Q4 2020 Stellantis NV Earnings Call

Hello, and welcome to the full year results are lumpy.

I will now hand over to Andrea Bandinelli responsible for Investor Relations of day landfall.

Thank you Jessica and welcome to everyone joining us today.

While we completed the merger.

And PSA in January two day, we will review <unk> fourth quarter and full year 2020 results and Groupe PSA as a result for full year 2020 earlier today. The presentation materials used during this call along with the related earnings press release was posted in the investors section.

Golan physical websites.

We will be presenting results for both the FCA and TSA our cost per day. He has also hit by Carlos Tavares in Sydney Bureau, Iraq, co selling PSA and Mike Molyneaux, Richard Palmer concerning FCA.

After their presentation. We just talked about will also have a short presentation related to <unk>. All of these gentlemen will be then be available to answer questions.

Before we begin I want to point out that any forward looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor statement included on page two of today's presentation.

Customary the call will be governed by that language now I would like to turn the call over to Carlos Tavares.

<unk>.

Okay.

Thank you Andrea.

Ladies and gentlemen, good morning, and good afternoon.

I am delighted to be here with you today.

And welcome you to this 2020.

FCA PSA financial results announcement session and of course, I didn't get the thoughts to stare at these.

That's what gives me the opportunity to share a few thoughts and answer your questions.

EPS for me I'm moving moments today.

And I'm sure for Mike.

We are presenting the last financial results of <unk> and the PSA but.

We are happy and we are so glad.

To be both offers today with you.

To kick start the <unk>.

<unk>, new chapter, which is going to be an exciting one with a very important value creation factor.

It is my great privilege today to welcome you I know that you are all very busy people and therefore, we value your time and I would like to thank you warmly for your interest in our cooperations and your interest instead of this hopefully will be able to answer all of your questions and without further Ado I would like to hand over to Mike Madden.

This year, the CEO of the FCA and the reach out Palmer the CFO of FCA day, I'm going to present to you. The 2020 results of FCA, Mike the floor is yours.

Well, thank you call us and just I'll add my welcome to everybody for the call and good morning, and good afternoon.

So normal traditional I'm going to take you briefly through our operational highlights and then Richard will walk you through the financials in much more detail, obviously, given the unusual nature of the year with COVID-19, having such a significant impact on fca's results, especially due to the disruption in demand and production shutdowns that we experienced.

First half of 2020.

Richard novel by focus our comments today on <unk> fourth quarter results, which we believe are a better reflection of the group's operating performance and a more normalized environment and are therefore, I think more indicative of where many people believe the future of environment moving.

Im not trying to minimize FCA from your results, which was still strong given the impacts of the group faced and continues to face as a result of COVID-19.

But I believe that by focusing on the quarter is the best way to fully comprehend the capabilities strength and solid foundation of FCA as it transitioned into <unk>, which as you all know happened in mid January.

So let me begin obviously.

We're extremely pleased with Fca's fourth quarter results in the group had a strong close to the year delivering a record fourth quarter group adjusted EBIT of $2 3 billion Euro and a record margin of eight 2%.

In all regions and Maserati contributed to these results with all segments profitable in the fourth quarter now this.

This was the first time this has occurred since the first quarter of 2019. So I think it is a great accomplishment for the entire book.

As you will see North America continued to be a standout delivering a record fourth quarter adjusted EBIT of $2 2 billion euros, which was up 8% and a record margin of 11, 6%.

And in addition to the tremendous performance in North America.

Latin American operations improved for the second quarter in a row.

Still managing through a very difficult environment.

The pandemic is still having a measurable impact.

On the overall industry and the Brazilian real and Argentine peso continued to weaken.

Another important accomplishment came from EMEA.

Region, returning to profitability in the quarter.

That's a sign that the combination of actions taken in the past to improve commercial performance restructure of the business and removed significant cost is bearing fruit, obviously theres still much for us to do but I think the fourth quarter.

Our recognized another step forward.

We also generated very strong industrial free cash flows of $3 9 billion Euro which reflects the robust operating performance coupled with continued positive working capital impacts and this led to <unk> ending the year with positive industrial free cash flows of $600 million you're right.

<unk> available liquidity remained very strong at $31 4 billion Euro at year end, an increase of over 4 billion Euro from the end of September and I'm pleased to report that during the fourth quarter FCA fully repaid the $6 25 billion revolving credit facility that was drawn down in the second quarter of 2020.

And the strong liquidity is another element of the solid Foundation S. B C. I bought two still lantus.

Now in addition to STI as strong operating results. The group also performed very well during the quarter from a commercial standpoint in its key markets. Despite the industry being down in each of those markets year over year.

In Latin America, FCA maintained its market leadership, gaining 340 basis points of market share year over year to 17, 8%.

FCA also maintained its leadership position in Brazil with share increasing by 530 basis points to 24, 3% driven by the success of the all new Fabs try to pick up as well as the Jeep Compass and ready guide in.

In fact, <unk> sales in the region were up 16%.

It's clearly outpaced the industry, which was down 6%.

In Europe, <unk> was able to improve its market share year over year for the second straight quarter with share growing by 40 basis points to $6 five per cent for the fourth quarter and this was achieved with sales remaining substantially flat year over year with the overall industry experiencing a 7% deterioration and.

And finally as established under the terms of the merger agreement the $2 9 billion euros special cash distribution was paid at the end of January to former FCA shareholders.

So let me turn to Sti's commercial performance during the quarter.

With the exception of Asia Pacific the industry in each region declined year over year due to the continued impact of COVID-19.

<unk> sales in North America were down year over year. This was substantially driven by fleet sales with retail sales increasing about 2% as production per day, let deliveries was prioritized to fulfill the continued strong level of retail demand.

Also U S dealer inventories remain low with day, let's talk at the end of December at approximately 420000 units down almost a 170000 from the end of December 2019.

In Europe as I previously noted sales performance outpaced the industry once again for the second quarter in a row, we gained market share thanks to higher sales of the Fiat Tipo family 500 amps.

And finally in Latin America FCA remain the overall market leader on the back of a significant share gain of over 340 basis points, while the industry was down 6%.

FCA has strengthened its market leadership in Brazil, gaining share in important segments, such as Suvs and pickup trucks and I'll see vs.

Now as I mentioned in my opening which it will take you through the financials in detail. So I'm just going to give you a quick overview of Fca's results for the quarter, which I previously noted were a record for the group.

The entire team did and the Philadelphia low job with delivering on improved commercial performance implementing strict cost containment actions I'm fully resuming our industrial machines pre pandemic levels without experiencing any significant production disruptions due to COVID-19, and all of this while maintaining our first priority which is to ensure the safety.

And well being of our employees and our communities.

Despite fca's consolidated shipments being down slightly year over year. The group achieved record fourth quarter, adjusted EBIT and margin, while prioritizing dealer deliveries and continuing to maintain strict inventory management discipline.

All segments ended the year with appropriate inventory levels, which will lower than at the end of December 2019.

As I noted earlier North America delivered a record fourth quarter adjusted EBIT margin, despite consolidated shipments being down 8%, primarily due to the discontinuance of the Dodge Grand Caravan and lower planned shipments of around 1500 classic in preparation for the much anticipated groundwork in their launch.

And as anticipated Sci experienced strong industrial free cash flows, which amounted to $3 9 billion euro for the quarter Theres not only reflected the record operating performance, but also the continued rewind of working capital in change in provisions, which totaled just over 3 billion you're right.

Before I hand, it over to Richard I want to conclude by saying that 2020 test of the business and frankly tested all of us in ways, we had not experienced before but I think it also brought out the very best of who we are low.

Resilience dedication creativity of our teams and I couldnt be more proud of how our people have responded and delivered in every aspect of the business.

<unk> said before FCA came into Atlanta is a very solid foundation. However, the strongest asset FCA contributed just Atlantis was its people.

I just wanted to touch on something that our call is set at the beginning in terms of his view about the start of Atlantis and he's called meant that he is happy and glad to be here I can echo that 100 per cent.

I think the work that was done to deliver the lantus in line with the projections that box called US had given was.

It was tremendous and given the year and we all know how tough that you yeah. It was.

It was a phenomenal achievement so I echo his views I'm happy and glad we're now he has established the line system with that Richard If you wouldn't mind, taking every one through the details of the financials. Thank you.

Okay.

Thank you, Mike and good day to everybody.

We'll continue on page six focusing on Q4 performance.

As mentioned consolidated shipments were down 1% with the Fiat professional LNG from Brian's up offsetting reductions indulge due to discontinued products and ramp due to reduced one truck volume as launch preparations for the new Grand Wagoneer proceed.

Revenues were down 4%, but up 3% at constant FX due to positive mix in North America and positive price in North America, Latam and EMEA.

Record adjusted EBIT reached $2 3 billion euros up 11% year over year with record margin of eight 2% and all segments are profitable.

Adjusted net profit increased 20% to $1 8 billion euros and net profit was flat at $1 6 billion euros due to increased unusual charges of $330 million per asset impairments and advisor fees regarding the merger.

Finance charges were up 22 million to 243 million due to higher borrowing costs and cost of carry all set by some positive FX translation and lower discount rates on pension liabilities.

The adjusted effective tax rate was 12% for Q4 due to some positive adjustments for prior year provision unfavorable deferred tax adjustments.

Deferred tax liability adjustment, sorry, strong industrial free cash flows of $3 9 billion benefited from the rewind of working capital and provisions were $3 1 billion liquidity was boosted further by the completion of the drawdown of the entire facility for $1 1 billion euros, partially offset by the reversal of 0.0 point 6 billion of negative.

FX translation and other.

Overall liquidity increased by $4 3 billion to $31 4 billion.

Now moving to page seven.

And we review the day adjusted EBIT by driver as mentioned all segments were positive in Q4, despite negative shipments impact from North America of 55000 units. All other segments showed positive volume year over year net volume was down just 14000 units.

North America drove positive mix and overall volume mix was positive for the group net.

Price was also strong in North America, Latam and EMEA, showing a strong overall commercial performance.

900 million euros.

Industrial costs were negative in North America due to a weak oil campaign in EMEA due to product costs on newly launched electrified vehicles.

Latam due to inflation and negative FX impacts.

The group continued to benefit from SG&A reduction actions across all segments for nearly $300 million in the quarter.

Yeah.

On page eight we show the industrial free cash flow for the quarter, which increased from $1 5 billion last year to $3 9 billion and took the full year number to positive 0.6 billion.

Adjusted Industrial EBITDA margin was up 90 basis points to $12 four per cent Capex was $2 4 billion euros below prior year by 0.5 billion, but up sequentially by 0.2 billion as we continued investments in key product launches for 2021.

