Traton SE

Ladies and gentlemen, welcome to the Tratton Q2 first half 2024 results conference call. I am George, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star N1 with 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 Ursula Queret. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Trayton's second quarter 2024 earnings call. My name is Ursula Queret, and I am head of investor relations at Trayton SE. with me on the call today are christian levine our ceo and dr michael yakstein our cfo and chro christian will kick off the presentation with the key results and highlights of the second quarter and michael will guide you through the financial performance and outlook in more detail as always we will conclude the call with a q a session where we welcome questions from financial analysts investors and media representatives to handle potential media inquiries during the q a session camilla devon our head of corporate relations is also present this session will be recorded and a replay will be made available on our investor relations website as soon as possible after the call You can also find our half-year financial report, which we published this morning, and the slides to this call on our IR website. Before we start, let me remind you of the disclaimer with respect to forward-looking statements on page three of our presentation. With that, I hand it over to Christian.

Thank you very much, Ursula, and welcome, everyone, also from my side. Thanks for joining. So, you can see the overall picture on this slide, and we follow up the second quarter with a really good result, just like in the first quarter, concluding a strong first half of the year. And from the left, we start with the order intake situation, and you can see that we further managed to grow our orders to almost 59,000 vehicles. Said that, the overall picture is that customers are becoming more cautious, especially in Europe and North America, and we see markets are normalizing from the past two very strong years. Brazil and Latin America, however, are moving in the other direction, and we see a really positive market development there with good order intake as a consequence. If we look to our sales in Q2, we're down 5% compared to last year to 79,000 vehicles, still a solid level, especially taking into account that we've had a really tough temporary supplier issue happening at our international brand Navistar in the US where a fire hit our supplier of rear view mirrors which unfortunately is a single source so in Escobedo just neighboring our own plant there was a total loss now this of course heavily influenced negatively our delivery figures for North America whereas actually impacting all our key figures in Q2. We, however, expect to be able to complete the tracks they are built. and we have an additional line and an additional shift up to complete with mirrors and deliver them and the vast majority we expect to deliver throughout the second half of this year now if we move on to the cash flow this is what has been especially hit by this temporary effect in Navistar so a minus of 374 million euro in the quarter but remember also that this is the quarter where we pay out the dividend and we did double the dividend payout 750 million euro this year If you look then back to the third box, sales revenue, you can see that despite 5% lower vehicle deliveries, we did 1% minus on the sales revenues coming to a very good 11.6 billion euro revenue, mainly explained by a very good price discipline in all of our brands, but also a good regional and product mix. So looking then finally to our result, it's an 8.8% return on sales, another strong quarter, showing again that our strategic ambition of reaching 9% in 2024 is definitely well within reach. All right, Michael will of course take you more into the financial details later in this presentation, so let me instead move you into the next slide and have a look on some of the most important strategic highlights from the second quarter, starting with Scania and an important announcement made that we have established and launched a company called Erinion. This is a company that will supply turnkey depot and destination charging equipment to our customers. We've come to realise that, of course, charging along the highways is important, but absolutely 100% of the customers first require depot and destination charging, and this is where they anticipate to make the majority of their charging happening. strategically important and interesting is that we were never into the energy supply of customers before with some very few exceptions fuel cards and other solutions but this is and will continue to be 30 to 40 percent of the customer wallet so a small step taken towards a big target of reaching 40 000 charging points already by 2030 and by that supporting further the transition into e-mobility solutions. Moving to MAN, despite shifting to zero emission vehicles, the demand for traditional combustion engine vehicles remains strong, and the most important sales arguments remain TCO, reduction of fuel, and with that comes, of course, reduction of CO2. min announced the launch of the new highly efficient d30 engine so after the super comes the s13 in navistar and d13 min all are based on the cb1 engine gearbox and after treatment system being the first trait on modular solution for all of our brands but mn has taken that one step further made further improvements with a new brake generation and with several aerodynamic measures, being able to promise reductions by up to 4% to their customer base. And deliveries of these driveline will start in the next calendar year. Back to battery electric vehicles and international brand in the US, where a huge effort has been made to prepare the dealer and service network for the electric vehicles, both trucks