Q2 2020 Earnings Call

Ladies and gentlemen, good day, and what can be done what does limited Q2 and flight when do you earnings conference call hosted by HSBC Securities.

As a reminder, participant lines will be in listen only mode and they will be an opportunity for you to ask questions. After the presentation concludes.

So do you need assistance you didn't on friends called <unk> and all paid about pacing style then needle on your Touchtone phone.

Please note that this conference is being recorded.

I now hand on French, Georgia, Mr. Yogesh other one how much it'd be securities. Thank you I know what do you.

Yes. Thank you Stephen good evening, everyone on behalf of HSBC Securities I bet you come you all for the thoughts on what those what leaves notes conference call.

I'm very happy to introduce the Dart.

What does management teams, we have it does mr. going to shake M.D. and field.

Professor Dr. Roger Spitz see you would you like Mr. PB Biology group, CFO and Mr. Aegean Marine does see it for JLR.

Along with members of the Investor Relations team.

Thanks again to the team for their time, we even started decision with some comments you from the management followed by Q when they but before I hand over to bite idea I would like to his show a very happy Diwali to everyone on the Collins well, what do you biology.

In addition, we should the same to undersold, you I'll be happy the lobby and you get some foreign spend within loved ones over the weekend. Good morning thing to do any good.

Oh, we have along with others.

But you'll get just let me also because each fargo ends up being it doesn't know what I'm sure there.

Question that you would want all of them as Oh, I mean are the change that's like a lot family would go quite far off almost life, because I need to be spent on that you money and because our father, who let me draw your attention to those people that they've been and then go to the key activities. There would have been slick water oh. It so most of the U.S. feeling.

The press, including.

The launch of it would depend on that we had the same payment system. The problem and you know you drive that we have.

And of course, the new product launches that we have plenty exciting work on nevertheless, and mesquites continuing to light.

On the numbers.

Yeah, really reassuring and I'm delighted to see the Jennifer Poland is coming back and starting to improve.

Unfortunately, it wasn't the Indian market situation, because you've been discussing right away laws, you have any shop market decline and they get it doesn't it.

More than one of the Cummings lasers that and a in the China JLR due to connect we didn't want to try and other activities I think the speed at no cost getting into numbers on site.

And as far as they become obvious concern, but there's amongst the highest as you've seen the knocking on doors.

And therefore, it's it's a good.

Delivery of numbers that we have.

On the GE and I'm, saying that following the delivery has been led Arlo makes.

I wanted to deliver the has been a wholesale but let me give of India and one thing.

Numbered decline can be attribute it to their minutes of use model.

If something makes me wonder if it goes back all of the cash smart doesn't find it fills and they get a significant improvement from what we having the same thing not yet and agenda has almost no cash neutral oh, well this quarter and indicative of India I'm excited to stock in a situation that's significantly improves.

Just off the cuff all the most translates into locally produced.

Oh, well spent much time on the gross breakup wanting to say that Oh I like all our focus on retains being significantly higher than wholesale you continue being used in the isn't that I'm wondering whether they mentioned in the music function and I didn't talk about that in assessing looks like.

So we want to slide six which is a bit.

Wonderful that you have.

The 1.7% EBIT improved by 4.4% because your loved anybody was owned by dialing one of those Oh My God. Once it's the same and others being broadly flat and that's how you see the performance.

Let's take a little bit on the dialed into the Luqman that has been or the board has decided to a lot a shifts to the promoter.

Some limited.

This is in a situation bands the businesses delivered both in jail and those of you alone.

Thank you delivered a strong don't at all.

And then you know some demonetization in India. The fluid ended this news and the Standalone business being high I mean, the board has decided believes that the dislocations in the last month.

And ER. This oh, the combination of she hasn't waters and a that'd be a premium to the last finding well the now what inspires me almost 11% of any who face a one christie.

And this is a significant premium do not building by building multi deep.

And then they expected proceeds of course divorcing sold them kind of course August 2892 will be to see though on this is both what happens if it doesn't have the warrants and doesn't many we'd be there and I'm older decides to ER Doc and one of the woman's into shares I, just think supposed to exercise of warrants the ordinary share.

Yes, that's been waterboarding into all groups owning and ordinary shares would be a more important because one thing I know working right.

Okay.

This is already fundamentally I mentioned because of course strengthened the balance sheet golf.

Group as a whole and particularly the domestic mom.

Among the BNS balance sheet it for wide ranging support for the group as well it limits dilution because it does that I see shouldn't have now you've heard us even more limits the dilution and also significant strong conviction. Other promoted on that I know more about opportunity that we have and of course benefit always had where does it go it alone the business the computing.

And those things because its growth strategy that was it. So this is a very keen dimension as part of this quarter and stuff.

Let me pick up speed in terms of a numbers, you'll see the gilat numbers.

Oh, it's almost like Ben I'm is basically an EBITDA up 13.8% a growth of 8% in revenue and then they picked up <unk> percent.

This is actually were best.

You will agree with me this is no longer digitally to happen from Sheila beat on all the revenue beat on wholesale Williams retailers also broadly there.

<unk> performance coming through in China as legal to meet this part of the headline numbers starting to stabilize any who has a new launches fighting with and of course from a cost saves RBC Charles good everything I see a land under the same family also have a lot of DNA, although overall.

So let me know there's always the Adrian will give you more flavored bones, all the performance of Vietnam is probably though and I hope that makes it real with you.

Thank you balance sheet. Good evening, everybody on the cool. That's why did you just said is that so a Q2 performance revenue up 8% a favorable mix is why does increase volume in the quarter retailers with slightly lower that strong performance year over year in China.

In both Canada, and blogs really while buses old model topic as a result of which would significantly that's a those volumes below so the chalk impact of lower operating costs DNA and favorable FX for the first time in a long time in spite of you also said, we wouldn't really breakeven in the quarter.

A large 559 million pounds, but that's the quarter last year the high profits the lower investment and we also received the growth of 65 million euros from the yet so back in government.

The quarter on this that was volumes two stories a b notes its continues with the discussions we raised and they do you like coal China was much higher in the quarter, 24% to the same quarter last year, we indicated that in July and also the overseas markets when much.

Well as they were in that so this quarter.

No. The C is likely to continue in the second half of this year. If I do the same on model I've mentioned already in folk compared to the say you're not the probably model in the same quarter was up significantly 54% or the models that when doing well each of those are up from yeah.

Upgrades 20, Mobiuss for discovery sport and the excess I'm a bit more the upgrade coming along on discovery within 12 months, It's a range Rover sport doing pretty well again as mentioned driving I quoted rigs actually if you want folks to a waterfall chart that decides gravity that's nice to secret changes.

So last quarter, we were losing a 90 million in quarter. Two left why 90 to 166 is actually before exceptional items of 10 million pounds. The P to P always won't find six and you can see there are lots of positives and lots of places included that higher volume high apart from excess.

It's a compound growth.

It's still opportunities for us to improve at China, JV business, so to even worse in the quarter again as we indicated we've done a lot to stimulate incremental volume we have four new product license happening over the next six to nine month and we'd expect that performance to improve going forward I think when he was higher again you seem to.

Yeah, there a announcements including the premiums.

Difficult to sell Cogs in the marketplace and beyond the is one thing some of that we did actually take it 25 million pounds residual value reserve additional reserves on a 16 must be a range Rover and range Rover sport products.

Which we booked in quarter two as well don't anticipate additional is required to Boston Smoky is a really good news on cost control. Several places driven by the charge program as we talked on several occasions manufacturing material cost to fix msgs Sally salary costs all well.

And the same quarter last year did have a tactical I'd like to labor and overhead which use code for inventory reductions this quarter versus last year I mean, that's charges, Ohio as well as you would expect I mentioned earlier X was positive in the quarter bus is the same quarter last year, which.

Welcome to see the operational benefits if a weaker sterling.

The contract seven that running ads over the course.

That's why 20 go to the next page cash flow almost breakeven.

The properties. So obviously the catch profits were higher than we've seen a blades 870 million times, where the cash profit from now through the movie inconsistency EBIT line and that's what was a bit like what we said the control on investment would continue I do anticipate that growing in the second off of this yet but it was only eight full one.

