Piaggio & C. SpA

Good afternoon, this is the Coruscall Conference Operator. Welcome and thank you for joining the Piaggio First 9 Months 2024 Financial Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Raffaele Lupotto, Investor Relations of Piaggio. Please go ahead.

Thank you very much. Hello, everyone, and welcome to the first month of 2024 Financial Results. The conference call today will be hosted by Piaggio Group Chief Executive Officer, Mr. Michele Colaminno, and the Group CFO, Alessandra Simonotto. Today, we have also the pleasure to have with us Piaggio Group Executive Chairman, Mr. Matteo Colaminno. You can access the slides supporting this conference call on the Internet at the Agile Group website. And as you may expect, before starting the presentation, I need to remind you that during today's conference call, we may use forward-looking statements based on the Agile's current expectations and projections about future results and events. By their nature, forward-looking statements are subject to risks, uncertainties, and other factors that can cause after results to be materially different. as mentioned in the safe harbor statement included on page two of today's presentation. Also, I remind you that the press has been invited to participate in this conference call in a listen-only mode. With that said, let me turn the call over to our CEO, Mr. Michele Colanini.

Thank you, Raffaele, and good afternoon, ladies and gentlemen. Thank you for joining our conference. I will be very quick to resume what's going on around the world with the Piaggio Group. First of all, you have seen that the Asian market is continuing the path that it started to have at the beginning, let's say half of 2023, with declining markets in all the regions over there, especially Thailand, China, and Vietnam. for different reasons, but mainly due to consumers' attitudes to spending that is lower than last year's due to political issues and high cost of interests in the area and global. Indonesia instead is going well. We are satisfied about the results. We are also satisfied about what's happening in minor countries where we are starting our operations, such as Taiwan, Philippines, and Malaysia where, by the way, we plan to be, you know, in a better position, let's say, in the coming years. Especially Philippines is a target for us because the growing GDP per capita push us to be more present in the area of Manila. As I said, China is declining in a premium market, premium and luxury market. You know the situation better than me. Other companies are outlining the situation over there. We are keeping the dealer's distribution safe in all the areas, so we're not pushing to sell in without having a real sell-out in the whole market. India coming a little bit in the oldest area. We are satisfied. Margins are growing. Our productivity is okay. The production of the global Aprilia bike 457 is going, I would say, even better than we forecasted, even if we started just recently. As you've seen, we are launching other products related to the 457 series at the EICMA fair. The customers are very satisfied on what we are showing them for the next year product line. So for India, we foresee a growing situation at the EBIT level and also the marginality is good. We don't see any disruption by the end of the year, so it will continue to do as it has done since now. Europe market is quite flat on bikes and it's a little decline on scooters. We know that we have new competitors coming from the Asian markets coming in with low prices. We are not following them. We continue to keep the prices we have at the beginning of the year. We are not discounting to customers because the healthy dealer distribution network among Europe is what we have reached until now. And as you know, a prudent selling strategy until now has given us the sustainability of the dealer's financials and we care a lot to that. We have this stock in Europe due to Euro 5 and Euro 5 Plus so to have a safe dealer's distribution network beginning next year because we have many new products to start selling in the fourth quarter. So this is perhaps prudent instead of pushing but given the actual geopolitical and financial global situation, I think that is the right strategy, perhaps to lose some million in revenues, but to have an healthy dealer's distribution network. You know, we manage four brands at the same time under the same roof of the multiplex dealer, so we have to carefully distribute the vehicles and carefully take, you know, price positioning compared to the competition. If you go to U.S., U.S. has shown nine months in a declining situation of the market, although over there we have a good result for the bike that we have introduced so far, and obviously Vespa is continuously to be the leader in the premium scooter segment all over U.S. So in a nutshell, I would say markets are going down. We are maintaining market shares. somewhere slightly growing, just slightly, zero point. And that has driven the company to have a nine months EBDA at 17.3%. That is the best ever nine months that we have shown since the last 22 years. As I told to the board of the director today, it is a very, very interesting number. I would say that it's difficult, but not impossible, to maintain in the coming years. We just need some stability, that it's not the Piaggio Group can drive the situation. It's interest rates that has to go down, and you see that they are starting to decline, so to speed up the consumer confidence on spending their money. The second issue is that we hope, as