Capex reached $8 6 billion euros up to your other point 2 billion compared to 2019.

Working capital contributed $2 1 billion euros due.

Due to sequential increases in production payables as seasonal and seasonal reduction in inventories in EMEA and North America.

Finance charges were up 45 million to 119 million due to higher gross debt levels and cash taxes were $130 million, mainly for U S taxes.

The net industrial cash position at year end was $4 6 billion up from $1 3 billion in September due to industrial free cash flow offset partially by negative FX translation.

Moving to page nine we show the adjusted EBIT by segment.

Mentioned all segments were positive for the first time since Q1 2018.

North America had a record Q4 results and margin.

We also see sequential improvements in Latam with strong commercial performance. Despite the continued market downturn.

The FX impact.

Now we move to the through the regions starting on page 10, with North America's a record Q4.

As mentioned, our sales were down 7% driven by fleet sales down from 40% as we allocated vehicles to fulfill demand in the retail channel.

<unk> was up 3% and I'll share was down slightly by 20 basis points.

Our fleet sales were 15% of total U S market sales as a result down from 23% last year.

North American shipments were 594000 units down 8%, primarily due to the discontinued Dodge Grand caravan and low of around 1500 classic due to plant downtime at one truck.

U S dealer inventories were up 34000 units in Q4, but your line levels, but still 165000 lower than prior year.

Revenues at $19 1 billion euros were down 7% or 2% at constant exchange with strong positive mix and pricing.

Adjusted EBIT increased 8% despite negative FX translation impact of $140 million.

The lower shipments of 55000 units were more than offset quite positive mix from retail up 8%, while fleet was down 6%.

All lines due to less Grand Caravan 1500 classics and Pacific is.

Price was positive around two percentage points, mainly on the Jeep and Ram brands.

Industrial costs were negative due to weak oil campaign costs as well as lower year over year supplier recoveries and other warranty adjustments.

SG&A benefited from reduced advertising spend and would use G&A costs.

Next on page 11, we have Asia Pacific's results.

Consolidated shipments were up to 23000 units from 20000 last year due to higher <unk> volume to China, and Japan markets.

China JV shipments were down 39% or 8000 units to 13000 units in other words.

Combined shipments were down 10% to 36000.

Net revenues were up 19% to 0.9 billion driven by the 15% increase in consolidated shipments and the improvement in revenues together with cost reduction in SG&A put the region into a profit for the quarter 34 million euros.

On page 12, we see the EMEA results.

<unk> shipments were up 13%, primarily due to a very strong performance in the JV in Turkey. Although consolidated volumes were also up 6% driven by the Fiat 500, Bev and the Jeep Phe vs launched recently.

Dealer inventory levels were substantially flat against that in Q3 at 162000 units down from 239000 units last year.

Net revenues were up 8% to $5 7 billion, including price improvements due to the electrified models.

Adjusted EBIT was $66 million with positive volume mix and price recovery of the electrified vehicles offsetting their increased product costs.

Year over year raw material inflation as well as the cost of compliance drove negative industrial costs.

Cost reductions continued to be a key focus for the region.

Page 13.

So it was the last time results.

As mentioned the commercial performance was very strong with full year market share up 340 basis points to 17, 8% driven by Brazil up 530 basis points other was.

Adult sales were up 16% for Q4, driving shipments up 11% with stronger demand for the new Fiat Strada pick up.

Dealer stock levels for the region were 28000 units down nearly 50% from prior year.

Revenues were down 14% year over year due to FX weakening of the Brazilian real of over 40% at constant FX revenues were up 17%.

Adjusted EBIT was also impacted heavily by FX FX impact for imported components and purchasing inflation on local components, both driving the negative industrial costs shown here.

The region acted to offset these impacts by continuing to improve pricing in Brazil, especially up around 10% year over year.

On page 14, we finished the FCA results with Maserati sales were down 26% in the quarter with old main markets down except for China and Italy.

Shipments were up 38% per cent as we launched the MCA versions of all the nameplates with model year 'twenty, one dealer inventories increased as a result from September levels sales.

But were still below prior year.

Net revenues increased in line with shipments and this also drove the improvement in adjusted EBIT to a 12 million profit from a 40 million loss last year.

Now I will hand over to Carlos and Felipe. Thank you very much.

Thank you. Thank you reach out and thank you Mike.

Before I move on with the PSA results I would like just to express to all of you.

My very sincere and warm thanks to Mike <unk>.

For his leadership.

The outstanding 2020 results and the stellar performance demonstrated in Q4 on the FCA family level.

As contributed immensely to their robust financial position at the birth of guarantees.

It's very important that we stopped we kick off sell antiques in a sound position and it is the case it is a sound position as a starting point for this new company.

And it has been so because Mike and Richard have led to FCA to this outstanding and robust results in 2020 with a stellar performance in Q4, I would like to recognize that to thank warmly Mike to thank warmly reach out and to tell you that since we have signed a binding.

Agreement back in December 2019.

I have been personally impressed and inspired.

By the maturity by the consistency by the open minds that Mike has demonstrated in helping us to converge towards the closing in January.

<unk> 2021.

We have filed more than 12500 documents.

12500 documents, we have discussed with the whole world.

We have sold many many issues many of these negotiations many discussions all of this was possible within the time window that we have set for ourselves.

Cause of the maturity because of the quality of our relationship.

Cause of the fact that we only had one goal.

Which was to create this great company called Certainties and other to open a new chapter in the history of our companies.

I'd like to recognize that I know how important egos are in our industry I would like to testify in front of you the maturity there.

Focus the consistency the open mind the business sense that Mike has always demonstrated.

Absolutely delighted.

To have them with me.

To support the birth of guarantees.

And moving our business forward. This is very important for me to testify. This in front of you and this being said please enjoy the nice a brand new DS four.

Crossover that he is going to be launched this year for the DSP name brands that you have on this slide so if you look at the results from the PSA family.

You can see that the.

PSA was able to achieve a very robust what we would call that all weather results for this all weather Corporation.

The Covid, we were able to deliver seven dot, 1% automotive adjusted operating margin.

And this is.

<unk> that has been combined.

The H two record operating margin of nine.

4%.

So the $9 four per cent to H two operating margin demonstrates that we were on our way.

To continue to grow our efficiency and effectiveness.

When the carpet appeared unfortunately for all of us.

This is.

It's coming from a very robust performance from the <unk> brands.

Seven 3%.

And from and also a very robust.

Performance from Opel Vauxhall four.

<unk> dot, 1% that demonstrates that.

That's in the turnaround.

For Opel Vauxhall was structural.

That even COVID-19 could not bring those back in the red in the Opel Vauxhall operations I think it is important that we highlight that.

With this two results we were able to deliver.

Seven 1%.

Automotive adjusted operating margin for 2020 this is demonstrating.

Number one that our guidance was respected.

Number two that we are Oh, whether company.

And do you have just seen that the FCA is also at an all weather company, which is that we are demonstrating that our companies are resilient.

And our teams are able to demonstrate that a great deal of focus and agility. When we are facing these headwinds. Some are some are impressive numbers.

Beyond the $9 four per cent of operating margin NH two yes, we could.

Deliver a $2 2 billion Euro net results group share $2 7 billion or so much of your free cash flow in the $13 2 billion automotive net.

Financial position, which is a very sound position that as I was saying for FCA contributes from the PSA side towards some net financial position of certainties.

I would like as always to express to all the employees of PSA.

My sincere and warm.

Thanks for what has been achieved not only for 2020, which as you may imagine was a very painful year for everybody, but for what we have been doing altogether over the last seven years since I took the helm of PSA does.

It has been a rewarding experience.

<unk> been feeling to work with these teams.

It's been absolutely something that we will keep in our minds and we are happy now to turn the page and opened the chapter <unk>, if we look at.

Another important aspect of our activities is our contribution to tackling climate change.

We have selected the only third party accolades.

So that this judgment is not biased.

Only using third party accolades, we see that all the targets that has been validated by as D. G. I R. A line.

To degree maximum warming coming out of the Paris, The Paris agreement for the Cop 21, and everything we do is aligned with this 2% maximum warming level that has been set.

As a ceiling from this cop 21 agreement is important that we recognize that.

From the carbon disclosure project group PSA was recognized.

As the leader of low carbon transition.

And from a global CSR performance.

We have received seven awards of which three are off.

Sector leader awards for for PSA.

As you can see we have also been able to reduce significant significantly our real estate footprint to contribute to reducing the sue to emissions and this is of course, yes.

As it is the fact that we have created a way of working and working processes that are completely consistent with remote working which is also a very significant contribution to the quality of life of our people as much as it is a contribution to the environment by reducing the scope two emissions of all.

The troubles in the Morbidities on this case from here I would like to therefore recognized the resilience.

Of the PSA family.

Recognize that a H two.

Operating margin was a new record for this seven year seven year journey.

Recognizing that this could be achieved thanks to our people.

I would like to thank them, all and each of them for their contribution I would like also to recognize the quality of our cocoa extraction processes with our unions are union leaders. They are always very demanding they are more and more diverse across the world as we become a global company, but I.

Do recognize that the quality of these dialogues is also supportive.

Off the performance of the company and I want also to thank them warmly for our interactions for their demanding stance.

But also their ability to contribute and their ability to discuss.

Constructive manner with the management of the company. It is also a big part of this the results I would like also to recognize that we have been blessed.

By the quality of the top leaders of PSA day.

Members of the Executive Committee team of PSA It is not easy to be.

Permanently put them into the challenged in the results that you have seen but you see that despite the COVID-19. Despite the improvement of those results across the first six years of this journey. This top executive team is always ready to face the challenge always ready to push the limits.

Always ready to recognize that we can do better.

Jim soft mindset in terms of mental strength.

These sales a lot about your management team.

He says a lot about their ability to be resilient.

Their ability to face headwinds their ability to find innovative solutions and I would like to thank them warmly for accepting me as their T. O that is continuously challenging them on their performance, it's not easy.

But it is something that we are doing together and I would like to thank them warmly.

And to send them all our very strong digital hook.

Last but not least I would like to thank the supervisory board.

The supervisory board of PSA has been stellar.

The way they have been supporting the merger.

They have been supporting the management and the way they have been respecting the dual governance.

PSA with the managing board from one side and the supervisory board from the other side I would like to.

Express to them also our sincere appreciation for the very proper value.

Rigorous governance that we could benefit from over the last seven years. It has also contributed to the stability.