In the second quarter, we had a series of events in working capital with the biggest of which was actually not the increase in our receivable balances versus.

The and due mostly to the southern right at the end of September being much higher in the end of the previous quarter, which drove a free cash flow just 64 million pounds in the core to 569 million better in the same quarter last year capital investment that's the breakdown of the investment less capitalized.

From a product development costs as you would expect and also the capital investment with allowing them to than last year as well down 164 million on the same quarter last year news on funding.

We raised with the last time, we completed the receivables facility early like lot at the end of that flight 19 withdrawing money on that in quarter. One no additional drawn down so not equal to two which did about 300 million at that facility used to date two additional loans have actually gone in.

Place in October and not in the quarter numbers not seen the quote to cash.

See happening in October we completed a unique deal which was backed by the UK exports funding guarantee a sense about 625 million pound deal was backed by that guarantee that was completed this week and money has been drawn down this week and we also get.

Hey completed the second deal with Black horse financing on not buyback fleet deals fleet vehicles, we buy back from the marketplace, namely mostly around management comp vehicles, which basically phones, it's a slow because as they come back before they refurbished and sold into the marketplace that daily show.

Then through to the 31st on December 2026 year old undertake who's being bought back. We also will look to take the opportunities.

We need to over the course the balance this fiscal year. That's again, we've discussed with you previously.

Looking back its strategic areas no change here reason why there's no change is the plan, it's actually working so the I turned around in transformation plan is underpinned by strong new product launches pipelines, you've seen the impact of the focus we've launched it over the last quarter. This is the previous.

Model, we've got an amazingly exciting defended coming at it.

I think.

It's preschool yet in the spring, which were really excited about project charge is starting to deliver in all facets of the program investment inventory people come and overheads are all impacting that dramatically. The the data to date over the full courses plenti charges delivered.

2.2.

Billion pounds, if you compared to last four quarters for the previous Foucault as you see the improves the cash is almost exactly that same number and then accelerates obviously will come along like two as we've discussed before fixing some of those fundamental issues that we still have to resolve within our business excites you would be amazing defender I can.

With justice to talk to it well I would like to say, it's we've had it leased 640000 complete configurations of this April .

Which is significantly higher than other baked goods, we brought to market place. So our anticipation on mistake, who is selling well is cautiously optimistic let me say.

So if you any of you on the line are interested in taking one you might want to put your ordering quite early next page. These are all the fantastic reports Weve had through the press on this vehicle, it's highly anticipated, it's creating amazing talked on social media and went very very proud of this new vehicle, China, China regime.

No. It was bina an area of challenge for us over the last 18 unsold. So these are the K P eyes, we put in place all of these K P. I continue to be positive. So the retail targets were again met through quota to.

The retailers all profitable equal to two they did have a dip in June as we explained last time because the claims the M.C.N. five units very importantly, most of those I always have local registration sales now and that went through in September our target of 85%, which is industry benchmark.

Level and retailer stocks are old tenfold intend to add targets that was just over 1.5 month.

Andy on the bottom there you see the actual sales first is the market place, where we are up over the previous yeah. When the market is actually.

Well I get charge. These other three areas. We said we would deliver 2.5 billion before March 2020 investment is already higher than not use all the relatively lower investment number in quarter two.

Working capital will go beyond its target in the second half of this yeah, I mean as salary increases come through an important cost and profit area next slide you would these the average for the 1 billion challenge on cost and cropping lost two we did 150 million.

Oh sure Web Sapphire program, you can now start to see for the last two quarters.

Significant reductions in people come and 50 million it begins to quotas and material cost performance always kicks in as you go through the year you would have so you would've seen that kicking in in the waterfall chart on profits for 40 million imports into China overhead cost went up a little bit lower than quarter.

The one actually equal to two so we're progressing really well with their overhead cost target and finally, because we know the E side of the caffeine President is so important we're already designing the Nextagent project charge, even though that's still six months to go but we do actually think we will complete the 2.5, but each arm.

And if its lease agreements fairly well in them. So much more detail on the next day two to have more eat focused when we talk in January finally, the targets the targets have not changed from your targets. We showed you in July so EBIT margin, it's still 3% to 4% range for this next fiscal year.

Although again I will repeat as of July we are unlikely to be at the lower end to the range.

The school year PBT is increasingly positive and we'll be in how to best meet spending will be left within 4 billion likely to be close to 3.7 billion. This fiscal year free cash flow is negative you saw the negative again in Q2, but it is improving and will be stronger in half.

Too and I gross debt to EBITDA up to the 2.8 range none of that Guidances change. What we will do is we'll continue to focus on launching that was we were cools, which you saw anticipation in the market will continue to improve profits in the second off for the yeah I'm to drive down the Kashkari.

Thread challenge and extend right programs and we will actually design and next stage of project charge should before the completion of the old program and what do you further details about when we talk in January .

How did he he gets back to south.

[noise] getting on just on what those so I think the focus of this quarter has been having that might go slow dollars alone definitely upon us and I hope that have been enjoying the demand is no long by doing it right into the quite a bit of a deviation from how we would be not forcing that done along a wonderful, but it's easy passed along from one.

Those of all ecosystem viable again, not just our liability I think it's just right or what do you have to do.

So then I focus has been pinch on.

Viability remain so we're.

Quite happy to do reduce some smell most people and ponder calls during this call Oh I wasn't goes up a strong and dealers muscle for multiple platforms I'm sorry.

And we can talk more of those little if need be.

Obviously, the then goes I was an implication on what else do offline and the shape of the BNS is not a PNM that we really like what I think it's a piano be have to lump in simply because that is a correction that needed to do on those are some stuff.

And you didn't want to do any underlying or kind of numbers, but just to lead over there for you, saying that are you happy to see read is being higher than homes gives me almost anybody golden units and quite disappointed with the revenue dropped.

Almost 44%.

On an EBITDA level, I think that negative EBITDA, so ankle and.

And ER.

Absolutely I mean to correct, but I think this wasn't picked up and I'd be happy with all of this quarter and does the plane in the profitability is almost entirely explained by them and it's CV decline, which I will talk more than the wild.

Sharpie and I know same time, you're also taking or we have to take a write off for more quickly because in the new Wifi business. This quarter on those models and those platform that we don't intend to.

Over the looking ahead.

As I mentioned last time to think asked most significantly lower.

But this quarter compared to last quarter and I'll talk about it doesn't.

So we honestly the on the profitability a waterfall that you have.

Nor does it is almost entirely waldman makes a declining I love there.

And all of the older pilot for those of you see as a decline in the Offerability because of volume and mix Olympic Wonderful is eminent CV disclaims any attributes to that so I'm of the predominant jump on that.

The cost savings are fighting quite well, even if I look at the media group off playing is almost the though most of the increase that you see that all that.

Included in cost that you see that only from the commodity price increases that we have to get lost your same by analysts you actually the significant saving but offsetting that on the fixed cost line. We have managed to keep it extremely tight and better ways. He is almost entirely that acquisition amortization that you see against it.

What I suppose forward and so they want to talk more than adults. So suffice to say that doesn't elements of the PNM that I don't know all control and something that you really want to keep an eye you managed to keep it right and then otherworldliness concerning to Semenya connection that people don't put I couldn't lives.

So just on all that you're seeing in the market <unk>.

On the cash flows line.

Clearly that is on the cash profit offered back this quarter has been very well are coming from the action that Vietnam's truckload the previous like that but I'm quite happy dozens of business, you're not focused squarely on cash flows and despite having significant inventory of system managed to.

Good receivables improved inventory into the only declined to do you see that I'm not able to same is more offshore action that you're doing on it but just like amenities that doesn't come back again that is more optics for us as we go forward.

So capex continues appears simply because you're in the midst of Ah vs. Six investment is we cannot put it off at this point in time do you need to be done last man. So that continues but we will be calibrating, our coking capex the CMO.

One final because what we expect to bottom out on the Capex light compared to the five of them. If it wasn't really flat so that'd be a correction that you're doing as well.

