Volkswagen Ag Unsp/Adr

Ladies and gentlemen, welcome to the Volkswagen Investor Analyst and Media Call, first half 2024. I am George, the chorus call operator. I would like to remind you that all participants will be listened on remote and the conference is being recorded. The presentation will be followed by Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Oliver Bloom, Chairman of the Board of Management. Please go ahead, sir.

Good morning, everyone. And this is not Oliver Bloom, but Sebastian Rudolph. Thanks, George. You will listen to Oliver in a few seconds. Good morning to the half-year results core of Volkswagen Group. It's a joint call for both media as well as investors and analysts. Teamwork effort also from our side. It's a pleasure to have Rolf Wohler with us, our Head of Treasury and IR, and I'm the Vice President of Global Group Communications. With us today is Oliver Blume, our CEO, and Arno Antlitz, our CFO and Chief Operating Officer. Let me provide a few remarks before we start. You should have received the press release, the interim financial report, and all other related materials all published this morning. If you do not have them yet, then you can find all documents on our website or just drop us an email and we will send them straight to you. We have also just released the Volkswagen Group Green Finance Report, which is also available for download on our website. With that, let me now hand over to Rolf for a brief run-through of the next one and a half hours. Rolf, the floor is yours.

Thank you, Sebastian, and a very good morning to everyone on the call. Again, thanks for joining us today. Let's have a brief look at the agenda. Olli will start presenting the key developments of the first half year, including an update on the Top 10 program. And then he will pass over to Arno, who will then provide a closer look at the financials and thereafter to the full year outlook 2024. Following the presentation, we will first host the Q&A session for the investor and analyst community, which is moderated by myself. And after that, we will have a short break before we then continue with the media Q&A, which will be hosted then, of course, by Sebastian. As a reminder, and as always, the safe haven language and other cautionary statement on page two of our presentation will govern today's presentation. I would like to encourage you to read the disclaimer carefully, since all forward-looking statements are qualified by this language. As always, I will not read it out to you in order to save time. With that, I hand over to Olli, and Olli, the floor is yours.

