venture agreement between DLL and EVECO Group. GATE was conceived as an innovative business model with the primary goal of supporting the energy transition for our customer. GATE facilitates access to green mobility, providing rental solutions for vans and trucks that are tailored to customers' specific needs. The joint venture will continue to help customers build green fleets, strengthening activities that began in Italy in 2023 and that were extended to France and Germany in 2024. This strategic partnership is designed to boost the energy transition in Europe by amplifying access to low to zero emission commercial vehicles. Over time, the joint venture intends to offer similar solutions for low to zero emission vehicles for other brands beyond VECO. New joint venture will provide GATE with the financial support it needs to accelerate its growth strategy and help it achieve its ambitious objectives more quickly. This is a significant advantage for IVECO Group as the funding will be supported by DLL while the joint venture will manage the rental ecosystem. Moving on to slide seven, let's take a look at the truck industry volumes and market shares. In the first quarter of 2025, European industry volumes experienced a decline versus the same period of last year. Light commercial vehicles were down by 13% versus last year, and medium and heavy trucks saw a decrease of 17% compared to the same period in 2024. With regards to LCV, It ought to be mentioned that last year's performance was inflated by a pre-buy effect, making the year-over-year decline more pronounced. Despite the overall decline in volumes, our LCV market shares in the first quarter of 2025 remained at a solid 12.1%. Within the chassis cap segment, we achieved almost a third of the market share at 31.2%, up 1% versus last year. While at the upper end of the segment, our market share was 71.8%, up 7.5% versus the same period last year. Turning then to medium and heavy trucks, our market share increased to 9.1% in the first quarter of 2025, up from 8.7% in Q1 2024. Within this category, our heavy truck market share rose to 8. percent, marking an improvement of 50 basis points year-over-year. These figures highlight our solid market shares coupled with our disciplined pricing strategy, one that has been maintained even in the challenging marketing environment. Moving on to slide eight, our truck segment has shown a solid growth in order intake across segments, confirming strong momentum for our module year 24 across all ranges with a book-to-bill ratio consistently above 1. In the first quarter of 2025, the European order intake for light duty truck increased by 7% versus Q1 2024 and was up 22% sequentially. The book-to-bill ratio stood at 1.09, reflecting a 44 basis point improvement over last year. In South America, the order intake for light-duty trucks tripled compared to Q1 2024 with a book-to-bill ratio of 1.51, up 75 basis points year-over-year. For medium and heavy-duty trucks, the European order intake in the first quarter of 2025 rose by 33% compared to Q1 2024 with a book-to-bill ratio of 1.17, marking a 47 basis point increase year-over-year. This growth confirms the strong momentum for our model year 2024 range. In South America, the order intake for medium and heavy-duty trucks more than doubled compared to Q1 in 2024, with a book-to-bill ratio at 1.38, up 30 basis points year over year. Then moving on to slide 10, where you can see the main achievement of our bus business unit for Q1 2025. In France, two national procurement hubs cataloged 800 EVCO bus units, including Crossway, Evadus and Minibus models. This allows local authorities, municipalities and operators to leverage on alternative procurement modality authorized by the government for these vehicles. They can simply place an order through one of these hubs, significantly streamlining the procurement process. On the 14th of April, The Crossway Low Entry ELEC won the Bus Planner Innovation Award 2025 in Germany in the intercity category. This award is a further testament to our ability to innovate and our commitment to excellence in the bus industry. In addition, we achieved a 2% market share increase in the electric city bus sub-segment versus the same period last year, continuing the upward trajectory in this pivotal sub-segment. Let's move on to the next slide, number 11, with the bus industry volumes and market shares. Our leadership in the intercity segment in Europe was further boosted during the first quarter 2025, increasing by 4.9 percentage points compared to Q1 2024, to a very solid market share of 55.8%. This strong position was supported by the introduction of electric versions. In the European city bus segment, we maintained a solid 12.9% market share during Q1 2025. We anticipate an acceleration of deliveries in the second half of 2025 in line with the seasonality of tenders. Our growth in the electric city bus subsegment was particularly encouraging, registering 11.8% in market share at the end of Q1 2025. And in Q1 2025, Iveco Bus maintained its number two position in the European market with a 21.8 market share. This reflects our ongoing efforts to enhance our market presence and deliver high-quality, innovative products to our customers. Moving on to slide 12, I'll focus on the strong book-to-bill ratio in our bus business, which proves significant visibility. In the first quarter of 2025, our robust order intake increased by 15% compared to Q1 2024, while deliveries remained largely flat. Our book-to-bill ratio was 1.41 at the end of Q1 2025, up 19 basis points year-over-year. This ratio is a key