Traton SE

and welcome to Trayton's Q2 and first half 2026 results call. My name is Ursula Keret and I'm head of investor relations at Trayton SE. With me on the call is Christian Levine, our CEO, who's dialed in from Sweden. Dr. Michael Jagstein, our CFO and CHRO is here with me in Munich. Christian will start today's presentation with the key results and highlights of the second quarter and cumulated first half. Michael will then guide you through our financial performance in more detail. As always, we will conclude the call with a Q&A session open to financial analysts, investors, and media representatives. To register for questions, please click the blue Q&A button on the webcast and follow the instructions. If you want to enter the queue via phone, please dial one of the country-specific numbers and enter your individual PIN followed by the hash key. To register your question, you need to press 01 on your keypad. To cancel the question, press 01 again. Please note that this call, including the Q&A session, will be recorded, and a replay will be made available on your website later today. You can find our 2026 half-year 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. And with that, I'm handing over to Christian.

Great, thank you very much, Ursula. Welcome also from my side to everyone in the call. So some of the Q2 headlines that we present today are most probably already familiar to you. We published our unit sales on the 10th of July and then had to publish our adjusted return on sales figures in an ad hoc release on July 13th. So I think today is more about putting these figures into a context. our improving top line momentum, demand signals behind that, and how all of this plays into our outlook for the full year of 2026. But let's start with our top line. So after a rather slow start of the year, our Q2 unit sales increased with a 4% up to almost 83,000 units. This reflecting a slight year-over-year improvement in Europe, and better sales momentum in South America, where we are already supported by the very first Mover Brazil incentive program deliveries. North America, however, still lagging as the recent order improvement has not yet been translated into deliveries. For the first half of this year, unit sales were down 1% compared against a relatively strong last year period, where tariffs have not yet impacted deliveries negatively. Also, sales revenues increased by 4% up to 11.8 billion euros in Q2, well in line then with our unit sales. And as a result, we were able to bring our half-year sales revenues back to a flat year-over-year level despite the slow start of Q1. Then for profitability, Q2 adjusted return on sales improved up to 8.1%. This was clearly above last year and higher than originally expected, hence the pre-release. Why is that? Well, mainly due to the earlier recognition of US tariff refunds at international, but not only, also supported by several operational improvements and bringing the half year adjusted rose up to a 7.0% and pulling forward part of the profitability support that we originally expected in the second half of the year. Like in Q1, the very highlight of the quarter is then the strong increase in order intake, up 44% year over year in Q2, after a plus already of 18% in Q1, thumbing up to a 30% improvement in the first half of this year. Let's turn to the next page and digging a bit deeper into the demand development. There we have it. So we continue to see strong demand signals across all of our key regions. Order intake again exceeded deliveries, confirming an ongoing recovery in the truck cycle. The book to build ratio ended up in Q2 at 1.2. In Europe, truck order intake increased by 23% year over year to around 29,200 vehicles. This was partly supported by weaker prior year comparison, but also by a strong brand level improvement. Scania up 30% and MAN increased orders by 17% despite the German home market still being behind our expectations. In North America, truck order intake almost tripled to 22,700 trucks with international motors accounting for the vast majority of the increase. This, of course, reflects improving US fleet economics, strong freight rates and some EPA 27 pre-buy activity. At the same time, deliveries remained below last year as our order conversion is coming through gradually. In South America, demand continues to be supported by the second tranche of the Move Brazil program, boasting our Q2 truck order intake by plus 20% to around 16,500 units, despite the ongoing macroeconomic challenges, especially in Brazil. This order growth was mainly supported by a strong increase at Scania, while Volkswagen truck and bus remained broadly stable compared to the same period of last year. First trucks from the tranche one of the Mover Brazil are now being delivered, which also supported our delivery figures in the region during Q2. And by the way, the second tranche of this program of approximately 3.5 billion euros, by the way, has now also been fully utilized ahead of expectations. So overall, The recent demand pattern clearly points to a back and loaded delivery volume in this calendar year. This also is supported by the fact that unit sales were still down year over year in the first half, while the comparison base becomes easier, of course, in the second half of this year. Okay let's switch slide and as just discussed the truck cycle is moving upwards especially in Europe and in North America where order intake again clearly exceeded unit sales in Q2. This gives us increasing confidence for growing deliveries in the upcoming quarters. At the same time, one should remember that our markets, the tariffs, the overall geopolitical uncertainty have not at all disappeared. So our approach remains cautious. Looking at our main region, starting with Europe, registrations are developing within our market outlook, while order momentum remains solid. Based on this, we leave our outlook range with a midpoint growth of 2.5% unchanged. In North America, the picture has become more encouraging. The positive order and the order trend is firmly established. Against this increase, we decided to narrow the North American market outlook range towards the upper end. This lifts the expected midpoint to a growth figure of plus 5% from a plus 2.5% beforehand. And