Oh auto C.D. side, I think our Ivy Park, the retailers are being significantly higher than wholesale and we are now but he was talking about the sitting at about 35 days and but just broadly that you're likely to be and there could be squarely on the dealer performance that profitability, while ensuring that they probably spend some happen.

Ecosystem I wouldn't be reported last quarter continues to do you know even in this quarter as well. So committed went back and we don't believe you had a comfortable level as you just talked liver I suppose reduced retailers is one of these days out of also the minute.

As in the market, we expect the a pickup yours, but I mean linear weather.

Andy or a function to be oh by keeping our system in required.

Hi, good one level belong there might have to people omens I'd like to pause a bit on this front it looks like what really.

He has played out in this quarter, because you're going on attention to the left graph on the one thing goes.

Dipping into other more 6% to 8% volume growth.

I've seen that going about 16% isn't going to willing but last year ending.

The year before.

This year actually the first half and so far the decline, but every job elevator.

Under these conditions wore me out reassured that up market just continually movie screens, we are not moving confident enough in the market.

Interestingly the portfolio for that's a lot of actually dramatically shifted what do you see in a good offer those various ballast point. So you have the heartland I'm not going to pick a lot of you're going to afford or is it fair.

Let's see the speed at which does accident Atlantic Wharf introduction of actually works and all of US at 11. These are the most profitable segments in the market.

And on top of or do you also have a situation on the absolute gross profits being done.

Being high only lake compared to the other me there and why thus far smaller size point. It makes it seemed that brings a great I know those have actually.

So in this kind of a situation he needed tells us what sort of gene that you're seeing market that we need a headache for that in terms of the profitability. Obviously does this segment as well as often ability of the although I. Once again exceeded the members you can see those things starting to pick up as it.

So meaning they have you had focusing squarely on enjoying up alternative for all of them is one of them and weinman from onsite and I'm quite confident that we wouldn't be able to pull through with that and I'm sure agrees with one or the subsequently when youre, having but she goes up. So that's all you want to have a set of applications are the same thing on the respective CV and the BG portfolio isn't it.

Well, the PD side or the correction on repairs I mean.

Because they've also got 800, even if a a distribution organization to although not orca so that I realize it was equal or what are the dealer stocking. Another 40 remains a high but that is a mixed up with early September the start of the because he doesn't do that the lower retail level. These almost up there.

The these learnings and be complete the basics.

Does not come down because if you did and I just have become internal maybe the other thing to be do we get to does that is this something you're interested in wanting to see the peak season. That's what he does this collection was slightly delayed on Monday disappear.

So then you have enough keeping that quite disappointed they become breakeven or something that we cannot deliver the sport.

That is EBIAT rigorous planning for the connections to the actions of the undertake to ensure liability of ecosystems overview of a big in the one off right also be habit.

So far east concern I think.

Action or excuse me continued to be an industry leader as volumes or something for the Parker and the product Greenhill starts is starting to look quite rapidly. We don't have extended range do you got that would be lost at one of the Lincoln to make US. We also have the new.

Excluding the effect on the vehicle technology, which is going to see the honest as.

And those of what we're going to deliver it on a range of the older D. in terms of bidding there, though is that won't be there.

And you also know started to see all profitability improvement in this as we start understanding this technology, but when they go so quite happy with the Windows as progress and of the next big event for the launch of the next on electric So do movies that are quite excited to draw Android intervention Gonna Millen someone Navy that's currently.

It doesn't that's going to be running over there to show how it's well that's reflected were going to go from an obvious the mail there.

I want to finance.

It's been a is quite a change in the way that doesn't have the starting to manage itself.

And they not seen those mr., yes, no longer division, the downtime Columbus, and Dnbi her up 4.9%, but I'm not concerned about it I, just wondered and because of GMP lateral.

There are those strategic suppliers, who have had liquidity issues and that concludes the last articles improved from September on much at all collection.

There are undergoing a genius if approved projects pocket.

Probably talking about our development and you're seeing the benefits coming through in the BNS because again good stuff, but nothing takes away from the fact that even though even with market share the doesn't that don't quite significantly reflecting the performance of the CV and if you businesses.

But use as far as I don't want to find them has been thunder the landscape you're not changing the everything just trying to deal there the start moving to an asset light model was fixing the talking this meant that we put into that business and then.

Actually include always going forward more of our this effort is that as you start having the plans by masonry orders in the coming for us.

So on a net debt level do you seem to the liquidity in the Israeli and are those reasons why we have to intervene as a potential allotment in that is what you've seen the automotive standalone metrics. They don't love their babies.

Or in other ways or is this collection coming through we are confident that does not start coming back under control again.

So all in the market situation continues to remain challenging you've seen this many times I won't talk much about inviting the Paul let's see positive after do [laughter] remains a challenge.

Are you you last month of I'd wind down the one of likely what happened there let me for the good news to play all that are outside of India is concerned the shop, so long as any much real and I, probably don't depend on hoping this infrastructure spending cuts coming through to pickup CD NPV of causes more consumer sentiment issue, but of course the government.

Given strong signals to intervene in this and we are hoping for the best outside of <unk>.

And in this situation how do you see the outlook Jan you didn't Wanna Nonunion plans, we remain confident of its eating aside just leaving that aside of India is concerned we remain confident on medium to long term less but then you have does is fluid and therefore, we are not going up we should become it.

And the will of course spoken laundry didn't go the junior Dnbi and growth that's because we'll be their financial recap indoors and our entire opens remains on be Essex migration, focusing on cost and gas and working on that liquidity across the entire system.

We have to say Oh going out of up so let me open in back to organize or do you mean.

Thank you very much.

Well I'll begin the question answer session.

And you Wanna wishes to ask why shouldn't even at Bristol and one on that that's done in California.

If you wish to them, we have said it from the question can you refresh stop and too.

[noise] participants I quit sticky use handsets well asking a question.

Ladies and gentlemen, really wait for a moment when the question give us members.

The first question is from the line up in saying something about please go ahead.

Hello, Doug on legislation to them they tend to live events, particularly on Jay a lot I wanted to check on the sustainability all.

The numbers if you could give some color producing the dominated this is it shows you the corresponding to know very strong improvement. This quarter. So are there any or what else to call out there and also the other expenditures I see you in that you know when you're doing anything because it's still not de stock.

So if it was just help us understand that.

And again I guess, you can make it oh, sorry, I didn't know Chris statement.

Yeah, Yeah, Okay, yeah, yeah. So sustainability as you mentioned, we had a really nice quarter, 4.8% EBIT margin.

We do expect to be problem second off for the year.

We do expect volumes to actually rise also in the second off with the technology is the best selling season for us.

We have this huge thing good Brexit still out there.

Which of course still has to be resolved and I'm sure. You're aware also that we will close out plans again.

In two weeks time for a whole week, losing 12000 units of protection, that's certainly will impact us in the short term, including quoted to you.

When we actually asked the question lost a loss.

Quarter, one it was at least 100 million problem for us in that quarter, it's likely to be similar this quarter.

However, we also expect over the balance of the yet to trade through that and salons. We don't have that another attend to ER to Brexit at the end of January which gives us a problem in February I expect us to penetrate through the issues that Brexit provides assuming that it's you know oh.

Brexit of course.

We are cautiously optimistic the underlying trading results are getting better in very difficult market circumstances, but we got to be where that that which of course could actually impact second off yet.

Oh, sorry, my question I'm in the specific line items, the gross margins and the other expenditures for the quarter, which we've seen a very strong demand as opposed to see so and they seem to go I know there or do you know sustainable.

Most of 200 that spills into my time ago spot beams, and similarly that expenditure is actually down from one Q1 last year.

Well, it's back into the presentation right. So we had a nice mix, we had higher range Rovers excuse me.

Products, which is obviously important to us so 8% revenue drug grew to 9% ER volume increase tells you that that should help make stress in the quarter parts and accessories were also higher in the quarter and then they are the increases in the actual EBIT performance, we charge is coming.

Through this.