Thank you, Rolf, and a good morning to all of you. It is a pleasure to guide you through our achievements and the key development of the first half year. Later, Arno and I are looking forward to answering your questions after the presentation. Ladies and gentlemen, we are at halftime of a truly demanding year. When we started into 2024, we had expected a year full of tasks and challenges. The six months proved us right. Our environment is challenging. We are faced by geopolitical and economic crisis. The changed framework conditions in China in particular are a major challenge for our group. It's already discussed at our recent Capital Markets Day in April in Beijing. Competition has intensified significantly worldwide. New competitors are entering the market with a high level of innovation and cost advantages. What's important for us? First of all, in this environment, we delivered on central decision points of our top 10 program to transform our company at high speed. Second, we made important progress in what is the most comprehensive restructuring program in the history of the Volkswagen Group. Third, we pushed ahead with our product offensive with attractive, highly competitive new models Over 30 new cars this year and more to come in 2025. The positive feedback received so far makes us confident that we are moving in the right direction. Fourth, we are strongly advanced with the execution of our In China for China strategy, with first exciting vehicles launched to the market and bringing our local partnerships to the next level. With this, we continue preparing the ground for an accelerated performance from 2025-2026 onwards. We also took decisive steps in software, and that's my fifth point. The global future electric architecture and software strategy is now in place, together with strong partners. This enables us to speed up the software development process and to develop cutting-edge products at lower costs. And last but not least, financially, we delivered a solid set of results on an underlying basis as we handled significant non-operating effects, in particular related to the restructuring of Volkswagen Group. In the competitive environment, we held up well. Nevertheless, we still have a long way to go to achieve our medium and long-term goals. But we have a clear plan and we deliver. Let's look at the financial performance. After the expected softer start to the year, we came back with a strong second quarter. Sales revenues in H1 came in 1.6% higher at almost €159 billion. The return on sales stood at 6.3% in the first half. However, results were held back by significant non-recurring items, in particular the provision related to our severance programs at Volkswagen AG and other restructuring items. Excluding those, the underlying return on sales stood at 7.1%. Also here, we achieved a solid sequential improvement in the second quarter with an underlying margin of 7.6%. Net cash flow was strong in quarter two at plus 2.9 billion euros. With that, we almost compensated the outflows of the first quarter. The solid set of results was supported by above-average performance of brands in the second quarter, which delivered even in a challenging environment. Higher volumes and positive price mix drove Scania's margin further up to very competitive 14.5%. MAN proved its new resilience with a margin of 8.5%. Our luxury brands, Lamborghini and Bentley, delivered stellar 29% and 20% return on sales within brand group Progressive. Porsche showed a strong rebound in quarter two to a margin of 17.8% after a muted start to the year. And this in spite of renewing nearly all model lines in only one year and a very weak China luxury market. Skoda achieved a strong return on sales of 8.7%, backed by great product momentum and competitive cost structure. However, our results also show where we need to improve. Audi continued to be held back by supply chain shortages and saw a margin of close to 7% only in quarter two. At Volkswagen brand, higher fixed costs and restructuring expenses lead to a return on sales of below 1%. Now that we have to put the group technically on track, our main area of action is cost cutting. Here we are working with an intense systematic program at group level and in all brands. Group vehicle deliveries were on prior year's level after six months in 2024. Overall, we delivered 4.35 million vehicles to customers. That represents a share of around 11% in the global automotive market. The basis for this is a healthy regional mix. We continue to keep our strong position in Western Europe. In North America and South America, we grew significantly and were able to expand our market share. In China, as announced, we have prioritized sustainable value creation over higher volumes in a highly competitive market environment in order to achieve our long-term strategic goals. This is another positive reflection of our strategic value-over-volume approach. Volkswagen Group is continuing to roll out its electrification strategy. In the first six months of 2024, we delivered more than 317,000 BEVs to customers worldwide. Doing so, the BEV share rose to slightly above 8% in Q2. Especially in China, the group delivered significantly more BEVs in the first half of the year, resulting in an increase of 47%. Attractive electric cars, such as the Volkswagen ID family, made this increase possible. The upswing of BEV deliveries in China almost compensates for the currently softer demand in Europe and the U.S. Still, there are signs of recovery in the electric segment across all markets, After a slight decline in quarter one, the global BEV deliveries were on prior level again in Q2. And Volkswagen Groove BEV order intake in Western Europe showed an encouraging trend supported by strong product momentum. Orders more than doubled year on year in both the second quarter and the first half of this year. We are confident that Volkswagen Group is operating on a solid foundation. We are advancing our transformation and are navigating with a clear and transparent strategy. The top 10 program mark the operational and strategic priorities of our group. We are focused on execution and we are getting things done. Let me highlight some more recent examples. We aim to increase productivity and efficiency at Volkswagen Group. Therefore, we have implemented a variable set of effective instruments across all brands and divisions. Our performance programs have already started to show first progress and we are consistently implementing its measures. For example, technical adjustments, organizational measures, capacity adaptions, plant cost reductions, and platform synergies, and there we see already early impacts. And we continue to make concerted efforts to consistently decry our overall investment volume going forward. The Group's largest product renewal is full in swing, greatly strengthening our competitiveness. 2024 is a record year for Volkswagen Group in terms of new model launches across all brands. More than 30 new vehicles will be presented to the public this year. And as per day, and as planned, more than half of these new cars have already been launched to the market, with great feedback from customers and strongly positive reactions by the automotive press. The electric Porsche Macan, the Audi Q6 e-tron, or the Volkswagen ID.7 Tourer are just some examples for our inspiring model lines in the electric world. The start of sales dates for icons of a new era, such as the ID.Bus Long Wheelbase, the new Porsche 911 GTS, ST Hybrid, and the Audi A5 as well. The A6 e-tron are just around the corner. And also important in the period of transformation or combustion, hybrid versions of the new Tiguan, Golf, Passat, the Superb, the Audi Q5, or the Panamera Cayenne are only some examples. Our product underlines our drive-thruing strategy with a clear commitment to electromobility, flexibly covered with a full-size offer of modern combustion engines and hybrids to be able to fulfill the desires of our customers in the different regions of the world which are moving with a different speed towards the transformation. And we are delivering on our promises. A new product strategy has been developed, especially for the brand Volkswagen and for Audi. We completed extensive design programs and developed new product concepts in all brands. Also, our quality improvement initiatives over all brands show good progress. We continue to enhance our position in the world's largest automotive market by systematically implementing in our in China for China approach. Key initiatives in the region showed significant progress. The cooperation with Xiaopeng is fully on track. I am really impressed by the high pace and commitment of the local team, and I am glad to say that the project advances faster than initially planned. Together, we will jointly develop the solar electric and electronic architecture to turn pure electric models of Volkswagen brand into software-defined vehicles in China. This will allow for a standardized system increasing scale and efficiency. From 2026, the China electronic architecture will be used in all locally produced Volkswagen brand models based on China main platform and the MEB platform. We successfully launched the new Volkswagen ID Unix developed in China for China. The feedback is overwhelming positive, especially from a new target group of young customers. The e-SUV coupé is characterized by a particularly progressive design, a smart human-machine interface with a 3D avatar and a range of more than 600 kilometers. Finally, Audi and SAIC are enhancing their partnership. The joint venture is preparing to launch some of the most appealing and progressive cars in the Chinese market. The cooperation between Audi and SAIC starts with three BEV models. First models will enter already the market in 2025 with a time to market reduced already by more than 30%. When Volkswagen Group's new management team took responsibility, we promised to realign the software activities in this company. We kept this promise by fixing the existing platforms First proof points are the Q6 e-tron and the Macan Electric, and defining the new worldwide strategy and partner network. In China, we are closely cooperating with our partner, Xiaoping, in the A and B segments. For the rest of the world, we focus on our new partnership with Rivian. Very recently, we announced our intent to establish a joint venture. Here, we will jointly create the next generation of of electric electronic architecture and software for electric vehicles. The vision of the software-defined vehicle is becoming reality in a short period of time. The new activities for Rivian will complete our smart partnership ecosystem across all technologies and regions. Volkswagen Group, together with Xiaopeng, Mobileye, who rely on robotics and others, is a powerhouse of automotive software development. We will continue to reshape our software company Carriot. Carriot for us is and remains an important part of Volkswagen Group's software strategy. We will combine expertise of partners with our own know-how and our capabilities for global scaling and industrialization. One of Volkswagen Group's strengths are high-performance, standardized vehicle platforms. Building on this, we have realigned our architecture structure and defined clear development responsibilities. With the Porsche Macan, we have launched the first model on the new PPE with the EQ 1.2 architecture, followed by the Audi Q6 e-tron. First customer deliveries of the Q6 e-tron started a few weeks ago and deliveries of the Macan will start in September. For both, the Porsche Macan and the Audi Q6 e-tron, The feedbacks are very positive in terms of design, performance, range, efficiency, charging speed, and the digital interface. These successful launches mark the start point of more models to come on the new platform, in particular the Audi A6 e-tron and the electric Porsche Cayenne. On top, we will bring new ICE cars to the market on the PPC platform. with the Audi A5, the Q5, and the A7, each with a modern plug-in hybrid version, also driven by the EQ1.2 software architecture. Ladies and gentlemen, our team has a clear focus on execution in this year of transformation. We are delivering in a challenging environment and setting now the base for a successful ramp-up from 2025-2026 onwards. Let's now have a closer look at the financials in the first half of this year, and therefore I would like to hand over to Arno.

