Iveco Group Nv

To withdraw your question, please press star 1-1 again. At this time, I would like to turn the call over to Federico Donato, Head of Investor Relations. Please go ahead, sir.

Thank you, Latonya. Good morning, everyone. I would like to welcome you to this webcast and conference call for the VECO Group second quarter financial results for the period ending 30 June 2025. This call is being broadcast live on our website and is copyrighted by VECO 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 our 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 yesterday evening. Additionally, please note that any forward-looking statements we 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'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 measure. 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 firefighter business unit to listed private equity holding company, Mutares, was closed and completed as planned on the 3rd January 2025, one of effects from the transaction excluding from all the comparative 2024 adjusted metrics. I will now turn the call over to our CEO, Olof.

Thank you very much, Federico. And let me add my own welcome to everyone joining our call today. And I would like to kick off things by commenting on the major news that was announced yesterday. I'm sure that you all have seen the headlines and carefully read the press release, whose key points are summarized on this slide. But let me now bring additional context to these developments and share our perspective. The offer would bring together two businesses with highly complementary product portfolios and capabilities and with substantially no overlap in the industrial and geographic footprints, creating a stronger, more diversified entity with a significant global presence. The combined group would be better positioned to invest in and deliver innovative, sustainable mobility solutions by leveraging both supply networks to serve customers globally. It will also unlock superior growth opportunities and create significant value for all stakeholders in a dynamic marketplace. By preserving each group's industrial footprint and employee communities, this complementarity is also expected to foster a smooth and successful integration process. Tata Motors is committed to respecting and maintaining Iveco Group's corporate identity, integrity, core values and cultures, as well as Iveco's key brands, trademarks and logos. Furthermore, Tata Motors does not envisage any reduction of the workforce of Iveco Group as a direct consequence of the combination. And our headquarters will remain in Turin, Italy. Ultimately, by joining forces with Tata Motors, we are unlocking new potential to further enhance our industrial capabilities, accelerate innovation in zero-emission transport, and expand our reach in key global markets. This combination will allow us to better serve our customers with a broader, more advanced product portfolio and deliver long-term value to all stakeholders. We also announced yesterday the signing of a definitive agreement to sell defense business IDV and Astra Brands to Leonardo SBI, as you know, a leading European defense and security company, for an enterprise value of 1.7 billion euros. The transaction will create an Italian-based European champion in the land defense segment with the scale and capabilities to compete globally. The transaction is expected to be complete, no later than 31st of March in 2026, subject to customer regulatory approvals and carve-out completion. On completion, Iveco Group intends to distribute the net proceeds of the transaction, subject to closing adjustments to shareholders via an extraordinary dividend. This agreement propels IVECO Group's defense business into its proper dimension as a key contributor alongside Leonardo in the creation of a focused, world-class player in land defense activities. Our colleagues in the defense business, who have done a tremendous job in building this business, responding to the growing need for both land defense vehicles and the technologies we have developed, will become a part of a group with a scale and integrated capabilities to compete on all levels and for all platforms, with all the positive potential for innovation and continuous development. All in all, I believe that this is exciting and positive news, both for our defense business and the wider EVECO group. We believe that these developments will enhance the long-term prospects of our business for the ultimate benefit of all stakeholders. Let me now move into slide four with the highlights of our second quarter performance. As forecast, this quarter was marked by lower industry demand levels across European truck segments. Market softness was especially pronounced in the light duty trucks, where the year-over-year comparison was further worsened by last year's pre-buy effect. In response to those challenging market dynamics, we acted decisively with discipline, execution, and unwavering focus on our long-term vision in both our truck and powertrain business units. In bus and defense, meanwhile, we continue to deliver good margins supported by very solid order books. If I break down by business units... In truck, we saw order intake pick up across regions and segments during the second quarter, affirming the momentum of our model year 2024 product lineup, especially for heavy duty. Powertrain continued to navigate the tough market conditions, both in on and off-road application. Strict cost management and the implementation of the group's efficiency program helped mitigate the negative effects of declining volumes. In addition, throughout the quarter, we booked higher quality costs to secure superior standards as part of our ongoing drive for increased long-term customer satisfaction. Again, in both the bus and defense segments, we delivered strong results with continuous margin improvements on a year-over-year basis, backed by solid order books and favorable industry momentum. Our free cash flow performance in the second quarter was positive. We registered 145 million euros in cash generation Partly due to actions we implemented through the acceleration of our efficiency program. And as you may have seen in the press release published yesterday evening, we have prudently revised our full-year guidance as a result of the delay of the recovery we had been expecting in the second half of the year in light-duty trucks, particularly in the chassis cab fleets and rental fleets, where the tale of last year's pre-buy effect is taking longer than expected to unwind as well as ongoing microeconomics uncertainties. If we go to slide five, this year marks actually the 50 years of IVECO, and during 2025, we are celebrating the milestone at our facilities around the world. And in June, we hosted our main anniversary event here in Turin, a four-day celebration of IVECO's past, present, and future in a truly Italian setting. I'm proud to say that at 50, Veco is full of vitality and getting stronger every quarter. We are more agile, more focused, and more driven than ever. And this is not the finish line. It's just a launch pad to the exciting