And to the ability that was given to the management to do the right things right over the years and the results are demonstrating that it was the right attitude, which is what's the right. The governance. It is very important that we recognize that's also given the past history of this company. So from there I would like to hand over to our.

PSA CFO Felipe Dolby Hall was going to give you the details of our results can you. Please the floor is yours.

Thank you Carlos good afternoon, and good morning.

It's a great pleasure to present to you Groupe PSA financial results for 2020.

Despite the headwinds created by COVID-19 pandemic. The group delivered $3 7 billion Euro adjusted net income in 2020, resulting in a six 1% adjusted operating margin.

You could resolve it goes down to the bottom line with net income group share at $2 2 billion euros.

Below the adjusted operating income.

<unk> cost and non to 696 million euros, a three digit number as you know last year we.

With a sharp decrease of 835 million euros versus 2019.

Other operating income and expenses amounted to positive 65 million euros, resulting resulting mainly from the disposal of the capsid joint venture in China for 204 million euros, partially upset by the impairments in China in Eurasia forgive non amounts of 154 million euros.

Net financial expenses and non two to 370 million euros people versus last year.

Income taxes standard.

628 million euros down 88 million euros as 2019.

This tax rate has been limited to 23% as we continue to use or the <unk>.

Tax asset.

Regarding total tax loss carryforward.

The roll forward of $8 6 billion Euro two French permanent establishment of state Altice NV temporarily agreed by the French tax authority.

Final valuation will take place in 2021 based on the full year 2020 tax declaration.

The line share that earnings of companies I think we view as a negative result of 87 million euros, you're down 63 years versus 2019 than.

The negative result linked with our joint venture EBITDA four minus 400 sitting in euros is partially offset by the very solid performance of our fingers.

Partnership with sometimes Theyre only with BNP Paribas, we stand at 339 million Euro.

Moving to page 20.

We present, the P&L statement for the group excluding from ICR.

Which corresponds to or activities that will continue within state Altice one's force your shares are distributed.

In the following pages I will come in I will commence the automotive division that constitute the ACO show of this activity is transferred to Synopsys.

Restructuring costs amount to 416 euros, which is a reduction of 921 million euros versus 2019.

Net financial expenses divided by three companies into the group perimeter with an amount of only 94 million euros.

And net profit stands at more than $2 3 billion euros in a price a difficult year.

Moving to page 21.

We present, the automotive division revenue bridge.

So of course, the decrease in revenue was driven by the volume drop in our main markets, especially in Europe, and the volume effect impacted revenues negatively by 24%.

Product mix continues to be a strong positive driven by the success of the last two launches of the group in particular, the new push with two eight on to weight the new Opel Corsa.

Also the favorable impact of electrified ranch in the world.

Pricing effect remains positive and 0.9% offsetting half of the FX negative.

Coming mainly from the Turkish lira and desert in peso.

The other positive effects come from the bucket also from the right hand side, which is linked to the reduction of the weight of buyback sales compared to last year.

And as planned the vacancies to partner is close to zero.

We move to page 22.

Worldwide sales were down 28% at $2 5 million units sold with a strong hit of COVID-19 in Europe, Latin America and China.

In this bleak market landscape.

At least in Africa, which is posted a 20% increase despite the crisis confirms itself as a powerful growth driver for the group now for the future.

<unk> see Quinn I don't know bill have increased their market share in the region.

Enjoying a strong legitimacy.

Can you share plans, which will gradually ramp up close to 150 some vehicles in the course of 2021.

Also continue to be a strong later.

In Europe. In addition to the pandemic the roof sales have been negatively impacted by the five model discontinued by Opel Vauxhall mid 2019, but this will obviously change in 'twenty 'twenty, one with the new book commercialization.

Let's move now to page 23.

Automotive adjusted operating income amounts to more than $2 6 billion euros in 2020, each to boosting your recorded to <unk> adjusted EBIT margin at nine 4% versus eight 3% in 2018 each too.

In a very contrasted year. This reflects the general level of performance delivered by group per se.

And now let's move to page 24 to go deeper into the analysis Division adjusted operating income.

Yeah.

So on page 64 of these automated it deserves income stands at $3 4 billion and the significant performance delivered four plus two.

2 billion euros, mostly driven by product mix and cost saving has partially offset the adverse operating environment.

The worst thing of anything above that is massively driven by the full of market demand for 3 billion euros and to a lesser extent by effects for 600 million euros, including the significant hit of Turkish lira.

Our limited one of the Argentinian peso.

On the right hand side on the peripheral side continuously robust product mix at more than 700 million euros, reflecting the success of our last lunches in particular, the renewal of the D segment and the SUV segment.

And let me remind that group PC has been enjoying and then going strong positive product mix effect over the last six years in a row.

We also have a positive pricing effect, that's a 137 million euros, showing your pet permanent focus on price and channel mix discipline.

New gains of efficiencies.

Evidenced by cost savings on production in Brooklyn line for 565 million euros on the SG&A for 930 <unk>.

30 million euros on R&D for 335 million euros.

Regardless of the savings made R&D Capex expenses remain in 2020 in the range of 8% to 9% that we've maintained over the line the five last years.

The other bucket is mainly related to the strong destocking of our network as you will see in more detail in a later page.

Moving to page 25.

Adjusting operating income of bump is a finance at 100% stands at 965 million euros, which is slightly below 2019, a record year.

This was a strong resilience of our partnership business models from the crisis.

The finishes and rate is up two 1% at a record level. Thanks to the continued progress made by open it out.

On a strong commercial dynamism on the Santander partnership with historical position in France, Italy and Germany.

There is clearly room for improvement, especially on a per batch.

Logically.

The cost of risk has increased as you can see on the right hand side of the chart, but remains at some level.

Moving to page 26.

The automotive net cash position stands at 13 2 billion euros at the end of 2020 compared to $10 six at the end of 19.

Groupe PSA excluding <unk> six 3 billion of free cash flow and Institute.

To reach and low to free cash flow of two points and be in euros in 2020 for Ya.

He said $2 7 billion free cash flow results from a $4 7 billion euros cash flow from operations.

The improvement of the working capital of $1 1 billion euros, mainly due to lower inventories.

Both PC finance and distributed the dividend to the group of 111 million euros.

And finally, the sale in Q4 2020 of shares representing approximately 7% to Horacio on the share capital was 308 million euros will be proposed to distribution by standard in V. During the next AGM to be held on March eight of 2021.

Moving to page 27.

We can see that inventories have been driven down by 19% at the end of 2020 versus end of 2019.

Both group and injury and dealers' inventory being reused and having less than 500 K vehicle.

It gives us good opportunities for 2021.

Yeah.

Thank you too for your attention and then I'll get back to flow to kill us.

Well. Thank you. Thank you very much Felipe.

For this clear presentation as always.

At this stage.

I would like to share with you that.

Ctrip has been playing a critical role in all the great results that we have achieved that PSA over the last seven years.

Let's not forget that he was the CFO of Opel Vauxhall during the turnaround of Opel Vauxhall supporting.

Alicia.

Over the last few years he has been supporting the efficiency.

<unk>.

And I would like also to highlight that the Richard Palmer and Phillipe.

At the core.

The merger process they were the ones that solves many of the traps.

That we had to overcome.

We're the ones that are discussed the most sensitive and emotional topics there.

They did this with a high level off.

Common understanding respect.

A lot of understanding of the motions.

That could exist from both sides and day to a certain extent protected Mike and myself from all of those discussions so I would like here to express to both of them.

Everything they have done to make stern piece of reality.

I would like to thank Philip specifically.

For his role as a great CFO of PSA and supporting me in this process and I'm So happy to.

To tell you that Filipe will now be heading a big part of the <unk> business.

Which is related to a significant number of business units that in terms of overall profit.

Count for more than 5 billion euros of operating income.

That means that we are safe.

On the fact that this significant amount of force tenants, whose business is now in good hands.

I would like to thank Philip for supporting sell antiques on this matter and thank him for everything he has done so far to support us.

Moving forward in terms of push to pass highlights I would like to start with the carmaker a part of our business.

Thank you that we could improve over the last year significantly our customer satisfaction.

In terms of sales and after sales.

In terms of sales the recommendation rates moved from <unk>.

<unk>, 92% in 2019 to 93.

In 2020, it was 88% in 2018.

And after sales, we moved from 86% to 89%. It was 80% in 2018. So what did you see against 2018 are very significant.

Net of progress to make our customers happy and I would like to thank warmly all.

All the National sales company that made this possible it's hard work with the dealer network to make sure that we respect our quality standards and as you can see the results are now visible and we are getting closer and closer to the benchmark in terms of customer satisfaction.

From soft product quality, we had a strong reduction in terms of three months in service failure rates worldwide.

As we were able to reduce by 33 per cent. The number of failures against 2015, which is also a good improvement even though.

There is more work to be done we still are not number one we need to continue to work strongly.

This is one of our major objectives of push to pass as you know well.

We also need to recognize that the COVID-19, the stop and goes in terms of manufacturing was not helpful to give us what we needed to move closer to the benchmark in the direct run rate of our plants.

So we still have work to do but we can recognize that by the end of 2020, the situation was getting better and better and I think we are now back in that.

Continuous improvement process on the dark run rates of our manufacturing operations now that we can have reasonable conditions to operate regularly from here I would like also to share with you. The fact that we have now eight car lines, which are in the top three in overall satisfaction.

That means that step by step.

With a strong focus.

Strong persistent pressure on everything we do in terms of quality, we are getting closer and closer to the top and we will not stop until we reached the top on this matter.

If we look at the E mobility and clean mobility, our vertical integration strategy is now on the move.

And you know that we have made a number of strategic moves to make sure that we control engineering manufacturing and therefore cash.

Quality and performance for the major components of an electric powertrain. So this is something that our company consider strategically important to control in terms of engineering manufacturing and of course quality performance and cost we have this JV with an index on the E Motors.

Where we are now on the move and by the end of 'twenty. Two we will have the first electric motors coming out of that JV. We are benefiting also from our motor racing experience as the D. S performance team has been awarded twice World champion on the Formula E Championship.

We also have the ECT dual clutch transmission electrified products that we are developing in engineering and in manufacturing with a bunch of powertrain. We are also on the moving will be ready by the end of 'twenty three.

Last but not least we have of course, the battery and battery cells.

With a specific dedicated JV that we have created with the we the total and theft group that will deliver also by the end of 'twenty three the first battery sales.

All of this demonstrates that we were able to make the right decisions on the right timing and this is going to be combined with two specific BV dedicated platforms, which other E&P in the E. CMP. All of this was going to give us the competitive set.

<unk> technology that we are going to be able to use across seventies worldwide and this is of course, a big opportunity for stellar and she's moving forward and as you know PSA has been leading the pack in Europe.