indicator of business health as it provides good visibility into our likely future revenue streams. We have increased the speed of execution of our order book particularly for electric city buses, by introducing a second shift at our Anoni plant as of April. This move allows us to meet the growing demand for sustainable transport solutions. Moving to slide 14, we turn our attention to the main achievements of powertrain business in Q1 2025. On the 24th of January, FPT's industrials N67 natural gas engine powered the Sustainable Truck of the Year award winner, the Iveco Eurocargo CNG. The N67 engine makes the Eurocargo CNG the only truck in Europe to offer natural gas across the full range. It is compatible with both CNG and Biomethan to later enabling additional emission reductions. On the 10th of February, we marked the entry of our e-powertrain portfolio into the marine sector with the launch of EBS37EVO modular battery pack. This product offers impressive energy density while at the same time reducing battery weight. It can be installed to power both full electric and hybrid applications. And finally, on the 31st of March, our latest battery management system, the EB5, achieve the top level of industry ISO standard for certification designed entirely in-house this battery management system is currently in volume production for the model year 24 vehicle e-daily as well as for a number of other customers vehicles these milestones underscore our commitment to innovation and sustainability driving us forward in the powertrain business Moving to slide 15, the continuous slowdown in demand driven by lower total industry volumes and ongoing customer destocking actions has had a stronger impact in off-road segments. Engine volumes were down 22% in the first quarter compared to Q1 2024, reflecting the challenging industry environment. However, the execution of our efficiency program and additional cost containment have enabled us to adapt production to market demand and thereby strengthening our resilience. Powertrain's new leaner construction will also position the business unit well to capture expected market recovery we'll see in the upcoming quarters. Moving to slide 17, let's look at the Q1 development with our defense business unit. On the 31st of March, we signed a strategic alliance between Ifveco Defense Vehicles and METLEN, a Greek mining and metal specialist, formalized through a memorandum of understanding. This collaboration aims to modernize the Hellenic Army's military truck fleet, including renewing the existing fleet of protected and unprotected military trucks for the three Hellenic Armed Forces branches. This partnership reinforces IDV's position as leading European manufacturer of military trucks and combat vehicles and METLEN's expertise in complex metal constructions and high-tech defense programs. Also in Europe, IDV was awarded a tender by the Dutch Ministry of Defense for the supply and logistic support of 785 military logistic vehicles. The deal was finalized this month and the vehicles will be delivered between 2027 and 2029. The 785 military trucks will be delivered in three versions, semi-trailer tractor, logistic commonality across different platforms, and among many other EU member states. The award includes an option for an additional 785 vehicles and integrated logistic support over a minimum period of 15 years. This new award reaffirms the strong partnership between IDV and the Dutch Ministry of Defense following the contract for the supply of 1,283 monthly core multi-role tactical vehicles with deliveries started in late 2023. On slide 18, we highlight the solid foundation of our defense business. In the current environment, we are ramping up production to benefit from industrial efficiencies. With a rear-armed Euro plan, several governments are considering the possibility of boosting existing programs with additional funds to avoid the delay that opening new processes would involve. Our long-term strategy focuses on strong internationalization and fostering client loyalty through sizable multi-year contracts. This approach not only lowers risk and provides long-term revenue reinsurance, It also offers the prospect of capturing the upside of any increase in defense spending. Next slide is for the communication made this morning about defense. And following the detailed assessment announced on the 7th of February, 2025, the board of directors decided to proceed with the separation of the group's defense business via spinoff. This is expected to take place within 2025, subject to final approval by the board and the shareholders of the vehicle group and the required regulatory authorizations. At the same time, a vehicle group has recently received preliminary expressions of interest from potential strategic buyers for its defense business. The board has therefore mandated the management to continue the preparation for a spinoff while exploring such preliminary interest. Slide 21 takes us to the electric vehicle portfolio. quarterly performance. The e-LCV segment has maintained a good level of performance despite softening in market demand. The e-bus segment boasts a strong order book, which is now full up to the second quarter of 2026. We aim to address this with ramping up of deliveries in the forthcoming quarters. We saw a slight slowdown in the e-axle and battery segment, primarily due to market demand. Our extensive electrical product portfolio and in-house expertise put us in a unique position to be able to deliver a wide range of propulsion solutions to meet our customers' needs. With that, I will hand the call over to Anna.