Piaggio & C. SpA

Good afternoon. This is the College School Conference Operator. Welcome and thank you for joining the Piaggio First Quarter 2025 Financial Results Conference Call. As a reminder, all participants are in listening-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 relator of Piaggio. Please go ahead, sir.

Thank you very much. Hello, everyone, and welcome to this conference call concerning the first quarter of 2025 financial results. Today's conference will be hosted by Piaggio Group Chief Executive Officer, Mr. Michele Colanino, and the Group CFO, Alessandra Simonotto. Today, we have also the pleasure to have with us Piaggio Group Executive Chairman, Mr. Matteo Colanino. You can access the slide supporting this conference call on the internet at Piaggio Group website. As usual, before starting the presentation, I need to remind you that during today's conference call, we may use forward-looking statements based on Piaggio's current expectations and projections about future events. But in nature... Forward-looking statements are subject to risks, uncertainties, and other factors that can cause actual results to be materially different. As mentioned also 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 Colanino.

Thank you, Mr. Lupotto, and good afternoon to you all, ladies and gentlemen. Thank you for joining our conference for the first quarter of 2025. Let me briefly summarize what characterized the first 90 days of the year, given that, as you all can see, Overall markets in the world has shown decline numbers for the business, for the mobility of two-wheel and four-wheel business in Europe, USA, China, Asia, and India. Even that markets go up and down and we are present in all those countries, I would like to outline that we are at the peak level or at the gross margin level. It means that, well, I'm very satisfied and proud of this because given the fact that revenues are down and business effect, we have maintained a 30.5 gross margin. I would like to also underline that we've started from 2022 that we were at 25% of gross margin. and we continuously improved our processes and productivity management, even if we showed this year decline in revenues. It is particularly important to say that our, let's say, generation of new processes to maintain and control day by day what happens around the world in our production plants in our purchasing processes, and in all the numbers around the production of vehicles is very satisfying. At least we have confirmed what we told you last year, that the productivity and the margins would have been the drivers and the strategy around what Piaggio would have managed both 2024 and 2025. Markets are down, and we are in a situation in Europe where we still have, you know, transition from Euro 5 and Euro 5 Plus. That's normal. It is every time we have new introductions of laws and legislations for pollution, safety, drivability, and It is totally a consequence of having a dealer stock that is going to zero from what it was at the end of the year for the Euro 5. And we are now at the end of the process introducing Euro 5 plus vehicles. I told you that April would have been the last month of introducing to the dealers network our new vehicles. USA? USA? USA is down by 10% the market. Well, USA is especially patient waiting to see what would be the impact of eventual. We don't know. We see, you know, some difficulties in understanding what we go on for the next months regarding tariffs. As I had the opportunity to point out some weeks ago, We will manage the situation. It's our job to mitigate tariffs, and we have done, you know, exercise and taken decision to reach the goal of, you know, mitigating the process, mitigating the problem, and, you know, don't have impact, or let's say big impact on USA profit and loss statement. Asia. Asia is down. The consumer market is, you know, not... recovering, especially in the premium market, even though we saw Vietnam in the last quarter that has shown, let's say, a plus. Even if it is a small plus, it is a plus compared to previous quarters. And Vietnam is very important for us because it's a good market, it's a rich market, and it's a high margin market. China is still suffering. You can see in every day press launch that the automotive, it's not our market, but it's a mobility market, is showing low numbers for imported vehicles. Even though we have a production facility there that we are restructuring, and that will be at the end of 2026, let's say, quite new, and we will... We are thinking of launching dedicated products for China market with our brands, but following what's going on in China that is one of the biggest electric mobility business in the world. So we will invest in those kind of vehicles for the Chinese markets. for the timing is not for exports, because outside of China, electric business is still very, very low. You know, we are investing. We will continue to invest in all the technologies, so, thermic engines, safety, electric engines, because we think, I think, that, you know, the market will evolve. It will take time, but we will be ready to fulfill the needs of the customers, whether it is thermic, whether it is electric. Let's say India, is a place where we are growing at the debit level because we are happy of being there. The market is still going well. Electric mobility in India, in three-wheeled and two-wheeled business, is a low-margin business. We have the vehicles, but we are not pushing, just waiting to have a better platform purchasing power and reducing costs in the country. I'm positive in India, you know. I think it's a good place to be. It's an enormous opportunity to be there and we will start in June evaluating the results of our studies about introducing new vehicles for the two-wheeled business there as we see that we can match the competition now given that the GDP per capita is growing and we think we are now able to compete with other brands in India. We will launch electric vehicles in the next years, and we will continue to launch also thermic vehicles in India in the next years. As far as other markets are concerned, let's say we are thinking about going into Africa, as you know, from India, And I confirm to you that strategically in the medium to long term is a good opportunity for us. And I think that Africa could be the next India for our business. As you can see, the first quarter of the 2025 has shown reducing value in our inventories. It is positive, minus 20 million compared to last year. We are managing the cash flow the proper way. We have done better cash absorption compared to the first quarter of last year. So I think that from an operation and cash management point of view, Piaggio is doing a good job. Obviously, we wait for some stability in the world, given that the geopolitical situation is not recovering. But given that we are managing the cash and investments as we targeted, I think that we will continue to reduce and work to reduce our inventories in the next quarters and to manage, as in the first one, cash and capex. We wait to see a re-burn of the Asian markets. As I told you, there's some slightly positive event in Vietnam. Thailand and Indonesia are still interesting for us, obviously. And so, given that the end of the year, you know, it's difficult to forecast if any other geopolitical or extraordinary events will come on the table, given that it's enough what we are managing. I think that there could be, by the end of the year, given that the second part of 2025 We forecast better results compared to 2024. That has been slightly negative. So I'm not negative on the year. Well, markets are what they are. You know, the business is what it is. But we can still see some number around 290 million at the end of the year EBDA. It is difficult, yeah. You know, many, many, many challenges are on the table for everybody, not just for Piaggio Group, but with the strength of our brands and with the launch of the new products that we are doing all around the world, I think we can still work on it. Obviously, first priority is to continue to, as I told you, to manage cash. Cash is the priority for everybody around the world, given that it is difficult to forecast what happens around, you know, markets on a new vehicle's purchase in Europe and U.S. For sure, what we are doing, it's very positive for the growth margin, even for the next coming quarters, because we have in place all the processes that are necessary to maintain this kind of numbers and to be in line with the DBDA percentage compared to the first quarter of this year. Obviously, we will not increase or push the accelerator for capital expenditure unless we see some stability in the markets. This is another consequence of managing cash. That's what I can say about 90 days of the year at the beginning, and I'm very satisfied of the people. They are doing their job, we are doing our job, and I repeat that page number seven, I guess, where we show the gross margin, number six, sorry, the gross margin compared to last year's, it is notable the job that has been done, considering that this year the revenues are down. So, Raffaele, I think that this is mainly what happens in the 90 days of 2025, I'm ready for Q&A or whatever you need from us. Okay. Thank you very much.