In terms of Q2 emission reductions.

Neither are we may not be the guys, who create the biggest headlines but the fact is that we are leading the pack in terms of reducing the emissions of our fleets and this is.

The tribute.

To this work done by our engineers done by our manufacturing engineers than by our strategic in terms of making those deals happen and I would like here to express to them. All my sincere appreciation. This is extremely important for the future of <unk> right now.

If we keep moving in terms of cost.

Of course of the year of 2020 was very painful because of the shut down for two months of our plants.

That was a significant headwind of course it.

Despite that we.

We still have.

One of the 19 euros off of cost reductions all in everything included it's still one of the 19 cost reductions and this 119 cost reduction <unk>.

A headwind of 400 euros related to the volume effect.

How do we not had this volume effect headwind then you see that the performance would have been stellar.

But we have the reality and we face the reality, which means that we have now a significant task in 2021.

We can achieve if we have some stabilized conditions in terms of markets and that as you know well depends mostly on the reduction of the Lockdowns and curfews.

He's the visibility of the consumers that will lead to more the decisions to purchase cars. This is what we have now ahead of us so lets keep in mind that despite their 400 euros adverse headwind, we could protect 119 euros of cost reduction the wages to revenue ratio.

It was also affected by by the revenue of course, despite that the resilience of the company is visible from the fact that we were able to achieve a quite competitive $11 four per cent.

Ratio and we will continue to target one digit number for 2021.

We are also taking the opportunity to work.

Lee on the everything that relates to diversity complexity and commercial complexity to it.

Is creating a certain number of inefficiencies inefficiencies in the showroom.

Where what we offer to the customer is so complex that even our own sales people may be facing difficulties to express the diversity of the offer. So it does have an impact on the quality of our sales, but also a big impact in terms of complexity in the plants.

A big impact in terms of reducing the volume per bot that of course is going to somewhere.

Our procurement efficiency at the end of the day. So we have been working on this matter and we that I referenced seeing a 2019 this year, we reduced by 50%.

The diversity complexity and we aim at by 2022 to reduce by 85 per cent. This.

This diversity complexity and this is something that makes.

Total sense, if we look at the diversity that we have commercially speaking, we can easily say that too with.

With 20 per cent of the specs 20 per cent of that diversity, we are delivering more than 80 per cent of the volumes.

Which means that there is a huge potential to moving the right direction with this initiative that is driven.

Specific cross functional team led by one of our top executives.

So moving to our to the brands.

<unk> done a stellar job.

With a very sound pricing power per as always know the reference brand in European market in terms of pricing power.

Can see that it has been improving since the beginning since 2015 and that has contributed of course to the improvement of the margins that you have seen it before.

While we are improving the pricing power of the brand we were able to improve their market share in six in five regions out of six.

Including Europe, we had an improvement of our market share with the peripheral brand so.

From my perspective, a great job done and.

Happy for.

Just don't keep up auto was the former head of the puzzle branded former digital brand CEO is now as you know the Alfa Romeo brand CEO Wendy I think he is enjoying the challenge to improve.

Our performance over there, which is great news, if we move to two C twin situated.

<unk> has been a stellar.

In terms of maintaining their pricing power and the facing of course, a lot of competition from other brands, which are discounting significantly.

What do they can discount.

You don't see a day for sure.

Of course, but also Sichuan have been able to protect very robust margins. Despite the headwinds.

And of course, now Sichuan is enjoying a much larger electrified portfolio. We just see twin army, which is a downtown urban mobility device that E variation of the GNU C for the C. Five across hybrid the E. M P. The East Bay store and they eat jumper.

This means that progressively see Duane is now enjoying a full electrified portfolio, which of course is going to be per month for the future last but not least I would like to to highlight the fact that the Sichuan army is bringing to our.

Our citizens and downtown urban mobility device, which is meeting exactly what we want which is safe mobility device.

Our clean mobility device as it is a fully electric and an affordable mobility device as a <unk>.

Any of you can rent the Sichuan Ami for less than 20 euros per month, which is I think a very competitive pricing and I can tell you we are still making money out of this project.

In terms of a premium brand for PSA D S.

Electric at Coutu O'brien.

You see that the pricing power is also been a quite.

Quite stellar coming from a minus near 8% in 2015, we are now plus three.

And we are managing this brand by the per unit margins, we don't care. So much about the volume. So we just care about having a sound high quality business model.

With the product and the.

Only you service to give consideration to this premium customers. So pricing is is great. The market share has been growing by 9% a one third of our sales are now made we do actually fight vehicles.

If we compare all the premium brands, which are multi energy.

Then you will see that yes is the best in terms of Q2 emissions across all of those competitors, who are multi energy competitors move.

Moving to Apple.

Oh, Paul what is what is also remarkable is the fact that the pricing power has been improving as you see we have been improving better than our roadmap starting with minus 6% against the benchmark. We are now at minus zero Dot nine and most probably in 2021 that we will be meeting.

The benchmark and being at the level of the benchmark.

Which is of course very important to improve the margins of the Opel brand, which are indeed, improving.

Which is of course an attribute.

Two the pace turnaround plan that was led by Michael low Schiller and by our CFO named feed or be off at that point in time I would like to tell you that simple.

What is demonstrating the quality of the job done is the H two performance of Opal.

The age to 2020 performance of Opal was no less than $5, 6% of adjusted operating margin.

Which demonstrates that the turnaround of Opel is structural.

And that is a good news for the future as well.

We are now, bringing a brand new pipeline of products that started with your book or so.

And I would like to tell you that the Opel Corsa is now the segment leader in Germany.

And the number three in the segment in the European market.

This is very important demonstrates that our other sister car from another car of our brand portfolio.

Oh of course, so is demonstrating a great deal of competitiveness and appeal and we are now launching as we speak.

New Opel Moca that you can see on the left hand side of the slide and from the order book, we have we believe it's going to be a big success.

That's good news because after this <unk>, we have a very regular pipeline with the one new product every year and I can tell you. The pipeline that was created for Opel by Mark Adams is stellar.

I'm very very happy with what they have seen and I would like to thank them warmly.

For their skills and for their talents in the bringing back Opel to the forefront of other markets.

In terms of regions.

I would like to tell you that in Europe.

We were able to continue to improve our SKU to enter our cafe for these sales in Europe through a very rigorous a very rigorous process. We want to continue to improve our market share in the LNG market, which we are currently improving and we want to continue to improve the mix of sales which is.

Now above 9%.

This is exactly what you see here, we see that the coffee is improving as we are as.

As we are increasing the LTV mix of sales we are doing that in a profitable manner. We are doing that in an ethical manner, where we tried to bring better and better products, including on the IC sales, which means that our contribution to fixing the global warming issue is sincere and concrete.

And I think this is very important for all of US I believe it is very important for us to tell our kids and our grandkids that we are working a car company that is bringing is fair contribution is.

Its fair share contribution to fixing the global warming issue and as you saw from my introduction everything we do is consistent with the Paris agreement on Cop 21, limiting the global warming to two degrees. This is that fair share that.

The societies in which we operate are expecting from us and we are proud and happy to do this as a contribution to this global warming fix.

If we look at the other regions in the overseas we have to highlight here the stellar performance of Middle East and Africa.

We could grow the share by two points from five dot one to $7 two and while we grew the share by two points.

We could deliver in 2020, the same amount of profit.

As 2019 despite.

The COVID-19.

This is an outstanding performance I would like to thank warmly the original team and the leadership team for this success I think it says a lot about the potential of development of talent is in are in Africa, and middle East and of course, we are supporting this with all the appropriate products and sourcing as much as we need to.

On all the other regions, where you see that the situation was either flat or almost flat in terms of of share. We still have our Chinese problem that we are now.

Fixing our preparing to fix with a very dedicated strategic does team led by one of our top executives to bring back to the executive Committee and the board the different possible scenarios to fix this in a meaningful way I just want to state here that it is the intention to stay.

In China.

And fix it that's very clear.

Clear position from our management team on this matter.

So let me move to the RCV LCB was again a success story.

Our leadership in PSA was reinforced to $25 three per cent.

As you can see here and we could grow market share not only in Europe, but.

So in Eurasia, and Middle Eastern Africa.

But we see that boardwalk, so could improve the market share by zero about four points.

In Europe and that we have now a full E LTV range to be offered to the market and by the end of 2021, we will have a midsize van with a fuel cell powertrain, which will be an important to <unk>.

Stone in the clean mobility and the clean a.

Utility of our LCD products. This is on the way. We have also launched this year our brand new peripheral non track.

Pick up once and pick up that will be a powerful tool to continue our offensive in Africa Middle East, but also in Latin America.

If I move now to the mobility part.

Of our results.

Like to use one synthesis slide.

To show that are free to move mobility services continue to grow we could growth 23% in 2020.

Which is important but what is even more important is that teenage to.

The free to move mobility services were profitable.

And this is a very important milestone.

The fact that our teams and their ability to go to his leadership I have now understood.

Is the business model that makes mobility services profitable.

Of course, Paramount for the future of this kind of mobility services.

This is something that we could achieve an edge to.

It was not a walk in the park.

We tried many times we failed many times now we understand.

And that's important of course for free to move as much as it is force talent is free to move as a tech company from PSA and it becomes at the company of guarantees as you know well.

From soft used cars.

Have a very strong online growth through our affiliate to armies.

Our profitability was also up.

Which is good news.

We know that the used car market was strong during this very volatile period, and we could capture those opportunities as you can see here in terms of aftermarket day.

Independent aftermarket.

<unk> business was growing.

Z or you're a power brand in the Euro bar car.

Our service network all of this is moving and as you can see the revenue growth was 11%.

This is specific.

Value props that we are now setting to many of our customers last but not least the PSA Banque demonstrated a very strong and resilient performance.

With 17, 70% of loyalty on on loyalty products on European New car sales and 80 per cent of B to C penetration on BV in.

In H two 2020 so.

We see that our PSA Banque is really supporting the business.

Very profitable way.

This is what I wanted to share with you in terms of PSA 20.

2020 financial results I think they speak for themselves.

What I believe is the most important is now that we understand to what has been presented by Mike Manley and Richard Palmer and through what has been presented by feed all behind myself. How did this contribute to a strong kickoff of the certainties company and I would like to start on share with.

A few comments on the third part of today's session, which is about <unk>.

<unk> set a new company.

A new mindset.

Our company on the move to make radical choices.

<unk> represents.

An open window.

Breadth.

Our fresh air in a shrinking fast moving world.

And I can tell you that to the talented employees.

