Jost Werke Se

Yeah, thank you very much. A very good morning from Norisenburg and welcome to our Q2 2023 investors and analysts call. Today, Romy Acosta and myself will present the results to you and we will be able to answer your questions hopefully all in after the presentation. Our new CFO, Oliver Gansert, he will start on the 1st of September and you will get to know him latest in the Q3 presentation then. I'm very happy to, if you go to the next slide, please very happy to present to you a very successful. Water for just, it's actually the most successful Q2 that we had in the history of just, we had record sales of 330 million in the Q2 quarter of 2023. A very strong growth in transport with 13% and that we were able to compensate the lower demands that we had in our agricultural products that had a minus 25% in sales. Our adjusted EBIT outpaced sales, growing to a record level of 37 million in a Q2 in 2023. And that leads to an adjusted EBIT margin expansion by 1.3 percentage points to 11.3%. Also, our adjusted earnings per share went up by 20% to €1.80 in Q2 of this year. And I'm very happy also about the cash flow development and Romy will explain that a little bit in more detail. We've generated more than 20 million in free cash flow in this quarter. So based on this very strong results, we confirm our positive outlook for the fiscal year 2023. If we look at the market developments that we had in Q2, our business was supported by a very strong truck market, especially in Europe. Trailer markets somewhat normalized a little bit with a minus 3%. Tractor markets was quite weak. Overall, just achieved a minus 3%, so our growth in truck could outweigh the reductions that we had in the other two sectors. North America continued strong in truck and trailer market, also a contraction in the tractor market. So we were more or less even the minus 1% overall. Asia-Pacific Africa, strong growth in the market, especially due to China with a plus 44% and the trailer market plus 15%. We generated 36% higher sales. If you would look at that in original currency, that would be 50% increase, but with the FX effects, it becomes 36% due to exchange rate changes. So very strong quarter, very happy with the development and Romy will present to you a bit more financial details.

Also welcome from my side. I'm very happy today to give you the deep dive into the financials for the second quarter. I will be focusing on the second quarter numbers as usual, and we will start with the European region. As Joachim just mentioned, in Europe, we saw a decline in sales, a slight decline by 3% to 178 million euros, which reflects the development in the underlying markets, a very, very strong development of the truck markets. that almost managed to compensate for the weakening in the trailer markets and in the agricultural markets. We did have a very robust development in the aftermarket, which is a typical development that you see when first-fit sales start to go down, as we saw in the trailer and the agricultural products. And we had a bit of headwinds from the currency exchanges, especially from the Swedish krona, Adjusted for that, actually, the decline in sales could have been only 0.6% compared to prior year. Despite this slight decline in sales, what was very positive was the strong development in profitability and adjusted EBIT, which grew in the quarter by 15% to 14.3 million euros. which was a great improvement compared especially to the prior year where adjusted EBIT margin was 6.8% and we managed to achieve this quarter 8.2% adjusted EBIT margin in the European region despite Europe bearing the headquarter cost for the region. Of course, last year We had a very strong impact from the outbreak of the Ukraine war. And if you remember correctly, a lot of our truck OEMs were affected by the lack of wiring harnesses, which disrupted the supply chain, as well as we had a lot of input costs that skyrocket due to the war. uh especially the supply chain we are happy to see have stabilized at the end of the of the fourth quarter but also continuing so in the first quarter now in the second quarter of the year and sea freight rates have gone down significantly which is very positive for the development of profitability in our act business so despite the decline in sales we saw a very strong development of profitability in the agricultural business due to the fact that a lot of the products that we sell in Europe are pre-produced in China and one of the major input cost factors is logistic costs. So that overall was a very good development and we are seeing Europe going back on track to the profitability levels that we saw in the past and we will continue to work on this in the future. If we move to North America, here we see a bit of the same picture Very strong transport markets. Here, not only the truck markets were good, also the trailer market continues to be very strong in the North America region. However, the decline in the agricultural market was also stronger than it was in Europe. And the reason for that is that if you remember Last year, we had a very strong boom in the so-called compact segment for detractors, which is no longer the case in 2023. So that here is where we saw the biggest decline in sales in agriculture, compensated almost completely by the strong development in the transport sector and also very good aftermarket. Headwinds. For the first time, I think in like two years, the translation effect of the dollar to the euro player worked against us instead of for us, so that we have a 2.3 percentage point headwinds from currency exchanges. Adjusted for that, we would have seen growth in the North American region by 1.7%. Also here, when you look at the bottom line, adjusted EBIT grew outpaced in sales by 8% to 10.3 million euros. And what we are quite happy to