Full Year 2022 Stellantis NV Earnings Call
Speaker 2: Hello and welcome to the Stellantis full year 2022 results. I will now hand over to our host Adit Mair, Head of Investor Relations to begin today's conference. Thank you.
Speaker 3: Hello everyone, joining us today is we review Stolenis's full year 2022 results. Earlier today, the presentation material for this call, as well as a related pressure lease, were posted under the Investor Relations section of the Stolenis Group website. Today, our call is hosted by Carlos Tavarras, the company's chief executive officer.
Speaker 3: and Richard Palmer, the company's chief financial officer. After both Mr. Tavares and Mr. Palmer present, it will be available to answer questions. Before we begin, I want to point out that any forward-looking statements that we might make during today's call are subject to the risks and uncertainties mentioned in the safe harbor statement.
Speaker 3: included on page two of today's presentation. As customary, the call will be governed by that language. Now I would like to hand the call over to Carlos de Varas, CEO of Stellantis.
Speaker 4: Thank you, Ed, and welcome to all of you.
Speaker 4: We really value your time and I would like to thank you for your interest in Stellantis.
Speaker 4: Let's get started. It's an understatement to say that 2022 has been a challenging year.
Speaker 4: There's been a year where we saw rising geopolitical tensions.
Speaker 4: Registry chaos.
Speaker 4: to apply chain disruptions.
Speaker 4: strong inflation and despite all of those headwinds.
Speaker 4: Our company has demonstrated once again that we are resilient.
Speaker 4: that we are an all-weather company.
Speaker 4: and that we deliver results.
Speaker 4: This is a very high level summary of 2022 I would like to express to each and every of the Stellantis employees.
Speaker 4: my sincere and very warm consideration, my deep thanks for what they have done for the company.
Speaker 4: They have demonstrated that they are a great team, they are resilient, they are focused, they have a great business sense.
Speaker 4: and here we are to celebrate today the results they have achieved. I would like also to express my sincere appreciation to our union partners.
Speaker 4: They have been highly mature, having a perfect understanding of what's going on in the world, understanding that the challenges that are in front of the company right now are external challenges.
Speaker 4: And because those challenges are external, it's best to align internally to get things done and to execute our strategic plan. So I would like also to express.
Speaker 4: to our union partners by sincere appreciation. Last but not least, this Talent is Bored has demonstrated a very strong Support
Speaker 4: to the management and to the employees, always with demanding questions, yet
Speaker 4: Helping the company to move forward we are in the second year of talent is
Speaker 4: So it's important that the board is fully supporting what we are doing. It is perfectly the case and I would like to thank the board for their GTAA companyeyed LONG AW WAS clandestine program.
Speaker 4: for the trust and for the autonomy and support that they have given us.
Speaker 4: So from here, I think we can summarize many of the things we are going to explain to you with Richard Palmer today by telling you that our net revenues were at 18%.
Speaker 4: Our adjusted operating income was up 29%.
Speaker 5: All right.
Speaker 4: AY margin was at a record high with 13%, our net profit up 26%, our industrial free cash flow up 78%.
Speaker 4: and our PV sales growth rate up at 41%.
Speaker 4: It's important that we state those simple numbers.
Speaker 4: so that we understand that we are talking about transformation at Terenity.
Speaker 4: We are talking about transformation at Terenti. We are doing it.
Speaker 4: We are now in the course of executing.
Speaker 4: the transformation of the company and the results we are achieving today for the second year of Stellantis are an encouragement.
Speaker 4: to accelerate and to go even deeper and faster in the transformation of the company. And again, I would like to express to every and each of our employees my sincere appreciation. They have been doing a stellar job in this second year of our startup company. If we look at some of the other numbers...
Speaker 4: We see that we had a very strong free cash flow with more than 10 billion years, 10.8 billion years, so a very strong cash generation.
Speaker 4: We are on track to deliver by 2030 the 20 billion that we have committed in the strategic plan.
Speaker 4: A very nice number about cash synergies, net cash synergies at 7.1.
Speaker 4: more than the commitment of five that we were expected to deliver by 2024.
Speaker 4: which means that we are ahead of the plant.