Thank you, Oliver, and a warm welcome from my side as well. In Q2, we achieved financial results that delivered on the statements we made in the Q1 call. It took some important decisions to speed up the restructuring of our European business And we made significant progress with a number of strategic initiatives, specifically software and finally the launch of our PPE platform. In the second quarter, sales revenue grew by 4%. Reported operating margin came in at 6.6%. In a difficult environment, adjusted for non-operating items, the quarter came in at 7.6%, slightly above our ambition of 7% to 7.5% set for Q2. Both Porsche and Audi showed an upswing, and Trayton continued to perform with 9% return on sales. Volkswagen brand results, however, came in below our expectations and clearly below our ambition. Skoda and Volkswagen commercial vehicles helped to compensate for the shortcoming of the Volkswagen brand. Brand group calls to that 5% that have here the automotive net cash flow in Q2 totaled $2.9 billion. and could nearly compensate the 3 billion cash consumption in Q1. In addition, we took two important decisions. Firstly, the planned joint venture and corresponding investments into Rivian, and shortly thereafter, the start of the information and consultation progress process regarding Oris plant in Brussels. Both decisions have implications for the financial result of the second half year, as well as the full year outlook, which was adjusted accordingly. With that, let's move on to the financials. Vehicle sales decreased 2% in H1 to 4.3 million units, excluding China. Vehicle sales were virtually flat at 3.1 million. The slight decline was overcompensated by higher sales revenue in the financial service division. As a result, group sales revenue were up by almost 2% to 158.8 billion euro. Reported operating result, came in at €10.1 billion, corresponding to a margin of 6.3%, one percentage point below the prior year period. Q2 was impacted by various non-operating items of, in total, €900 million. Adjusting for these effects, the underlying margins stood at 7.6% in Q2. However, what counts at the end of the day is the reported result, and our reported results are clearly down compared to previous year, and the reported margin of roughly 6% is below our ambition and clearly below what we can deliver based on our strong products and also our global footprint. And we must clearly intensify our efforts to improve performance and achieve our targets in the second half of the year. Net cash flow after six months in the automotive division totaled at minus €0.1 billion compared to €2.5 billion in the prior year period. This was mainly due to a buildup of working capital of 6 billion and here in particular driven by higher inventories with rebounded by 7.7 billion Euro versus year end 2023. This brings me to the automotive net liquidity, which declined by 9 billion. About three quarters of the reduction is attributable to dividend payments and the redemption of a hybrid bond. The convertible note related to the announcement partnership with Rivian accounted to 0.9 billion euro. This had an impact on the net industrial liquidity, but not yet on automotive net cash flow. The reorganization of financial services impacted automotive net liquidity temporarily with minus 0.5 billion euro. But this reorganization was another important milestone in the second quarter. As a result, we are now better positioned to achieve our goals as a provider of comprehensive mobility solutions and integration of our banking business allows us to take advantage of financing benefits, particularly in the leasing business, which continues to grow strongly. Overall, at €31.3 billion, net liquidity continues to be solid. Moving to the divisional performance, passenger cars recorded an operating result of €6.5 billion, about 9% below the prior year period, and the margin amounted to 6.2%, down by 0.5 percentage points. Commercial vehicle confirmed a strong performance of the first quarter, also in the second quarter. Operating result improved by 15% to 2.1 billion euro. Return on sales stood at a strong 9.1%, up from 8% in the prior year period. The financial services division recorded an operating result of 1.4 billion euro, corresponding to a decline of 36% year-over-year. Let's have a look at the drivers behind the operating result development in the passenger car segment. Volume price mix contributed a negative €1.0 billion year-over-year. Mix was affected by weaker model mix in particular due to the V6 and V8 engines and Audi and brand mix with lower sales at Porsche and Audi. Regional mix effects were slightly positive due to a stronger performance in North America and slightly improved European business. Pricing turned negative in Q2. Continued benefits from rollover effects from last year's price increases were overcompensated by higher tacticals in a highly competitive environment, and in particular at Audi in light of the supply situation of six- and eight-cylinder vehicles and the current significant model changeover. Compared to prior year period, operating results in the first half year benefited from a swing of fair value effects outside hedge accounting, forex, and other derivatives amounting to about 3.8 billion euro. Product costs were slightly headwind year over year, but turned positive in the second quarter on a standalone basis. And fixed costs and other costs increased considerably as a result of higher R&D costs, higher depreciation and amortization, the ramp up of new businesses, as well as inflationary trends and the step up of wages. Of course, this bucket also includes the provisions for the severance program. In that content, let's have a more detailed look at the overhead cost development. To be very clear, right at the beginning, we are not satisfied with the development here. Higher overhead costs driven by wage increases from 2023 and 2024 are slightly lower Automotive sales revenue resulted in a strong increase in the overhead cost ratio in the first half of 2024. In an environment characterized by excess capacity and rising competition, specifically in Europe and China, this is a trend which we need to reverse. We will rigorously continue to execute our performance programs to improve profitability across all brands and groups and value drivers. With continued implementation of the early retirement scheme, the hiring freeze and the severance program at Volkswagen AG as an example. Moving on to automotive investments to R&D and CapEx. R&D costs increased by 1.2 billion in the first half year, evidence of the accelerating transformation of the Volkswagen Group towards electrification and digitalization and the focus on the ramp up of our PPE platform for Audi and Porsche. CapEx is currently at an elevated levels due to high upfront investments in battery and software, as well as execution of our regional strategies, including Scout. A stronger focus on leveraging group synergies, more efficient R&D processes, reduction of this year's peak level of ice investment, as well as the expected effects from the announced partnership with Rivian, will drive the reduction in expenditures going forward. Taking all this into account, it's our clear ambition to reduce investment in R&D and CapEx to well below €170 billion in the next planning round from 2025 to 2029. Moving on to the performance of our brand groups, platforms, and financial services business. Brand group core recorded 2% higher sales volume in H1. Sales revenue was broadly flat year-on-year, supported by continued positive pricing, but held back by higher technicals, regional mix, and fixed costs. Operating result declined by 8%, so €3.5 billion, corresponding to a margin of 5%, 50 basis points below last year's level, and excluding the facts from the structuring measures, the underlying operating margin amounted to 6%, up 40 basis points year-over-year. Ryan Group's progressive sales revenue was significantly below last year's level, mainly due to the lower vehicle sales and constraints of V6 and V8 engines. Operating result came in at €2.0 billion, corresponding to a margin of 6.4% and some 3.6 percentage points below the prior year period. Operating result was burdened by valuation effects in a magnitude of €0.4 billion, in particular resulting from Audi's residual value model, Adjusted for this valuation effect, the underlying margin of Brand Group Progressive came in at 7.7%. Brand Group Sport Luxury achieved a 64% operating margin in its automotive business despite lower sales volume and higher ramp-up costs due to a record number of new model launches this year. Let's have a closer look at the Brand Group Core. The weaker operating performance of Volkswagen Brand at 2.3% or 3.6% each point on an underlying basis could be compensated by strongly improved profitability at Skoda and Volkswagen commercial vehicles of 8.4% and 7.9% respectively. This clearly shows two things. Firstly, the quality of the product substance of the MQB and the MEB cars, allowing brand Skoda to achieve an operating margin of 8.4% in a difficult environment based on efficient cost structures. And secondly, the clear need for a step-up in cost reduction and productivity improvement efforts at Brandt Volkswagen, including our component business, specifically in the German plants and operation in the course of the current efficiency program. Garriott continued to roll out software to a growing vehicle park, which resulted in an increased sales revenue of 30%, Operating results came in at minus 1.2 billion euro. Reported net cash flow stood at a negative 0.4 billion or minus 1.5 billion if you adjust for intergroup income tax refund. Developments in our battery business continue according to our adapted planning both in terms of operating results as well as the buildup of production capacity. The operating loss was broadly stable at 0.2 billion euro. We continue to monitor our global sales, BV sales expectations, and are prepared to adjust capacity and CapEx plan further if necessary. Creighton continued its positive momentum and delivered another strong performance in the second quarter. Unit sales were down 4% year to year, held back by lower volumes at MAN, in particular due to supply shortages at Navistar, which are expected to recover in Q3. The lower volume was compensated by stronger product mix and better average revenue per car per unit. As a result, sales revenue were up by 2%. Operating margin came in at strong 9.1%, driven by the increase in sales revenue and improved cost structure. The net cash flow of Trayton was flat in the period under review and held back by a build-up of inventory, which was due to a large extent driven by supply shortages related to a fire incident at a supplier's plant in North Carolina. Volkswagen Group Mobility recorded an increase of the overall contract volume by 2%. The credit loss ratio increased slightly in the first half year, but remained on a solid level. An operating result in the financial services division in the first six months of 2024 fell by about a third to 1.4 billion euros, corresponding to a margin of 4.8%. This decline reflects the forex valuation effects related to the deconsolidation of our Fave Bank Ruth business in Russia, increased interest expenses, and a continued normalization of used car prices. Moving on to the performance of our China Transventures, volume were down by around 19% in the second quarter, with deliveries at 652,000 vehicles, The decline was due to a weaker ICE demand in an overall declining ICE market, whereas PV deliveries increased by 21% to almost 50,000 vehicles. Proportionate operational result of our Chinese JVs amounted to 0.8 billion euro after six months in 2024, down 30% on the prior year number, but fully in line with our expectations of the 1.5 to 2 billion euro proportionate operating result for the full year. This decrease is mainly reflecting the marginal effects of the ramp-up of our BEV business and initial costs for the realignment of our BEV and ICV business, which will positively impact our business from H2 2025 onwards. Finally, moving on to our full year outlook for 2024, we continue to expect an improved underlying performance, in the second half of the year in order to deliver on that expectation. We built on a step up of sales and earnings momentum supported by the launch of new models, as well as a stronger mix due to, in particular, better availability of six and eight cylinder models at Audi. We are building on a solid order bank in Western Europe of 900,000 cars still above pre-COVID levels with visibility into the fourth quarter and an overall encouraging order intake which is above prior level. Overall, we anticipate mix to positively contribute to second half of the year. At the same time, we factor in that markets will remain highly competitive. Broader costs are expected to be a small tailwind in H2, and we continue to push ahead with the execution of our performance program across all brands and divisions. Based on these assumptions and developments, we expect sales revenue to advance by up to 5%, the operating margin in the bandwidth of 6.5% to 7%, and automotive net cash flow in the range of 2.5 to 4.5 billion euro. The outlook reflects a total of minus 2.6 billion in non-recurring earnings effects with the 0.9 billion severance provisions and about 1.3 billion of expected expenses related to Audi, Bezos, Brussels plant being largest drivers. Taking into account the most recent announcement of Porsche AG related to the adjustment of the full year outlook, we currently expect to range at the lower end of the presented guidance across all KPIs. And looking at the second quarter and looking at the second half of the year, you should take into account that the Q through, so the third quarter, is typically the biggest quarter of the year because of the plant holidays. And please bear in mind, that it will be additionally affected by provisions at Audi for the Brussels plant and the supply constraints at Porsche. So this means Q4 is expected to be by far the strongest quarter of the year. With that, I hand back to Oliver to give us a small summary of what we achieved.