Perfectly understand this from all the interactions I have had with them over the last few weeks and I have spent significant.

And if you can tell amount of my time with the Ora ex FTA teammates.

To make sure that everybody understands where we are going and what is the sense.

Of this new company creation.

Everybody gets it everybody understands that it's a fantastic opportunity a breath of fresh air in a shrinking world.

So we will focus on the quality of our business model.

First of all it's all about doing the right things right.

In a proper way, which is the opposite of quick and dirty.

So we have to do things properly, we have to improve the efficiency and effectiveness of everything we do.

But it's not only about leveraging a clear governance leveraging the fantastic diversity of our company.

Making sure that we.

We create a framing where our talent can unleash their full potential.

It is also about making sure that we will be making disruptive decisions.

As many as necessary.

To make sure that nobody is going to corner <unk> as a legacy car company.

It is important that we stay that it's important that you understand that.

There is no way.

We are going to accept.

To be a legacy company no way.

So what we are going to do is not only about demonstrating to you that we can be very efficient and effective in everything we do but also that we are able to make a disruptive decisions when need be.

To be on the forefront of the new mobility that the citizens of this planet expects from us.

So if you look at the major numbers.

Coming from the two companies by combining the two companies you can see that in 2020.

We were short of 6 million Shipman.

Shipments overall.

Slightly above 134 billion euros of revenues.

And adjusted operating income of <unk>.

$7 1 billion.

And adjusted operating income margin of $5 three per cent.

From the combination of 4.3 on the FCA and seven Dot one on PSA and adjusted free cash flow and automotive free cash flow of.

$3 3 billion euros.

And what is of course, the most important number of this slide is the $17 eight.

Billion euros of net financial position.

With $57 4 billion of available liquidity.

What does this mean.

This means that.

FCA.

PSA did their homework.

By completely leveraging the power of their age to results.

To create a sound financial foundation.

For the birth of penalties.

And this is of course very important for all of US we are starting with the right foot.

The strong financial <unk>.

Situation that was very much higher.

Much higher than the what I said is a flawed.

And this is good news, which means that the team is perfectly understood the challenge and the team's perfectly.

Responded to this challenge under Mike's leadership, and FCA and my leadership in PSC that is a great new great news. So we are starting sell antiques with a solid foundation.

A very sound as you can see through those numbers.

And this is of course, a great way to look at the potential.

The potential of this group if you look at the H two results.

Revenues over $80 billion.

Margin of nearly 9%.

And a very strong free.

Free cash flow.

We can that we can.

Just consider here looking at these numbers that therefore anticipating on some of the questions that are continuously raised.

But this is not.

A crisis merger.

This is much more than that.

This is a merger that is going to open new opportunities for a company that is sound.

With a talented people people who want to compete.

And people, who do not want to be cornered.

The legacy position or a diagnosis of our position.

It's very important that we all understand this moving forward.

So from here I would like just to.

To highlight the fact that we are going to present.

Presented here the financial reporting to all of you I I'm sure that this is important.

Where you are on the our understanding about what we are doing.

We will present full financial results twice a year.

Each one and full year.

And we will present sales and revenues only in Q1 and Q3. So that we can focus on the operations and I think that that will lead to good transparency.

On everything that you need to know and I think that's what you have seen from the PSA experience will support that would support that in terms of regional breakdown. We will show you. The details on four regions North America, South America, Europe, Middle East and Africa, which represent the biggest profits of our company.

We will group the two Asian.

For the time being our businesses very small in that area and we'll give you visibility on the unique luxury brand.

Business unit.

Dedicated to the luxury brand of Maserati.

This is what we intend to do and of course, we hope that this will meet your expectations in terms of the details and frequency of off reporting.

If we move forwards you have here the outlook.

That we have come up with for the 2021 a year.

You see that we see a growth in North America, South America and Europe.

Which is good news because that's where we have the biggest the biggest biggest business in the most the most profitable business we.

We see also growth in Middle East and Africa, where we have also a strong profitability and more limited the growth in Asia.

If we move towards our 2021 priorities.

Sure that many of you are wondering what we're going to prioritize in 2021 and I would like to spend a few minutes explaining this slide first two we want to establish.

A very proper governance.

<unk> already presented to you.

Moving onto the business governance way with a nine day.

The committees that are going to be used to make all the decisions of the company.

This has started a few days after the closing.

It is moving very well with a very good understanding from our teams that we need to we need a very.

Sound way of preparing the proposals and then.

Using the valuable time off our top executives for the listening mode. The discussion and decision mode on those topics. So we have already.

Think organized.

Half a dozen of those committees. They went very well so far with a very good level of synthesis very good level of business sense.

Very good level of proposals, even though some of them were challenge and there were improvements coming out of those challenges, which is great news. So that's what we are now doing we have 100 days from the closing to setup the new governance.

We're ahead of this.

And of course any meeting I would share is only related to this new golf in this way and I think it's moving fast and strong and I would like here to express my sincere personal appreciation to Mike <unk>.

He is helping me a lot.

Moving in this direction fast and in a very professional and rigorous wait.

We will keep our eyes on the ball.

By making sure that we deliver our business plans for 2021, there was a business line by PSA and other by FCA for 'twenty 'twenty. One we have kept those business plans of course, we will try to improve each time, we can but we want our people to stay focused on the business to keep their eyes on the ball and not be day.

Tractor by anything other than just moving forward and getting things done in a proper way. So that's one of the major priorities. We want to have a good result in 2021.

We are also.

Put a strong focus and the stronger monitoring on the synergy plan. This is our commitment to you.

We created this merger because it represents north of 25 billion euros of value creation through the implementation.

Mentation of the synergies that were presented at <unk>.

Which represents on a run rate 5 billion per year. So we have a very detailed.

The plan that we follow up with the specific dedicated team that we call. The synergy implementation office. So every decision we make is facing the synergy.

That is expected from that decision and we are continuously trying to improve and make sure that we deliver on our commitments and we will.

That's the third priority the fourth priority is to make sure that we come up with a winning strategy for China.

As I said, we will stay in China.

We recognize that we have not been successful so far.

And we are spending significant amount of time.

With Mike and a few other executives trying to understand where we are the things we couldn't understand.

And what other things we need to change to become successful in this market, even though we recognize that we come late after many other people, but that's that's life that means that we have an upside there if we do it properly. This time and this is one of the priorities for 2021 is to come up with a winning strategy for China.

Last but not least.

We are now working on.

The strategic plan for <unk>, we have started to set the process by which we are going to create this plan.

It has to be a strong bottom up plan, which will contribute to.

Setting the foundation of this in large family.

Which means that each strategic task team will be.

Staffed with people with the best people coming from both families. So that we can use the building process of this plan as a strong contributor to setting up a sound foundation for the future of tenant as well.

We do not forget.

What happened in the past.

The Chrysler Daimler we.

We do not forget.

So we will keep our eyes very wide open to make sure that we create in terms of management.

All the appropriate conditions, all the appropriate behaviors to make sure that.

The building process of this plan is contributing to making a sound foundation for this in large family we will of course.

Expect significant bottom line contribution for our young.

Managers in our young executives.

This is going to be a very important listening mode from all of us.

And then possibly after the summer break we will start converging to what would be finally, the decisions of the executive Committee.

I expect that we'll be able to present this plan to you which will be a long term strategic plan up to 2030 by the end of this year or early next next year. Please.

Please understand that <unk> is not born from a crisis.

TS is born from the understanding that the two former companies will be stronger together than on a stand alone basis and therefore it is important that we do the right things in a proper way to create the solid foundation. It is also important that we all understand that this is not about creating a defensive plan.

This is not only about the.

Implementing synergies.

It will be also an offensive plan.

It will be also a disruptive plan.

It's a number of dimensions and we want the spend to be very strong and we do not accept.

Repeat we do not accept to be cornered.

The legacy comic book.

And we will have to demonstrate to you that we have this capability to be innovative to be disruptive in a certain number of dimensions of the sun, but why do we do this.

We will protect.

What is best.

In what some would call a legacy car maker, which is our enormous expertise in terms of manufacturing engineering development sales. Many many things are extremely.

Excuse me.

Experts like in our companies and we will protect and enhance that as well we are going to develop a more aggressive offensive part of the plan moving forward. This is what we intend to do.

From here.

What are the actions that first actions that we are going to implement to deliver on the synergies.

I will just like to give you a few examples.

Of course, everything which is about sharing assets engineering assets.

Platform modules.

Our trains.

You need a certain lead time.

Even though some of those some of those actions are already.

On their way.

But what is more short term driven for 2021 is all about.

The best supplier price alignment when we compare the prices of the two companies pharma companies and we select the best and we align on the best.

It's about leveraging our scale.

For everything which is related to commodity buy.

Making sure that we bundle all of our needs in terms of media media by mix.

Make sure that we make more integration in logistics make sure that we align on commercial policies and reduce the distribution cost.

Overall, given the size of our company given our the way we are selecting the most profitable projects the highest value creation projects. We believe that we will be able to stay below 80% of R&D capex against the revenue rate, which from what I have seen is what we need to.

<unk> enhanced the efficiency and effectiveness of <unk> against what was done in the former model companies.

If I move forward what will be the in the guidance that we want to give you today for 2021.

The guidance is that we expect to be between five five and $7 five per cent of adjusted.

Operating income margin with of course, a strong caveat.

Which is related to the COVID-19, we cannot anticipate.

What are going to be the lockdowns if any.

We cannot anticipate what would be the restrictions on business if any.

So of course, that's a factor that we cannot control and that we put aside of this of this guidance everything else you can see it on this slide we have some tailwind.

Which come mostly from North America, great new products, mostly on Jeep coming in.

Strong pricing and mix environment are positive in North America.

We expect that there will be a non repeat of disruptions from COVID-19, if that was to be the case.

Because of the improvement in the vaccination process, if the vaccination process.

Moving to head as it is moving for instance in North America than we expect things to go in a better direction.

We started with a very low inventory level at the beginning of this year and that is going to support the business moving forward.

We are keeping a certain number of cost saving initiatives from the Covid period.

In 2021.

And we will start benefiting from a certain number of synergies and we have already seen that on the first decisions we have made.

On the headwinds we have basically.

Well.

Three our three big gorillas.

Number one is the raw material cost inflation, which is extremely powerful extremely impactful and we are fighting very hard on this matter I would like to express my sincere appreciation to all the functions in the company that are fighting against this raw material cost inflation, which of course is.

Analyzing the margins of our products.

We are also facing a significant shortage of semiconductors as you know well.

From everything I've seen so far.

The number of our.

Plant.

Closures.

