Iveco Group Nv

We would like to remind you that today's call is being recorded. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. At this time, I would like to turn the call over to Federico Donati, Head of Investment Relations. Please go ahead, sir.

Thank you, Razia. Good morning, everyone. I would like to welcome you to this webcast and conference call for Iveco Group third quarter financial results for the period ending 30th September 2025. 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 me, Federico Donati, Head of Investor Relations, standing in for the financial section usually covered by our CFO, as Anna Tangarelli could not be present today. 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 from forecast and expectation 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 measures is included in the presentation material. Furthermore, on 30 July 2025, IVECO Group announced the signing of a definitive agreement to sell its defense business, IDV and Astra brands to Leonardo SBA. The transaction is expected to be completed no later than 31 March 2026, subject to the customary regulatory approvals and carve-out completion. In accordance with IFRS 5, non-current asset held for sale and discontinued operation, As the sale becomes highly probable in July, the defense business meets the criteria to be classified as a disposal group held for sale. It also meets the criteria to be classified as discontinued operation. In accordance with applicable accounting standards, the figures in the income statement and the statement of cash flow for 2024 comparative periods have been recast consistently. Additionally, in 2024, the firefighting business was classified as discontinued operation. It says it was completely on the 3rd of January 2025. As a consequence, 2025 and 2024 financial data shown in this presentation refers to the continuing operation only, unless otherwise stated. Finally, please note that subject to applicable disclosure requirements pending the publication of the final offer document, we will not comment on the tender offer. As per the joint press release on July 30th announcing the entering into the merger agreement and the press release by TATAN on August 19th announcing the filing of the document with CONSOB, anyone interested is invited to refer to the offeror's notice published on July 30th, 2025. which indicates the legal basis, rationale, condition, terms, and key elements of the tender offer. All the aforementioned material and announcements are available on IVECO Group corporate website, where any additional relevant information will be published in due time. We will not comment on the sale of the defense business to Leonardo Ather. The rationale, terms, and condition of the sale, with the details as currently available, were disclosed on July 30th. As announced, the transaction is expected to be completed in Q1 2026, subject to customer regulatory approvals and carve-out completion. Consistently with the agreement reached with Tata, Iveco Group will distribute the net proceeds of the transaction based on the enterprise value agreed with the purchaser via an extraordinary dividend estimated at 5.56 euros per common share to be paid out to the company shareholders before the tender offer is settled. With those points covered, I'd like to turn things over to our CEO, Olof.