In terms of a cat point that point within the data the Bailey levels, which again was stuff that we are at 7% the problem not pretty.

Got it ought to gross margin was positive for us that's just a rock or today.

Okay. Thank you and secondly, I just wanted to check.

One question I had from the I don't want those little designs Databank, well Q2 S identity.

I see that on slide number 10.

We have not realized foreign exchange gain of 509 gross.

And do Standalone number it's going to go so there is some balance.

Yeah, that's why it seems density.

Is that something does have some I got it was mainly sitting in Tata motors realized gain so the answer some of the hinges on the CD and in Q2. We have received we have seen already allegedly enough for 144 grows which is that as a balancing act. The gilat 11, I could request back to chip it.

[noise]. Thank you.

The next question, it's something lineup Robyn do from Bernstein. Please go ahead.

Hi, I'm. Good. Thank you so had three questions. Please if possible. The first one is the impact of FX. When one thing that's what miscible home solar was in 123, and the second quarter, which has got a bit lower on a sequential basis. It's it's going back up again could you just.

Clarified.

To what extent the FX.

Impacts revenue and direct material costs and what the.

The margin, okay that person and direct margin.

Move sequentially would have been had we had a constant.

<unk>.

You too the second question is on the.

The China JV I mean, the the equity income number continues to look very weak one other things but.

I think it's bit of an issue was good luck with is too much capacity. Okay. That's obviously on your books I mean, it's just if you could share any thoughts on what the strategic plan that there might be to try and <unk> lower those losses over time or is it just going to remain large so long as your volumes remained basically where they are today question three.

It's more just accounting.

As mentioned the you had a 65 million euros subsidy I'm, just curious to know where that was booked and what that was it sounds like you.

Let me, let me take those in the order that you asked them.

So FX.

If you if you go back into the actual waterfall chart, you'll see is breaking that out. So we definitely had some good operating exchange.

The quarterly number with 70 78 million and of course, that's directly as a result, the net effect of Sterling actually being the closer to that 123.

I'm not 112 level only youre right. So that was positive operating net net income statement in the quarter.

We did have some hedges of course, you know a hedge book is rolling off there was some backup in the paper on the roll off of those hedges but of course.

It was the Sterling actually depreciates and the contract values increase we had a large alonge revaluation, obviously moving from 127 I think it was the ended June to the back 123, which he to some FX Reval line on that page, you'll see about 28 million.

We had some unrealized commodities so net net net the.

The operating exchange was very positive the the hedges crystallize neutralizing antibody with the balance sheet revaluation, and that's and that was the partial offset if he now move forward to 129.

Lee, which we currently I want to 28 this morning.

Revaluation on the balance sheet reverses.

On the JV.

On the China JV question.

Yeah. It was a difficult quarter for us. He did say we were going to stimulate the sales on the JV. We've done that for several reasons actually one because there's nothing that is just too low and also to the Q3 threats to the products in the marketplace.

It was of course the law next six to nine months. The first one of which the about did start so I'll call said too and we did we are going to tick.

Right and an improvement we believe in the transacting prices on all four of those products as we go through the next six to nine months. Okay. The first first one of the ACSI long, what's the second one and then the discovery sport maybe the third one that come along so we are expecting some improvement.

And the transacting prices, although it is a difficult market place for us and there were certainly still working progress I'd expect it to be had a report some positives from not work when we talk in January and the third one is the ground see from me try that gets put to the balance sheet, obviously impacts cash increased.

I find 65 million euros in the quarter. It goes into the balance sheet and we think in the course it probably other favorable income statement impact from about 5 million.

Right right got it if I could just follow up who's on the on the China JV.

The company given any thought too.

Potentially working down somebody else. It's like you did a few quarters ago, even possible considering that it's a 50 50 arrangement you because otherwise you just up is big lumpy.

That's true skin to weigh on the DNA lined up the JV.

Yeah, we look at each quarter throbbing actually I think what were actually doing then I would just being clever exactly where we think the trading performance is going to be over the next 12 months and then the planning period that normally the trigger for whether we feel we need to write down those assets. If we continue to trade as we happened to law.

Fourth quarter going forward, there would be an asset write down, but I think I'm signaling, we don't expect to trade quite that way over the over the following 12 minutes.

Got it thank you.

Thank you. The next question is from Plano Sonal Gupta from your P.S. Please go ahead.

Yeah, Hi, good evening, thanks for taking my questions.

The couple of questions one on the Jerry law or if you do reserves of about 25 million. This quarter I. My understanding was that I mean like in terms of you wouldn't want them to hook for some of these it if you do it on to me use book.

Yeah, I mean like are you on the because right now we don't really have much liability into balance sheet, but is there a me I mean like can there be or liability from these agreements for other falling more news.

Okay. Let me so yes, it was north American business. It was on 16 must be a bit codes for range Rover sport and raise the price contracts with chase was a sharing 50 50 losses over 6%. That's nothing we've changed those contracts 60 modeling.

So we don't expect any sizable increases on the was on all the losses on that because in the U.S. that follow in periods, where we're trading at the moment, but pretty much done we feel.

So there's a sharing arrangement that's the key potent over a certain amount of losses overwhelmingly all 100% before that is actually taken by chase.

Okay and could you give us the same so from where youre warranty costs was in this quarter compared to Q1 in four Jr.

Yes, and Q1 warranty costs of 6% if you remember back to Q1.

Two or three significant one offs well what the TV. The six recall I know that one would be goodwill programs software.

Oh, Yeah, we have to which we actually pull into the marketplace Rolling answer because it's a next three to six months.

In Q2 that was a significant reduction in warranty as a percentage of revenue to just over 4%. So improved by two point most of that improvement because we didnt have one offs.

Oh, yeah underlying lifetime to maximize the Iqos you know at the coverage level of warranty is broadly the same that's core to one.

So what should we see 4% or the more sustainable I mean, given there's been no one else.

I think I'd say I Didnt in July the range for us will be between four and 6%. So between the four and 6%, yes, well that when I went off I would expect it to because the 4%.

Right and just lastly on with China volume outlook for Gerard I mean, we have seen an improvement though of course, where you're coming off of a little base as well. So I mean, just in terms of absolute volumes do you think sequentially Oh, how things could find out I mean do see significant improvement from current volume levels. So do you think.

We see more gradual improvement.

Let's see a gradual improvement from levels. We just 11 in Q2, but we do expect them to be positive in the second though for the Airbus is not level.

Sure. Thanks, a lot of thanks.

Thank you.

Q.

Next question is something I know Brendan brick yanni from JP Morgan. Please go ahead.

Yeah, Hi, Thanks for taking my question I had just a follow up on the China thing no at this level of volumes on the EBIT margin. If they are very very negative. So how should we look they did I mean does I mean, if people are usually when do we need gradually do you see di di margin direct team building.

We continue to see that this business will be Oh, we'll have a big lots of portfolio.

[laughter] check I think you're talking about the JV Robin import yes, yes, yes, it's easier.

I think I think.

So there will be a gradual improvement I think that they point to note. Though of course is that that ROE for the model lines are actually pretty much on running just being changed and therefore you lost in act of older vehicles at the end of that at the end today that current life and so I Wouldnt expect.

Even at these levels the volumes could transacting prices to lift and so the losses in the JV to reduce substantially from 11.

[noise] [noise], okay, or any any guidance you can give as to how should we see this tragic dream doing I mean do we see this donning positive anytime soon or this teas negative or I shouldn't be release. He didnt makes things I'm, just new products coming through.

Yeah, you see I mean, the new products are starting to come from the bulk of the first one through end of course, it too I started selling I think in August the XT long starts to sell later this quarter in December I believe so you will have to wait for those new products to come along I think the important point.

They are either here or very close to be yet and the job obviously, but they all products is to make sure you London that quickly an orderly and that's what you'll see in some of the data that we posted good in Q2.

Okay and the second question I had was on the capital raise not this is a a this isn't entirely going to be used for the standalone operations as I understand.

He said any thought process. So do you bad or you know a two to think about you know looking at the funding gap NGL line.