Yeah, thank you, Arno, for providing our financial overview. And ladies and gentlemen, let me summarize quickly. First, we delivered solid underlying financial results. We are holding our own in demanding first half year and need to act with even greater determination. Second, this is why we accelerated speed and enlarged the scope of restructuring measures. Third, our comprehensive global software strategy is now fully in place with smart partnerships to improve competitiveness globally and in China. Fourth, execution of our regional strategy in China is in full swing. Fifth, the group's largest product renewal is continuing with full force, greatly strengthening our competitiveness, particularly in 2025. We expect a strong underlying financial performance in the second half of the year, especially in quarter four. To achieve our full ambitions and to deliver on our outlook, we must switch gears and make considerable efforts, especially on the cost side in the second half of the year. And with this said, I would like to hand back to Rolf.

Thank you, Olli, and thanks to both of you for the very comprehensive overview of the development in the first half of 2024. With that, we would start the question and answer session. And if you want to raise a question, please press star 1 on your telephone keypad. We can see that already some of you have done so, so we would start. with the first question coming from Tim Rokosa from Deutsche Bank. Tim, please go ahead.

Yeah, thank you, Olli, Arno, and Rolf. I would have two questions, please. The first one is on investments. Obviously, we had Rivian. You can and should spend money only once. If you already get the EE architecture and the software from them, you probably need less money to invest into Carriot and possibly even Scout. Is it fair to assume that we can see synergies thinking about this with respect to the 180, respectively, 170 billion investment budget? And as a follow-up to that, with everything going on with respect to EV demand, is it fair to assume that you will spend less money than you had previously thought on Powerco? And my second question is also probably to both of you, or maybe mainly Olli, it's great to see that you're addressing the cost base in Europe with Brussels. Some would say that's even revolutionary for VW. Is this only the beginning, or do you feel like you're done with that move?