Is for Sterling is quite competitive.

Against what I have seen from other car companies. So so far I would say, we have been able to push back.

To fight on this matter hopefully this will continue.

And we are now working hard and as fast as we can while respecting all the quality standards on finding alternatives.

For the semiconductors that that are in short supply, but this is also a very big hit to our business plan as we all know right now and of course, we see that the increase in the AR L. EV sales mixes are putting pressure on the margins because as you know the cost of electrification is very high.

From here I would.

Like just to say that this this band.

We are guiding you on is something that we believe we can deliver.

But of course, there is something we do not control is to which extent things will improve in terms of health.

The conditions.

So COVID-19 related.

Business disrupt this this is something we do not control and of course, we are facing the other headwinds that we have here. So that's the guidance.

I wanted to share with you.

And then moving to electrification. This is two represents the old the pictures of the electrified products that we have now on sale.

The least we could say at 70 sales that we're not missing electrified products.

This is very representative and on this slide you don't have the Ltvs.

So you have even more than what you see here, we expect to be fully compliant in Europe as a sell antiques and we continue to work aggressively to improve our cafe.

In the U S understanding that with the new administration things will be most probably more demanding in the near future and we are preparing for that as you may expect and of course, we have all the technologies that we need for that from the presentations that were made before.

Last but not least I would like to talk to you a little bit about software.

When I was telling you that we do not accept to be cornered.

We do not accept to be legacy carmaker we.

We do not accept to be a dinosaur we are now preparing for a very strong initiative in terms of software.

We understand that software is core.

We have counted the number of lines of coding.

That we have in our one of our premium ph EV.

<unk> segment products.

Around 80 million lines of code.

So needless to say that this is a fantastic sophistication of our products.

By the way, it's roughly three times more.

And then a midsize airplane.

Which tells a lot about the complexity of the car industry.

Of course.

Important that we.

We address the key goals that you have on the right hand side of the slide which is of course attractive and the.

Fluids customer experiences of our products, it's about making sure that our products are continuously up to date through the over the air capability, which is already a reality for the infotainment of our cars, it's about making sure that we scale up and the way we use the data and the way we use artificial intelligence.

Vince it's about mostly decoupling completely their software development from the lead times of the hardware, which are completely different and that's that.

Need that we can control over the software in the value chain.

This is what we are preparing for it and of course.

Do this we want to attract the.

The best talents in terms of software that means that this open window.

To the World Gold Celanese.

To have a breath of fresh air.

We'll be a strong a strong attractive point for many people because we are a highly diverse company. We are open minded we wants to change things, we want to do it faster.

And of course people want to achieve something in their professional life people want to unleash their potential they will be attracted by standard <unk>, which is an open company and open minded company. This is what we are preparing for in the within a few weeks or so.

A limited number of months, we'll be able to explain to you a strong initiative on this matter and this is the reason why we have assign the top executives that will report to the CEO directly called these Vodafone.

We are in charge off preparing this strategic.

Innovative and disruptive initiative. This is what I wanted to share with you.

And from here I would.

I'd like to hand over to you for the Q&A.

Thank you for your attention.

If you would like to ask a question. Please pass star one on your telephone keypad.

Please ensure your line is likely as you will be advised when to ask your question.

So once again Thats star one if you would like to ask a question.

And the first question comes from the line of Jose I assume Andy from J P. Morgan. Please go ahead.

Thanks, very much it's all set and taking more than low.

Carlos and Hello to the management team just the three three topics day Susquehanna can you talk a little bit about the synergies and the synergies on two fronts as I think about FCA R&D Bill.

And how much of that is exposed to Europe and how much can you reduce that.

R&D expenditure that I supposed to Europe as you leverage on the.

On a per your architecture, what is the opportunity please and how much of that R&D is exposed to Europe second topic on the synergies the engine on the powertrain opportunity how quickly can you share powertrain across supposedly on the FCA architecture.

In Europe, and how quickly can you match those engine families.

Please.

Opex as well one in so far as you just mentioned and the second one on the on electric vehicle platforms.

Can you talk a little bit more around what are going to be your key software partners too.

Develop the autonomous driving toolkit on level two level three and in the short term maybe in the next two years and then on the E. Architecture. You have I think that's very successful Oh very solid book It was the combination of.

Neither.

Soft pants powertrain on the different components of illegal kit can you most destocking over into North America.

And replicate the same strategy in Europe, and the U S or do you need a different strategy for the U S market. Thank you.

Well. Thank you Jose that's a lot of questions.

That's of course need a lot of development, so I'll try to make it to us our focus as I can and thank you for raising so many are very important.

What an interesting questions I'm sure for you as much as for your peers.

First of all.

We see with our with our Italian teams enormous potential to improve fast.

Because of course.

Everything that we are already doing.

To deliver the nine 4%.

Operating margin by H two of 2020 is available to our own F. T a teammates in Europe.

So there is many many things that can be used in a very efficient way very quickly and we have a lot of a lot of references a lot of them.

Internal benchmarks on everything that we have been doing between <unk>.

The ASP, but also.

We the Opel Vauxhall So all of this is on the table I see from our.

Our Italian teams a lot of interest I would say they are really eager to jump and see.

What can be done I know that they are doing this and by the way I would like to thank them for being so open minded in from soft grasping those opportunities so yeah.

Yes. It is true that the FCA Europe as a big opportunity to be using many of the assets, which are available in Europe coming from the PSA world, but not only.

There will be also some of the assets coming from FCA debt will be used.

Also by PSA because this is exactly what our synergy means.

Synergy means that you can do things that you would not be able to do in a standalone basis and this is going to be both ways.

This is something that Ah.

I can tell you and I think it's going to move reasonably fast of course, you have the lead time of new projects, which generally speaking is between two and three years.

On the existing platform is an existing powertrains, but.

That to me represent a very significant part of the of the synergies what I can tell you is that all of those topics are coming to the governance bodies that I am sharing and they have already we have already decided on many of those over the last couple of weeks.

And we do not forget you and me that the closing was on January 16th.

And we are in March the third.

So many of those students are already in execution mode, which is good news and it is also the the big demonstration that our teams are eager to use those assets and use those opportunities it's going to be the same thing in powertrain.

Of course in terms of IC, we do not we do not intend to invest more.

We're going to use the existing assets from both companies and trying to leverage everything we can and use the.

Existing capacity as much as we can with the existing Ics, we have a very good proposals from both families.

I would say smaller engines more from the PSA bigger engines more from the FCA and we see that those opportunities are going to allow us not to invest more.

Despite the needs and despite the new norms et cetera, which is great news in terms of synergies.

And on the powertrain of I see a lot of a lot of cross sharing between the two families. I also see that in terms of electrification.

We have investors in Europe is a blessing.

Foster Atlantis the electric motors.

The.

Dual clutch transmission electrified.

The battery packs the battery cells. All of this is going to be available for FCA Europe, which is I think very good news to improve very quickly the performance of our sales and the <unk>.

The only thing I can anticipate is that.

By 2025, and please remember this will be very happy by 2025 to be in control of the full value chain.

The electric powertrains.

We will be very very happy in 2025 and by the way that's a decision that we have made.

Couple of most of those decisions were made in 2014 2015 and the the battery cell company was decided last year as you know well.

In terms of software.

Tournaments vehicles.

Well, we have a great deal.

A great deal that was a that was crafted and negotiated by Mike.

With Weibo.

It is a great partnership.

Between our it was a great partnership between FCA and Weibo and now it's a great partnership between sell antiques and waiver. So now we are going to execute.

This strategic partnership and the and make those autonomous vehicles.

The way more software technology.

Which is the best way of course to learn is to do things and of course to come up with the appropriate projects that will be announced shortly but.

You see it's very simple.

Certain extent.

PSA was coming with a lot of good things with assets in terms of Q2 emission reduction.

And the FCA was coming with great things in terms of autonomous vehicles and now all of this is part of the assets that the family can enjoy.

For the.

For the EV architecture.

We are still working on the on the architectures are you have seen from other PSA presentation that we have two platforms, which are very much b and C segments dedicated platforms.

E C M. P. M D E E M P. The easy and people out from is going to give us a very strong <unk>.

Improvement in terms of a range.

In terms of I'm sure satisfaction for the customers given the range that will be offered because the packaging of the battery pack is absolutely.

Efficient in the way it is sort of in the in the platform are low.

Are those assets.

Assets you usable.

Yes.

With the caveat that they need to be federalized in some of their AR and some of their dimensions and the answer is yes.

We do it.

We'll see so far it's too soon to say, we still have a.

A lot of work to do we are now preparing for the.

Product strategy for the next 10 years.

For the 14 brands.

So I think you can imagine 10 years' time window.

14 brands.

Product planning strategy technology strategy all of this needs to be combined we.

We are working very hard on that car model strategy of course, it's moving very well and very fast.

It's still a little bit premature for me to give you the details but of course one of the major drivers of this global initiative is to make sure that they are shared assets.

Because those shared assets are the best levers, we have to be more competitive than our peers and at the end of the day.

Through our efficiency continue to invest in our future. This is where we are today. So we can we could we use those assets in the U S and the answer is yes.

As long as we further realize what we need to Federalize based on the U S regulations.

Thats my answers to your questions Jose. Thank you next question. Please.

Before we go to the next question could I. Please ask that you limit yourself to two questions.

And the next question comes from the line of morphine idea umbrella from.

Please go ahead.

Okay. Thank you. Thank you I would try to ask adjusted two questions.

For 2021.

Could you elaborate a bit more on.

Your top line in the sense are you presented.

Some indication coming from independent sources concerning market volumes are.

Just a quick comment on the ability to outperform our mix 'em Forex adjusted have an idea. So at the end of the question is.

150, roughly billion that is a reasonable number on what to build the your.

Adjusted EBITDA guidance.

And the second one is a more general in your comments you said, we are prepared for a disruptive decisions or is there any examples you could provide you can share with us.

Well those are two great questions. Thank you.

I will answer the second one and then give a few minutes to reach out.

To answer the first one about the top line that is supportive of the guidance that I presented on.

The disruption was one example, I can give you is the recent investment we have made in the Archer Aviation company.

Two developed for.

Tico.

Flying flying with devices.

For urban mobility, which is a very different kind of mobility that we are now here facing this is one example, we believe that this.

Strategic investment in Archer aviation is going to be highly convergent with the technology that we need for the automobile.

The world in terms of.

Energy management systems in terms of light weight batteries and in terms of fast charging over those batteries. So that's a very clear technology convergence between aerospace and automotive.

