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.

Thank you, Olof, and good morning, everyone. Let's now take a look at the highlights of our second quarter 2025 financial results on slide 19. Q2 2025 closed with consolidated net revenues of 3.8 billion euros and net revenues of industrial activities of 3.7 billion euros. contracting 3.5% and 3.1% respectively on a year-over-year basis, mainly due to lower volumes in Europe for truck and powertrain and the negative effects translation effects primarily in Brazil and Turkey. Group adjusted EBIT closed at 215 million euros with a 5.7% margin, with the adjusted EBIT of industrial activities reaching 187 million euros, with a 5.1% margin, both contracting by around 180 basis points versus Q2 2024, but increasing sequentially compared to Q1 2025 as expected. Net financial expenses amounted to 71 million euros in this quarter compared to 49 million euros in Q2 2024, which, as you might recall, has been affected by a positive hyperinflation accounting impact in Argentina. As already disclosed in our first quarter earnings call, starting from January 1st of this year, as a consequence of changes in our business model in Argentina, the U.S. dollar became the functional currency also for our local truck legal entity, thereby eliminating hyperinflation accounting fluctuations going forward. and as a result, further minimizing the volatility of our results in that country. Reported income tax expenses were 36 million euros in Q2 2025, with an adjusted effective tax rate of 26%, sequentially flat, resulting in a consolidated adjusted net income of 106 million euros, down 56 million euros versus last year, and with an adjusted diluted EPS of 39 euro cents. The adjusted net income attributable to Iveco Group closed broadly in nine with a consolidated figure at 105 million euros, down 67 million euros versus prior year. Moving to Africa's low performance in the quarter, Q2 2025 closed with 145 million euros million euro cash regeneration, mainly driven by a positive year-over-year working capital and, above all, inventory performance, as well as by lower investments, thanks also to the efficiency investment reprioritization program launched at the beginning of this year. Finally, available liquidity, including undrawn committed credit lines, closed solidly at 4.7 billion euros, on the 30th of June, including 1.9 billion euros of undrawn committed facilities. Let's now focus on net revenues of industrial activities on slide 20. As you can see from the chart on the right-hand side of this slide, all regions contracted compared to prior year, excluding South America, which was up 9% versus Q2 2024, confirming the region's positive trend started already in Q4 of last year. Looking at our net revenues evolution by business unit, bus and defense were solidly up versus prior year at plus 23% and plus 19% respectively, while truck and powertrain both contracted versus Q2 2024. More in detail, truck net revenues totaled 2.3 billion euros in this quarter, minus nine percent versus prior year as a result of the largely expected volume contraction in europe in this first half of 2025 and an adverse year-over-year foreign exchange rate trend in brazil bus net revenues were up as said 22.5 percent in q2 2025 reaching 750 million euros thanks to higher volume A better mix resulting from the ramp-up of electric vehicles production and delivery and the positive pricing. Net revenues of defense were once again substantially up versus prior year, posting a plus 19.3% increase to 340 million euros, driven by higher volumes and the positive product mix effect. Finally, powertrain net revenues were down 10.4% euro per year to 878 million euros, mainly as a result of the continuously challenging off-road industry performance, as well as lower volumes in trucks, with sales to external customers accounting for 45% in this quarter. Turning to slide 21, let me briefly comment on the main drivers underlying the year-over-year performance in our adjusted EBIT margin of industrial activities. Volume and mix contributed negatively for €39 million in the period, mainly driven, as said, by lower volumes in Europe for our truck and powertrain business units, combined with lower deliveries of light-duty trucks, which further negatively affected the overall truck profitability. The negative year-over-year net pricing impact of 29 million euros is mainly a result of one, a last year's extraordinary positive pricing leverage, deriving from a still exceptionally high number of weeks of production already sold, and two, a strong pre-buy effect in Q2 2024, particularly of light-duty trucks on the back of the subsequent launch of our new modern year 2024 truck range. But it is worthwhile to be noted that our sequential pricing performance, on the other hand, was substantially stable in light-duty trucks and even slightly up in heavy-duty trucks, thereby confirming our effectiveness in maintaining a diligent pricing discipline also in this challenging market environment. Finally, the year-over-year improvement in SG&A costs, totaling €40 million in this quarter and €32 million in the semester, is again a result of the efficiency actions announced and launched beginning of this year. Let's now take a look at each industrial business unit adjusted EBIT margin performance in the quarter on slide 22. Truck closed with a 5.5 adjusted EBIT margin as a result, as said, of the largely expected volume contraction in Europe, combined with a negative mix linked to lower light-duty truck deliveries only partially compensated by the cost containment action implemented in the period. Pricing in Europe remained broadly flat sequentially. BAF Q2 2025 adjusted EBIT margin closed at 5.6%, up 40 basis points versus prior year, thanks to higher volumes, a better mix resulting from the continuous ramp-up of electric vehicle production and deliveries, and the positive pricing. Defense adjusted EBIT margin posted a 400 basis point uplift versus prior year, reaching a historically high 13.8% on the back of increased sales of more profitable vehicles and a continuously positive aftermarket contribution. Finally, powertrain adjusted EBIT margin closed at 3.9% in the second quarter due to the severe volume drop suffered in the period, And as previously mentioned by Olaf, due to higher quality costs, only partially compensated by continuous cost management actions. Excluding the higher quality costs incurred in the quarter, power chain profitability would have landed at around 6%. Let's now have a look at the performance of our financial services business during the quarter on slide 23. Q2 2025 adjusted EBIT closed at 28 million euros with a managed portfolio including unconsolidated joint ventures of 8 billion euros at the end of the period of which retail accounted for 43% and wholesale 57% at 43 million euros compared to the 30th of June 2024. Stock of receivables passed due by more than 30 days as a percentage of the overall on-book portfolio was sequentially down 20 basis points to 2% in line with last year. Return on assets remained solid at 2%. Moving to free cash flow and net industrial cash evolution on slide 24. As said, Q2 2025 free cash flow generation closed at 145 million euros with a plus 243 million euros improvement compared to prior year. largely as a result of a positive working capital and, above all, inventory performance. In fact, as you might recall, Q2 2024 working capital had been negatively affected by the extra exports put in finalizing and getting our model year 2024 vehicles ready to ship, thereby resulting in a temporary exceptional increase in our inventory levels, which was then reabsorbed during the remaining part of 2024. Investment, total 146 million euros in Q2 2025, down 64 million euros versus the same period of last year, in line with the already disclosed acceleration of our efficiency program and specifically of the reprioritization of some of our less strategic investments. Moving now to my last slide for today, page 25, our available liquidity as of 30th of June 2025 stood solidly at 4.7 billion euros, with 2.8 billion euros in cash and cash equivalents, and 1.9 billion euros of undrawn committed facilities. Looking at our debt maturity profile, as you know, the majority of our debts will mature from 2027 onwards, and our cash and cash equivalent levels continue to more than cover all the cash maturities foreseen in the coming years. Thank you. I will now turn the call back to Olof for his final remarks.