everybody hopes in the world, that the political situation will in some way be better, hoping to be better, because otherwise we continue to manage some hysteric markets that it's not what we are taking care. As you know, we have a medium to long-term strategy. It's not just tomorrow morning. The productivity is going on. We are very satisfied with the management of our capabilities around the world and we are very satisfied of what we are doing in investments, both in products and facilities. As you see, it has grown roughly 15 million euros compared to last year in capex. This is due to new products and new facilities, especially the one that we are totally renewing, Mandello Lario, for the Moto Guzzi brand, where we will have, I think, a very interesting situation in place for our customers. let's say one of the best in the world for design and capability. We are introducing new technologies that we have delivered in the Boston robotic components division in Boston such as robots for carrying stuff in our factories to enhance for our workers their safety for sure and also to be more productive. So by the end of the year I don't see any major improvement in the areas that is to say that the markets will not have a big rebound and that's why we will continue to manage eventually the stocking the dealers taking that we have done 90% of the job given it is November because we are also introducing starting introducing the Euro 5 plus vehicles So the show has begun. I would say that the financial situation of our debt that has increased a little bit is due to 14 million of capex and obviously less cash in from revenues. That's the direct consequence of the decline in revenues. If I have to think from now to next year, so what will happen in the world, I would say that The product line will be very interesting from a customer point of view. We will not have a major increase in prices, so we will continue to work on increasing costs that is everywhere in the world, potentially on raw materials and logistics due to the fact that there are wars and tensions around the world. Through productivity, we will try and I think we will succeed not to increase prices. We are satisfied with the price point we have, given that we have a 17.3% EVDA. As I said at the beginning, we are at the Milano Fair, the biggest in the world for the sector, and our product line has been very, very interesting for the customers. They are satisfied, they're happy that we renew quite all our products and that we put new products in the dealers distribution channel. As far as brand equity is concerned, that is one of the key pillars of the strategy in the medium-long term. We are continuing to invest in marketing activities that are correct for the customer of today. We are investing in the digital world of e-commerce. We are investing in fashion and apparel for our Vespa brand. We are starting to invest in fashion and apparel. related to the brand. So it's a strategy that would enhance the value of the brand. Commercial vehicles. Commercial vehicles, as you know, we have a major production hub in India that delivers vehicles to Indian surrounding countries. As I said, the margins are good. The market is going back to 2019. We don't see any major issue that would put us in difficulties also for the next year. We launched the new electric vehicle, four-wheel Porter, totally new for the brand, a very good job from the team, both R&D and production. The vehicle is perfect for big urban areas that want to enhance their traffic jam through electric mobility for delivery of goods. We will start putting in the dealer's network next year from April, let's say March, April. It is a very good vehicle, interesting for the payload, one ton, and also for the dimension, that it's perfectly suitable for last mile deliveries all over the world. We will start just from Europe on selling the vehicles, because, you know, it's a total full electric vehicle, And the second line is the new Porter MP6. It's not a new vehicle, but it's totally aligned with new designations from cybersecurity others and others. So the product line is ready. From the capital expenditure, as I said at the conference call of the first six months, I confirmed that 2024, and I would say after 2025, we will reach the peak of capital expenditure. Then we will start to see some declining need of investments due to the fact that we have filled the gap on the two-wheel product line with the competitions regarding some displacement that we didn't have. So we are starting to complete the product range and then obviously maintaining the actual product range, we will enter into more maintenance and update more than totally new products. totally new products is far away more costly than, you know, maintenance and update. So this is to say very shortly what has happened in the last nine months and what happened in the last three months. Obviously, I'm here to answer your Q&A. You've seen the presentation. You've seen a lot of interesting pictures of our products and results that we have also achieved in the sporting competitions with the Tuareg in Africa. Frankly, I'm not satisfied with the result of the MotoGP Championship. We ran at the beginning of the year for the third place. We could do this. You know, it happens. It's a competition. It's a high-end, fantastic play. But we are ready for 2025. New people are coming into the team. You know, we are pushing for more concrete results since the beginning of the championship of 2025. That's it, I want to say, Raffaele, and I'm ready to answer.