And this is why we have done this investment in the Archer aviation a few weeks ago, because we believe there is a value creation potential in terms of technology roadmap for the electrified components of our powertrains. That's an example.

I don't want to give you more examples right now with my apologies because as long as we have not decided them yet.

Is I think a respectful to you and to your peers that we'd not talk about things, we have not decided to do.

But what we have decided to do.

And that I can share with you is the fact that we are not going to let ourselves be cornered as a dinosaur.

That's clear.

You see that as something that I can easily capture from our people from our executives they understand that we can be much more.

Efficient and effective in everything we do.

And the internal benchmarking is showing that.

Which means that we have great potential to improve our results, but for the purpose for the purpose of making sure that in this fast changing world in this volatile world in this chaotic world.

We are not going to be cornered, because we would not be bold enough because we would not be fast enough.

Cause we would not be in innovative enough.

This is something that is coming up strong.

From my top executive team and I was talking to them.

300 top executive just before this session.

I think that today, they completely understand and of course, there is a big a.

A big question Mark in the room, as you know well, which is the valuation of Tesla.

Which is always there somewhere and.

We will we will make sure that we compete in a way or another I don't know what the valuation will be but I can tell you that we are not going to be a legacy carmaker cornered in legacy products. This is not the intention of our top leadership team. This is not the intention of the few of the.

Company. This is something that we need to create and of course to present to you at the appropriate time. So that's where we are on that topic I'm sorry for giving you only one example at this stage Richard would you like to answer the question on the top line. Please.

Sure Carlos Thank you.

Hi, Masimo.

So I think I think as you saw in the second half of last year, our revenues combined.

80 billion.

Simple math would indicate that we should be a little bit higher than your 150. The big unknown clearly is the impact of the chips issues, particularly on the first half of the year. So I think a range of $1 50 to 160 is probably a reasonable assumption given the volatility.

Pricing both.

Some of our markets and particularly because of the chips in the in the short term.

Thank you very much Richard.

Let's move to the next question. Thank you.

The next question comes from the line of Thomas Besson Kepler Jeffrey Please go ahead.

Thank you very much.

Lots of people, who will have two questions as well please.

The first is about capital allocation Carlos I think you mentioned $17 8 billion, it's unimportant secured its effectively higher than what we had in mind.

On cash generation.

Could you give us an idea of how much net cash you think that the senates needs are in absolute term or the proportion of group revenues.

And so those are the ones who deal with other 1 billion dividend.

But you had the coincidence of the change in terms of the mill joins up deliveries is enough or maybe you could be more given the prospects of free cash flow generation and mention what you'd like to say on dividend policy from here on I mean, you've said, 8% get back the 90 so.

That leaves a lot of room for free cash flow. So basically an overall question on with the strong net cash flow.

One how much do you think this could.

Could it be done from here.

The second question is to come back on the synergies. Please we've seen.

In the press so several reports suggesting that.

There could be a force E&P vehicles from the FCA family coming as early as the mid the 'twenty 'twenty two.

It would be it would seem extremely quick compared with what you managed to achieve a with a low ball, but I'd like you to a commodity as possible on the timing of the first vehicles coming from.

Oh, Gee, Bob off yet, but could be shifted into the CMT vehicles.

In Europe to have a first idea of.

The sequence for synergies and that's it thank you very much.

Well, thank you Tamara.

Always great questions not easy ones I.

I would like to ask Richard to comment on the net cash position of certainty. So I would like to say a few words about the R&D and capex and the dividend policy.

Dividend policy.

It will be presented to you later on.

It's not the right timing for us to do that.

The right timing right now is to close the loop on the deal.

It was concluded to create certainties.

What's the sense of the dividend the distribution that was announced.

To close the deal related to the merger. That's why we are proposing to the shareholders to make that decision in terms of distribution and close the deal of the merger.

Terms of R&D and Capex.

I have I have presented to you. The fact that they believed that two weekend stay below 8%.

Why because.

I can see the needs.

Coming from the brands.

Including the brands that I've been a little bit starved.

The last few years.

I also can see the efficiencies.

And I believe that Sterling is can be one of the best players in the world.

The efficiencies when we are doing a sister cars.

From a leading gas.

Which means that we can be very efficient in the way we build the business plans that fly.

Because our entry tickets and the way we have to engineer doses. The cars is very competitive.

So I believe that being below 8%.

We'll demonstrate that we can from one side.

Be very efficient from the other side, if we have to rank.

The projects, we will of course cancel the ones, which have the lowest value creation ratio.

Which then means that it is going to improve the overall margin.

Income margin rate of the company as you of course understand so the 8%.

Income from the efficiencies that I see.

Both from the PSA and FCA and I will give you two examples I think that the PSA is coming with a very clear understanding that we can do a sister car for a very competitive entry ticket.

And I think that the FCA is coming with a very clear.

Development process that is faster than the PSA one.

So from one side they have one family telling me that they can do the things at a faster pace from the other side.

Another part of the family that is telling me that they can do it in a more efficient entry ticket. So if I combine both I should go fast and that should be very efficient efficient at the end of the day.

That's the reason why we created <unk> by the way.

So I.

I think you can easily.

Easily think that.

Within our within two to two and half years, we can have some of those products on the market.

Which is something that is reasonable given the fact that we will make our parts on existing platforms.

That's something that you cannot you can understand.

And regarding the dividend policy, we will talk to you later in the year most probably about this at.

At this stage is too soon for US we have too many things on our plate.

We need to set the direction start creating the value discuss.

With our board and then we'll come back to you I'm sure later in the year Richard would you have to take the commenced from the net cash position of 70 Street.

Sure. Thanks Carlos.

From a couple of.

Premises, obviously, one volatile markets.

Continued risks and in some of the market places, we're operating and secondly, we have about 13 billion euros of maturities.

And the debt.

Later, which we need to.

Addressing the next three years half of which is in 2022.

So.

We're investment grade, we have a very I think attractive.

Set of financials from 2020 refinancing that debt should not be an issue, but we will.

That's the first priority I think to do that as we look at our liquidity position.

And then secondly.

If you think about percentages of revenues I suppose in terms of what sort of liquidity, we shouldn't be holding I think 25 per cent to 30 per cent of revenues is a number which people are considered to be a reasonable range for a car company.

Currently with the volatility with facing probably on the high end of that.

So I think that's the sort of target would be looking at.

Short term as we refinance other maturities and then you know as markets stabilize we'll continue to look at that number going forward.

One fact on the 50 757 billion of liquidity we show.

Clearly needs to be normalized for the $2 9 billion, an extraordinary dividend we paid in January.

0.3 that will go out with our furniture distribution.

The 1 billion of a special dividend that will go out.

Approved by the AGM flow the AGM.

We also have a $3 billion that expires in April.

So the number is a little bit lower normalize for those factors, but it's clearly very strong and we will keep it very strong I think maybe for some people to strong until we have refinanced some other maturities that come due.

Thank you Richard Thank you very much for this clarification, let's move to the next question. Thank you Tamara.

The next question comes from the line of course Schneider from Bank of America. Please go ahead.

Yes. Thank you.

Most of my question, but I tried to keep it brief and regarding the 2021 guidance on operating margin Carlos.

As we know from usual you'll have been always very cautious in setting guidance. So I wanted to understand now the guidance that we got today is that now.

From from the guidance has it gotten deposits from you. So in other words is that now really a realistic guidance or you would still call. This guidance are cautious and in that context also I wanted to understand what the what amount of synergies is already baked into this guidance and what is the counter effect from the semiconductor shortages in the wrong.

Material inflation.

From I I want to understand a little bit structure on premium costs. For example, if you want to continue to have to be S. Grant next to Alfa Romeo and Maserati. It appears from the outside that you have gotten all many small premium but not one large premium brands. So maybe you can.

Extend a little bit on that and the last one is from financial services you want to have that in the future again fully owned by your group continues at India J P. Thank you.

Well those are those are great questions.

For making those points.

Are we being too cautious in the 2021 guidance based on the your knowledge of your CEO.

I would not make that assumption.

First because your CEO has to learn many things and he may change.

Secondly, because when you look at the headwinds.

We need to be.

Realistic on the power of those headwinds.

And third because some of our peers.

Ive been guiding on a lower number.

So.

I'd like just to tell you that.

Please be cautious on that one this guidance I think is a good guidance.

I think it's representative of a balance between the risks and opportunities.

As you know one thing that did not change.

Our CEO is that he is a competitor.

He will remain so.

And he will continue to compete and do his best with his team to deliver as much.

Much value as we can but I would not consider certainly not to this guidance as being cautious I would not say that bill.

Because the power of the raw material cost inflation, what is to come in terms of semiconductors is very much the unknown.

We are told that things will go better in the second half.

I'm not sure that that will happen.

Because the evidence that supports that it's not so obvious.

So at the end of the day my answer to you with all the respect is don't consider that this is a cautious guidance.

Consider that is centered guidance I think that's the best way to look at it and of course, you can count on your CEO and you can count on our CFO and the top management team to fight against.

Against the headwinds as strongly as we can.

But of course, there are some of the things we cannot always control.

The second.

One was about the premium brands.

Your point is valid.

It's also about value creation.

See we.

We have three premium brands.

The D S brand a French sophistication.

The launch of our brand the Italian elegance.

And the Alfa Romeo brand, which is an iconic brand.

That needs to find a better fit.

With the potential target customers.

On those three brands.

There is a huge amount of synergies that our brand Ceos are now working on and this is the reason why you have seen that for each of those brand groups. There is one synergy reference.

In this case is the Alfa Romeo brand seal.

About who is in charge.

Offered creating and executing those synergies within the brand group.

So you can expect that to those synergies between our lunch, yes and offer them you are going to happen.

And of course that is going to to a certain extent allow a better market coverage.

At the end of the day against another scenario, which is the one that you have mentioned and that it is fair to mention that why don't you have only one premium brand.

Which could be eventually you are your strategic thinking.

So far we are not there so far we believe that if we are quite strong with es.

In France and neighboring countries, if we see that lunch has a big potential in Italy in neighboring countries.

If we see that after a meal can do a better job.

Everywhere in the world, starting with Europe, and the U S is because we believe that we can leverage.

Do you already visible.

Equity value of those brands Smith, but your your question remains valid, but for the sake of being totally transparent and honest with you I must say that our first direction.

As to give to each of those brands are car model strategy and a chance to build the future based on the great achievements of the past and that's why we have assigned one brand CEO for each of those brands and as you know we have a battery for share taking care of deaths from people about what they can get off after a meal.

Look I'm, a polytunnel taken care off lunch here. So we are working.

On that and I can assure you that against.

Against having one single brand.

I would say that if we have a strong.