Because clearly got on guidance is that it stays negative for two years I know I mean, if it what did he thought process that is they bring to be an infusion to bridge the gap funding gap there.

Let me think that.

Oh.

And on accessing this Uh huh.

Intervention happening just setting.

Groups overall levels and bring it though.

The other piece is also strong signal to support from up or more birds in support of the there's no condones all they see this is an opportunity [noise].

You know there's also notable does remain for the current market price.

And therefore this is being done by actually signal as much as the fund as well.

Number two as far as you said it was on the Samsung isn't we used to repay debt.

End of either ratings workers. They love holds up into Darren Windows are open and that's totally things look.

We need a group level, because anything formally pension benefit JLR Anders bondholders and Smith.

So therefore at this point than signs of used to feed on it and the usage can be intermodal BJ, let it could be anywhere.

And they told me you run it doesn't compete when it comes to how we want them than they did all operating companies looks at it as well.

So that's how we're looking at it and.

At this point in time, the did production that happened in the Standalone entity.

So it is a passing the maximum challenges as pointed.

Gee I love insiders are very strong balance sheet as I keep reiterating again and again [noise].

Oh, they're very pretty nature of the quite comfortable that golf any mcdonough Muslims are quite comfortable parts of your is performing as a starting point.

And therefore of importance based mostly the.

Finally, the promoters to say that maybe even donald present themselves as individuals coming.

Okay got it just last question if I can squeeze in on Monday alliances. The BMW I know people. It's just spoken about looking at such more alliances could do the you know or you know to some more light on it I mean, what kind of alliances. We are looking ahead and does that mean that you know they did so keith for capex to be on <unk>.

From bad we I couldn't hear GE alive.

Overall, I can only to really.

She a few opinion, you're looking for taking a look and thing I'm not sure to partnerships like BMW or the Olson there if I phone partnerships in more areas. So your father partnerships. This me most of your pocket partnerships in trying to resolve the phone or.

I do.

Really old, saying Gee area or think about.

So it hasn't moved off.

For my piece is he going forward and there are two system. This is very important new company. It can really be perfect and leasing in Italy in each segment.

Okay got it thank you.

Thank you next question is from Atlanta Teenage Gandhi from Motilal Oswal Securities Limited. Please go ahead.

Hi, So my first question pertains to Chile, a couple of questions would you like no. One is on the material cost reduction mature I listed in the presentation of 300 million pounds of how much of that doesn't mean that she didn't know what stops and second question pertains to jewelry accessories no [laughter] this quarter.

Oh, he's an extra two we so high.

Not second quarter.

Okay. Let me take the first question you asked.

I think it probably wouldn't you say the 300, then you're probably referring to the college age I didn't actually happened within.

Yes. It to of course, you go to the waterfall bridge, you'll see in quarter. Two that was about a 40 million and I think improvement in material costs, even though there's some commodity costs in there as well so what we're signaling that race.

We as a part to the charge program kind of expecting in the full year.

Well actually did use material by about 300 million.

And from a tax rate perspective can you just repeat your question if you would.

So if you look at effective tax rates would you not in this quarter, it's almost close to pretty 6% I know, it's not the right way to look at what kinda because of the.

Additional saw Texans.

Those people see losses that are solving degrees.

But.

What would be the sleepers extra to the for you.

Yes.

Okay got it.

Coming here I think are missing what can be born after taxes go look both when do you have numbers. These are all the time lumber who lived here like I said nothing has changed from what has been done over the previous years, what do you see US. That's also why you see that back number also being extremely high because basically crawfords Ngls.

Being factored momentarily.

[noise] losses in.

Does that put back this is not recognized and the combination this brings us number one or so.

<unk>.

It's better to be looked at them clear basis, and we don't see any change as far as they love pediatrics.

Should should that be I'm pretty quick [laughter] or draw highest.

20% to 20%, 22% to because either on that.

Okay, Okay, Okay, Oh, Turkish and putting studio business, particularly in the CV site.

Oh I mean, what are the trends we have seen now after last quarter little sauce.

Got it did inventory, but you do they still substantially down off talking much likely business solutions to walk and pilot about Oh I want to the emerging trends on the 10 minutes you business and then superstar and Stan.

For a second dose.

Yes, yes.

Okay. So I think the last quarter was.

It's pretty bad as you can see and in fact.

The hotel industry volume in September .

Was the lowest into September or Bobst, and yes, I mean, there I know.

Average fall when I've seen.

And if we look forward.

Oh.

It's very difficult to predict what kind of.

Both our legal does like input.

But what he's seeing some green shoots entered the main driver not the mines.

So for safer.

Green shoots into demand drivers.

Some of which I'd like the freight availability post.

Wonderful news looking up slightly the freight rates are firming up slightly.

And it'll be look like what we call. It the transporters sentiment is less.

It's actually an indication of their satisfaction with the current business.

And then like you will purchase going ahead.

And what we've seen is this.

For the cargo trucks, the crops photos sentiment index actually bought them, though can you what.

And that's slightly more up into two which augur well for golf cart.

If you look at it but.

The sentiment index in fact as for the gold only who work your way.

So that's the mix effect, one season medium and heavy so much later.

I think we'll certainly expect which by the government.

Well, that's factored seen some select to find disbursement happening on the infrastructure projects.

Between gradually get things when we.

Yeah, I don't have anything.

Actually Oh start off some of the new projects and allocation of new projects, giving up some of my new licenses also.

So therefore, I think there are some green shoots sort of demand drivers you shouldn't affect the fleet operators that such a little more or less I'm talking about medium and heavy commercial because.

They have actually started coming forward and ER and budding up but the thing.

Because it makes a lot of business sense for them to buy the B S. Four because now.

By replacing their Fiveseven Emmy Award used to do you see because because there's a huge your operating cost advantage when when what most of your phone maker.

And you get also avoid those likely placing who's going to happen in Vienna sales.

So that's what we see in the medium and heavy commercial because right now in this month.

We still don't see reaching the mine.

The way to give you seem to be troops in demand driver so something for the two mishandled bags before.

Okay, and the remaining segments instead of you didn't like so much because actually has been the one which has brought.

The minimum almost all the segments.

And this actually continues to do that.

Drop is less as compared to less than one.

So we're just going ahead.

And you see more customers came coming here and asking about ER you wait till the abuse whatever goes before beginning of music.

I mean small commercial rate goes up currently though it's too soon is there and therefore, we do see but annual increasingly deal [noise].

But we absolutely I was a small commercial becomes backlog as we Laurie.

Sure. Thanks for the strategic plans come back in Q.

Thank you.

The next question is from that I know anything from Morgan Stanley . Please go ahead.

Oh, Hi, Timo, thanks for the opportunity.

Just firstly on China, you know I'm most other press releases of Chelada, pointing out that China company being the key driver of profits. Tony So is that coming from the import business because clearly the JV business, we've not seen any improvement they hit the wholesale dispatches to China sequentially, how pretty sharply.

And all the pricing recovery going if a company happening over there.

Understand that no, which part of China I've seen recovery.

Yeah, it didn't seem cool.

Quite rightly say and is having an.

Impacting quarter to modest impact.

What is happening impact in quarter, two and we will look too as I mentioned earlier, so volume from that Chinese import business steadily as we go through the balance of this fiscal year.

Oh, Okay. So the retail dispatch tying up only 1500 units quarter to quarter. They meet all they must have gone up significantly so inventory levels in China or would have gone up is that correct.

No no no. That's certainly not correct I showed you the China page you can see inventory levels.

Okay No no just tell the I suppose it's not surprising that just 1500 units how wouldn't make such a bit different.

But I can do come into project, China, Toby we're targeting all pain you name it can make any due in part of minutes yet I think.

If you can see the waterfall charts light on the enrollment you'll notice that it is a pretty well around or delivery coming in from Jay let on all fronts I wouldn't attribute this only to China yeah.

And yes, there is a better mix coming in collateral.

Sure charges delivered.

Substantial pieces of the positive Uh huh.

Right, where the sport, therefore, or China is definitely one of the important but not only thing yeah.

Right right. So that's helpful.

