Q2 2020 Fiat Chrysler Automobiles NV Earnings Call
Good afternoon, Oh, good morning, ladies and gentlemen.
Today's fiat's Chrysler outcome abide screw up result for second quarter Twentytwenty.
The information today's conference.
At this time I would like to Tom the cold overt to Joel that tree.
See a global Investor Relations Mr. battery. Please go ahead Sir.
Thank you Robert.
Welcome to everyone joining us today as we review.
Second quarter 2020 results.
Earlier today, the presentation material for this call as well as the related press release, which posted under the investors section of FC age group website.
Today, Our college hosted by Mike mailing, the group's Chief Executive Officer, and Richard Palmer the groups CFO.
After both Mike and Richard present.
It will be available to answer questions from analysts.
Before we begin I'd like to point out that any forward looking statements that might be made during today's call are subject to the risks and uncertainties that are noted on page two of today's Jack in the Safe Harbor statement.
Yes, customary the call will be governed by that language.
So with that I'm going to turn the call over to Mike.
Well. Thank you John good afternoon, and good morning, everybody.
Well before Richard and I take you through our results for the quarter I wanted to provide you an update on our actions related to the cold, but 19 pandemic.
And the laws change since all else cool.
Now to begin with I kinda plays enough the level of commitment solidarity determination NFS exhibited by everybody in our company. During these months to help our local communities and support.
Spawn doesn't healthcare workers.
The extraordinary why our employees that mobilized is proving once again that the CIA families capable of applying its ingenuity to any situation and as always I may be proud to be part of this thing.
The personally thank all of them for their continued dedication Brazilians I'm flexibility.
There's also been highly focused on implementing a rigorous plants are getting the business back up and running in each region always keeping the safety and well being of our employees on local communities at the forefront of our efforts.
Most of our plans to back up and running in all regions onto a comprehensive multi layered program of health and safety protocols.
We're able to idea to our previously communicated we start schedule.
Now North America, all the time and AIPAC Atlanta back to pre Pandemics your patents and we expect EMEA to achieve this level.
This quarter.
And in fact in North America. We're currently running production a pretty pandemic levels with the exception about war in truck until loop loans, which about currently down for planned retooling activities related to future product actions.
There've been no significant production disruptions due to cope with 19 and based on the tremendous efforts of our suppliers.
No I had any significant supply chain issues and I'd also like to thank them for that help and support.
Overall, I'm very pleased with the restarted our operations.
Well it seems that worked tirelessly to create an environment that can keep everyone site and our employees have done that pop, but following the new probably close enough supplies of work hard to support our plans.
We've also fully resumed a product development activities in each region as we continue to invest in programs as part of our plans to enhance our product portfolio.
As a result full year 2020, capex spending is expected to be between <unk> and eight in the hospital in Europe.
Now some of you may remember that as we came into this year, we had a capex expectation of around on a half billion. So we will reduce that by around 1.5 billion, but not jeopardize the launch of important white space products in North America, or let your thought product in EMEA.
I'm talking of then there will be launching five new high voltage easy four of which I made in Europe, and I'm going to give you further details on these launches later.
For the Jeep brand, who stopped production that some new high volume in high margin products next year.
A new three run full size that you'd be in Q1, the all new wagon and Grand Wagoneer in Q2, and as you know all three of these vehicles will go into high margin segments that we do not plan today and then of course, the next generation Grand Cherokee around Q3.
Now along with restarted production I'm happy to say that substantially all of our dealers right themselves and service in all regions I'm. All the inputs themselves process is now again available to our customers. The advanced digital solutions. We have developed will continue to be valuable tools to conduct cells remotely going forward.
So now turning to the business highlights we knew the pandemic whatever significant impact on our second quarter performance.
Overall results of being better than expected.
Studied it was down 2.5 billion year over year, however, due to stronger than anticipated retail sales rebound in the U.S. during may and June remained profitable in North America, despite our shipments being down to 60% year over year.
Well the disruption in demand in local restrictions in all regions impacted ourselves a commercial teams were able to deliver several broad support during the quarter.
The first time ever we achieved market leadership in the time with 15.9% market share up 190 basis points year over year, and we also maintained our leadership position in Brazil, 19.8% market share of 100 basis points.
And in the U.S., our retail the retail market share was up 10 basis points to 12, and a half a cent Romney driven by the Jeep brand, especially this wrangler Grand Cherokee and of course, all Ram heavy duty pickup.
Now in addition at end of June.
I'd power announced that dogs became the first domestic brand at all to achieve the number one ranking and its I knew U.S. initial quality study and this was followed by the Rembrandt time for the number three ranking.
That's the eyes I will perform and showed significant progress improving by five spots and outperforming the industry average for the first time in its history.
Now given the unprecedented nature of the pandemic, we took quick actions to safeguard our earnings power preserve cash and strengthen our financial flexibility, which included a new 3.5 billion you Redbridge credit facility, which was syndicated in April I remained undrawn at the end of June and then this facility was replaced in July the issue.
Other new 3.5 billion Euro term notes.
The new innovative 6.3 billion your credit facility that we signed in June within Texas, Mpower, which is fully dedicated to our operations in Italy and to support the restart and transformation for more than 10000 small to medium owned enterprises.
There are a critical part of it so these automotive sector.
Our industrial free cash outflows were 4.9 billion in the quarter, which was better than our previous expectations and as a result with the significant liquidity actions, we completed during the quarter.
<unk> liquidity remained strong at 17.5 billion euro, which by the way excludes 4.5 billion Euro that remains undrawn under the new 6.3 billion Euro Italian facility.
Now during the quarter, we successfully launched off first plug in hybrids in Europe.
As we began production in June the new Jeep renegade encompass plug in hybrids and on Melfi plan.
Already announced in May and in light of the impact from the current 19 crisis U.S.J. Board of directors and P. assays, managing booties resolve not to distribute respective companies 1.1 billion euro ordinary dividend related to fiscal year 2019.
Finally last week, we announced expansion of our successful autonomous driving technology partnership with wind up and I would like if I might to provide you with more details later in this presentation.
So let me turn to our commercial performance during the quarter as you will know the overall market was down significantly year over year and each of the regions due to the impact to cope with 19, and correspondingly ourselves with down significantly as well throughout the quarter, we were able to accelerate the deployment of a complete online retail experience to our customers.
Without dealers quickly progressed into online sales channels and today nearly our entire global network is able to sell cars online compared to less than 10% pre pandemic.