showcase is that our adjusted EBIT margin continued to be at 10.5%. higher than last year, but on the same level as the very strong quarter of the first quarter of this year, which is the highest adjusted EBIT margin and profitability we've ever achieved in the North American market. So we are quite happy with this development. Here, too, what we are seeing is on top of the efficiency measures that we've put in place to compensate for the high cost that we saw last year, That with the stabilization of the supply chain and the reduction of logistic costs, these measures are able to unfold further. And of course, North America does not bear the headquarter costs, so you see a major impact as well of this profitability development. And with that, I go to the next region, which is the highlight for this quarter. The Asia-Pacific-Africa region grew by 36%. to 55 million euros, as of 15 million euros more than in Q2 of last year, but also higher than the Q1 of this year, in which we had sales of 50 million euros. And that's despite the fact that currency exchanges worked against us in all regions for headwinds of 13.7 percentage points. Adjusted for that, as Joachim mentioned, it would have been almost 50% growth. Here, too, we see the very strong development that we've already saw in the prior quarters of India, Southeast Asia, the Pacific region, as well as South Africa. But more important, we are seeing the slow recovering of the Chinese market. And that, of course, boosts sales for us because we are well represented in that market. The profitability also developed quite nicely, growing by 31% to €11 million in adjusted EBIT. An adjusted EBIT margin was 20.1%, which is still beyond the 20% despite the fact that China is coming back. And if you remember from the past, China does tend to have a different product mix that we see in the other countries in the regions. with more on-road products. But despite of this, we are still enjoying a very good and strong profitability in the Asia Pacific Africa region, also driven by the better utilization rates in our Chinese production plants. And with that, I'll move on to the group overall. The second quarter, as Joachim mentioned, the strongest second quarter we've had so far with sales of 330 million euros total, growing by 2.6% compared to prior year and adjusted for the negative effects that we saw in all regions that growth would have been 6.4%. Transport developed very, very strongly, both especially trucks and of course the Asia-Pacific Africa region overall growing by 13% compared to the prior year quarter, whereas agriculture declined by 25% to 67 million. So overall, We are quite pleased with this development. You see it also in the adjusted EBIT, the profitability was increased by 16.3% in the group to 37.3 million euros. And the adjusted EBIT margin in the quarter was 11.3%, which is higher than prior year. But even if we look one year further back when we did not have the impact of the war and all these issues, skyrocketing supply costs and supply chain issues that came with the war. In the second quarter of 2021, our adjusted EBIT margin was 11%, so we managed to actually improve open that and i think that showcases the strength of the business and how we are positioned the fact that the markets that are doing really well this year which are trucks and the asia pacific africa regions were markets that last year were doing less well if you remember we had a lot of disruptions uh from truck oems and asia was very down due to china those are the markets that are now pushing the growth and this highlights one of the key factors that we mentioned at just and is that Actually, the fact that we are very widespread geographically and have a very wide product mix and different business lives help us to cope with shifts in demand and that also reflects in the development for the overall group. So in conclusion, when we look at the numbers here today, sales grew by 6% to 672 million euros and adjusted EBIT grew by 16% to 77%. million euros with a year today adjusted EBIT margin of 11.5%, which is something we are quite pleased to report to you today. And with that, I move further down the P&L to the net income and earnings after taxes. Reported net income went up by 19%. to 45 million euros and you come you see the typical adjustments that sorry we add taxes on that and then financial net income sorry the financial result and that was less that developed negative compared to last year last year our financial result was only minus three million euros This year is at minus 8 million euros, mostly due to the much higher interest payments for bundles that we are seeing due to the fact, of course, that interest rates have increased. If you just see here the numbers, also interest rates Payments were up by 6 to 6M euros compared to 2M on the last year. And then that brings us to the to the reported of 62M euros. We are the with developing as the depreciation and amortization for, which develop in line, like, in the prior years, 12M. Other exceptionals went up to 3 millions and that's also in line with what we had last year. This year they're mostly coming from the India production plant and that brings us to the adjusted EBIT of 77 millions I mentioned before. Then we go down the bridge, subtract the finance result and the adjusted taxes and come to an adjusted net income of 56 million euros for the first half of the year. up 14% from last year and adjusted earnings per share of €3.79, which is the highest we've managed to achieve in the first half of the year. So also here, a very strong development. of the P&L that also reflects again on the development that we see in the balance sheet items, with ROSI going up to 19.8% compared to year end, driven by the very strong development in adjusted EBIT, a very good equity ratio