The project charges were targeting at 1.80 I'm billion cost savings on the cost front, how much heavy achieved in one and I'll hop you try to 2.8 800 million pounds for Julio.

Yes, so it's not 500 million delivered in B cell phones, or the charge program 150 million or that was last fiscal year.

Which means we ended the 50 million or that was the first off this year.

Yeah. So you don't like to do the remaining golf teach pitch to.

And the different says in the second half of the and more than material cost reductions as negotiations get closed and then backdated nor the material cost reductions didn't come through the second half of the yet so yes, we're on track.

Right.

And just tell one question on the India business in a lot on TV and not on PD. One defeats how you Toby Pete seen discount town hall going up quite sharply in the last quarter.

So women men keep pressure, though he's town do we expect discounts to we've done over there and the question on P.D. that you know marketshare has come down on the wholesale tight quite sharply so could you shed some insights on retail market channel.

Yes, let me comment here as far as.

A CD discounting has come and you're right the intensity of discounting in the market is indeed.

And I think or to your question on the how does it they arent going forward.

We are happy that I mentioned those are connected to the almost 12 million lives that we wanted to be or what the levels of mark Intercontinental can depend on how each of the clearance inventory levels. Obviously, we'll know if you're not really goes I mean, obviously you can see how it plays out.

Let's say that from our point of view will remain converted over to ensure that we do not lose market share gains when you want to amplify the area. So.

Oh, sorry that I think on stocks are north of six quarter mill.

And.

But the mine supply mismatch, which was there in Q2 World words.

Supply being more than the mine is getting more matured as well as you say that I think there's been some green shoots on demand drivers I think when we see the realizations for me numbers before.

Yeah first BD market share is concerned so conscious connection in the wholesale markets or that you have.

Well, Oh plan found or anything else.

So really right Tony mentioned for the ER, the marketshare came down.

Well, we see as it is officially somewhat uniquely mission in India.

We took a conscious called well in preparation of transitional beautiful to be a six and because of the factor to the market between the collapse in the second quarter.

In particular on expectation or the cheese TV. So if I can serve it was a and turn to choose Tony do you see Comping. It's meeting the first on the changes so September .

We decided to drastically cut production.

A couple of production. He also Justin we Savage Accordingly, and since we have Hebei shifted focus so completely within a two between the first off you bring this year.

I would be we took the potential impact so an hour marketshare doping beautiful if I suppose but.

As far as it goes much more important to be used to talk to them.

Yes, it was much more important protectionist be tall commitment to the Veeva network to reduce to supplement to unleash working capital on device.

Because as far as you read too much concern and you'll see them bundles decides to send this I love cheap, though he most significantly higher within or if the besides we'll see if was supposed to be used to talk on VCM. Although there's no official this is because he will be in India. The good officially.

Although we are pushing up even with the young and find out which is for you just confused investor sending it does not.

Actually focus on the crown utility businesses repaying.

Not seen any compromise neutral hooked in all markets, you, which was the between the first half of your consistently between 6% to 7%.

Which actually confirmed to us as we are doing the right thing as it was well she's a presentation in order to correct the market situation.

And the to adjust to the system. So as we call. It so not only on the other cap on the dealers also in taught them would look like or to the best supposedly accent.

By the end of the bank.

As we look for will enter for most of whom we expect to be bankers to the normal level or which gives us further come forth for countries should be is supposed to be a fixed.

Great I tend to put 6% to 7% that's what all PBT taking market share that killed that's your best estimate right.

So that's why there was this would we see on wouldn't be can be found the statistics visible as what you can read on the market's a feedback but as you know that somebody that's remember the I've no idea of knowing that he did shares when they go Oh, maybe five lumber business what are the market intelligence, we believe it's called 6% or.

Operator.

Okay, great. Thanks, Philip Thank you.

Thank you next question is from that I know, what you're not show from either way skis core.

Yeah. Thanks, Judy said two housekeeping questions first.

Yeah business this.

Charlie you end up TV business do you have taken.

Right.

It's insane David Delaney.

Other expenses you see the teaching.

And by the next I'm going to finish.

And.

Second is good.

Right.

Sure.

We can't during the presentation.

Is it more willing to do just that we had seen goal.

<unk>.

Because well have coincide it just seemed thanks.

So what gives you confidence.

Thanks.

Yeah, so see.

The slowdown which doesn't happen to Doug is on sort of different than the front end user segments like.

Then the excellent three et cetera.

And especially those in long beach with segment.

Mostly use.

For the E Commerce segment right that this was logistics of ecommerce companies and this is one segment, which has been great pretty well and therefore, one sees that share of this segment has actually gone up as compared to the multi axle vehicles and tractor trailer.

I Wonder if you accelerate constructor colors.

Which are used for sieminski transportation or some of them are used in.

Road construction for a promise Retranslation I think both segments of and do segments have gone down and as the as a result in the fall in these segments is actually higher than the old industry volume for.

That's what are you going back the smaller like of smaller tonnage because.

Oh, sorry go ahead.

Depending upon how one sees the end use segments green and the remaining half the second novel, Yeah, I think different segments will be kind of change there, including the or on the industry volume.

Yeah.

Oh and question on Jan.

Right, Okay, but that probably econazole nitrate yep that's true.

Change.

Okay Fysixteen.

So how does it look I guess that's number.

Because.

But we can can be Kennedy.

On your own or something and especially coming.

For us.

I understand that the current performance was driven by a new launches the sustainability of new launch any impact on profit everything together.

Let me take that question. If you. Many so yeah, we had a really good EBIT and EBITDA quarter to I think this back into the into the answer I gave earlier in terms of the second also the yeah I do expect volumes to be stronger in the second offer.

Yeah, maybe because of the volume either be a little bit of a weakening in the mix. So on a per unit basis, we werent quite get the same level.

Profitability. It was the big issue code Brexit coming out in Q2 in Q3, again, which will impact when you're building hundred 20000 cars in the quarter that we'll certainly have an impact on the quarterly results. So I would encourage you to wait in shape to see what the shape of the quarter is when we talk in January .

However, the underlying profitability on the because a stronger than they were early in the media and I'll go back to core to one to help you understand that equal to one we had to be any of 9% of GE beyond that was down to 7% in quoted to you know I expect to that level going forward they split.

Yeah, I'm being quotes the one we had a warranty of more than 6% GE. They are not stands at 4% in quarter, two and I'm expecting a level closer to 4% in the second now for the because it's basically a pool point improvement in those two areas in quarter, two and it's not level.

I'll spend under coverage is I expect in the second half.

Yeah.

Hi.

Just to close the point I think that's the reason we are confirming that we hold our full year slams. It has been 3% to 4% David and all the intervention that you're making its been show that we get more and more robust in terms of everything within that particular quarter at all.

And a real reconfirmed prolia performing against certain every quarter legal.

Yeah, Thank you and others.

Thanks.

The next question is from lineup Aloxi on it from Blackrock capital. Please go ahead.

Thank you for taking my question. We this is a more JLR focus question what are your plans regarding potentially accessing the bond market and if so what are your thoughts about whether secured versus unsecured financing would be more likely.

And I'll take that so this is Ben Birgbauer I'm, the treasurer JLR. So in terms of accessing the biomarker one of the slides in.

In the JLR presentation shows what we've done today in terms of funding and with it we will be looking at other funding options for the rest of the either one of the thing I noted there is definitely looking at bonds.

We'll continue to.

Did the same thing, we always do which is monitor the biomark and decide when the right time to access. It is we'll obviously be take we will look at the the market. After it absorbs these results and and we'll look at whether it would make sense to go sometime this year or maybe we wait until next year. So I think at this point.

That's still remains to be decided in terms of the question of security. We've been very very clear that we have no plans to issue secured debt. Our our strategy has always been around.

Okay got it unsecured basis and there is no change to that strategy.

Hi, Sheila Thank you very much.

The next question is from that I know, what I've been on them from and global Please go away.

Thank you so for the opportunity congratulations on a very good take offence Oh My first question those on a Chandler.

If I look at them not to Chad between April to September in various geographies.