In North America sales were down 40%, mainly due to a more than 80% reduction in a U.S. sleep volumes, primarily within the daily rental channel. This quarter demonstrated the resilience of U.S. consumers with retail sales rebounded since April.
Reopening of the economy study gas prices and access to low interest loans, but consumer demand and we gained 10 basis points of U.S. retail retail market share year over year.
Now for AIPAC, while activities will gradually improving in China throughout the call to the negative impact to cope with non team up aggressively ramping up in countries outside of China, we significantly affected our business in the region.
No it in EMEA ourselves with down nearly 50%, which are largely reflects the impacts of the pandemic in several of our key markets, especially Italy.
Packed in the quarter in EMEA, we kept our plans down for a longer period them was mandated partly because we saw demand in Italy coming back slower and partly because we wanted to ensure our dealers. These dogs to say from viable level now obviously this impacted me as quarterly performance.
Now I'll highlight for the region. However was the improvement we're now seeing and the dealer retail sales channel. This is you know has been a focus for the team for a while in those out at the moment. It does not make up for the volume drop due to our move away from lower margin channels cities progress on in Europe, where LCB sales performance remained strong as ourselves declined 33% year over year, while the.
Industry was down 41%.
These are LCV market share in the you up 190 basis points versus last year to 14.5%.
Now in Latin America, which continues to be hard hit by car that 19 ourselves declined 16% year over year.
As I stated earlier, we gained significant market share in both the region and Brazil, achieving leadership positions in both markets.
As I said, Richard will take you through the financials in detail. So I'm just going to give you a quick overview of our results, which I noted earlier was significantly better than expected as north American market recovery in late May and June was stronger than anticipated.
I also want to point out that we saw an improving trend towards the end of the quota in each region, which we expect to continue into the second half of the year.
I'm in North America, delivering a profitable quarter. Despite as I mentioned earlier shipments them down significantly you can clearly see the benefits of the what we've done to lower the regions breakeven all of which will continue to significantly but benefit us in the second half of this year.
Combined shipments were down 63% year idea, mainly due to the temporary production stoppages in the disruption in demand experienced in all regions due to cope with 19.
The consolidated shipments declined 65% on net revenues deterioration was limited to 56% primarily due to improved sales mix and pricing actions taken in North America during the period.
Adjusted EBIT was down 2.5 billion Euro your idea due to the dramatic drop in our global volumes.
And as noted earlier, our industrial free cash outflows were limited to 4.9 billion Euro and the decrease in our available liquidity was limited to 1.1 billion year.
Overall, just by a result being down year over year, our entire team did what I think as a phenomenal job with executing our production we stopped plan effectively and efficiently resumed in foods got industrial activities across all regions and all functions. This along with the cost saving actions taken and actions to maintain the liquidity of minimized.
Negative impact to cope with 19 during the quarter.
With that I'll now like to hand over to Richard will take you through in more detail outperformance Richard.
Thank you, Mike and good afternoon, well good morning to everyone on the cool.
I'll continue a little bit on page six.
As Mike mentioned consolidated shipments were down I'm, 65% as most of all facilities I didn't pull shutdowns through April and a large part of my revenue that I'm, 56% as the shipment reduction was partly offset by positive mix and pricing.
Adjusted EBIT was a loss of 928 million down due to the loss of volumes from 1.5 billion profit last year.
Adjusted net loss was 1 billion euros, driven by the negative adjusted EBIT.
Finance charges were reduced year over year by around 10% to just under 240 million euros and adjusted tax for a benefit of 126 million compared to an expense of 340 million euros last year due to the reduction any any BT.
The effective tax rate is around 11%.
And our expected rate of around 26, due mainly to deferred tax assets not recognized on losses.
Todd in Brazilian operations.
Unusual operations in this call sorry unusual items in this quarter were insignificant.
As Mike mentioned industrial free cash flows were negative 4.9 billion driven by working capital and provisions unwinding for negative three and a half billion capex of 1.7 billion.
Available liquidity at June 30 was 17 billion composed of 14 billion of cash on the balance sheet and three and a half billion of Undrawn of the Undrawn bridge to bond facility.
This liquidity excludes the four and a half billion undrawn portion of the new 6.3 billion Intesa Sanpaolo facility entered into in June so.
Well in all we have a strong liquidity position tools I note that in July we completed a three and a half billion euro bond offering which successfully replaced the bridge to bottom facility syndicated in April.
Moving to page seven we show the adjusted EBIT by operational driver.
Consolidated shipments were down 730 736000 units.
<unk> down to 70% last time down 68% North America down 62, when I back down 50% due to the different timing of the in force shutdowns of the plants and varied impacts on demand.
Drew that drove 3.1 billion of negative impact on adjusted EBIT.
Net price was positive due to North America actions, partially offset by negative price.
The region.
Industrial costs was slightly negative where they may a negative another region substantially flat.
S.J. costs were reduced by nearly 600 million euros with all regions contributing positively as actions were taken across all cost categories, particularly on advertising spending.
Moving on to page eight.
Sure the industrial free cash flow performance.
It was negative for the quarter 4.9 billion euros, obviously heavily impacted by the impacts or would use negative working capital and changes in provisions as I mentioned earlier for a total of three and <unk> billion.
Expend the 1.7 billion with EBITDA reduce deserve a point 3 billion down two and a half billion from Q2 last year.
The negative 1.9 billion of working capital was driven by a reduction in payables.
Offset by reduced vehicle inventories and reduce working progress.
As well as a reduction used cars another receivables.
The change in provisions of negative 1.6 billion was driven by reduced 11 fleet incentive provisions on warranty provisions a dealer inventories destocked in all regions due to continued retail retail sales admittedly not differently levels and the introduction of new vehicle shipments.
To summarize off first talk negative cash flow was 10 billion euros of which 7.3 due to working capital on provisions impacts.
If market conditions continue to improve proof through the second half we would expect a substantial part of the 7.3 billion to reverse positively as we were stopped production levels and also dealer inventories, especially in North America.
We closed <unk> Q2, with a net industrial debt position of 5.1 billion euros compared to zero. The end of Q1 due to the negative free cash flow as was FX on lease additions of 0.2 billion.
Moving on to page nine.
To summarize the adjusted EBIT performance by region, the North America region remain profitable. Despite the substantial drop in volumes are the others recorded losses, although the trend in the quarter was positive for all regions as the manufacturing plants ramped up through the end of May and June.
Moving onto the individual regions page 10 deals with the North America performance.
Shipments were down 62%, well North America industry sales were down 36%.
The U.S. total industry was down 34% person with the retail industry, showing resilience down 23% compared to fleet down 70%.