Amount of synergies between the three perhaps we can enjoy the benefits of the synergies.

And at the same time have a better market coverage shops. This is where and how we are working on the the brand strategies that we are going to be reviewing between now and the summer break that's what we are doing right now on the financials.

What we are seeing is that we are enjoying.

We are enjoying.

Significant collaborations positive collaboration with our banking partners.

On PSA as much as on the FCA.

I think that we are going to leverage on those partnerships.

I believe that we will simplify.

What we have today.

To make it more efficient and effective in each market, where you operate but of course this is a still a.

In the make we are still discussing any appreciating the benefits of each scenario.

But we will continue to enjoy strong partnerships with some of our current partners.

That's clear and we will see how we can use the potential of our partners to be more aggressive.

And the more impactful.

Some of the business areas.

Offer offer are a global business.

Starting with the leasing activity, which is I think a very important one for our for the future of our business. So this is right now in the making we will be discussing these matters from the end of this month.

And I think that by by the summer, we'll have a clear direction on this on this matter, but so far what is coming up is that we are happy with our partners and we continue we will continue to leverage that moving forward. Thank.

Thank you for your questions, let's move to the next one please.

The next question comes from the line of George Kelly is Goldman Sachs. Please go ahead.

Yeah. Thank you very much for taking my questions. So the first question I had was just around electrification.

<unk> been very clear in your remarks that you don't want to be seen as the legacy car maker.

But one question, which frequently comes up in discussions with investors is your relative positioning on electrification and specifically on battery electric vehicles and on Slide 51, you did lay out your plans for high voltage battery.

They make any distinction between beds he had range extenders.

So when you consider the Atlantis globally, how do you believe your positioning on battery electric vehicles, specifically will compared to peers five years from today.

And are there any segments or regions, where you believe there is a competitive gap that needs to be addressed and how quickly can you address that.

This is a very a very fundamental question. Thank you for asking that.

We believe that to the day.

Of.

Of sales.

Within the LTV World will move very fast to pure bvs.

Which means that.

We believe that the societies and the markets in which we operate will have.

The tendency to ban Ics.

That's the reason why we have created the E&P.

That's the reason why we are now working on a strong evolution of the current CMP.

To simply.

Bring what the customers expect from us.

Which is range.

And affordability.

This is where we are today in the E&P is a very good.

The technical answer to that.

We have already presented.

The range more than 600 kilometers from more than a 100 kilowatt hours of energy storage.

All the other attributes that you expect from a very comfortable product C and D segment. So.

So we are there and we expect to compete in.

In terms of our platform capability.

You know that this is a strength of our of our families.

We do not expect to be anywhere in trouble on the platform architecture and the platform capability being.

All the conventional dimensions.

Or in energy storage and we are working very hard not only on the energy storage, but also on the energy efficiency ratio.

Which is all about the electric motors. This is all about the transmissions, which is all about the IRA dynamics of our products. So it's not the only one factor.

That is going to give you the energy efficiency in number of miles per kilowatt per kilowatt hour is a combination of iron dynamics.

Wait.

Efficiency ratios in electric Motors.

Patiency ratios in our electrified transmissions.

Capability to store capability to charge and capability to use the full energy that you have stored in the battery.

Other states combined.

Is what we are now working on to make sure that in terms of range and affordability, we are going to be meeting the expectations of our customers. So I'm not.

Not too worried about that.

Challenging hard.

My engineers on this matter and I'm pushing them hard because I know that this is where the battle will be.

Battle will be.

Within the three to four years on at which extent.

Did we remove the range anxiety factor.

From the BV World too.

To which extent are we able to make that affordable in.

In our attractive packaging inside of a car.

So in.

In a nutshell.

The message I would like to convey to you is that we are full throttle.

On the BV.

That's where we are we are not thinking that we still have the ph D V or the M. ATV no no no.

We just believe that that is going to disappear.

There will be a ban on Ics.

At which speed they will that disappear in other regions I don't know.

But for other regions that are leading the way in terms of.

Zero emission mobility, we are focused on the pure bv's.

That's where we put the focus and that's where we put the most significant challenge and demand to our engineers and I hope that we will be able to discuss that in a couple of years.

And check both of US that we have done a good job in that area, but of course, that's still in the making right now.

That's my answer to your question. Thank you very much.

Next question.

The next question comes from the line of Alan <unk> from.

The Daily Telegraph. Please go ahead.

Good afternoon.

So there are some day.

19th of January you talked about a it would be weeks before you made a decision on a new model throws Nicole.

We're now at March 2nd and at the time, you also said the dishes decision would depend on the U K government being willing to protect some sort of auto industry in the country.

U K government talking about being in intense discussions with the company.

What are they offering them what will it take to get the lantus to put a new marble electrified models into the U K or orange the plants future decided already.

For making that question I was expecting that question sooner.

In the session today, but I'm happy that you could raise it.

Let me go back to.

To the different events in the sequence.

Events that happened on this topic.

We're preparing.

After a very hard work that was done with our teams in the houseware reported with the support of our local unions.

We were preparing for a new investment.

In El smell Port and it was clear in our mind, what we wanted to do.

Firstly at the moment, where the.

The UK government announced that they would ban the IC powered cars by 2030.

Of course without the brutal announcement.

That immediately suspended.

The decision on that on that projects, which for which was a multi energy project.

We are not willing to invest.

In the U K market a product that is going to is going to be banned from 2030 onwards.

So that decision was suspended.

So once we suspended the decision as a consequence of the UK government announcement of banning the IC costs from 2030.

Then we went back and try to find a solution.

Why because we believe.

In the U K market, we have a stronger British brand called Vauxhall.

We respect our people we protect our people in SME book, because we have been doing difficult things with them.

And we respect our Union partners, who have been supportive and collaborating with us in finding solutions.

So we figure out what was.

The need.

For those electric share product in the UK it happens that those products there.

They already exist somewhere else.

They are already planned to exist somewhere else. So why would we double.

The sourcing in Europe.

For the same kind of products.

In this situation, where we are able to meet all the requirements.

Of the Brexit deal.

Well, if there is an intention to protect in the U K.

This automotive industry, the zero emission automotive industry, which I could understand.

Because it is consistent with the decision to ban Ice's then of course from a pure govs perspective.

I can only doubled the sourcing for those products and go to the U K if.

From a governance perspective, I am supported in the investment by the UK government.

And I can therefore confirm.

That we have good discussions with the UK government. They are collaborative day are productive they are open minded.

But of course this.

This is a business I have a very clear governance rules in my company.

Can only make decisions based on facts.

And based on commitments. So at this stage, we have those good discussions we need to make sure that we get from the UK government.

The commitments on the supports.

That we have been discussing if those commitments happen then good things will happen. If not then we will have to assess the situation, but please understand that this is a very specific sequence, where we have clear Brexit deal rules.

Rules in terms of.

Local local components that weekend respecting anyway.

With a single.

Continental Europe sourcing and if we want to duplicate that then we need support from the U K government. If there is intention from the UK government to protect our local automotive industry. Because those investments are of course significant and there is a clear governance in our company, where we should.

Not spend R&D and Capex, if it doesn't make economical sense, which of course I'm sure you understand so at this stage what I can confirm to you is that the discussions are productive discussions are positive they are ongoing but to make a decision we need to commitment. If there is no commitment.

In terms of governance of our company we cannot decide so when is the U K government are going to commit and how is this going to happen. This is what we need to understand from now but the discussions are productive and let's see what comes up and we have a deep respect not only for our people, but also for our union.

Partners and of course, we want to support our Vauxhall brand in the UK. We believe this is also somewhere something that is part of the equity of <unk>.

This is my answer to your question next question. Please.

One more one more last one thank you.

The next question comes from the line of Charles <unk> from Redburn. Please go ahead.

Good afternoon, Thanks for taking my questions.

I've got two first on China. So what are the things that you need to change in order to be successful in this market and maybe you could sort of comment on what you think is the blue sky scenario for profitability in China.

<unk> targets become as profitable as you all globally or could even be a premium.

Like it is the German carmakers.

My second question was I noticed that the FCA European <unk> pool with Tesla was formally confirmed last week for 2021.

Can you confirm what you paid for C. O two credits in 2020, and maybe comment on what we should expect for 2021.

Thank you. Thank you for the two questions.

I will let Richard answer the second question as I'm not sure that we can unveil to you those numbers.

Richard will tell you because he knows this deal much better than I do.

But on the first question.

What I can tell you if you ask me what do we need to change in China well.

Many many things.

Many many things need to change because we.

We see.

Obviously that we have many problems related to the respect of our brands.

We believe that brands are.

Represent a strong equity.

The company they have to be respected.

And the way to respect our brands is to make sure that we communicate properly on our brands that you that we respect the pricing power of our brands.

And that we do not commoditize.

Our brands.

That's obviously one of the things we need to change.

We also need to make sure that the way any strategic collaboration with work is fluid.

Is focused.

It's purely business oriented.

And make sure that when we do that we are only looking at the markets and not that something else.

So we need to be focused on the market focus on what the Chinese customers are expecting from us.

Of course, we need to have the right business framing in terms of regulatory framing in terms of performance to make sure that we can bring the right technology.

In the right in the right way you see so far.

Our performance.

Is a net by some of our competitors using only Cpus.

Even localized.

Which clearly demonstrates that.

There is a lot of things that need to change.

I would like to stop here on this matter because it is premature for me to comment on the different scenarios that we are now preparing for some of them are concepts some of them are already under negotiation.

But of course, we are not going to stay still.

Because we have nothing to lose.

As we are not happy with the results its only about upside. So if we want to capture the upside we need to change many things.

That's why we have different scenarios and that's why.

They'll still premature, but as I presented to you.

We can commit that this new strategy will be.

Released.

Within the year of 2021.

This is what we can say today and Richard we'd like to comment on the Tesla deal. Please.

Yes Carlos.

So Charles we.

We had a cough.

Of credit in 2020 of around 300 million for Europe.

Most of which well at Tesla and we have a similar number in 2021.

As it goes down but not significantly.

Thank you.

Well. Thank you Richard Thank you to all of you I think we are we are over now and I think we have a we have dedicated a hopefully enough time to your great questions I still would like to tell you that I very much appreciate each of your questions. I think each of them is helping us to sink in a better way and I would like to take this on.

For Trinity to express to you all my sincere appreciation for.

For the support that you have all given to FCA and to PSA.

Now and I would expect that we will meeting your expectations within the <unk> World moving forward I expect to see you very soon thank you very much have a great day bye bye.

Yeah.

[music].

Yeah.

[music].

Sure.

Uh huh.