There has been a reduction in market share when they calculate marketshare I'm, taking the top four or five players and seeing how the market share has changed for JLR.

So just wanted to understand how do you see this strategy to recover they said going forward.

Okay.

[noise] going up.

At the end of the.

Interest as a result more cost would be so most of them cost.

Marketshare is important for us.

On that.

No.

Right.

Even more calls.

On over the base you have some warm.

Yes.

Greetings and items in the home contribute most of these litigation and regulatory issues, especially in overseas.

The rest of some markets do you see a city area.

Who is.

So now you can even if we see that customers who back because of this kind of Brexit degrade.

You are U.S. is more theirs.

Steve Lindsey continue and we will have a stronger certain fourth quarter.

Thank you Sir.

My second question was to get Ace ER that has been lot tougher Nielsen described pitch policy of slate. So just wanted to understand how do you see there 10, what that your talks about that.

[noise]. So there are two three things on this crackers policy first of all [noise].

Well it make any meaningful difference on the demand.

The life of the because.

Should be somewhere 10 tenure I mean right no that was initially there was a couple of printdeal than there was a couple of 15 years.

I think it but you did is made and even when they took a few years then it would be helpful and if it was more to what extent any other than I think you're going to have a putting back onto my number one number two.

I think the policies here to be fully fleshed out in terms of.

Definition of what is end of life.

Right right, so end of likely not necessarily by be by number of your.

But it can also be in terms of usage the number.

Since one and so forth. So there is also need to flesh on before you see Becker.

So that it actually ends up into the finding the end of life properly.

Good thing is after the end of life has also been decided there's a need for good number of scrap is four facilities across the country to something cannot be localized said one location the tight capacity the recover because of me. So this is another requirement which is there.

And on the scrap it show facilities or the nice cartridge facilities I think things up just started moving so all these three things need to folly placed I really don't have clarity or in terms of capacity and then one can see you're going impact happening when do you mind.

But.

CV OEM.

One would certainly leukert those coming in when there is a transition to be a six.

This will certainly to a good incentive for people to come forward and by you wake up.

Thank you said that was helpful. One last question, if I mean, hollister festive season on the kind of site.

[noise] I'm going to take a discretion.

[laughter], this or not yet or what.

For the long in the first incentive environment of until September one for September as mentioned earlier.

Really up to the trade do for off Oh September that you see council meeting or.

What's the literally looks much more festive season because.

Hockey's use any improvement on video inquiries for consumers are not on condition and we didn't because people expected.

For the geography, or why did the situation actually changed.

Thank you Bruce offer.

Or is the last week after months of September significance is or isn't the inquiry.

And also good improvement due under conversion retail was somewhat below because most of you couple must be through actually seem to be hickey physically in the month of approval or kind of go for different reasons.

In the month of for October as we speak we have seen ocwen traditional to constitute trend.

As far as the inquiry level is consumed inquiries were almost on the level of wouldn't be that's even a year ago indices festive season, the only thing, which we've seen this continues to trend.

On the change in the mix of the inquiries from will be called the natural did walk ins and the Sealy inquiry more to each of the inquiry it should beliefs or where I think all industries. It's a matter of fact that although the number of inquiries.

Your conversion rate on the digital leave no. It's not too close to two must be I used to on the niches inquiries into walking, but this is something that doesn't want to address.

Yes, I would you choose the whole lot Wonder did she leads is concerned dedicated to digitally teams.

Consistent with.

So most of our units.

The particular skills that required us to analyze the lead to talk to their customers.

Let me offer them a test drive from really need to match the digitally service the physically reality of our business as far as conversant raises concerns.

There should be but in general has improved in the month of October or the we cant has picked up.

And so therefore, we expect a significantly better balanced in the month of a boat or but I make the same copier like if you lose a this is the festive season well all of the players have actually put the fast food for both.

So festive season offering outcomes through this is certainly not going to continue a in a in the quarter tend to be Oh, yes, well, it's actually see but as we get all those different degrees and we actually get back to business as usual.

The strong demand situation is going to be Oh, we expect the liveperson normal seasonality that number because most probably going to be somewhat.

Somewhat on the lower level, but towards the end of the yet as far as the calendar you change is concerned we expect for that 30 tenders for the increase.

Which would give us actually the best a starting point for the transition is for to be a fixed because it's often like what do we are going to introduce to be a six week. He in preparation of the transition effective as opposed to Bristol equal 2020 .

Thank you Sir thank you for their detailed answers Nicolas critical Phil.

Thank you.

The next question is from Atlanta, what Aldo sheet, something quite asset management. Please go away.

Oh, sorry. This is older here congratulations on good set of numbers all of this one question Oh when used to buy lagging the opening of Mike said they'd be government has been templating mordantly shows in terms of boosting the mine what exactly are.

They are referring to I think some color in terms of the steps that are being taken apart from the scrapping which has already been discussed.

Yeah, I think a combination of factors is going to collect the composition. There was about one last month of there in the in the public domain.

Things are the big one less day infrastructure in the spend that the government that seem to funding [laughter] and that will effectively or have a significant impact on the concerts segment for us in a positive spinoff affects that often.

Although interventions happening on Siemens and liquidity is getting fuel [laughter] and that is again will be a big video for aspects of these either of them up you're already seeing some of the and then check or they are starting to come back against those and stock or didn't rating tomorrow, but I think he does and therefore they cycle.

The multiplier effect of all these things coming from the rest of the economy is that so we remain cautiously optimistic that these are things that should start benefiting ugly over the over to Scott is that wasn't the sentiment changes is that a bonanza via vs explained by a beautiful country by those things that we can see.

Oh, what according to new international timeframe in terms of it.

Mind improvement apart from the scrap it lets us traffic was not announced our work. According to you would be all the time Kimmel would ritual TV demand or getting back to normal thing.

I think it's a you'll get to that but as Mike.

The reason, we left or the thing okay. So the near term is fluid. So we have either I think more than waiting for the month ago more via our objective is to say that when they actually doesn't have nimble as possible. So that when the demand that's because you're able to jump onto it immediately so that is on track for cousins is finding bye.

Thanks, a lot.

Thanks.

Thank you. The next question is from lineup Riyadh engine from antique Stockbroking. Please go ahead.

Thanks for taking my question for one question is on the material cost reduction on the Gilat sorry.

About 400 billion, so where do you see had been were what type of the school sitting in terms of where do you see the detection can ever it can happen second part is on the warranty cost type in New York car talked about that debt as a tourist spending reduction between video card. The Carlo taking the waterfall chart, just seeing it and pipe really important from that.

In fact stuff.

Whether it be close to even in this quarter compared to last year.

Let me take the first I shouldn't say a material.

Yeah, we are expecting much 300 million pounds redemptions on your full year basis compared to prior year quarter by quarter of course is more negotiations get closed down.

And the claims mostly get backdated to the starts for the fiscal year number each quarter grows the number but net.

Q2 was 14 million it will be bigger than that in quarter, three and it will be biggest incorporated for the final negotiations get closed down and backdated.

Back to April 2009, too so we're right where were relatively confident the material numbers.

Full year basis in charge will be glad that you can see what we actually did in quarter two a warranty costs I think.

That's a clarification that when I answered the question earlier I was answering the first is the level of spend in quarter one.

And he say school, yet, which was just over 6% the parts of the losses that we told you about in July for quarter, one level in quarter. Two is just over 4% now the paid you referred to there is nothing to do we call to one it's actually the same quarter last year I.

I wanted to ask why 90, and the absolute level was about the same upside.

Yes.

That's a clarification around which quarter you're comparing to.

Yeah, I got it I mean, but I've been a the warranty cost each each and every quarter. It has been going are absorbing.

Is there any into retarded segment. They have to topline is keeps going I mean, the or the number of vacancy September to keep increasing [laughter]. So it will be increasing I mean, what we're doing to change that I think that direction. It what's ended up.

To see its looks nice, but I mean in terms of absolute numbers. If it can be produced it definitely.

Yeah, well, we're working hard to reduce the absolute number if you're on the cool thing July you remember our quality threats and nine to blanking CELP basically took to 15 minutes. Since this is what we're doing a basket.