Sales were down 40% with retail share up slightly as Mike mentioned, a fleet sales I'm old and the market due to lower rental sales.
Importantly, our North America dealer inventories road, where would you significantly from 635000 units at the end of Q1 to 450000 units end of Q2, leaving us well positioned for the second half.
Of these North America inventories U.S. dealer inventory close a 389000 units down from 553000 much.
Revenues were down 53% with positive mix, including low a GDP fleet shipments as well as FX, partially offsetting the shipment reduction.
Despite the 62% reduction in shipments in North America. Adjusted EBIT was main maintain positive volume impacts discussed were offset partially by positive mix of retail market shipments increasing.
But the fleet market shipments and positive color kept calling mix as well as opposed to the pricing mainly on Jeep and Ram products.
Has seen a savings was significant or just over 350 million euros.
Mainly by advertising spend and a reduction in DNA costs.
Industrial costs was slightly negative due to the nonrepeat of the prior year cafe find rate reduction of of 150 million, which offset cost savings on purchasing and reduced personnel costs.
Moving to page 11, we review the the Asia Pacific results.
The consolidated shipments were down 50% due to cope with 19 related production restrictions in India as well as reduced import shipments to the region due to restrictions in the production sites in North America, and the math I was what does demand impacts outside of China outside of China.
This would you shipments to 11000 units with the Jeep brand on nine now for down 1000 combine shipments were down slightly less than 41% due to the China JV shipment reduction of 28%.
The adjusted EBIT loss was 59 million euros for the quarter with volume mix impact of negative 68 million, partly offset by reduced SGN a costs.
Moving to page 12, we show and I as a result.
Hey, a consolidated shipments were down 70% all 250000 units with all brands impacted.
Dealer inventory was reduced to 174000 years from 257000, a year prior would that day sales.
At a level, we consider appropriate for current consumer demands.
Net revenues were down 60% due to used car sales and parts and service sales being less impacted the new volumes.
This reduction in volumes was the main driver the reduction in adjusted EBIT to a loss of 589 million euros.
Industrial costs were negative 60 million driven by the impacts of compliance and purchasing inefficiencies due to the nonrepeat of savings savings achieved in Q2 last year.
Minor impact of raw material inflation due to pgms.
Actually in a cost actions where significant.
I was on marketing and on DNA goes.
And the other impact was due to reduced results from our joint venture investments.
Moving to page 13, we look at the last time results last time region and Brazil in particular.
It was slightly behind the other regions and its progress out of code with 19, and then as it was reflected in shipments down 68% with planned suspensions as well as impacts on demand with the industry sales down 66% impacting as the volume performance.
Net revenues were down 77% with negative FX impact as well as a reduced volumes.
Adjusted EBIT was down 206 million.
Principally due to the volume impact industrial Cox cost actions were offset by purchasing cost inflation unpriced was negative due to the nonrepeat of a credit in Q2 19 related indirect taxes.
Cost actions and SGN anywhere again significant partially offset the volume impact on the other impact was due to FX translation of the weaker Ral.
On page 14, we showed them as a royalty brand sales were down 51% with all regions down I May Ussixty nine North America 44 in China down 41.
The models were similarly impacted shipments were down in line with sales with net revenue slightly better than 46% adjusted EBIT loss was reduced from last years level to 99 million euros due to the Nonrepeat of North America residual value adjustments last year.
Global network stock was further reduced to just under 6000 units compared to 7000 at the end of March 11000, a year ago. This trend is important as we prepare to launch the M series for the Quadruples the ghibli under the bonds that and the ghibli mild hybrid.
Moving on to page 15, we show a market outlook for the full year Twentytwenty, obviously, the big unknown continues to be how the markets will perform and whether that would be any significant disruptions to the demand improvement trend. We saw in June and July.
Clearly the market situation is very fluid saw current expectations are subject to the risk of significant fluctuations.
As a result opposition on guidance remains unchanged and that we withdrew all guidance for the full year and we're not going to provide any guidance on all future financial results until circumstances stabilize.
Our current market assumptions, so U.S. saw in the second half at around 14 million vehicles down 70%, 17% year over year.
<unk> represent a continued moderate improvement from the 13 and a half million. We saw in June and the 14 million expected in July and will get us to a full year saw of about 14 million down 20%.
For a major we assume that Eutwenty eight plus after region up 13.4 million for the year down 26%.
The month through June was down 23%, but we expect July to be done much less year over year demand continues to improve.
Last time, we assume at 2.8 million units down 33% for the year and 27% for the second half.
Based on these market assumptions and supported by the operating performance trend. We saw in June and July we anticipate a significant improvement in all financial poor performance in H. too with strong positive cash generation driven by the restoration of a significant portion of the 7.3 billion unwind the working capital and provisions we.
So in each one.
On EBITDA generation that we expect will offset the capex spend and the cash taxes and financial charges in the second half.
It's always assumes no further disruptions in our supply chain or in production as well as the continuation in the recent demand improvement trend.
Also just to be clear, we do not plan to provide interim updates to these expectations notwithstanding the potential for continued market volatility.
Thank you very much on without I'll turn the the line back to Mike.
Thank you Richard.
So as I mentioned earlier, we focus on our commitment to deliver a portfolio of high voltage electrified vehicles, which will obviously help ensure that we made the increasingly stringent emissions and fuel efficiency regulations around the world now electrification is already at four of our strategy and is growing significantly during 2020.
The addition of several new electrified options.
And obviously spoken quite a bit in the past about.
Plans and when they begin to route to market. So obviously, we've now reached the stage where that begins to happen and the all new fit 500 full battery electric vehicle, whose first limited edition was launched in March will be available in our European Chevron's in September and combined the clean and sustainable so without mistake littlefair design and attention to.
Detail.
Now that it had a bad or fully electric version of our segment later in Europe and currently sold in more than 80 countries around the world will become fair professionals flagship for electric mobility and will be launched in Europe in Q4.
Feeds electrification plan is well underway on the.
Oh Gee electrified vehicles will carry a new full by E batch starting with the plug in hybrid electric versions of the renegade encompass which are leading the way for the brands entry into the market in Europe and production began in June but both their calls and I. Both currently available for doing across Europe.
Also GE exotic on the Wrangler will arrive on the market with a full by either version that will be in the front line of our electrification strategy in North America.
We plan to globally, Brazil, the all new plug in hybrid in the third quarter and that they will arrive in our showrooms in the U.S. by the end of the and in Europe and China early next year.