Thank you. May I take over? Thanks, Tim, for your questions. First of all, I think it's interesting for the whole group about our software strategy. We are now in place with our overall worldwide group software strategy. As you know, we are bringing in order the existing platforms, 1.1 and 1.2, now with the first product to the market. And we have built now our software strategy as we are speeding up the move to a software-defined vehicle with the ChaoPeng approach in China, where we also use the ChaoPeng architecture for the MEB, and now with Rivian for our first SSP models to adapt them for the group. On the other side, um we have carried in responsibility um beside of the existing platforms for cross-functional items like autonomous driving infotainment connectivity cloud data and and backend and all of this brings us in a very flexible situation regionally and in a better cost positioning and having said that the investment in Rivian is well sought also to reduce investments in Carriot. First part of your question. Second part is about Powerco. There we think this is the right approach to have engineering and production in-house. And what we have done is to adapt the sequence of the ramp up of our plants, depends on the demand of battery cells. And with this, we are also able to decrease investments, and we will leverage at any time the mix of own production and of our partners. And resuming, that also has a high flexibility, and it brings us to a better cost positioning. In terms of our planned investments, 180, less planning rounds. This planning round, 170. And we plan more reductions for the future, and we see especially this year at the peak of our investments and now decreasing with all the strategic decisions we have taken. Then let me come to the second part. You asked about the restructuring of capacities. And there, first of all, you know that we are in the middle of the implementation of our performance programs over all brands. Then we recently launched the surveillance programs, especially in brand Volkswagen. And we've been informed about the consultation process of the Audi Brussels side. Beside of this, we have a lot of capacity adjustments already done, and there we are talking about organization and about technological adaptations. For example, in Wolfsburg, in Emden, in Zwickau, Neckarsul, and Ingolstadt, we already reduced technical capacity by 25 percent. And we continue to plan with our staff-oriented so-called plant allocation. That's an important factor, especially in Germany, where it brings us in a better positioning. And we are reducing all factory costs over all levels with productivity, but also supply chain costs and labor costs. And that's a complete program. which is directly linked to our performance programs.

Tim, I think we have a brief follow-up on Arno on the investment spending.

Yeah, Tim, I think everything is said already, but just to give you a little bit more clarity on our opportunities, I mean, it's clear 2024 will be the peak year on R&D and CapEx. For the planning round, we are already committed for the next planning round to 170 due to significant ramp down of our ice. And currently we think of about 165 taking into account the JV with Rivian. This provides us obviously with multiple opportunities because we can draw on very competitive solutions that are developed already. So that helps us to save time and also expenditures. And we continue to plan for low investment ratio of about 11% in 2027 and 9% in 2030, just to give you a reminder. And, of course, that will favor the next cash flow generation as well.

Thank you, Arno, for that addition. I hope, Tim, that has answered your questions.

Yeah, obviously, we would like to hear some sort of quantification, but I understand that it's probably a bit too early.

The quantification on the investment, I think, was given by Arno to the 165% From the 170 currently.

Okay.

Thank you. We continue with Mike Tindall from HSBC. Mike.

Yeah. Thanks, gentlemen. Just a couple of questions from me. I guess the first one, equity income went to negative, and I can see that China profits is down per vehicle, but I'm kind of curious what the driving force is for that equity income being negative. And then just Picking up again on the restructuring side of things, you talked about reduced technical capacity of 25%, but fixed costs, even if I strip out the restructuring side of things, look like they're going up. So I'm trying to square that. When are we going to see the benefits of the performance plan start to actually bear fruit? Is it just simply too early, or are you seeing other headwinds, which means you've got to run faster? Thanks.

Yeah, I take the first question in terms of the equity result. The first driver clearly is the equity result of our big Chinese JVs, FW and S4W, but there are also some smaller JVs we just founded which incur significant head-up upfront investments. For example, the JV with Horizon Robotics, we call it Horizon, they will develop the next generation of ADAS a day Software in China level two level two plus plus And then the losses they incur in upfront investment.

They are also booked in in this category to give you to give you one example Yeah Mike coming to your second question First of all the technical adaption of the plants is necessary to further benefit in the upcoming years from a better cost positioning of the plants, also in the shifts we are driving. And talking about the performance programs, we kicked them off. We are implementing the performance programs in the early phase. They are to compensate expected headwinds. and also one-time effect in the restructuring process of the group. But in the upcoming years, we will also see positive momentum for the development of our group. It's planned step by step. Now we have all the measures defined for this year, for next year. For the upcoming years, we are working on measures and we are still in the ramp-up curve. and it will pay off in the upcoming years.

I wonder if I can just do a quick follow-up. Arno mentioned that the VW passenger car result was not where you expected, and it wasn't in your ambition. Does that mean we need to do more, or is it just a case of waiting for these programs to kick in?

Yeah, that's our main focus, and therefore we have mentioned it. And for us, in the upcoming months, in Volkswagen Group, we have now all the strategic bases. We have taken all the technical decisions. We have done all the organizational steps needed. And now it is about costs, costs, and costs. And that's especially in the brand of Volkswagen, but also we will focus in on all the other brands.

Got it. Thank you. Thanks, Mike. And we are moving on to Patrick Hummel from UBS. Patrick.

Yeah, good morning, everybody. I just wanted to ask very simple on the cost side of things. Why are you not giving yourself an absolute billion euro target for fixed costs? That would make the life of us analysts or investors much easier. We wouldn't have to deal with all the puts and takes and also it would probably give you a better handle internally to achieve an absolute billion euro target if you have cost inflation in other areas that are offsetting all your efforts, which seems to be the case for the time being. And related to this, as you enter more partnerships, it feels like more and more of cost burdens go into the equity result structurally so that an important part of the operating performance is actually below the line that you focus on, which is operating profit. So are you thinking about including that in some form going forward? Because it feels like it's just going to get more important. And if I may, Oliver, on the second topic, CO2, you sounded in the last call quite confident that you could get a bit more flexibility for 2025. It feels like listening to the EU Commission President that We shouldn't expect too much for next year, if anything at all later on. So can you just give us an update about your CO2 compliance plan for 2025 and the related cost? Thank you.

Yeah, Patrick, I'll take the first one. Look, we are absolutely committed and focused on the fixed cost side. This is why we are also very transparent, both in R&D and CapEx. And also on the fixed cost side, we give you high transparency. Clearly, we have internally tough targets. And as I said before, we are not happy with the performance right now. It's a little bit technically, you had huge wage increase in Germany last year, I think five point something percent, and now another three point something, which of course has a lot of carry on and it takes some while until our restructuring measures, for example, with early retirement, program take place, but as I said before, by Oliver and myself, we also have to step up in initiative there. So we have clear targets internally and we give you a lot of transparency externally. And believe me, we have also the other elements of our result and of our P&L firmly inside. We're not only looking at the operative result, we look at financial result and And at the end of the day, if you look at our performance during earnings per share is a major parameter of how our board is incentivized. So don't worry. We are absolutely committed also on the earnings per share KPI, which is finally everything, including all the discussions we have.