Speaker 4: And it's not because the CFO has been pushing on this, it's because it's a bottom up.
Speaker 4: about a more contribution from our employees that perfectly understand.
Speaker 4: the sense and the need for this merger. So this merger is being a big success, not because of us.
Speaker 4: but because of our employees.
Speaker 4: Our employees get it. They understand that we are better together than on a standalone position.
Speaker 4: They understand that we have moved from the second league car companies to first league mobility tech companies
Speaker 4: They get it and they are supporting the move which is of course very reassuring for the future.
Speaker 4: We continue to execute our therefore 2030.
Speaker 4: Just taking an example of electrification, we have currently 23 electric vehicles on sale.
Speaker 4: By the end of this year we'll have 32-9 more.
Speaker 4: And by the end of next year 24, we will double what we have today as we will be at 47 pure BVs.
Speaker 4: by the end of this shoot.
Speaker 4: It's also important that you realize that the 41...
Speaker 4: self-dv growth rate has been achieved only.
Speaker 4: with European sales.
Speaker 4: which means that we didn't even start.
Speaker 4: the EV offensive in the US market, but we are going to start this year.
Speaker 4: from this year.
Speaker 4: In 2023 we introduced the RAM ProMaster EV in the US market
Speaker 4: So from this year we start the EV offensive in the US mark and we achieved 41% sales growth in 22.
Speaker 4: mostly on the basis of the European cells.
Speaker 4: It is also important to recognize that we are by far the leaders of the LCD marketing Europe .
Speaker 4: that in Europe .
Speaker 4: brick, slippage, cutting off
Speaker 4: We have 42.7%.
Speaker 4: of market share.
Speaker 4: in the RFV.
Speaker 4: So you see what this demonstrates is that the technology of talenty in terms of electrification is very much appreciated by the consumers.
Speaker 4: We were blessed with the fact that the first product that has been launched in the Stellantis era, the Jeep Avenger, the first ever pure...
Speaker 4: Jeep EV has been awarded the car of the year, which is a very strong recognition of our capability. And therefore, it gives the team another encouragement to move fast and strong in this transformation. If you go now to North America and have a look at the region,
Speaker 4: and say that North America achieved a record margin on the full year at 16.4% AY margin.
Speaker 4: A very impressive result in conditions which were not always easy, namely in terms of supply. But the team was able to manage the business model in a very skilled way.
Speaker 4: We lost a few tens of market share as a consequence of supply disruptions.
Speaker 4: That is something that we recognize. We can do better in terms of supply.
Speaker 4: We are keeping a very high average transaction price the highest among the big fleet.
Speaker 4: in the US market, which means that
Speaker 4: the pricing tower of our models.
Speaker 4: is matching the appeal.
Speaker 4: of what we create. And our creative teams, both from design and engineering, are doing a stellar job to make sure that the customers are willing to pay for the value that we create. And this is measured on the average transaction price, which is the best in the market. We are the number one USPHEV sales.
Speaker 4: The creative teams, both from design and engineering, are doing a stellar job to make sure that the customers are willing to pay for the value that we create and this is measured on the average transaction price, which is the best in the market. We are the number one US PHEV sales company.
Speaker 4: We are number one in the PHEV with the Wrangler 4 by E.
Speaker 4: in US and Canada and of course we are benefiting with the RRE from the framework that is going to support our US-USL. So record profitability in North America, growing BV sales.
Speaker 4: So I growing PHEV cells and just introducing the BV right now in 2023 so more to come.
Speaker 4: and a lot of potential for profitable sales in this market. If we move to Europe ,
Speaker 4: The U.S. was also able to deliver a record of EY margin at 9.9.
Speaker 4: Significantly improved my against last year.
Speaker 4: 80 basis points.
Speaker 4: We are the number two in the PV cells in the European market, number two being number one in France with the personal E208 and number one in Italy with the Fiat New 500.
Speaker 4: So again, our PURIVI cars are appreciated and the technology is demonstrating a great deal of maturity.
Speaker 4: Our market share in LEV is at 15.7 in Puehl BV or market share at 16.2.
Speaker 4: And we were at an extent hurt.