So we're doing a lot on electrified vehicle front I know I know the orders from our partners and customers are coming in strongly.
Fine I think we can confirm that with fully expect to be compliant in Europe with the combinations of our strategies.
But we're also doing more.
Now the goals it embarked on production location does not consist only of electric vehicles, such as the one that I talked to them and actually in both the entire customer experience by taking a completely different way of looking a vehicle you some ability in general.
She's saying, we have a number of new electrified motors coming out soon and of course, there will be even more fallout.
These first models represent a fundamental move in a comprehensively developed strategy.
No our strategy results in anyway, you can see them ability that puts the environment at the center and adopting new technologies, such as they could degrade and supporting energy transmission.
All of this is don without losing sight of the customer's needs such as reducing range anxiety as well as a night and access to the largest public charge in network available across Europe.
See I would as E mobility and leases division is there for working to play a true ecosystem of products and services to meeting expectations of those who use electrified vehicles. So that they use becomes widespread well established.
Now to ensure that customer experience as well executed FC eyes adopted realistic view on electrification offering mobility services encompasses arms tools ranging from digital tutorials dismount access to cities as well as we charge and networks, both public and proprietary.
All with a view to always keep the customer first.
There is going to quickly talk about few examples that part of our Emobility ecosystem.
Hi, Thanks to the Presales App physically life.
By the our customers I provided with data on trips simulations incentives charge and network availability as well as vice on Electromobility behaviors.
As a member of the chair and Geo fencing Lad FDIC piloting a patented digital solution to allow plug in hybrids to behave as bad in restricted low emission traffic signs.
This pilot, we believe is a well first.
Furthermore, through the service my easy charge, we will provide customers with access to the largest European network of public charging points.
Which is expected to reach 200000 by the end of this year.
And lastly leases, our European mobility, and rental division keeps on expanding and electrifying as network of leases mobility stores across Europe, which is targeted reached 500 locations by yearend.
We'll be equipped with 1700 proprietary charge importance.
Now additions as news on electrification from we've also been enhancing our efforts related to autonomous driving technology with the recent expansion of our successful partnership with way my.
See I became way much first automotive partner in 2016. Since then the two companies at work closely to integrate the waymo driver into S.J. vehicles, and it might self driving history and the proven type of allow for ready Chrysler Pacifica hybrid minivan.
Partnership has already led to the first commercial economists ride hailing services, including the offering a fully driverless service to riders as well as driving in dozens of cities across diverse geographies in challenging weather conditions.
That was part of the next significant step and expansion of the successful partnership SCM weighing our announced last week in agreement, which includes this working exclusively together on the development and testing of out for autonomous technology in class one through three light commercial vehicles for goods delivery.
Its application is targeted for around probably most of that.
In addition, Waymo has committed to deploy tell for autonomous technology across that she has full product portfolio as FDIC exclusive strategic partner.
Our strategy in the area of autonomous technology is always being based on leveraging strong partners and there is no stronger partner in Alphaville technology space.
No.
So now looking forward to the second half the year based on the actions taken the resilience and flexibility demonstrated by global team and our current market outlook, we expect to significantly improve profitability and positive free cash flows.
Already planned to shorten or eliminate the usual summer production shut down at most of our plants in North America, which will allow us to satisfy a stronger than expected consumer demand.
So far year to date will be felt dealers by the 300000 vehicles and our dealer inventories around the world are in good shape now this coupled with higher than expected consumer demand. The market's recovering more quickly than anticipated has resulted in us having a significant order that in fact in North America, EMEA and let time, our order book is strong.
I'm now than it was pretty kind of is on Ting.
We also on track to achieve our stated target reducing overall costs for twentytwenty by around 2 billion Euro and as I mentioned on our Q on learning curve. We expect between 600 800 million Euro if these cost savings to be carried over into 2021, depending on how the industry develops.
Now one thing. This crisis has done is forced us to reload just about every facet of our business and every day. The teams are finding new opportunities to gain efficiencies.
Now I still results will be impacted by some planned planned downtime Warren truck will be down 14 weeks from late June until early October for retooling to facilitate the production of the all new wagon and Grand Wagoneer, and Toluca was down for the month of July to get ready for the Jeep Compass Midcycle refresh.
However, we have several key new product actions that will provide momentum in the second half starting the deal new fit Strada, Brazil's best selling pickup trucks now for almost two decades, where production essentially began in may as part of upfront restart and I'm happy to report that demand for the new truck as being very strong.
And we also have several other key vehicle launches occurring throughout the remainder of the year. We'll begin production of the all new Ram Trx pickup truck had outstanding Hon Hai plant beginning in Q4.
And lastly, another article benefit from several new models, which will go into production this quarter Midcycle freshening. So the ghibli quattroporte handle them today, along with the new gives him out hybrid SaaS Maserati model to the top hybrid electric propulsion combine and high performance low emissions and Maserati frontage right.
The new Ghibli, <unk>, which is the first offering the <unk> engine.
We expect alone to these vehicles and numerous other actions.
The new leadership team has and continues to take to have a solid impact on their financial performance in the fourth quarter.
Now we're looking forward to the much anticipated Maserati day that will take place in September.
Well set out the future of the brand introducing exciting new product innovation plans and customization programs and we'll start with the supercharge was able to the new MC Twentys Super Sports car and the new 100% Maserati powertrain.
Last but certainly not release, we continue to make good progress appears on the merger process and recently, we announced repair say that when the transaction is completed.
New goods corporate name will be the Lantus of course, the great brand names and logos from each company will remain unchanged preparations for the merger advancing well and on schedule antitrust approvals have already been granted in 12 for 22 jurisdictions, including the U.S., China, Japan and Russia.
Last month European Commission initiated this phase two reviews at the merger project with a focus on the light commercial vehicle business in Europe and this review is not expected to delay a timetable to completion both companies will continue to engage with the PC and the same constructive spirit that is defined our proposal from the on site.
Let me end by refining I shared objective to close the transaction by the end of first quarter Twentytwenty, one and in the meantime, we'll maintain our focus on the flawless deliveries our commitments.
And Joe with I think we should open up if you and I session.
Thank you, Mike Robert or if you would please let's open up the line for Q Vinay.
Ladies and gentlemen, today's question answer session will be conducted electronically.
A question Little this session you would need to press star one on your telephone.
Let's take now how our first question comes line of Thomas Besson from Kepler.
Please go ahead your line is open.
The first one.
On on the U.S. performance, which was against the law.
Can you discuss your inventory target by yearend.
And then talk about the assumption you're using the 14 million SAR given the decline in consumer confidence we have seen the fact, we funded mic is still a quick stronger.