at 37.2%, also an improvement compared to year end, despite the dividend payment. And when we look further down to the net debt here, I too would like to highlight that cash remained very stable at 80 millions compared to year end, despite the fact that we did pay 21 million euros in dividends in the second quarter of this year. And despite this payment, net debt remained very stable at 197 millions. So that the leverage was down compared to year end to 1.18 times on the same level as at the end of the first quarter. And the reason for this strong development is, of course, the cash flow. And here is what Johan mentioned before, something that we are quite proud to show. Free cash flow doubled in the second quarter to 20 million euros compared to the 9 million euros that we saw last year. And if you look at the year-to-date numbers, that's even more impressive because free cash flow was at 33 million euros year-to-date compared to almost minus 4 million euros negative free cash flow in the first half of the prior year. And our cash conversion rate has also doubled to 0.8 times from a free cash flow relation to adjusted net income. And it's very close to coming back to the one time that we actually have as our target. and this development we managed to achieve that despite higher capacity capex expense expenditures of 7.5 millions compared to the 6.4 million in the prior year all well within our guided range of 2.5 percent of capex compared to sales we are in the second quarter at a ratio of 2.3 percentage points and the fact that it went up compared to the prior year has again to do with the investments in the Indian production plan. The reason, of course, for this very strong development in cash flow comes to working capital. The measures that we have implemented through the past quarters are showing effect. We see especially a very strong and positive development in the inventories, which have gone down by 28 million compared to the prior year. we are well below the 200 million threshold and also further down than the 199 millions in inventories that we had at the end of the first quarter. Also, trade receivables have gone down despite sales growing. And the only thing that is different or is atypical or does not impact positively the working capital would be the decline also in trade payables, but that has to do with the measures that we've put in place to reduce inventory if we are trying to continue to reduce the safety stock that accumulated due to the supply chain issues over the past quarters and those are not repurchasing as much materials as before and that's the reason also for the decline in trade payables. So overall, the relation of working capital to sales went down to 19.3% compared to the 21.2% of the prior year, and also better than the 20.6% that we had at the end of the first quarter. And we are very close to achieving our target for the year, which is to be below the 19% threshold. And with that, I've gone through all the financials and I will give it back to Joachim to speak about the outlook for the year. Thank you very much for your attention.

Thank you, Romy, for the details. And let's look at how we expect the rest of the year to unfold. And these are the numbers now for what we expect for the total financial year 2023. So truck, we expect a very strong year in Europe, 10 to 15% above the level of 2022. Trailers somewhat weaker, I would say to a normalized trailer level. Tractors also weaker than the year before. In North America, still a very high level, little growth expected in truck and trailer for the overall year, a little less in tractors. And Asia Pacific Africa, you've seen earlier that we had big growth rates in the first half year, so those are expected to come down a little bit so that the overall year will be at 15 to 20% in truck and in trailers. So overall, it should be a strong year, but somewhat normalizing the high growth rates that we've seen in the first half year. What do we expect for Yoast out of this? We confirm our positive outlook. So we expect growth in sales. um last year we had 1.265 million and we expect a low single digit growth year over year we also expect a growth and adjusted ebit somewhat outperforming sales also in a low single digit range last year we had 124 million euros ebit So that the adjusted EBIT margin will increase over the 9.8% that you've seen last year. And based on the very good first half, we think that will certainly be a double digit number. Um, CapEx, uh, Romy mentioned already, we usually stick to the two and a half percent and, uh, and that's the way we operate. And so that's also the range that we expect for the overall year, 2023. And our working capital will be below the 19% of sales, um, that we've also seen last year. So to sum it up for the. First half year or the Q2, we had a very strong demand for trucks. We had the recovery of the Chinese market and the high demand in North America. And that continued to be the growth drivers for our business in Q2 of this year. I cannot stress enough the operational flexibility, how important that is to us. And I think the fact that with a minus 25% in our agricultural business, we were able to increase the overall profitability is a testament to that flexibility. So with that flexibility, the increase in profitability and the strict working capital management, we were able to support our strong financial performance and our continuous profitable growth in Q2 of 2023. The market expectations for the overall year continue to be positive. The softening that we are seeing in the agricultural demand, we are able to offset with a stronger demand in transport. And based on those strong operating performance, we confirm our positive outlook for the year 2023. And we're now happy to take your questions. Thank you very much for your attention.