Speaker 4: by not-bond logistic problem that has been somewhere reducing our share in Europe . And this is one of the operational issues that we are now fixing. It's an opportunity to do better.
Speaker 4: in 2023. I believe that in the next couple of months this will be behind us.
Speaker 4: has been painful. We have understood where the out-pun logistic issues were. We are addressing them. There are multiple. It's not one single reason that we are addressing each of them with a specific action plan.
Speaker 4: And we are still around 20% market share even though we lost.
Speaker 4: 240 basis points in 2022 on the back of this outbound logistic problem.
Speaker 4: We are now on track to execute our new retailer distribution model.
Speaker 4: We have been having a very fruitful dialogue with our dealer network associations.
Speaker 4: They haven't understood what is at stake.
Speaker 4: in terms of improving the customer's centrality of our distribution, in terms of making sure that we can keep both of our business models profitable for the future as we are aligning.
Speaker 4: the distributors and ourselves on one single thing, which is to make the custom happy.
Speaker 4: We have also delivered on what we committed to you.
Speaker 4: by being now live on the electric motor production.
Speaker 4: in our tramry planting France.
Speaker 4: and we are going to be live in the H-1-2-2-2-3 on the electric transmissions.
Speaker 4: and I will add to this.
Speaker 4: that on the second half.
Speaker 4: of 2023 will be producing battery cells.
Speaker 4: in our first European gigafactory. So in 2023, our first gigafactory in Europe in Dovera will be operating on the D-samples to validate the production and then go full production by the beginning of next year.
Speaker 4: So in large unit is on track.
Speaker 4: to deliver its electrification plan.
Speaker 4: In that short, it is highly profitable.
Speaker 4: doing a great job in terms of BV cells.
Speaker 4: There is potential to do better, there is potential to go faster once we solve our odd-bound logistic issues and we will.
Speaker 4: And our manufacturing footprint is now ready.
Speaker 4: Not only to manufacture the left-fret components like the motors and the transmissions, but very soon to manufacture the battery cells.
Speaker 4: It's also important that you realize that our PV cells grow in Europe .
Speaker 4: is along the desk.
Speaker 4: If not the best of the industry.
Speaker 4: including against people that you generally consider have been the leaders on this matter.
Speaker 4: I now move to the rest of the world and comment three other areas of our business.
Speaker 4: We can see that Middle East and Africa is now the most profitable.
Speaker 4: the region of our business at 16.7.
Speaker 4: We nearly doubled our profit against 21.
Speaker 4: which demonstrates that there is a significant profitable growth potential in Middle East Africa and we have been making many many decisions.
Speaker 4: to improve the soothing in Africa for African Middle East.
Speaker 4: And the goal is very clear, we will move from 30% local sourcing to 70% local sourcing.
Speaker 4: within the course of this plan.
Speaker 4: within the course of this plan. And you have been looking at some of our decisions.
Speaker 4: If you pile up all of those sourcing decisions and more to come, you'll see that we are going to put ourselves in a trend where by the end of this plan will be sourcing for the region for the region of modern 70% of the needs.
Speaker 4: which means that we are going to serve.
Speaker 4: on the high growth potential of this region, given the very good birth rate and the young population that we have over there.
Speaker 4: The market sharing in Middle East Africa improved by 20 basis points to 12% more to come.
Speaker 4: South America has been a success story for our company. We are by far the automotive leader in the region.
Speaker 4: And the Fiat is the leading brand.
Speaker 4: So we are keeping that leadership strong and we will continue to reinforce that leadership. As you see, the profit increased by 132% to now more than 2 billion euros. It's significant because if I sum up those three regions here.
Speaker 4: We can tell you that we called it the third engine as you know very well.
Speaker 4: that we call this the third engine as you know very well. X.
Speaker 4: The USA was very much dependent on Europe , XFCA very much dependent on the US.
Speaker 4: SA was very much dependent on Europe , XFCA very much dependent on the US. Americans, helmet-peace has two engines.
Speaker 4: North America and Europe .
Speaker 4: and we are adding a third engine.
Speaker 4: Make sure that our business footprint is highly diverse.