We also.
Challenging competitive landscape with the literally was it bronco relaunch.
And how the second question. So I ask you know.
No.
Second question is on that on this.
Kelly.
Funded Mick boost for Peru, and this year has had a big consequences in terms of Scotiabank.
Ruined if you have some better than expected with both companies have done a substantial amounts of cash is here.
Could you talk about your view if his view.
On what's needed in some sort of starting.
Net industrial cash position facilities.
And with though you think.
Maybe a ways, we're going to lease adjusted cash components of the.
Isn't getting into the deal and transform it into something else they're going through this.
Thank you very much will Smith my two questions.
Thank you Thomas this is Mike How's that.
With.
Yes, and quite possibly the second with your questions as well.
I think about inventory levels at year end I'm very pleased with the levels that we have today in the data supplies because means our dealers are in a healthy position.
The demand that we have seen enough production outlook for the balance of the it means that there will be some slight increase as we begin to fill in some of the inventory holes that we had.
We do not anticipate significant inventory build.
We think that to the demand will continue and I know your question in terms of our assumptions for so I mean, the reality is each day brings a different.
Different information to us, but when you think about how the U.S. ours has performed really since April where that was kind of an implied saab around 9 million and then in June up to searching for and even though we haven't closed July I think you'll be solidly above 14, so for the month.
And it today, so I think our outlook is reflected as the fact that they're all going to be some ups and downs I think.
But I think is it reasonable assumption going forward.
Competitive nature as the markets at markets are always competitive we play because of a portfolio of products and our brands in some of the most competitive segments.
We were able as you work as you seem to improve retail share.
In the quarter as well as.
In truth transaction prices as well so.
We live in a very competitive wells, they're competitive company, we have a very competitive spirit.
So I'm not particularly worried about that.
You mentioned a.
Cash position us to Lantus I.
I'm sure you recognize that I'm not going to give you.
An answer on that because.
Certainly part of.
The.
Discussion and planning process that theyre going through and as you know John outcome will be the chairman and Carlos will these NCR and I'm sure when they're ready told you in more detail about that but I do want to take this time just to thank the teams that have been working incredibly hard on this process to get us to closing as as I mentioned during my.
I think remarks, we've already cleared a number of the.
With that need to be clear it and we're working very closely with you on addressing some of that concerns, but pleased to be able to say that.
That we're on track and is called Us and I've said.
The creationist alliances in the one year five year project. This really has been together I think two very very strong Oems in that in that key regions EMEA for.
Yes, I in North America for us and that logic.
Clearly has not changed and in fact, if you think about the pandemic into results.
So if anything it's been reinforced as we go through this process. So I'm sure there'll be lots of speculation between now and when we finally come together, but I think we just have to get this year finished up and see where we are but at this moment in time as I said before.
We expect to a much much better Stefano.
Thank you don't break it up many thanks.
Thank you for your question then our next question will it came from the line up.
Just say has Mandy from JP Morgan. Please go ahead.
Topics. The first one can you speak a little bit about these are brought up working capital coming back in the in the second half I know you can address it is a bit with how you see production coming back specifically, it's what sort of quarter across regions, but you know we tend to see.
Our North America, obviously.
And then second this phase of the question goes into line. So if you know if you're using the crisis the improved.
Some of the operations quicker and this goes in the line off.
And I said that the and whether you have thought on many.
You have been made across both region some asset write downs that could improve.
And improving substantially the profitability going forward. Thank you.
Yes.
There's nothing they got the working capital question.
Sure Mike.
I'm sorry.
As we talked about regarding Q2 scene.
A significant.
Improvement through the quarter.
I think.
Volumes in June.
Reflected.
The fact that we now have you know you know key market in the U.S. and North America.
A very healthy order backlog on a very positive.
Positive trend in terms of.
The ramp up of production so.
I think of that along with.
Improving demand also saying I'm in a manner.
I think makes us relatively confident that based on.
In other markets, such as we discussed which clearly.
As we said they're all.
Covered assumption, but clearly our risk that for all of us, but based on those I think we we expect of the 7.3 billion of negative working capital and provisions that we saw.
In the first half of their we expect.
Very substantial portion of those.
To reverse.
Into a in the second half.
Could you that reversal will be.
Some wall weighted into Q4, just because of the no normal seasonality of Q3, where we have shut down for model changeovers in North America.
And vacation periods and in Europe.
But I think.
With some with some reasonable assumptions about volume is going to the second house, which are down about 15%.
Overall.
We can we can we can you can do the math on how much the the negative working capital position comes back.
We're also working very hard.
On further improving our inventory positions.
The inventory positions.
Last year improved quite significantly.
In a Q1.
They increased.
Also significantly because of the late shut down.
Related to cope with so.
Inventory went up over a billion a half in Q1.
We brought it back down.
Q2 to two basically eradicate all of that.
And I think and the second half of the year, we expect to continue.
To reduce the inventory positions as well because frankly, we have opportunities on both.
New car inventories and logistics.
Of the of the delivery process, particularly in Europe and on worldwide in export vehicles, and all used car positions. So.
I'm not going to.
Give you a number Jose, but I think you can understand all of those things will.
It was a substantial.
Restoration of the of the impact that we saw in Q1.
In each one.
Thank you.
Mike where they've got to their pockets.
So that's the second part of the question with regards to the opportunity to maybe to some asset write downs across maybe a pack and Maserati and probably improve the profitability of both.
Hi, Thanks, Thank you.
Yes.
Obviously, obviously, we review our assets and life at those assets and and.
As I look at and Richard you can comment as well over the coming quarter I don't see substantial.
Got it right down to either Mazur audio AIPAC.
No I mean, we we've taken as you know Jose a number of write downs on mother out in the last few quarters.
As we define the strategy going forward in terms of the vehicle launches that Mike mentioned earlier that will discuss at them Maserati day, and I think we have a CLIA pound for Maserati now.
And frankly.
Mike counting team would would be upset what endpoint times, we don't do opportunistic write downs, we just do write downs when we when we when we see that the assets are in pad.
And frankly.
You know we are already Ms clearly too.
Great cash flow so that doesn't happen.
On another out the other thing we have a great plan going into new team is.
Putting together, a great product plan and cadence or product line I think they'll be part of the discussion, we'll have with with yourselves and other or the other guests the mother out today.
And I might add to that.
Images that for that Richard.
As you know you've been many of you didn't follow enough quarterly calls and experienced a tie in all that to go through as Weve spent time I'm trying to structurally correct a businesses Maserati in a in a very public fashion because of the way that we reported.