Thank you very much, Federico. And let me add my own warm welcome to everyone joining our call today. I'll start with slide three, outlining the main highlights from our third quarter performance, excluding defense. Throughout the quarter, we maintained a high focus on our long-term vision and maintained discipline in the execution of measures that will help achieve it. These include tight control on inventory levels, diligent cost management, and the ongoing commitment to our multi-year efficiency program, as well as its acceleration for the current year, which is proceeding as planned. We have also identified additional areas of improvement which will deliver further full-year savings. In our truck business unit, we concentrated on balancing pricing and market share. The focus was on protecting our leadership position in the LCV chassis cap sub-segment, where pricing dynamics were more challenging, and maintaining a very strict pricing discipline in medium and heavy in support of the final phase of the introduction of our model year 2024 across European countries, and thereby ensuring the quality, performance, and the full potential of the product. I'd now like to break down our performance by business units. In-truck industry demand in Europe remained particularly low in the chassis cab sub-segment, which affected profitability in the quarter that was only partially offset by strict cost control measures. European deliveries in the period were down year over year, particularly for light commercial vehicles, which were down 27% versus last year. At the end of the quarter, worldwide book-to-bill for tri came in at 1.0, up 25 basis points versus the same period last year. In powertrain, we began to see the first sign of a sustainable recovery in engine volumes, as had been expected, supporting profitability improvements. In our robust business unit, profitability was impacted by costs associated with the ramp-up of production in our M&A plant in France, But despite this, our order books remain strong, providing us with a clear long-term visibility. Free cash flow absorption in the third quarter of 2025 was at 513 million euros, broadly in line with last year's performance when we excluded from last year the positive effect of the deployment of the higher inventory levels that we registered at the end of June 2024. You will recall that this was linked to the phase-in and phase-out of the new model year in tracks. Going forward, we will continue to remain very focused on quality and operations in line with our long-term pathway, maintaining tight control on production levels and inventory management, and on delivering our efficiency programs. Guide 4 outlines our indicative timeline for the first half of 2026 with the sale of our defense business and the tender of the free vehicle group progressing in parallel. Regulatory filings for both transactions, including those required by the European Union, are currently underway and subject to final approvals. Both the sale of the defense business to Leonardo and subsequent distribution of the net sale proceed through an external ordinary dividend and the tender of the Batata are on track for completion within the first half of 2026, as we stated previously. Moving on to slide six and the truck segment. We maintained pricing discipline and tight inventory control throughout the Q3 in 2025. European industry volumes increased by 5% year-over-year for both light commercial vehicles and medium and heavy trucks. Iveco's third quarter LCV market share was 11.7%, of which 29.7% was in the chassis cab sub-segment and 65.8% was in the upper end of the segment. Industry growth overall was largely driven by the camper sub-segment, where Iveco has limited exposure. Chassis cab volumes, on the other hand, remained under pressure, yet we managed to protect our leadership position. In medium and heavy trucks, our market share reached 7.2%, with heavy trucks accounting for 6.4%. I do apologize. In this segment, we implemented a selective sales mix strategy throughout the quarter to optimize challenge profitability and support the final phase of the introduction of our model year 2024 across European countries, and thereby ensuring the quality, performance, and full potential of the product. Our ability to adapt to segment dynamics while preserving pricing integrity and managing inventory effectively reflects the strength of our commercial execution and the strategic clarity of our truck business. Moving on to slide seven, our worldwide truck book-to-build ratio reached 1.0 at the end of the quarter, registering a 25 basis point improvement year-over-year. This reflects balanced commercial performance across geographies and product categories. In light commercial vehicles, our European order intake rose by 17% compared to Q3 2024, supported by a book-to-bill ratio of 105. This increase, we believe, is a welcome first sign of recovery. Coming on the heels of a prolonged period of production coverage well below last year's level, seven weeks this year versus 12 weeks last year, In South America, experience even stronger growth with order intake up 37% and book-to-bill ratio 1.11. In medium and heavy trucks, European order intake declined by 3% year-over-year with a book-to-bill ratio of 0.82. South America saw a more pronounced contraction of 21% with a book-to-bill ratio of 0.94. While these figures reflect a softer demand environment, the backlog remains stable at seven weeks of production coverage. Let's move to the next slide, number nine, with bus industry volumes and market shares. EVECO bus during the quarter continued to demonstrate strong competitive positioning across Europe. In the intercity segment, our leadership was reaffirmed with a 55.1% market share in Q3, representing a 5% point increase year-over-year. This gain can be attributed to the successful introduction of electrical models, which are contributing positively to both volumes and brand perception. In the European city buses segment, our market share stood at 15.1% in Q3. We expect an acceleration in deliveries during Q4 consistent with the seasonal patterns and supported by backlog conversion. Overall, Iveco Bus maintained its consolidated number two position in the European market with a 21.3% market share year-to-date. Moving on to slide 10, in Q3 2025, our bus order intake declined with 17% following the strong momentum we enjoyed in the first half of the year. This front-loaded demand contributed to a 6% year-to-date increase as of September. Deliveries rose 20% compared to Q3 2024, demonstrating robust execution and sustained customer demand. The book-to-bill ratio stood at 0.77 at the quarter end, a figure impacted by scheduling of orders early in the year. Importantly, year-to-date order intake remained higher than 2024 at 108, demonstrating the segment's resilience. On the 29th of October, EVECOBUS signed the framework agreements with Ile-de-France Mobilité, a leading public transport authority managing one of Europe's largest and most complex transit networks. EVECOBUS will supply Ile-de-France Mobilité with up to 4,000 low and zero emission buses and coaches between 2026 and 2032. This is in line with the brand's long-term strategy to building on zero emission and electromobility solutions. In conclusion, we maintained a solid long-term visibility for Intercity and CityBuds, with coverage now extending well into the second half of 2026. On slide 12, we have the delivery performance for our powertrain business units, and after nearly two years of consecutive year-over-year decline, engine volumes increased by 1% compared to Q3 2024. While modest, this improvement reflects the recovery we predicted last quarter. During the period, new third-party customer contracts were signed with Lindner and JCB. Production for these orders will begin in 2026. These contracts position FBT Industrial as one of the main references in the agriculture industry and are in line with our long-term strategy to grow the number of third-party clients. Operational discipline remains central to our approach. We continue to manage costs diligently. and remain committed to our efficiency program. These efforts are helping us to protect margins and ensure sustainable delivery as volumes recover. Looking ahead, we expect the recovery in deliveries to third-party customers to continue throughout Q4 and beyond, supporting profitability improvements. Going to slide 14 looks at our electric vehicle portfolio where year-to-date delivery volumes continue to grow across the business units despite the challenging market demand scenario. This clearly shows the competitiveness of our product lineup and our unique positioning in LCV where EVEKO is the only truck maker to offer a complete fully electric product lineup ranging from 2.5 to 7 tons. With that, I finish my opening remarks and I will now hand over the call to Federico.