looking only at class eight, it could grow even more by a 9% equal to 282,000 crocs. South America. In South America, the macroeconomic challenges remain, but deliveries continue to be supported by the Move Brazil order intake increase. So with this mixed picture, we leave our outlook range unchanged with a midpoint remaining at a minus 5%. In China, registrations developed very strongly in the first half of the year. While we do expect some cooling down in the second half, the strong year-to-date development allows us also here to narrow the outlook range. This brings the expected mint point up to 0% from a previous minus 5%. So overall, the updated market outlook reflects a clear upward cycle while still taking into account the remaining uncertainties that exist across all our regions. With that, let me now turn to how we are translating this improving market momentum. also into stronger operational performance through targeted initiatives at both brand and trade-on group level. Let's change slide. Starting with electrification, Scania is strengthening Our European BEV capacity with a planned 70 million euro investment in the French Angers factory, while MIN is closing a portfolio gap in the BEV portfolio by launching the new 16 ton MIN e-TGM. Continuing with digitalization and efficiency at International, we have launched My International to simplify fleet management and enhance uptime, while Volkswagen Truck & Bus is advancing production digitalization and automation in our Brazilian Resenda plant. And on services, Trayton Financial Services is broadening its insurance offering while continuing to ramp up its geographical footprint. Latest new addition is Norway for MIN Financial Services. And finally, at trade and group level, our first green bond and green loan issue, totalling 850 million euros, support investments in battery electric commercial vehicles and ultimately further help our future BEV groups. All taken together, these initiatives show that we are very actively improving our business, not only benefiting from a favourable market cycle. Please change your slide again. I'm building on the recent green bond issuance. Let me update you on the BEV transformation. Also here, we saw a clear acceleration in the second quarter of this year. Battery electric vehicle deliveries increased with 67% year over year, up to 1,050 vehicles. An even stronger rate than the plus 38 we saw in Q1. For the first half, this brings battery unit sales up to 1,907 vehicles, up 53% year over year. In Europe, our BEV ratio, excluding the VAN, the MNTG, continued to increase from a 1.9% in first half last year to a 2.6% in the first half of this year, supported by growing customer interest and, as mentioned, a broader product and services offering. Incoming BEV orders also continue to grow in Q2 but at a more moderate pace than deliveries, which is mainly explained by North and South America. In Europe, charging infrastructure remains the key enabler, but unfortunately also a bottleneck for BEV adoption. We did however see further progress during the quarter. Mylan's secured 120 million euro financing facility to further scale its pan-European public charging network including now megawatt charging system technology and Great on charging solutions continue to expand across to public charging across Europe through Scania Charging Access and the MIM Charging Go while our depot charging initiatives such as Erinion support customers for charging mainly at their own operating locations. So important building blocks are being put in place, but to support a broader BEV adoption in Europe and to meet the C2 requirements, the roll out of charging infrastructure and stronger support for battery electric vehicle TCO needs to accelerate and accelerate significantly. So to sum it up, the track cycle is moving upward. Our market outlook has improved and our Q2 profitability was stronger than expected with an adjusted return on sales of 8.1%. Beyond the cycle, we continue to execute on initiatives that strengthen our operational performance and future growth. including the continued acceleration of the battery electric vehicle transformation. So with that introduction, allow me now to hand over to Michael for a closer look at our financials. Over to you, Michael.

Thank you, Christian, and a warm welcome from my side as well to all of you. So as Christian already mentioned, the top line development clearly improved in the second quarter. Unit sales increased by 4% year over year, driven by a 3% increase in European unit sales, despite a 9% decline in Germany, a 13% increase in South America, supported by Scania and Volkswagen truck and bus in Brazil, with first deliveries under the Move Brazil program. This was partly offset by a 9% decline at International in North America, where the recent demand inflection is not yet fully reflected in unit sales. Sales revenue also increased by 4% year over year in the second quarter, driven by higher new vehicle sales and improved vehicle services business and continued growth at Trayton Financial Services. So overall, Q2 shows a clear acceleration in top line momentum. Given the slow start in Q1, this is not yet fully reflected in the cumulated half year figures, but it clearly supports our expectation of a stronger second half. Turning to the next page to profitability. Here, we also aim for a stronger second half versus the first half. However, as flagged in our ad hoc release, part of the expected H2 earning support materialized earlier than anticipated, driven by the tariff-related catch-up effects at International. From Q2 onwards, International recognizes the full amount of minimum expected Section 232 tariff refunds as a receivable. This reflects the increased likelihood that at least around half of the import value will qualify as US content. This new booking logic was also applied retroactively to the fourth quarter 2025 and the first quarter of this year. In addition, we booked a one-off receivable for expected recoveries related to IEPA tariffs, as we now have a basis to reclaim amounts already paid. Taken together, this resulted in a positive catch-up effect of around 120 million euros in the second quarter, bringing international to an adjusted RS of 5.6% in the