A lot of it relied on the product investments that we needed to make really to refresh as product range that do so in a way that.
Gave us a regular cadence of news, which I think is very important for our brands such as another Arctic we're now.
Getting to the point where.
Those investments will well begin to hit the marketplace and as I mentioned in my opening comments my expectation.
And in fact expectation under leadership of Materazzi without it and his team is that will begin to see some solid progress on that front.
In Q4, which will continue as we get through to 220 21 that as Richard said, you'll get the opportunity and Measurex you die.
To understand and much more detail what we're planning so I look forward to I'm sharing those plans with a with all the season. Thank you.
Thank you very helpful. Thank you Nick.
The next question came from the line of how damaging.
Please go ahead.
Hey, everybody.
First question is on the company then the name of the New company still Lantus.
Can I ask is a serious question what can I ask how you how you got to that name what it's what is trying to how you settled on N. and what is trying to communicate.
Hello, Adam how are you I'm good how are you.
Okay well thanks.
Well, thank you and to answer the question.
I have the tally that naming of a new company [laughter] unites. It is no doubt is it's a process for sure and on instances many instances it could be very painful process and.
Well I'd watch with interest some of the reaction if you notice.
As a new nines.
Or the new name and I'd remind people when they first heard is Google, but I wonder what that the reaction was but in general I would sound balance reaction has been good OSL process was very very very simple we have a stable of some fantastic storied historic Brian.
We knew from the beginning that we didnt want to use the brand names as our corporate nine but we did want something that represented.
An aspirational coming together the two organizations.
That really spike in our minds anyway to the future possibilities and the roots of the company the New company nine come from the concept to the Galaxy stars in that and as poetic has it may seem and I'm not.
Particularly poetic person.
We strongly believe that.
Brian portfolio.
Some of which are already I'm very very strong brand in some of which had a very strong future is probably the best way we could describe.
How we feel about them and investments that are going to make side, but it was a process Adam and I'm very pleased with where we ended up.
Hi, I think you're more poetic then you think Mike that wasn't that wasn't I'd like they have certainly.
Follow up I'm just on on batteries, a lot of a lot of Oems as well I want to say a lot Somali Atms are taking the vertical integration approach.
And seeing some of the at least Craig.
It was about to say something sections that extremely a generous valuations out there first some businesses that are better putting invested capital towards towards energy storage and kind of owning the IP in the software that behind that.
You're not doing that but I just wanted to you and I know I've asked you. This in different ways before we would love just your latest thoughts now that he lines offering to supply escape boards to everybody and that's probably not a surprise.
I have of how.
Atlanta assist thinking or FC a leading up to that is thinking about that make or buy and how you. How you see why its optimal for you to not on that part of the of the.
Okay. Thanks.
Well, I think and I'll talk a little bit about obviously I say first then come back to still Lantus and and I try not to detect Carlos.
Its quarterly call and with these entities as told.
I'm a bit about the European battery initiative, and and he assays involvement in that and obviously there is a long term commitment. So they will flow to the lantus from my point of view when I look at and I'd love the long winded onset, Adam because I would never say never because when I look at what is half.
And as the last few years with regard to the portion of the entire value chain, the lcms and flight and with the exception to test. The it's been a shrinking its been a shrinking universe and I think that's dangerous thing and I think it needs to be reversed and therefore, I think ultimately Oems will.
Aggressively get into the make side.
Of batteries batteries, and B pack assembly and everything else and that will apply that would apply to sci as well as this lantus in my in my view and I think it's you will see from us.
Further information as as the year progresses, but thats.
That's the way I think that Oh I am should go person. That's that's great Mike I remember I do like that the corporate name I think so it's it's cool and then that's nice to try something there it's great. Thanks.
Yeah.
Thank you.
We'll take that next question from the line of George Galleries from Goldman Sachs. Please go ahead.
Hi, everyone and thanks for taking my question.
First one actually just continuing with within with the new technologies and Wayne.
Could you give us some insight into the commercial arrangements all of your agreement with way by all you.
Screen to manufacture the vehicles for for a fixed retired and then if you asked how does that impact margins on your existing business or is that some kind of profit share element to that based on that side of it that way my and providing the on customer.
Hi, George this is Mike.
Well, we previously announced in terms of in terms of availability, we previously announced that with me.
Reserve capacity for for why Am I, but I would.
Obviously at this stage I will now give you a huge amount of detail in terms of commercial arrangements, but.
What I would tell you is that the view of the future in the potential from John Krafcik on his Waymo team is very similar to mine, particularly in the field that we are going to concentrate on an announced our partnership which is the commercial vehicles.
What we want to achieve is a situation where both of the organizations benefit and broadly is equally as possible in the opportunity or that the present. So as we begin to talk more about what that looks like you will understand that it will be relatively unique relationship in that area.
That's very very appropriate given the fact that vehicle alone.
I think we're not being successful as the combined who is the best driver in the World and Thats why most driver.
Thank you and then.
The next 12 months, just returning to its Atlanta.
Play on the paycheck cool Mrs have already but to the net cash position of the lantus that asset inception.
The question I had was when determining the affordability of 5.5 billion dividend, but it seems.
Will it be the net cash position of the Lantus ultimately determine whether it's paid or will it be related to the respective cash flow performance of each company during the course, but this year.
And with this in mind from <unk> perspective.
Net cash position of the landscape.
Sure Hey that dividends in school.
Do you happen, that's an amount that flexibility.
Well.
You can imagine Jones, given where we are in the air under full cost for the balance of the year that died questions actually very complex.
Got to try to break it down and just give you my views.
Obviously.
We want to make sure that the land.
Is born in a very healthy position and therefore when call us reference the cash position at any surprise to anybody because.
He has been very vocal on making sure that the company has all of the resources that it needs to be successful none of us really know.
How 2021 really will will develop although I I have because I personally I remain very positive about the outlook.
The 21.
But there are a number of factors in and your question and I think there are too many moving pieces at this moment in time for me to give you a comprehensive answer other other than to say that we clearly have a weekly they haven't agreement agreed with the board.
Fundamentally bugs as T. I M. P. S I want to make sure. That's the Lantus is born in the right and appropriate way.
And as we progressed through this year will understand more what that means and what it looks like and beyond that I think the rest George is just speculation.
Thank you very much thank you.
We will now our next question.
On the line of Martino de Ambroggi from Equita.
Please go ahead.
Thank you.
Good morning, and good afternoon everybody.