Thank you very much, Anna. And now I'd like to conclude this presentation by looking at both the outlook for the industry and our own financial guidance. I will also, as usual, provide some takeaway messages from what you have heard today. In terms of total industry outlook for the current year, for some regions and segments, we have updated the preliminary industry outlook we provided in May. And I would like to provide a little bit more detail on that. We now forecast that the light-duty truck industry in Europe will be down between 10% and 15% versus full year 2024, coming in at around 620,000 units. The revision is mainly due to the delay of the recovery we have been expecting in the second half of the year, particularly in the chassis cab fleets and the rental fleets. where the tale of last year's pre-buy effect is taken longer than expected to unwind. That said, customer fleets are aging, and we are expecting a progressive recovery, principally in the chassis cab subsegment. We have lowered our expectations slightly for the medium-duty trucks in Europe to 26,000 units versus the previous forecast of 30,000 units. Heavy-duty trucks are confirmed at between 280,000 and 290,000 units. In South America, we confirm our expectations for light-duty trucks, but we are lowering our forecast for medium and heavy-duty trucks to between negative 5% to 10%, mainly driven by Brazil, where the interest rates increases since the beginning of the year have negatively impacted consumer confidence and willingness to invest in trucks. On the other hand, in Argentina, we experience a more dynamic industry scenario supported by government initiatives and cash injection in the country allowed by the International Monetary Fund. In the rest of the world, both sub-segments are forecasted to be either flat or slightly down. Finally, we expect demand for buses to remain flat across all regions. The next slide has our full updated full year 2025 financial guidance, which does not reflect any impact from the separation of our defense business. Our full year 2025 financial guidance has been updated. This mainly reflects a slower than forecast recovery in light duty trucks for the remainder of the year, negatively affecting our truck business unit's full year profitability. Based on the updated industrial outlook, our solid order backlog in both bus and defense, and our continuous focus on cost management, we are updating our guidance as follows. At a consolidated level, Group adjusted EBIT at between 880 and 980 million euros versus previously 980 and 1,030 million euros. And for industrial activities, net revenues including currency effects to be down between three and five percent year-over-year versus the previous flat expectations adjusted a bit from industrial activities at between 750 and 850 million euros versus the previous 850 and 900 million euros industrial free cash flow to be between 350 and 400 million euros versus the previous forecast of four and 450 million euros. We will continue to manage costs on production capacity for trucks in Europe with caution, especially in the light duty truck segment where, as I just mentioned, we're expecting a slower than forecasted recovery in the second half of the year. And now on slide 29, let me provide takeaway messages for today's Q2 earnings call. First, as I just mentioned, we revised our full year financial guidance, mainly due to a slower than expected recovery in light-duty trucks in Europe. As a consequence, we will adjust our production levels in the second half of the year to meet forecasted industrial demand, thereby maintaining tight control of our channeled inventory. Second, the increase in year-over-year audit intake levels across truck segments confirm our model year 2024's momentum and the progressive positive perception of the range despite challenging industrial levels. Third, for both bus and defense, our order books continue to be solid, providing a good long-term visibility and underpinning profitability improvements for both businesses' units. In Powertrain, we expect deliveries to third-party clients to progressively recover in the second half of the year. And fourth, we are proceeding apace with the acceleration of our efficiency program and the reprioritization of certain investments, confirming the expected €150 million in savings in CAPEX and OPEX for the current year. We have also identified additional areas of improvement which could potentially deliver further full-year savings. In conclusion, regarding the updates on Tata Motors' offer for Veco Group and our defense business future, I would like to reiterate that all in all, I believe that this is exciting and positive news for both our defense business and the wider Veco Group. We believe that these developments will enhance the long-term prospects of our business for the ultimate benefit of all stakeholders. Thank you.

