Mercedes Benz Group Ag

The conference is now being recorded. Welcome to the global conference call of Mercedes-Benz. At our customer's request, this conference will be recorded. The replay of the conference call will also be available as an on-demand audio webcast in the investor relations section of the Mercedes-Benz website. The short introduction will be directly followed by a Q&A session. If you have difficulties during this conference, please press zero and rhombus on your telephone keypad for operator assistance. If you want to ask a question after the presentation, please press 9-star on your telephone keypad. To remove the question, please press again 9-star on your telephone keypad. Please note that dialing 9-star a second time during the call will automatically withdraw your question. Please refrain from pressing the key combination multiple times during this call. I would like to remind you that this telephone conference is governed by the Safe Harbor wording that you find in our published results documents. Please note that our presentations contain forward-looking statements that reflect management's current views with respect to future events. Such statements are subject to many risks and uncertainties. If the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. Forward-looking statements speak only to the date on which they are made. May I now hand over to Steffen Hoffmann, head of Mercedes-Benz Investor Relations and Treasury. Thank you very much.

Thank you, and good morning, ladies and gentlemen. On behalf of Mercedes-Benz, I'd like to welcome you on both the telephone and the Internet to our Q2 conference call. I'm very happy to have with me today Ola Kelenius, our CEO, Harald Wilhelm, our CFO. In order to give you maximum time for your questions, Ola and Harald will begin with an introduction directly followed by the Q&A session. The respective presentations can be found on the Mercedes-Benz IR website. Now, I would like to hand over to Ola.

Thank you, Stefan, and good morning, everyone, and welcome. In Q2, we have delivered, again, solid financial results and results remain on track in executing our strategy in what we consider a dynamic environment. We increased sales across all the main regions in the first half of this year, especially on the top end sales side and dynamic growth of our battery electric vehicles. We, of course, remain vigilant and stand ready to adapt to dynamic macroeconomic and geopolitical events But for all intents and purposes, we're on track. The reason for our confidence is very attractive, complete, and a young portfolio in the market, both for our electrified high-tech ICE products and our BEVs. So let's have a look at the numbers on slide three in the deck. The higher car sales, which were plus 6%, and the significantly higher van sales, plus 90%, drove healthy growth of the revenues. And that's then also in combination with the rest of the strategy execution underpinning a better EBIT than the period last year, and a very strong increase in the free cash flow to $3.4 billion. And the net industrial liquidity remains also on a very healthy level, and considering that we also paid out, of course, a dividend in the second quarter of this year. If we, on the next slide, go into it a little bit in more detail, with regard to the performance here for Mercedes-Benz cars, the key messages are really that the percentage of top-end vehicles and the percentage growth of top-end vehicles, which was 12%, developed favorably in this past quarter. And our BEV sales more than doubled. So we have picked up momentum on that front. We have also demonstrated resilience in a challenging environment. We come off of, of course, COVID supply restriction through semiconductors and so on. And now on the operational side, things are starting to normalize. So I think that we have navigated through this first half year in terms of operational performance in a very reasonable manner. The new products that we're launching, and I was just down at the press test drive of the new E-Class speaking to product and business journalists and driving that, we have received a phenomenal, really a phenomenal feedback from customers around the world that are waiting for this vehicle, our dealers. Here we have the the precursor really of MBOS that we will launch shortly. But the infotainment domain is a precursor of MBOS and the first full digital product as part of that overall operating system. And then we have a couple of dream cars that are about to start production here soon with the CLE Coupe and the CLE Cabriolet. And we also launched the GLC Coupe, the GLC being our bestseller in our portfolio. On the technology side, we're making progress. We now also received level three certification for autonomous drive system in California. So step by step, we're building our position here. And this is, of course, just the first few steps and much more to come in the next few years. But also the launch of what we call automatic lane change on highways is a function that you really must try. Now I think we're also going to be the first ones that get to launch that in Germany as well after speaking to the German authorities. So that's very positive for our customers. Since we have our own cloud infrastructure and a cloud layer where we can quickly, through our backend, add technology to our vehicles, we were the first manufacturer that took the opportunity to do a beta test of chat GPT in our vehicles in the U.S., And what I've heard from customers so far has been very positively received, and the usage of our infotainment system has gone up even more. But we're also working on the customer experience in general. As you know, we're expanding our charging options. We think that charging infrastructure is going to be one of the driving enablers for people to adopt BEVs in this marathon towards zero-emission driving. And we have now struck a deal where we open up to our customers in the U.S., also the Tesla Supercharger Network next year. And as you can see from news this week, together with several other OEMs, we're going to put more money into building a very comprehensive charging infrastructure, complementing the things that we're doing around the world. We're in the process of changing our business model in go-to-market and moving towards direct sales. And in this past quarter, Germany, which is our third biggest market, switched to direct sales. And that went as smooth as you can expect, realizing how big of a market this is. But also in overseas markets, we're pushing ahead. Turkey is a good example. So strategically, on many fronts, we are taking Mercedes into the future. If we jump to the next slide in the deck, you see here the structure of our vehicle sales. And I think I've commented on much of it. Maybe one thing to mention is that on the core side, we're just in switchover mode of the GLC, which is our best seller. So I would say we should pick up some momentum on the core side in the second half of this year and then going forward. On the entry side, we had quite a bit of pent-up demand, especially in Europe. That was also brought to waiting customers in the first half of this year, and I've already mentioned the strong results on top-end vehicles and BEVs. Plug-in hybrids, now I think we have the most comprehensive fleet of plug-in hybrids, and literally every new vehicle that we have launched over the last couple of years and are about to launch. With a WLTP standard, we have around or more than 100 kilometers range. So you really get half of an electric vehicle now, more or less. Monday through Friday, going back and forth to work or wherever you go, you can drive electric, but you also have the high-tech combustion engine on board. So the plug-in hybrid will play a role throughout this decade. And I think we have