quarter. Beyond this timing effect, profitability was also supported by solid operational performance. Higher unit sales, especially at Scania and Volkswagen Truck & Bus, helped improve fixed-cost absorption. Price mix effects, some foreign currency tailwinds, and continued cost discipline across the group also supported profitability. As a result, adjusted return on sales for the trading group reached 8.1% in the second quarter and 7% for the first half. So compared to our original phasing, part of the expected H2 earnings improvement was effectively pulled forward into the second quarter, while the underlying operational performance also improved. At the same time, we should not overlook the headwinds. R&D activity is increasing and will continue on a high runway, especially as we invest in e-mobility and our trade modular system. In addition, we saw first input cost pressure related to the Iran war. And of course, tariff costs remain a burden. Let's now look at the performance of our segments on the next page. Overall, Trayton operations increased sales revenue by 4% and achieved an adjusted return on sales of 9% in the second quarter, supported by solid volume growth, operational improvements, and the tariff-related catch-up effect at International. At Scania, the main takeaway is strong earnings leverage. Sales revenue increased by 7%, driven by higher unit sales in China and Brazil, while earnings grew by 27%, bringing the adjusted ROAS to 11.6%. A strong vehicle services contribution, product mix, and renewed currency tailwinds supported the development. These effects helped offset the continued impact from China operations and higher R&D activity, which remains a clear margin headwind. At MAN, the focus is resilient growth, despite a difficult home market. Sales revenue increased by 4%, even though Germany clearly held back the overall development. But MAN still grew European unit sales, thanks to a dedicated effort from its sales team and continued to build BAF momentum, albeit from a low base. Adjusted RS came in at 6.7% in the second quarter, while a better fixed cost absorption, supported profitability, higher R&D activity, and first Iran-related input costs weighed on earnings. At international, the main point is timing. Sales revenue declined by 7% as the recent order recovery has not yet fully translated into unit sales. Earnings benefited from the tariff-related catch-up effect, while tariff costs remained a headwind, and vehicle services was softer in the second quarter. As already pre-released, the adjusted RAS was 5.6%. At Volkswagen Truck and Bus, Move Brazil was the key driver. Sales revenue increased by 22%, but also supported by higher bus sales from government tender wins in Brazil. Profitability was held back by negative price mix, with adjusted RRS coming in at 10.9%. Finally, at Trade and Financial Services, the focus is on scaling the business. The increasing portfolio volume drove revenue up by 21%. Profitability in the core financing business improved while ramp-up expenses and elevated risk costs partly offset this development. So return on equity came in at 8.7%. Turning now to net cash flow, Trayton Operations reported negative 269 million euros in the first half. This mainly reflects the weaker operating performance at the start of the year, the usual first half working capital build-up, and the full cash burden from Section 232 tariffs. And last but not least, ongoing investments. At corporate items level, the June dividend payment of €465 million was more than offset by the two SinoTrac placements with total proceeds of 523 million euros. Overall, with negative net cash flows, both from trade operations and corporate items, net debt increased by 351 million euros compared with the year end 2025. Looking ahead, in line with our usual seasonal pattern, we continue to expect stronger cash generation in the second half of this year. Let me conclude with our updated outlook for 2026. Based on the stable revenue development in the first half, the improved market outlook, especially for North America, and the overall positive order momentum, we are narrowing our guidance range towards the upper end. We now expect the unit sales and sales revenue to develop in positive territory between 0% and 7% growth. For adjusted return on sales, we achieved 7% in the first half. This gives us a solid basis for the full year, and we are therefore raising the lower end of our guidance range to our previous midpoint of 6.3%. The upper end remains at 7.3% while we continue to aim for a stronger second half. If this materializes, however, the gap versus the first half would be smaller than originally planned. There are three reasons for this. First, part of the expected second half earnings improvement at international from tariff effects was already pulled forward into the second quarter. Second, we expect additional Iran-related input cost pressure, which was not reflected in our original guidance, but We have been pointing to this risk since the first quarter. And third, R&D expenses will continue on a high run rate in the second half. In terms of quarterly phasing, Q3 should be seasonally weaker, especially due to the holiday effects at MAN and Scania. We then expect a strong Q4 in terms of revenue and margins in line with the usual seasonal pattern and this year supported by the high order backlog we have built up. That said, geopolitical risks remain an overarching uncertainty. For net cash flow of trade and operations, we are maintaining our guidance range while we expect cash generation to improve significantly in the second half Higher primary R&D expenses will weigh more on cash flow than on operating results due to capitalization. Cash refunds from tariffs could provide additional support, but the timing remains uncertain. Overall, our second quarter and half-year financials show that our business has gained momentum. Auto intake is stronger, our truck market outlook is confirmed or has improved, and our first half profitability gives us a solid basis for the full year. That is why we are narrowing our guidance ranges towards the upper end while still taking a prudent view on tariff, costs, cash flow, and geopolitical uncertainties. With that, I'm happy to hand it back to you, Ursula.