Speaker 4: And what we are saying is that we are already contributing at 3.8 billion euros.
Speaker 4: which is already a significant number, but within the next three years.
Speaker 4: What we call the third engine, which is the combination of these three regions, will be at the same level as yours.
Speaker 4: means within three years our company will have three engines.
Speaker 4: of America, Europe .
Speaker 4: and overseas, as we call the combination of these three regions. So in all of these cases, you see that we are going in profit. It's also the case for China and India-Egyptic.
Speaker 4: Profit has been improving from 11% AY margin to 14.5.
Speaker 4: and the amount of profit.
Speaker 4: interesting to see that it has increased by 48%, which means the amount of...
Speaker 4: Adjusted operating income in pre-srate in Asia has been higher.
Speaker 4: Then what we have for the whole company, the whole company is at 29%.
Speaker 4: China and Asia Pacific are at 48% of AY increase.
Speaker 4: We are now successfully introducing our national sales company for CBU sales and the Jeep direct online sales in the Chinese market, it's working very well.
Speaker 4: It's contributing to the increase of the profitability in China and even more important.
Speaker 4: We are now as we speak.
Speaker 4: manufacturing the first new C23 EV version based on the smart car platform.
Speaker 4: which is going together a fantastic tool.
Speaker 4: to be competitive against new entrants in the mutual markets, i.e. the Chinese entrance in the mutual markets. So we have the tool.
Speaker 4: with a smart car, a platform-based family, and with the EV technology that we have on that platform.
Speaker 4: We have now the tool to be able to fight on the middle of the market if not the low end of the market in terms of profitability and cost competitiveness vis-à-vis the new entrance
Speaker 4: If we move from here to the branch
Speaker 4: Let's start with Jeep, our Global SUV brand.
Speaker 4: So, Jeep doing a fantastic job.
Speaker 4: The first ever PURYV the Jeep Avenger, as I said, was a WDUPN car of the year 2023.
Speaker 4: which demonstrates that the teams did not waste any time to bring the EV technology to Jeep in the European market.
Speaker 4: We are now starting the sales of this product very soon.
Speaker 4: We will also bring in a
Speaker 4: So in 24.
Speaker 4: the all electric racon from Jeep and the Wagon EOS.
Speaker 4: a compact wagon here, a purie vis that will reinforce opposition, mainly in the US market.
Speaker 4: We have successfully launched the Grand Cherokee 4xE and now ramping up on the segment chair quite nicely.
Speaker 4: and we keep on expanding the cells of this icon. As you can see, we are also now expanding the cells of Wagonior and Wagonior around the world. They are a profitable product.
Speaker 4: Very, I end product for this brand and of course Middle East and Africa represent a big opportunity that we are going to grasp in the 2023.
Speaker 4: She has also been the number one SUV brand in South America six years in a row.
Speaker 4: which means that the route...
Speaker 4: of Jeep in the Latin America are getting deeper and deeper.
Speaker 4: and we have to recognize the great job that has been done by this brand. The uniqueness of Jeep is the very sharp.
Speaker 4: and very clear position of the brand all over the world.
Speaker 4: which captures the emotions.
Speaker 4: of many of our customers who are looking for freedom.
Speaker 4: and outdoor living.
Speaker 4: And the position of Jeep is so sharp, so unique around the world that it captures the mind and the emotions of many of our customers. Our pricing is just fine.
Speaker 4: If we move now to the other American brands...
Speaker 4: It's good to say that the Pacifica is still the number one selling minivan in North America and sells out by 11 percent. Brighting power is fine.
Speaker 4: and progressively as we did at the last CS in Las Vegas, we are showing the way of what the Chrysler rebound will be into the future.
Speaker 4: And I think that the potential to relaunch the Chrysler brand is getting bigger and bigger by the day.
Speaker 4: We have the all-time highest US average transaction price.
Speaker 4: So that's great, it means that our customers are recognizing the value.
Speaker 4: that we create with the RAM pick up flux. Brushing power is fine.
Speaker 4: As I said, the pro master BV is going to be launched this year in H1 and we'll start delivering those BV VANS.