The first question is on the second else performance, if they can I ask you.
For a an extra comment on the performance, particularly in North America Endymion.
And specifically on North America for a that Q1.
Q2 performance.
Just separate quantifying the fleet.
The decline Oh wait a contribution so just to.
Understand if it was particularly relevant.
Supposing these will not be repeated in the next few quarters.
The second question is on the prices.
Because they are holding well almost everywhere.
So if you ex Pat.
Any additional.
Pressure, particularly in Europe.
Not in as Mike.
Give me monsoon Richard feel free to to supplement she will firstly the fleet declined for about a point of view was very explainable and as mentioned it was mined in the tiny rental channels and part of that was because demand obviously in those areas it shifted but a big part of it was the fact that we needed to direct available production.
Capacity to the replenishment of a retail inventory with our dealers.
I continue to sell Sal above expectations throughout the quarter.
Large extent that version of the acoustic retail channel was going to continue.
So we get through this quarter.
Because as I mentioned before levels of inventory at the moment I healthy that we do have significant order bank now in the U.S. and there certainly pockets of inventory that need to be refilled, but that does two factors explain the fleet to drop that we experience.
I think conscious decision.
Yes on May touch during the period and you see some of that and the results.
And turn to the pricing environment, we did see good pricing, particularly in North America increases in our customer facing transaction price over and above that how the segments performed the segments actually performed well as well we saw we saw some improvements in pricing and in EMEA.
Partly offset by some increased incentives, but I was pleased with the work that out for that brand had done during the quarter to improve their margin. For example, my outlook on pricing is always willing to how the.
The demand continues to demand continues to hold off I think if if we're right in terms of the for costs that we gave you for saw it means that.
I think we will be idle today continue to be disciplined with pricing in the in this in the third in the fourth quarter, because as I mentioned early particularly around North America.
We do not anticipate we will see some increases in inventory that we don't anticipate building inventory with the current levels that we see.
Just remind me not and it was another part of question that I didn't answer John just if you could elaborate on the second enough performance expected in North America and EMEA.
Well as I said.
Obviously this is relying on our view on.
The industries and I spent a little bit talking with them on the previous question talking about the U.S., both EMEA and North America had more healthy order books than we had pretty kind of at 19, So I think.
Our outlook is broadly reflected by the dealers in the regions as well obviously in EMEA, it's very it the dynamics of any areas. You know that was a very high country of origin bias in terms of sales performance and we saw literally come back a little bit slower than they are the or some other the owners in the southern Europe.
Your markets and I think that that there is a degree of demand and it's really that will be aggressively release as we get through the second off and obviously our team that has to make sure that because it's our country of origin that by maximizing that opportunity and in North America as I've said, we've seen increasing implied SaaS.
Just four months.
And even if that celgene around what you liars it will put us on track for the.
For the saw that we forecast at around 14 million in the U.S. and then if you combine that with as you've mentioned pricing.
Environment that we're in and the costs that we were able to remove from the business I think the formula or is that to give us a strong second half performance along the way we see the market continues.
Okay, and say, maybe a follow up from the networking capital. If there are so I'm doing my math based on your assumptions.
Hi, My.
Totally wrong or.
Far from reality, if I assume a 5 billion roughly 5 billion a reversal in the second house.
Not totally wrong I would say based on a scenario that we.
Yeah.
Okay. Thank you.
Thank you Matthew.
We will now take next question from Philly Putra from Jefferies.
Please go ahead.
Thank you and good morning.
One of you.
A couple of questions maybe one simple for four Richards first is would you disclose how much.
Thank you were able to externalize in Q2.
Using the temporary work schemes available in the U.S. as well as in Europe.
No I don't think it would be Proclear family no yeah, Okay, and another one for Mike.
20 ones that figure I think for you in many ways of course, but.
On one hand, you're getting a bit more competition from Ford Jeep with a bronco.
The same time you launching you've got you re entering will you hadnt been in there for size they see the segment.
Im just trying to understand I am I wrong in assuming that.
Well side the profit pool that we can allocate the full size as you'd be segments, probably 20% of North American public school.
Yes, you on this they're interesting to me and I was just wondering as well we've seen a lot of announcements no tangible and more promises around electric pick up.
You have these SCR hasn't told us anything about this.
Is it because you think it's just premature or do you haven't you kind of reservations without you led us to do a full size pick up that would be.
Battery powered.
Thank you.
You're right on 2021 is a big yeah.
No just like they from wagoneer and the wagoneer.
Oh point will go into the one of the highest margin.
Segments within the U.S.
So you can imagine expansion has that.
Opportunity for the Jeep brand producer and Grand Cherokee segment, 60% of that segment is a three is three violent obviously grand Cherokee there for any place in 40% residual 40%.
To a large extent day three route.
Actually that we talked about today and in previous sessions is also going into a white space that.
Offers the potential for a very strong margins.
Notwithstanding the fact that we talked a little bit about competition.
We're very used to competition and I think our products and our people are proven that.
They are up to that challenge, so I view 21, very positively and saying and frankly the activity that we've got in the second half of this year will help a momentum as we get into 21.
I mentioned the Trx launch on behalf, we have some other I'd product coming through our plug in hybrids are now hitting the market iconic 500 will be a bad and we have a number of additions that will be will be supplementing the U.S. in terms of model lifecycle maintenance.
And then you asked about electric pickup trucks. The reason, we haven't spoken too much about electric pickup trucks is that.
Not that we.
Views that market as nonexistent.
And we've always had a slightly different view in terms of timing and adoption rights.
I'm, particularly in North America in terms of full electrification.
We are very committed to electrification strategy.
Most of which we have revealed we haven't been able to everything, but obviously pickup trucks is a key franchise for us.
We're not gonna say on the sidelines, if there is a danger that opposition get diluted going forward. So.
I'll leave you to speculate what that means that should be relatively clear.
Alright, thank you very much but.
Thank you for your question. The next question came from a line of money kept bus you from it doesn't follow.
Let's go ahead.
Yes, I'm sorry.
Yes.
Yes, excuse me and can you hear me.
Yeah, we have got good afternoon, everyone and thanks for taking my question can you. Please elaborate a little bit more [laughter] on day to be on cost savings plan outmatched [laughter] viscose travel plan.
[laughter] obtained in the third.
And how much do you expect that for the second quarter care and they do you see it comes from every thanks, Sean but it sounds like me young you well.
Oh, well supported the next yeah and the second question is on that they retooling docket brands in the third quarter in that now that's why Didnt you modest setting up the that Muslims going or on the impact on.