And Patrick, coming to your second question about the CO2 regulation for next year, we still have a gap to close, first of all. On the other side, it's very promising. The order intake we do have on BEVs, which doubled in the first half of this year comparing to last year. And we are launching this year over 30 new models, and the half of them are BEVs And they are entering in the market right now. And the first products are getting very positive feedback. And that's very promising for more order intakes, which will support us for next year. And being very clear, every euro spent on penalties is a bad invested euro. And therefore, we will fight for a way to compensate everything, and the main driver are our product offensive with the BEVs and the positive response we are getting already from the markets.

Thank you both. Thank you both. Thank you, Patrick. And we are moving on to Jose Azumendi from JP Morgan. Jose.

Thank you, Wolf. Two questions, please, Olli. You mentioned getting things done. I fully agree. The changes we're doing now is definitely many more changes. We're seeing many more changes now than what we have seen in the last 10 years. So congratulations on all the work you're doing there. I'm just wondering if you could just comment on into the second half of the year, what is top of your mind? What needs additional restructuring? Which divisions do you think need further acceleration? And then second, Arno, there's a lot going on, obviously, on the cash front with different partnerships and collaborations, restructuring charges, you name it, a lot of things. Does your two-and-a-half to four-and-a-half free cash flow guidance, does it now, are you comfortable with this free cash flow guidance? Does it have all of the elements we need to think about for 2024? And can you help us a bit on second-half free cash generation? How should we think about it? Thank you.

Let me start with your first question. We are following strictly with our top 10 program for operational and strategic issues. We have taken already the main strategic, technical, and organizational decisions. First of all, we brought in order our product management, focusing on delivering on SUPs, what you can mention already this year. that we are reliably bringing our products to the start of production. We have brought in order the technical architecture of our cars. We kicked off a massive design initiative for all brands, which is paying off step by step. We have implemented a complete quality program, which we can already fear from the response from the market. We have brought in order the software strategy. First of all, to repairing the existing platforms, the first results we can see right now with fantastic offer to our customers. And now with the international strategy with ChaoPeng and Rivian being flexible. And we have structured or restructured our China strategy, the products offered there, but also the China-in-China approach we presented in the Capital Market Day. And we adjusted our battery strategy. And now we have two main issues from my point of view, is ramping up all these activities which are founded – on all these directional decisions we have taken. And we are middle of this, what you can mention from the product side. And the second issue now is for me, as I mentioned before, cost, cost, and cost. And these two things will be after the first two years restructuring the whole group. My personal focus ramping up all the initiatives and cost, cost, and cost with a strong support from Arno.

And I take the cash flow and also the question which drives net liquidity then in the second half. Of course, we expect the underlying H2 result that it should be better than H1 because Audi Brussels impact earnings but not cash effective in H2. based operating cash flow, of course. And we have a positive effect from working capital, as always, in Q4, when inventories are expected to decrease towards year-end. Supply parts issues are expected to be solved. So it's a working capital contribution. Then, from today's perspective, it's too early to say, but there might be a situation that not all M&A would materialize specifically on what we were planning for at Carriot for some raw material topics. Don't forget China dividend in the second half will be slightly higher than in the first. We talked about strong investment discipline. Oliver and myself will really have a look at that. We see the reversal of the 0.5 billion euro of H1 at Corale. That's the internal project name for the reorganization of financial services. But there will be public compensations for the additional investment in Rivian. So the second tranche of about the one billion and then also the first billion will also be cash relevant then for the JV. So these are the ingredients for the second half of the year will be, I would say, positive contribution in the third quarter and then the rest should come in Q4. eventually leading us to the 2.5 to the 4.5 billion euro.

Thank you so much. Thank you, Jose. And we are continuing with Horst Schneider from Bank of America. Horst.

Yes, good morning and thanks for taking my questions too. Just more follow-up questions from my side. As you rightly pointed out, basically, the environment is getting more challenging. You talk about fierce price competition, more technical price action. With that regard again, I wonder basically what is needed to achieve this implied close to 8% operating margin in Q4. So, I mean, when Tim asked about quantification, could you maybe quantify what is needed in terms of cost cutting, for example, cost cutting step up in fixed costs, but also in the other cost bracket in Q4? I know for you it's difficult to talk about pricing, but at least can you say that the pricing gets more challenging or why should it get less challenging in H2? That would be helpful. And then I want to get back on Patrick's question regarding EVs and the CO2 targets in 2025 in Europe. We heard recently that Mercedes said it could be an option basically to pool emissions with other car makers. I just want to ask you, Olli, if that is also an option for you as a Volkswagen group, and if not, what best ratio basically is required in your view in 2025 basically to meet the targets?

Thank you. I take your first question. Basically, you didn't ask for the second half, but basically you did. In a way, I asked for that. On an underlying basis, we should see a result based on H2 2023, and obviously you have to deduct then the one-time effect of Brussels. So a volume price mix should be overall stable with a small positive effect On volume, why positive? Because the volumes basically outside our Chinese JVs, we expect positive, and that will drive small volume. But as you said, mix and pricing challenging. But we have a very good position there. The best position in a challenging environment are great cars and a good auto bank in Europe, and both we have. We bring really great cars from the premium from Porsche EMA car and Q6 e-tron tourer is doing very well. And we have this auto bank of 900,000 cars in Europe. Then we expect a small positive from valuation effects. We communicated our program to basically finalize the transfer. them to our, basically, to our balance sheet. So, but there are small positives from the derivatives in the second half. Broader costs should be a small positive. And yeah, there will be a continued fixed cost burden, but the fixed cost burden should be lower than in H1, because if you compare it like for like, we had the huge step up of of wage increase, basically in the middle of last year. So in the second half, we compare like for like, and the bridge is comparing like for like, to a second half 2023, where the wages already went up 5 point something percent, I think 5.5. And then eventually, what Oliver said, our restructuring measures kick in, our first effects from our severance program kick in. So this would be should be the ingredients for the second half. And this should bring us to our guidance.

Small follow-up, Arno, just on when you say lower fixed cost H2 versus H1, despite the cost of the plant closure at Audi.

Yeah, lower. I mean, we expect a fixed cost increase in H2, but the increase should be significantly lower than in the first half of the year. But this was basically before the restructuring costs for Brussels. That's clear.

Okay. All right.

And then, Horst, let me come to your other question about pooling emissions. There, clearly, again, we want to avoid penalties. So first of all, we have big potential with all our groups and the new models we are bringing to the market. We want to help ourselves. And only secondly, we will balance other measures like pooling emissions, but always leveraging expenditures on the one hand side and benefits on the other side. And therefore, We work firstly on our own issues and then at the end we will think about if it's necessary to take other measures.