and buses. We've learned in Europe that you need a significant effort to prepare the staff, and Navistar has chosen the path to prepare 100 out of the around about 300 dealers of international BEV trucks and IC buses for electric. an important step to be able to take on, especially the school buses that are coming out first. In Volkswagen Truck and Bus, we choose to highlight the internationalisation strategy that we've talked about for this strategic period, where in this quarter, a new production facility was opened up in Argentina, in Cordoba. There will be five models brought into the local production, in the market and in the market where Volkswagen truck and bus is present since more than 25 years. But if you look to the results in the market, you can see that Iveco and Daimler are the predominant players as they do have local production. So we expect significant improvement in sales figures for Volkswagen truck and bus thanks to this move. So two of these strategic initiatives directly pay into our electrification journey, which is moving momentum. And on the next slide, you can see our Key figures, order intake and deliveries of full electric vehicles throughout the first half of the year. And you can see that momentum is rising. Customer interest is really high. More than 1,700 orders is a clear improvement over the first half of 2023. We choose the picture here of an MAN electric bus, electric city bus. because we are tremendously proud to be actually the market leader in Europe for electric city buses. You might have thought that was a Chinese manufacturer, but it is not. It is MAN that is number one in the European city bus market, thanks to an excellent product that you can see here, the MAN's Lion's City E. But, as you know, we also have a great line-up from Navistar, with school buses, the biggest bus segment in the US, and we see momentum building up, especially on the offering side for e-trucks. Unit sales are going backwards, 605 only, and then you should know that this is partly due to the fact that the MAN e-van was discontinued at the end of last year. And hence, that's out of the delivery figures for this year. And then there is a strong pipeline of electric trucks coming into the market in the coming quarters. We see more and more customers being able to make a positive TCO calculation. We see improvements in the charging infrastructure mylands as we've already told you about erinian that we talked about today but also min strategic collaboration with eon where they are electrifying all of the min workshop and dealer outlets but as usual i call out to the governments especially in europe but around the world to make sure that the tissue parity is improved through whatever means available to them, and for us to be able to reach the CO2 emission reduction needed to reach the Paris Agreement. And with that, let's leave the zero emission vehicles, move into the next slide, and I will give you an overview of the market situation. so this is our global both deliveries and orders in one slide over the years and as you can see there is a decline in unit sales in q2 due to continued normalization in our big market areas, both Europe and North America. MIN is especially hit by the weakness of the German market, but both Scania and MIN in Europe are impacting by weaker demand out of Eastern Europe. Nevertheless, we continue to have a strong order book in both our European-based brands. Also in the US, we see decreasing figures, and this is mainly coming from the on-road Class 8 vehicles, whereas we actually see growth in Class 6, 7 and in the severe segment. And as you'll see later on, We make no change to our guidance. We stick to it. We believe that all the market areas will be as we forecasted for this year. South America. It continues, like in Q1, to be really strong. In Q1, it was predominantly Scania that benefited as the heaviest part of the market grew fastest. But in this quarter, you also see a very positive development for Volkswagen truck and bus, whereas the lighter and medium duty segments also started to grow. But besides the total market effects, I need to mention again the additional hit that the Navistar team took with this fire at the supplier of mirrors. Tough for our team that worked so hard with restructuring and getting the company back on track, getting this force majeure. taking their deliveries down with 23%. So mixed picture between the brands, but all in all, that takes us to a decline of 5% in the quarter. Order intake. We actually managed to increase 4%, as already mentioned, mainly thanks to North and South America, and especially thanks to Brazil. And therefore, you see very strong order intake improvement, especially from Volkswagen truck and bus, growing 36%. But also Scania benefiting this development, being a big player in Latin America, and also growing order intake in the first half year. This takes us to a negative book-to-bill ratio, or a book-to-bill ratio below one, I should say. We are on 0.75, a slight sequential improvement, and as a consequence, improved, or if you would like, lower lead times. So if we talk in the different market areas, we are now down to rather normal delivery times, around about three months on average in Europe. Whereas in South America, lead times are growing up to six months, depending on brand and application. And with Navistar in the US, we have the longest lead times because mainly of this supply chain issue now mirrors. But as you remember and recall from before, we also have frame rail issues, gearbox issues, etc. So there you need to count between three and at least six months, depending on specification. So that's trying to paint the picture, overall picture of the market. And with this, let's jump into the financial figures and I hand it over to you, Michael.