Mercedes Benz Group Ag

Welcome to the global conference call of Mercedes-Benz. At our customers 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 difficulty during the conference, please press 0 and the hash key 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 and you will hear the following message. Thank you for your participation. Your request to speak is registered. When it's your turn to raise a question, you will hear the message, you are now in talk mode. To withdraw your question, please dial 3 and the star key, after which you will hear the message, your request to speak has been removed. I would like to remind you that this telephone conference is governed by the safe harbor wording that you will 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 Christina Schenk, head of Mercedes-Benz Investor Relations and Treasury. Thank you very much.

Good morning from Stuttgart. This is Christina Schenk speaking. On behalf of Mercedes-Benz, I would like to welcome you on both the telephone and the Internet to our Q2 results conference call. I'm very happy to have with me today Ola Kelenios, our CEO, and Harald Wilhelm, our CFO. To give you more time for your questions, Ola will provide a brief introduction, followed by Harald, who will detail our financials. After that, we will move directly into the Q&A session. The respective presentation can be found on the Mercedes-Benz IR website. With that, I would like to hand over to you, Ola.

Thank you, Christina. Good morning, everybody. In a very dynamic business environment, you can see in our Q2 results that we have produced solid financial performance in line with what we had expected. Of course, the financial performance is affected by the tariffs. We're going to get into more details on that in this call, and Harald will drill down on it. But next to what's happening in the world, in the market, we have also been very busy and very focused on delivering our biggest product offensive and technology offensive in the history of the company. This is a journey that we have been on now for the past several years, and it's coming to fruition. The first calling card of this product offensive is the CLA, and it's now being delivered to customers. The response that we have received from customers, from dealers and industry watchers around the world has been extremely positive, and we feel encouraged by this. But this is like an appetizer of an eight-course meal, where in the next three years we're going to launch more than 25 individual models. And it's happening rapidly. We have presented a new CLA shooting brake, which is very important, especially for the European market, also for business customers in the European market. It's been traditionally a popular model. And at the IAA, the International Auto Show in Munich in September, only a few weeks from now, we will show you the first vehicle of our so-called Mercedes-Benz electric architecture, which ushers in a whole new era in electric mobility for Mercedes-Benz, and we're very, very excited about it. But it's not just about our main brand, Mercedes-Benz. Our friends in Affaltobach have shown a concept car, which is nothing less than spectacular. Many of you maybe ask yourself, my goodness, what is this? This performance vehicle seems unreal. Is it really real? And I can tell you this. You're probably surprised when we launch the series version of this next year how real it is. Watch this space. At the same time, our van division is also going through a historic product and investment offensive, really, where we're going to replace the complete lineup of our vans in the next two to three years. And that's also around the corner. And they are equally busy compared to the passenger car people. On the customer side, I could go on for the rest of the day talking about what we're doing there, both on the physical touch points and also in the digital world. But I just wanted to highlight two things. We have now started the sale of the own retail in Germany. So the first few transactions are in the pipeline here. And the interest has been tremendous, which we also view as a positive sign. And we opened at the very top of our portfolio, the first Mercedes-Maybach brand center in Seoul. Should you be traveling in Korea, I highly recommend that you stop by. It is an unbelievable celebration for that product, for those products and that brand. Last but not least, in terms of key messages here on page two, as you know, we have been focused over the last few years on cash flow generation. Again, Harold will go into detail. But we produced another solid quarter in terms of cash flow. If we turn to page three, I don't want to go into too much detail on the earnings. I just want to highlight two things. The free cash flow, as I just mentioned, but also in terms of the EBIT, you can see that there are two numbers there. That is because of restructuring. You know that we announced at the beginning of the year that we would start restructuring, especially here in Germany, especially on the indirect staff side. That's progressing according to plan. And that is why we have made some provisions for that. Moving to the next page, page four, dissecting the sales. Yes, the market environment is challenging, especially in China. But also through the whole tariff discussion, there was management of how to deal with wholesale in the United States that we tried to do to the best of our ability. And I'm sure that will continue into the next quarter, which affects the wholesale figure in spite of the fact that the retail sales were quite strong in the U.S. in that quarter. In terms of top end, we stayed at the healthy 14 percent as a percentage of the total sales. And on the XEVs, we had slight growth. You can see that the plug-in hybrids are very successful here. And we are managing our battery electric vehicle sales in the current environment. We're watching, especially in the European environment now with the 2025 regulation in place, that many market participants are trying to above and beyond the natural demand, push volumes up. We are managing this, in my view, in a more careful way to also protect the integrity of the brand, not just on the I side, but also on the web site. And as I mentioned here at the beginning, we're just on the verge of a massive product launch here in the next two to three years on the electric side. So we will see our electric, the BEV only sales, once that product offensive comes to fruition, grow. And especially important will be the vehicles in the core segment, like the new electric, GLC, and the C-Class that we're launching in next year. And we'll have the full first year in the market in 2027 on a broad range of products. So here, intelligent management growth of XEV. With that, I switch to vans on page five. The van market was also affected by the current economic environment. In that economic environment, you will see that as we go into the van figures, if you follow the van segment as such, everybody is challenged. But I would say we're probably the best student in the class here. Not everybody discloses their financials in this case, but for the ones that do, you can see that they are significantly, significantly more challenged than us. That is not the call to be complacent and certainly not arrogant. What I want to do is to say kudos to the van team for managing this in a difficult circumstance. And that kudos actually goes to the whole Mercedes-Benz team. I've seldom been in a more dynamic environment in the auto industry than what we're expecting now. But everywhere I go in the company, I meet focused people, motivated people, people with a can-do attitude and looking forward to everything that we have in the pipeline. Take the challenges and in an agile way try to manage them. On the BEV side, to go back to electric vans, yes, we are growing.