The target for 2025, the death penetration ratio, you would need to meet the targets. Can you share that information or you don't want to share that?

It's too early to predict. We have what I already mentioned, very positive order intake. And I think we have to wait for the second half of this year with all the new models coming to the market. It's very promising. And then we think that we come to our target situation. But to be very clear, we need to wait for the whole reaction of the market.

Okay. All right. Thank you. Thank you.

And we are moving on to Henning Kosman from Barclays.

Yeah, good morning. Thank you for taking my questions. I had a clarification first, Arno, when you talked about the bottom of the guidance ranges respectively across all KPIs. I just wanted to make sure that means really everything you have on the slide. So sales revenue up to 5%. So does that mean closer to zero than to five? margin closer to six and a half. I think you talked about the net cash flow. But just on the cash flow as well specifically, I wanted to ask you, you have four billion M&A included in that number. If you end up spending less, should we expect the free cash flow to be higher by the balance that you don't spend? That's the first question. If you could just clarify that point around bottom end across the KPIs. And second question, maybe, Olli, for you. I wanted to ask you to discuss the dynamics a little bit of 50% of your model launches being BEV because not just by yourselves, but it's often discussed in a very positive context. But of course, these BEV launches, even though improved generation over generation, they're still dilutive for you, right? So could you help me just understand the positivity around the BEV launches with respect to the financial results? not just generation over generation, but also in the context of combustion engine profitability. Thank you very much.

Yeah, Henning, you're right. What I just said basically refers to sales revenue, the margin and net cash flow, more towards the lower end. And you're quite right. There are some chances concerning cash flow, specifically as I mentioned before, concerning M&A. On the other hand, we have some additional burden on the inventory side because we have really a lot of new model launches, and these new model launches, they kick in in Q3, Q4. We ramp up the PPE platform, EMACAN, Q6 e-tron, and eventually E6 on the year, and it's really too early to give a very precise production on the burden on inventory there. But from today's perspective, we will have a step up in inventories, which then will be more than a chance in 2025. But from today's perspective, for the three KPIs you mentioned, we are more at the lower end of the range.

And Henning, coming to the cost positioning and profit positioning of our best, First of all, we have the flexibility in between combustion, hybrids, and BEVs. That makes us flexible. And in terms of the BEV ramp-up, we are benefiting from scale effects and from our platforms we do have. And our strategic financial targets, bringing the group up to 20, 30 to 10% return on sales, is... directly linked to the bear share we are expecting. And we are working on the cost structure. We are benefiting from strategic decisions, bundling products on one platform. For example, the entry cars we will bring to the market soon on a level of 25,000 euros is shared by Volkswagen with two models, Skoda and and Cupra, and so on. And now the PPE for Audi and Porsche, where we will bring many, many more products. That brings us to a better cost structure, and also the strategy of moving to LFP batteries is an impact on this. And so it's very clear that our strategic plan takes in mind the BEV share.

But it's fair to say, Olli, that the current generation of EV launches is still dilutive, right? And that's something that you have to compensate elsewhere as that share goes up.

Yeah, we are now in the second generation. On the one hand side, the technological profile is much better than the first generation. And we are just at the beginning of the second generation. There, the benefit of the scale effect we will see in the upcoming years. And then what will strengthen our competitiveness there is also the decrease of raw material prices will have an aspect there. And with all the points I have mentioned, working on cost structure, LFP batteries, raw materials, scale effects, bundling products, that will have an effect. now with more and more web products to come on the same platforms.

Thank you. Thank you, Henning. And we are obviously aware of the fact that the competitor is starting its call at 10.15. It's in your hands. We have now five people still waiting in the queue. George, you would be next. And try to hurry up to let the others also have a chance to raise their questions. Thanks, George.

Yeah, no, absolutely. Well, I'll just ask one quick question then. Obviously, encouraging to see all the new products on slide 11, and you talk about European orders increasing slightly over the course of the first half. Could you perhaps just give us an update on the health of the European market and the consumer, and do you think your order growth is more a function of your strong product portfolio that is coming to market over the course of the next six months? Or are you actually also seeing some margin improvement in terms of the consumer and appetite for new cars? Thank you.

Yeah, we expect slightly growth of the Western European market and the strong order intake we do have. is mainly driven because of the product momentum we have on BEVs. Very attractive products, very positive feedback from the automotive media, from the customers, and for combustion engines and hybrids also. And that will help us, especially from 2025 onwards, when we are with a completely new product range in the market, we expect a strong momentum.

Thank you, George, and we are moving on to Philippe from Jefferies.

Yes, good morning. Thank you very much. I have a couple of questions. One is, Arno, I'm looking at your working capital, networking capital, inventory, payables, receivables. It's about 50 billion euros, which, by the way, is the market cap of the group, which says a lot about how much value the market puts on your core business. I'm just trying to think is what can you do to reach working capital? Whether we look at inventory, payables, receivables, you tend to be at the high end or the low end of the performance of your peers. Is that part of your KPI? Is that part of your action plan to free up liquidity capital in the business? And then I have a question maybe more for Oli. I look at your CO2 compliance for next year. There are two ways of complying. You can try to comply right away from January, lower your CO2, or you can do it gradually as the year progresses. To do the first one, which I think is easier, always better, that requires ramping up quite a lot of your deliveries of EVs to dealers starting September, October, so they can hit registrations in January. Are you in position to do that, or are we going to see the second scenario where we start non-compliant and then we improve and a lot of stress in 2025 to try to get to the target? Thank you.

Philipp, you're quite right. It's a really high number, and we also have a very good external benchmarking. We are a competitor stand, and we know our levers, and there are some levers. Obviously, the first one is inventory. with all the levels we have for raw materials, then inventories in the plant and final goods. Unfortunately, we made some progress there, but there were also headwinds. The first headwind was increase in working capitals on the raw materials for batteries. quite overstocked currently in some of the batteries. And second, we have also an headwind because we roll out our agency model, which will bring significant positive advantage in terms of steering, in terms of having the pricing in our own hands. But this is also a small burden on that. But nevertheless, we work intensely on the topics. And what also makes me very encouraging We have now the management incentivization in place, not only based on EBIT, but also based on cash flow. And I make you one small example, then you can understand how that works. It takes a little bit longer, but it works already very well. Look, in the past, we used to order the biggest ships. The biggest ships had the smallest transportation rate per car, and you have to wait until the ship is full. And now the people have started looking into that. They look, it's not only EBIT, it's not only the cost per car, it's also how long does the car stand, what's about our cash flow. Now we order smaller ships, which are a little bit more expensive to transport, but significantly positive on the cash flow. So this is some of the examples we look at now. And yes, there are other dimensions, payables, receivables, we look at as well. And Yeah, rest assured, we have an absolute focus on cash flow and working capital. And the third topic I already mentioned, this year we see a significant positive momentum for our business by, Oliver, I think 30 new models we bring in the market this year. But if you bring 30 new models, you have also kind of a burden on the inventors because we have to fill up the pipelines worldwide. For this model, as I said before, this might be also a chance for next year.