Speaker 4: the VV is going to be launched this year in H1 and we'll start delivering those VV VV in H2.
Speaker 4: But more importantly, you have seen at the CS in January .
Speaker 4: you have seen at the CS in January , the brand new
Speaker 4: 1500 EV pickup truck from RAM.
Speaker 4: 1800 EV pick up truck from RAM. You have seen the appeal.
Speaker 4: You have seen the fantastic creativity that our teams have demonstrated.
Speaker 4: with the different functionalities.
Speaker 4: and you can also trust that our performance index against our competitors in terms of combining.
Speaker 4: going
Speaker 4: Payload
Speaker 4: of charging and range.
Speaker 4: Using those four performance KPIs, I can assure you that we are going to have the most competitive BV pickups in the US market. So more to come, stay tuned. This is going to be big news very soon.
Speaker 4: I can also tell you that when we open the pre-orders for the next BZ-1300 ramp pick up track.
Speaker 4: We were sold out in three days for the first model year.
Speaker 4: for the first model year. So three days to...
Speaker 4: the whole production of the first model year of the BVP cartridge.
Speaker 4: If we go to Dodge.
Speaker 4: George has been doing a fantastic job with the challenger. We are the number one selling muscle car in the US for the second year in a row.
Speaker 4: flashing batteries.
Speaker 4: and we are now introducing the old new Hornet.
Speaker 4: that will start deliveries in H1 2023.
Speaker 4: So we were reinforced
Speaker 4: business of Dodge in this year.
Speaker 4: And I can tell you that the way we are preparing for the e-messalkar in the future is just...
Speaker 4: outstanding from every different dimension I have seen. Sound acceleration.
Speaker 4: performance, design, connectivity features, you name it.
Speaker 4: The E-Dodge is going to be fantastic success in this market.
Speaker 4: So those were the American brands, if you now go to the upper mainstream.
Speaker 4: Mostly Opel, Vauxhall and Tarrot.
Speaker 4: It's interesting to see that opo within the sterenties brand portfolio is the fastest growing
Speaker 4: €10? Furbeng predicament Brand NBVLB
Speaker 4: So the OPPO Global DV cells rate increases 52%.
Speaker 4: As you remember for our whole talent, it was 41. OPPO is...
Speaker 4: on the leading edge of the DV cells, which is fantastic.
Speaker 4: This is what we like them to do and they have been increasing this This sells of BVs Year of the year in a significant matter. It's the the only brand where the total market share in the BV Market is higher than the total market share in the total market
Speaker 4: So, Opel is on the edge of electrification. The course that continues to be a big success, number one selling car in Germany and UK on this segment hatch.
Speaker 4: Rising power is fine.
Speaker 4: and among the different L-C-V brands we have,
Speaker 4: Opal is the number one in terms of BV cells. Number one in cells growth.
Speaker 4: Number one in your CV cells.
Speaker 4: which is demonstrating that within the Stellantis galaxy, Opal is the leading brand in terms of electrification.
Speaker 4: At the same time, Pujo has demonstrated great success.
Speaker 4: At the same time, Pujua demonstrated great success. The number one selling car in U.
Speaker 4: 34-deter?? to await. The number one selling car on the E208.
Speaker 4: starting with friends of course.
Speaker 4: and the pricing power is the reference of the market.
Speaker 4: the growing outside of ira salt
Speaker 4: And this BV cells momentum will continue with five new C segment BVs in the next two years.
Speaker 4: Now, the drill is pushing very hard on the BV cells. Already number one, with the E208, that will continue to reinforce its leading position.
Speaker 4: If we move now to the core brands,
Speaker 4: with Citroen and Fiat. As I said, the big news is the launch of the new Citroen C3.
Speaker 4: based on the SmartCard platform.
Speaker 4: The cells are going steadily in India and in Brazil. The launch has been successful. Very tight control of quality, which is fine.
Speaker 4: And we are running up nicely with those products that have the capability.
Speaker 4: to fight against the newcomers.
Speaker 4: As I said in the introduction, we are now manufacturing the EV version of the C-23, right now in India.
Speaker 4: But that is going to be an opportunity for other markets.