future ahead. To talk about looking forward, we made significant investments in product innovation and customer support, preparing the group for a new chapter of growth in alternative fuels, digital services, and customer-centric solutions. Our ambition is to become a more premium company in every respect, engaging customers with both their heads but also their hearts. We are proud of our Italian heritage, our belief in empowerment, and our commitment to sustainability. These values are embodied in our vision for the next 50 years and every product development that unfolds, including our electric models, the SE way Arctic, The e-daily and the latest addition to our electric lineup, the e-jolly and the e-superjolly. To reiterate, as we look ahead, our focus is clear. Quality in everything we do and a laser-shaped, sharp commitment to empowering our customers and drivers. Moving into slide seven and look at the truck industry volumes and market share on slide seven. In the second quarter of 2025, European industry volumes experienced a decline compared to the same period last year. This was both expected and a continuation of what we saw in Q1. Allow me to give you some numbers. As of 30 June 2025, light commercial vehicles were down by 13%, and medium and heavy trucks were a decrease of 15% compared to Q2 2024. When we talk about LCV's industry performance, please keep in mind that last year's performance was inflated by a pre-buy effect, resulting in a more pronounced year-over-year decline. And to break that down further, decline in both chassis cab and the upper end of the segment was even more pronounced versus the same period of last year. Reflecting on market share during the second quarter of 2025, LCV in Europe remained solid at 11.8%. Our share of the chassis cap segment was comfortably above 30%, and the upper end of the segment came in at 69.3%, which is actually up 5.7% versus the same period last year. Figures like these demonstrate how strong brand recognition and historic leadership can build resilience even during challenging phases of the business cycle. If we then turn to medium and heavy drugs, our market share was 8.5 in the second quarter of 2025. Within this category, our heavy drug market was 7.8%. In maintaining these solid market shares across segments, we paid close attention to our pricing discipline. If we then look across the ocean, industry volumes in South America were once again strong in LCV and broadly flat for medium and heavy. Moving on to slide eight. In Q2, order intake was up across segments and regions, with a worldwide book-to-bill ratio at 0.9. For light-duty trucks, European order intake increased by 7% versus Q2 2024 and remained broadly flat sequentially. The book-to-bill ratio stood at 0.84, reflecting a 22 basis point improvement over last year. In South America, order intake was up 79% compared to Q2 2024 with a book-to-bill ratio of 1.09. For medium and heavy trucks, European order intake rose 34% compared to Q2 2024 with a book-to-bill ratio of 0.8, marking a 26 basis point increase year-over-year. In South America, order intake was up 20% compared to Q2 2024 with a book-to-bill ratio of 105. Order book visibility in Europe is about two months for medium and heavy trucks and slightly shorter in light-duty trucks. Let's move on to slide number 10 with the bus industry volumes and market shares. We not only held our leadership position in Europe in the second quarter but managed actually to increase it by 2% 2.3% points to 53.9% compared to Q2 2024. In the European city bus segment, we maintain a solid 12.4% market share during Q2 2025. And as we mentioned in our first quarter on this call, we expect to accelerate deliveries in the second half of 2025 in line with the seasonality of bus tenders. The electric city bus segment registered a solid 11.8 market share at the end of Q2 2025. Throughout the quarter, Iveco Bus stayed firmly in the number two position in the European market with a 19.7% market share, largely due to the strong momentum of our innovative products. We then move to slide 11. In the second quarter of 2025, our bus order intake increased by 10% compared to Q2 2024, while deliveries remained substantially flat on a year-over-year basis. Our book-to-bill rate here was 1.08 at the end of Q2 2025, which is up by 11 basis points year-over-year. The order book is strong, providing long-term visibility, and it goes all the way through the second half of next year. To step up production of electric city buses, we have introduced a second shift at our anonite plant as of April. This resulted in some additional cost and negative impact of our production cost for Q2, but it is a temporary situation. On slide 13, we have the delivery performance for our powertrain business unit. And looking at our e-trucks, powertrain continues to face challenging industry environment, particularly for off-road applications where demand is sharply down. Engine volumes reduced by 13.6% in the second quarter compared to Q2 2024. But on the positive side, we are expecting progressive recovery in deliveries to third-party clients in the second half of the year. And as I said in my opening remarks, we booked higher quality costs during the quarter, expenses that will secure superior standards and help realize our ongoing ambition for increased customer satisfaction. These necessary additional costs impact the profitability in the second quarter. To counterbalance the decline in volumes and strengthen our resilience throughout the industry cycles, we focus heavily on implementing our efficiency program and containing any additional costs. On slide 15, we highlight the strong performance of our defense business unit. In the second quarter, our order intake continued to be healthy and supported the increase in our order books, which is now at 5 billion euros. Increased sales of high-margin vehicles and continuous positive after-market contribution gave rise to an all-time high adjusted EBIT margin of almost 14%. Slide 17 takes us down to the year-to-date performance of our electric vehicle portfolio. And looking at our e-trucks product lineup, all these vehicles not only add to our extensive electric product portfolio, but also bolster our in-house expertise. Iveco was primed to team up with Stellantis Pro One for the supply of two new 100% electric Iveco branded vans, the E Jolly and the E Super Jolly, with the launch of these vans in Europe in 2026. Iveco will be the only truck maker to offer complete fully electric LCV products line up with the LCV vehicles ranging from 2.5 to 7 tons. Our e-trucks maintain a good level performance despite softening market demand, and the plan for our heavy-duty electric vehicles is proceeding apace. We have already introduced our rigid version on the market, and we expect to introduce the Arctic version in the later part of this year. The electric bus segment boasts a strong order book, which is now full through the second half of 2026, and we expect deliveries to ramp up in the second half of the year. With that, I have finished my opening remarks and I will now hand over the call to Anna.