Thank you. Coming back to your CO2 question, first of all, we rely on our product momentum for next year, and we will wait up to the end of the year. How will the order intake develop? And then thinking about technical measures to bring cars from 24 to 225 that could have a very small, small effect. And so it's a speculation. And I think, first of all, we go for our product momentum, where we see ourselves very well prepared.

Thank you. Thank you, Philipp. So we have two to go. Steven. from Bernstein.

Yes, good morning. Thank you for quantifying the potential reduction in CapEx that's going to come from the Arabian deal, which I think you've got about 5 billion over five years. Can you put that into context of the loss of Carrier, which probably seems to be running at about at least 2 billion euros a year? When do you think we'll see material impact in terms of reduction in losses or even profitability, which is as far as that carrier? And secondly, on the software strategy, obviously you talk about all the flexibility you have from all the joint deals you've done in China and you have Carrier and then also in the U.S. But could you explain how that works with your platform strategy in terms of really giving to one platform and when you're going to actually have one unified stack where you would actually get real scale effects? Thank you.

May I start with a strategy and then Arno can take over the reduction of investments. We are planning there. We built now a very flexible strategy for software-defined vehicle, one with a Chaupeng approach and the other one with a Rivian approach. And they are very similar in terms of sonar architecture. First to ramp it up, we have chosen in China the China main platform and the MEB to bring the solar architecture quickly to the market from 26 onwards and for Rivian to start with the first SSPs. Then we think about a convergence and There we have to leverage also in terms of regulations which standardized modules we can use of the architecture and where do we need regional layers. Today already we are working with regional layers in China because the demand expectation of the Chinese customers is different than in other regions of the world. And then we will have also western layers. but in terms of standardization to carry over as much as possible what we are able to do also in terms of regulations, and then being as specific as necessary in the different regions of the world. And that is sought in this software strategy. And therefore, also the cross-functional issues like infotainment, like connectivity, and so on, are driven centrally by Carriot. And therefore, we are very flexible to adapt what we need in terms of autonomous driving. There we have a lot of regulation. There we have partners in the Western and in the Eastern world. And so everything is carefully balanced to have this flexibility and also cost positioning. And about the investment, Arno? Yeah, thanks for your question.

Look, the indication of 165, it's It's not directly linked to Rivian. Why? Because, I mean, look, Rivian, we have a huge chance now to generate a next-generation software stack, bring our competencies together with Rivian, but that takes a little bit of time. And our planning round is 2025 to 2029. So part of the $5 billion is a significant positive impact from Rivian because we can use existing very competitive solutions. but it's only a small, I would say, time frame, and the huge benefit will come 2029 and beyond, which is not part of the famous 180, 170, or now 165. So the benefits, the upfront investment in the TransVenture and in Rivian, yes, was $5 billion, but the benefits will significantly continue later on. And on the other hand, we discussed some chances. We already took... some decisions to adapt on our ramp-up of PowerCore, for example. We're still absolutely committed to ramp-up PowerCore, but, of course, we look at the ramp-up of demand globally. We want to invest 50% in our own battery capacity, so we adapted the PowerCore ramp-up already. So the $5 billion is the chance we have currently looking at 2025 to 2029, but the chances are really beyond the strategic and operational level. advantages are obviously higher going forward beyond 2029.

You can't actually cut?

Yeah, of course. If you look at Carriot, it's too early to give you a concrete set of numbers. We gave you an indication of where at the capital market, say, where we see the break-even and the cash flow break-even for Carriot. Obviously, what Oliver said, Carriot will play an important part going forward. We'll concentrate on the 1.1 and the 1.2 and the 2.0 platform, the next generation platform, will be basically built out of the joint venture with, of course, an involvement of Carriot. But obviously, since in the old, let's call it old business case, the upfront investments for the 2.0 were in the Carriot business case. Now it moves to the JV. So we will come up with a revised business plan also for Carriot, which should be positive both on the operational side and also on cash flow breakeven.

Thank you. Thank you, Stephen. And we take the last question from Michael Ponset from DZ Bank. Michael.

Yes, Michael. Good morning. I have one question with regard to your order book. You mentioned a number of 900,000 cards in Europe. That is a drop of roughly 200,000 cards compared with the Q1 results. I would like to have an additional figure for the BEV share, if that is possible. And the second question is on the expected better performance in H2, which will be the main drivers or regions for that expected development.

Michael, may I start for the order intakes and expectation for BEV? We are right now at around 8% BEV share, and the expectation up to the end of the year It's in between 9% and 10% because of the product momentum we are expecting and the strong order intake. And main driver of the regions, we still see a very strong North American and South American market, but also Europe play a big role. And we have to struggle this year in China. That's what we presented in the Capital Markets Day in Beijing. But in the other regions, we think that we are able to compensate and at the end to go for a volume which is comparable with the last year.

Okay, thanks. I mean, can you give us any figure for the BEF order book? It's included in the 900,000 cards. That was a real question, sorry. Okay.

That's included. That's included. And especially we said, because I think that's a strong number, being doubled comparing to 2023. But it's inside of this.

Okay.

Thank you. Thank you, Michael. And thanks to all of you for the questions. We are now at the end of the investor and analyst call. If anything is unleft or if we couldn't actually take your questions right now, we are very happy to answer them bilaterally. And please contact the IR team here in Wolfsburg. Next time to meet us will be on roadshows in London or in the U.S. and on the East Coast in early September. As well as we do this in part virtually and in part physically. The nine-month call will be on October 30th. and we will have the pre-closed call on October 14th. And after a short break of about five to ten minutes, we will continue with the media session and hope that you will arrive on time at the Munich call for all of those who have to switch. Thank you. Thanks to all.