That concludes our prepared remarks, and we can now open it up for questions. To be mindful of the time, we kindly ask that you hold off on any detailed modeling and accounting questions, which you can follow up directly with me and the investigation team after the call. Operator, please go ahead taking the first question.

Thank you. And our first question will be coming from Alexander Jones of Bank of America. Please go ahead.

Great, thanks. Good morning. Thank you for taking my questions. Two, if I can. First, on the defense sale, can you help us bridge the 1.7 billion euro enterprise value, which I think is about 6.3, 6.4 euros a share, to the 5.5 to 6 that you mentioned in terms of any net debt in the business, taxation on the disposal, or how we should think about possible closing adjustments? And then the second question on production levels, you talked about adjusting those in H2 given your sort of revised demand expectations. Could you give us a little more color and split that between LCV and any changes you're making on the medium and heavy side? Thank you.

Should I perhaps, Anna? Yes, please. Okay, I'll start on the production level. Given what I just said there, it's during the presentation, the main adoptions would be in the light commercial vehicle on the LCV side. We will, of course, making sure that we don't overproduce on the heavy duty as well. But what we see right now is we have a good production pace going into the second half of the year. We keep some flexibility to make sure that we can react quickly to any market demands. but it's mainly within the LCVs that we're adjusting the production rates. And that is because we really want to make sure that we don't use our cash flow to create vehicles that stand on the yard. So we, again, are having full focus on making sure we have a very good breathing machine when it comes to the number of production, the sales, and our inventory levels in that respect.

I'm listening to your first question. So as you correctly said, the 1.7 billion is the enterprise value, which then will translate into a 5.5 to 6 euro per share extraordinary dividend. As you correctly pointed out, the difference between the two figures are all the closing adjustments that need to occur. As we said, and as we stated in the press release, closing is expected to occur in Q1 2026 So obviously the closing adjustments will also be the full year 2025 reports in defense, financial statements, as well as other factors, which should in any case be denied. So that's broadly speaking the difference between the two values.

Okay, so there's no material net debt or cash tax you're expecting to pay when that closes?

No, no, no, in relation to material cash tax impact. But as I said, yes, definitely we need to look at December 2025 balance sheet of defense, including the financial position at that time.

Thank you.

No problem. And our second question will be coming from Nicole Eichen of Deutsche Bank. Please go ahead.

Hi, good morning. It's Nikolai from Deutsche Bank. A couple of questions from my side. Can you just highlight on the remaining business of truck, powertrain, buses, how many bidders were there for this asset? And I will start here.

I think the... I mean, we had the... basically had a position to take where we are looking at the bid that we had. And there was only one firm bid to take consideration of, and that was from the Tata and Remeco. And the board believes that this is the best interest for the company, promotes the sustainable success of the company, and, of course, provide, as I've said before, also in terms of strategic and complementary support clear benefits to all the stakeholders, including shareholders.