The core to what was the typically cool and goodwill actions. So the absolute number will increase that volumes increase and therefore, the warranty car park has that gets bigger.

Well, obviously for the tend to revenue isn't acceptable I'm, we're working hard to reduce that mostly in the power powertrain, Andy infotainment areas, that's where the higher levels of warranty a challenge or that we have undertaken.

Yeah.

And one thing on the write downs I mean, do we need to take the write downs for engine, Florida, sometimes in future Israel with up more.

I mean, the diesel engine classics, which obviously, we have set up in the UK.

So.

Coming here on this funding or if you recollect accommodations on or anything bad when I think you've done what our best foot forward in terms of Oh, what we think there's an assessment of those that we see on this at this time, we don't see anything further that's coming up in front of house. So.

Yes.

Second part is on the on India business, I mean, Oh, what came in in terms of PV business second wholesale and retail.

I mean, you have not been connecting but the problem might have been occurring since last one year. So how much do you attribute to the bill but not the live work play enough scenario, which is pretty normal practice in the industry I mean, typically when you have to.

Concord as faced some great know for sure in depletion passed so RBC.

I think from a retail perspective, the focus on repeal of ensuring that we keep a frontend ER gene and ensure that none of the in the right.

And that's where our focus remains and as far as measures on all the enjoy the coal sales reflect those lead isn't going to get ahead of them. So that as a correction that we've been putting in place. So therefore, we believe the only place on that one.

And that's all we intend to people.

Yeah.

Last one but from Greece I've been how do you see this.

In the entire decline how much do you attribute put like that construction, except for I mean, the construct segment going down in the last six months or so.

Because I guess the lost your entire emissivity volume was driven way construct that might be perfect.

Primarily driven by Petrobras.

Yes, that's right so.

But in the imminent CBD office will happen.

Touching on most our own type of thing in each one.

I think the people segment has a.

Contracted more.

And as I mentioned in the beginning.

Even the sentiment index for it but customers is actually.

Don't forget if you're going down.

In Q2 was even lower than that of Q1, but doesn't go.

Sentiment index has increased which means that you know there looking forward.

Oh for white buying or possibly a head.

In spite of affair.

What's going to help stock the buying season again is.

Actual funds disbursement from the government for various projects.

Number one number two.

Expediting licensing off some of the new infrastructure project.

And thirdly, also renewing or new mining lessons to be sporadic and I think you season.

I know, bringing back the demand for it but.

But with the government's focus.

On the infrastructure and among the near indicators barely listed infrastructure I think.

One does see in medium to long term that people should do very much.

One moment to longer term question I mean, if they can't.

His own Berman impact from Dfc, having there has been lot of talk about Dfc back from the common shouldn't be it can take a concern that the legal my CODI doors.

How are you, saying, what's your reading on that.

Yeah, So she's there who oh go quarter doors, one is not used and the second one is northwest.

The northeast corridor when dedicated freight quoted on when it comes up we used mainly for.

Transportation of mean does.

I mean other than coal et cetera.

And actually two great extent views commodities, I mean, even being transparent but industry.

Well, that's the best means of transportation for these therefore, the impact of the eastern corridor, he's going to be UK.

It was going to that's been corridor, which is the you made I think there's a lot of dinner traffic related to export import which happens on this quarter dog.

And therefore, there is likely to be some in fact happening.

On the tractor trailer market, which uses a these containers for transportation.

So when do you see some in fact happening on a tractor trailer my occurred in the Stern corridor, but even even better [laughter] I think me back does not there's not going to be huge more than a you know.

It seems like maximum return from your own single digit Chip company back from go lives today [noise].

And lastly, if again.

Just on the P. beside him to that's been a lot of Parker debate on the diesel petrol phobia six or.

There's been a lot of cost differential et cetera. So what's your part I mean.

On that front or because of market leaders is trying to more world hobbies and so.

You are describes the on that.

[noise], we're seeking an official position of it.

You might recall.

Are you seeing diesel for the time being a is available position for Susan use cases.

In particular as far as a higher mileage accumulated mileage is no my concern.

But we expect further view into these use cases.

Becomes an auction.

No comparison on a few fuel taking the higher acquisition costs of the diesel ought to be a six a into consideration.

This whole discussion is certainly going to be foolish accelerated when we look to use the before so some people trends even due to.

The company mom or if it's too early because they need to become even more stringent well, which requires an addition to to use of technology to be as it.

Where we expected in particular to know what do you see displacements. That's the that's largely as a discussion.

I will become more or do you have more expensive.

So that even bottom line use cases today, which was just before the diesel engine.

Actually my.

Bye now.

Make sure it's easy Okay. Good reason.

So do we have decided to continue with visa.

Well, we lose eases use cases, although we expect to north offended took these one off the transition to be six talking about low displacements Loxo displacements I made reference to all tweeting diesel diesel was something on the heavy him or her baby. This is kind of displacement side is going to continue because that's what does the speed.

King no real option available as far as Petrobras concern for these losses. We it was a 4.6 a meter or if you will be a is best a good bit diesel engine and gives the customer are the best for driving.

Especially in terms of although inconvenient, let's be very close to carefully monitoring the situation at the door.

And we'll take care all decisions accordingly.

But for the prime for the time being are we going to move forward as trustees crop.

Thank you that's hard for me sorry.

Thank you you take the last question, which is from lineups technique from JP Morgan. Please go ahead.

Hi, I'm using answered most of my questions I'd say, thank you very much are going through it I'm. Just one quick question about the mission mandates that are kind of countries starting in 2020.

I'm just wondering what your P.S., we have seen some articles about for example, perhaps sometimes the a heavier vehicles being pushed I guess towards year end and the starting next year as on the next needs to change formation, the automated lcms and I guess.

If you could perhaps comment on that and just as well I'm looking at [laughter] staying at Bell any of the is the cost cutting exercises that you can't line.

He may have already sell my calls I apologize sure PT yourself and how are you looking that also in the context of like raw materials handling. These three back half of the air.

Yeah, Let me 10 years to clarify your question I referenced it would be a six migration in India.

The emission loans in Europe for JLR, the European Union.

Okay. They didn't really want to begin.

[noise] so the lane for JLR came as disconnect. Thank the call them back.

Fair enough I mean any comment on the materials cost season, the sustainability of a profit improvement that you can orders that even just talk about back in terms of why we believe that off the number correction that have happened Athena, particularly from the point of view and warranty cost increases or decreases.

As well as some of the charge intervention coming the maybe wanted to play and of course the better.

Or the overall volume starting to pick up the flying going into causes Brexit, we just need to wait and see how that plays out in the coming months and that's going to err on the picture if it doesn't it's easier to you're forced into one more on those stocks collection of shutdowns, we need to do in the next transition you as you're aware that we are.

Taking one in November .

That's something that we need to watch and see a other than that I think we believe the underlying performance is now starting to improve and we like what we see there.

Emissions and 2020 the complaint is concerned.

Well, we're comfortable with the compliance announced of any 20.

And our plans and the roadmap for the future also factor then the ongoing compliant, but I'm going to come up and it's always been deals as well and given the mix of products in the launches coming in particularly with the three new architectures coming it doesn't.

As confident that beyond that I like that.

It didn't do you want to just one question I I think you're going to join Bakken.

One question on the emission compliance for JLR for the year 2020 and what's your comfort as on a hearing for that.

Oh, we know what the targets out we know the challenges at the moment or all the actions we would need to take next year I haven't been taken but where we framing that plans and our expectation is overwhelmingly we will be compliant next year [laughter].

I appreciate the color. Thank you very much in great quarter. Thank you.

Ladies and gentlemen, I know I now hand, the confidence or what are the management for closing comments.

Yeah.

Thank you.

I mean, thanks, everyone for joining the call a once again I wish you a happy Diwali Antidumping brothers, as well and hope to get to spend some time ago loved ones in the coming weekend take care and got to supplement exports.

Thank you ladies and gentleman on behalf of back I'm. All does limited that concludes this conference. Thank you for joining goes any may now disconnect talent.