On the trend that funding that's pad, we I am not perfect probably peak.
So.
Thank you very much.
Richard You want me to answer the cost question are you going to Stephan.
To step in my King.
Out to my comment.
So obviously moderate goes a.
Last part of the cost actions.
Q2 Q3.
And then.
They start reducing Q4.
As we imagine that the market becomes.
No more normalized as we said earlier, Mike said earlier, we do expect 600 800 million of these cost savings to remain into 20 or 21.
And obviously, we're working extremely hard to ensure that happens market conditions.
Allowing so I think.
There's been you know you've seen the.
Performance of our regions and the amount of effort and cost save take an uptick in S. DNA.
And so.
We expect a good piece that to stick into 2021.
As regards the read too retooling.
The bigger impact.
We have is downtime mentioned in.
In Warren truck in Q3.
Preparation tooling for.
The Grand Wagoneer launch next year, so that means that.
We will have our I'm light duty classic.
Vehicle down for a Q3 and that will clearly you have some impact in Q3, we get it back in Q4.
And so that's part of the reason why but also our cash flow performance will be stronger in Q1 in Q3 because of that working capital impact.
But there's also the.
One month for the keep compass.
Oh, It's July now so shouldn't have a significant impact on working capital for Q3, but whatever impact on margin performance, but we we expect to have a very strong Q on Q3 in North America. Nonetheless.
Okay. Thank you are not too I mean does that to Richard.
It's a classic truck is gonna be between I would say Saturday and 38000 trucks out and from Compass perspective, probably just over 20000 campuses.
So that will that will happen in the quarter.
Okay. Thank you.
Thank you very much.
We went back in our next question from the line of catalysts cultic from Redburn.
Thanks for taking my questions. My first one was just on the cost savings.
600, <unk> hundred million.
The next year.
The these in any way encroach on the 3.7 billion euros of synergies you've talked to the today show or they are they similar sauces or they completely separate.
And then my second question was I was just wondering if you could update us on your purchases of regulate tree emissions credits in Europe and the U.S.
So what has been a payable in cash impact that is purchases. So far this year and what you expect remained a 2020 and 2021.
Thanks.
Richard I'll do the first one and you can you can pick up the you can pick up the SEC ones. The short answer is that now.
That denying coach Oh, I told on the full cost synergies and in fact, if you looked at the source of the majority of the savings from this point going forward that will.
We anticipate.
Given current conditions will go into next year, the vast majority of its going to come from North America.
So that helps reinforce the first part of my answer.
And when should you want to address the second part of the question.
Yep.
Oh, the first half of this year, we had cash, but just under 400 million euros pool.
Credit purchases.
Slated to both North America and the math.
And Oh, we expect assuming another number in the second half.
Thanks.
We'll now take 10 last question from the line of John Murphy from Bank of America.
Let's go ahead.
Good afternoon guys.
I just had two quick follow up questions purchased on the regulatory credit question.
Mike You said that you would be regulatory compliance and I apologize I, it's in the Miss that the timeframe in your commentary.
When do you think that would be that meet both in North America, and Europe and is that under the umbrella is going at this or before before you get there trying to understand timing when these regulatory credit purchases.
Hopefully go to zero.
Hi, John.
Different timeline dependent on the they.
Depend on the region and these last stand alone.
Yeah I saw this rate when the merger closes and this will change and probably be accelerated by the anticipation was that.
As we get into 2023.
In the U.S.
We will basically be zero reliance on on credit Amar electrified fleet will carry the carry over the burden of compliance and then in Europe because of the focus that we've put in terms of electrification by the time, we get into 2021 actually enter 2022, we expect the fleet to be able to people.
Fully compliant in EMEA as well and that is that is with what I think it's very reasonable forecaster take rates with bofa plug in hybrids and <unk> and our battery electric offerings.
That's incredibly helpful. In its just just on that I mean is the bulk of the purchase on these write credits.
Ooh or the U.S. at the moment no can give us a rough split maybe not exact.
I'm pretty sure Richard doesn't want to do that.
Sorry, Okay got it and that I don't think yeah, that's fine.
Yeah, and then just quickly on <unk> on slide 10.
Mix in price.
Together in the same bar I'm just curious if you can give us the benefit of of mix in the quarter 'cause it looks like it's probably you might even be as much the billion dollars plus offer North America, just trying to understand what mixes of that.
Got it offsets the buying decline.
I would you Richard.
It's not about significant John I think it's up about 400 million of mix.
Related to retail and nameplate channels, but then there's also some negativity because of low parts and service business.
It goes up we don't tend to talk about it's very much but obviously with.
With customers not going into dealerships and Hello to dealers shot for <unk> for some other costs that we didn't have as much parts and service business, which is coming back a lot now, but the offset some of the positive mix on the vehicle side.
Yes.
Okay, great. Thank you very much guys.
Thanks.
Yes, we'll conclude the question and answer session.
I'd now like to turn the call back over to Mike My only for an additional for closing remarks.
Thank you again.
Just like to thank everybody for being on the cool did I answer your questions.
Hopefully Richard and I were able to answer them and give you the information that you need.
But I'm going to just a few minutes just to summarize based on what we Atlanta sorry today.
So Q2 plan is expected to be the worst quarter of 2020, and even though we do remain cautious on the continued impacts uncertainties as a result with the pandemic.
You heard and I think we've demonstrated we believe the second off will be a strong finish to the yen.
Thats, often said at times across as reveal the two character of an organization that is people and I believe the our second quarter was a period during which the employees are there <unk> and China resilience in spirit that moved over and then the for many years to come.
And our commitment to all of our stakeholders into each other's been steadfast in will become even more creative inflexible and the way we approach each and every day.
The last months have expressed the very best of who we are and I'm proud of how companies responded on all fronts.
And as I said before I don't think I'll be able to thank each and every one of employees enough for the extraordinary why that reacted adjusted mobilized and executed and these past few months ago aspect to the test, but at the same time of an incredible learning experience for our company handful of us as individuals across our brands regions and functions with truly use this time.
And then apply new ways to make a company more effective and efficient the way we've collectively risen to these challenges tell me that despite the testing months. That's still lie ahead, we will come out of the stronger than ever so again with that I'd just like to thank for joining us today and Oh, given your families keep well. Thank you.
Yes.
That does conclude todays conference call. Thank you for participating ladies and gentlemen, you may now disconnect.
I do Lisa.
Sometimes.
He did I can you hear me.
Yes, we can area.
Okay.
The line is off.
That's right.
Hello.
Okay. Jay can you hear me.