Okay, got it. And my second one would be on the new guidance, which is actually quite large, looking at the earnings range, actually bigger than the one before. So should we look at the midpoint of this new guidance range or the upper and the lower end? Any comment on that? Thank you.

I think the reason is, as I mentioned, I mean, we have a visibility now of about two months on the heavy-duty and medium, and we are basically slightly shorter on the light. So it is a – and we also have the uncertainty going into the second. So I think that is the reason why we contemplated to have a little bit of a wider range, seeing where this market will come and see how it will – Okay.

Got it. Thank you.

It's a visibility, I would say, a visibility issue right now.

And our next question will be coming from Martino D'Ambroghi of Equido. Your line is open.

Thank you. Good morning, everybody. The first is a general question on what are the main synergies that you see from the deal with Tata. And specifically, from a technical standpoint, the engines provided by Cummings could be replaced by yours or maybe with just technical adjustments. I don't know. And the second question is on IDV. If you could split the $5 billion backlog among the different products, armored, multi-role, and trucks, and off-road, And the margin was the historical peak. Should we take it as a starting point or there were no recurring elements in this high profitability for IDV? And what is the current capacity utilization for IDV?

So let me start with the synergies, and I touched upon it in my commentary. I think there are a number of synergies that we look. One is, of course, geographical, definitely geographical. You start to see if you map out the geographic complementary, it's really not much overlap at all. The second one is on the product side and the customer segment side, which is also very complementary in terms of supporting between the TATA products and the products that the vehicle makes. The third one is technology. There is a technology development that is not always the same technology development and trends as in Europe, so we basically could align to and also be taking advantage of that as a synergies. So there are a number of those synergies because of the complementary situation of the two companies, which makes it very exciting and really looking forward to that. Now, when it comes to the details, as you mentioned, around the different situation, that is something that has to be worked out over time. But I just want to highlight once again the strategic match in terms of complementary is quite very high. On the IDV, I can already say from the beginning that we don't give any details on the order backlog. And then, Anna, if you want to perhaps give a little bit of other color on the second part of the question.

Sure. So on the margin of profitability performance of IDV, there are no non-recovery elements, so it's all ordinary. And I think the performance, I mean, we had a very good two quarters in a row of defense that I think it's a proof of the solidity and the good marginality of the business itself. I wish, we all wish that would continue in the future, but that remains to be seen. So definitely they had a very strong performance in these two quarters. Let's hope it continues, but Let's say they have their own business plan which was released last year, so that still stands. I think that's what I can say for now. In terms of capacity utilization, IDV has flexibility, first of all, to fulfill their full backlog without significantly increasing their related investments. I cannot provide you with a percentage because we don't disclose that. But what can I say is that, as I said, they can foresee the backlog and the revenue performance, the revenue expectations they have in the plan without incurring into additional significant investments from today.

Thank you. Our next question will be coming from Akshat Kakkar of JPM. Your line is open.

Morning, Olaf and Anna. Akshat from J.C. Morgan. I have two questions for you, both on the proceeds from the defense fair and proposed special dividend. I just want to make sure I understood this correctly. So firstly, could you just explain what is the book value of the defense business, please? And what do you estimate as the corporate tax liability on the capital gain expected from this transaction? And the second question is, if you have received any guidance from tax authorities, on the withholding tax rate that will apply to this extraordinary dividend for different shareholders and if there could be any exemptions or reductions that we should be aware of. Thank you so much.

Thank you for the question. Yeah, well, we don't disclose the book value of IDV. So what I can say is the proceeds of the sale itself are estimated, though you've seen that, between 5.5 euro and 6 euro per share. So I think that's what I can say. And in fact, we don't disclose the book value of IDVs of today. Anyways, in terms of impact, tax impact from the distribution of the extraordinary dividend per se. So as you very well know, Ibiza Group is a fiscal resident in Italy. Therefore, dividend distribution will be subject to the Italian tax rules as any other past dividend distribution EVACO group did, so very long past practice. The withholding tax obviously may vary according to the legal form of the shareholder receiving the dividends itself and its country of residence. So, as I said, it really depends from the jurisdiction and the form of the shareholder receiving the extraordinary value dividend but the distribution itself will be subject to the same tax rates and revolving tax rates as any other distribution of dividends we made in the past. I hope I answered your question.

Yes, thank you so much.

No problem. And that will conclude the question and answer session. I would now like to turn the call back to Federico Donati for additional closing remarks.

Thank you all for your participation and have a nice day.

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.