Speaker 4: As need be, rising power is fine.
Speaker 4: The only concept that was launched in Europe as a show in the vision.
Speaker 4: for the brand.
Speaker 4: And this vision is going to translate in great new products very soon. So can tell you that this concept car has been extremely inspiring.
Speaker 4: to show us the way to be modern.
Speaker 4: clean, affordable and light.
Speaker 4: in the way we bring zero-emission mobility to our customers.
Speaker 4: At the same time, Fiat has been doing a great job.
Speaker 4: The Fiat brand is a market leader in Brazil.
Speaker 4: Turkey and Italy, strong market shares as you can see. The C800E is the third most sold BV.
Speaker 4: In Europe .
Speaker 4: Another one in Italy, another twin state, another three Germany could have been better had we had more.
Speaker 4: Bye!
Speaker 4: So we were limited by the supply, but the potential of this product is much higher than number three.
Speaker 4: were limited by the supply but the potential of this product is much higher than number 3. The pricing power is fine.
Speaker 4: And the brand new Fiat BVs are not coming, they will start
Speaker 4: This year in 23.
Speaker 4: And you see now the power of the talenties at work.
Speaker 4: All the new BVs from Fiat as much as we have seen the Jeep Avenger are coming and I can tell you that given the capability of this team.
Speaker 4: the new BVs from Fiat as much as we have seen the Jeep Avenger are coming and I can tell you that given the capability of this team to sell.
Speaker 4: I can tell you there is a very bright future ahead given the pipeline of products that we have for this for this brand so very excited about what we are going to see.
Speaker 4: Let's conclude here with commercial vehicles.
Speaker 4: We continue to be the unrivaled market leader in Europe and in South America.
Speaker 4: We are growing in Middle East Africa with a market share of 15%.
Speaker 4: There is much more potential than that.
Speaker 4: that we are ramping up.
Speaker 4: We are, as I said,
Speaker 4: We are, as I said, by far.
Speaker 4: The BV market leader with 42.7% market share for the BV sales in Europe by 5.1. Number 2 is very...
Speaker 4: very far away.
Speaker 4: We have achieved the record Rembrandt sales outside of North America which is extremely profitable.
Speaker 4: the record RAM brand sales outside of North America which is extremely profitable. We have taken a stake.
Speaker 4: in Symbio, waiting now for the closing.
Speaker 4: which is a company that is a leader in hydrogen mobility as you know.
Speaker 4: We are now producing...
Speaker 4: the first
Speaker 4: but little more because we have another extra
Speaker 4: pure self powered cars and we will bring this to a high volume plant by the beginning of next year So we are on our way
Speaker 4: to protect our leadership in fuel cell art rains.
Speaker 4: And of course we are going to focus on the L-CVs, but it's moving and it's moving fast.
Speaker 4: If we now go to the premium brands, very, very impressive performance.
Speaker 4: from the previous brands.
Speaker 4: brands. Their profit is up.
Speaker 4: Their market share is either up or stable.
Speaker 4: and customer satisfaction and quality are up.
Speaker 4: Our premium cluster has been delivering a very strong value.
Speaker 4: As I said, the fantastic turn around the inafro meal.
Speaker 4: We have now a very profitable brand just by mastering the way we go to market.
Speaker 4: now a very profitable brand just by mastering the way we go to market. Highly profitable.
Speaker 4: We are now bringing the electrified products as it should be and we will be selling.
Speaker 4: only be V from 2027 and tonally proven to be a very strong success.
Speaker 4: with a very tight control of quality which has improved significantly.
Speaker 4: Lunch Shades preparing for the launch of the new models, starting in 2024, fully electrified and full BV from 26.
Speaker 4: a quick Klein Power Improving.
Speaker 4: epsilon steel the number one selling car in Italy in the D segment.
Speaker 4: which is demonstrating the very strong skills.
Speaker 4: which is demonstrating the very strong skills of the Lensheteam in terms of sales and marketing.
Speaker 4: As we know this car is 12 years old, still the number one in the segment after so many years.
Speaker 4: The SO-TOMO will have been improving both the profitability, the share and the customer satisfaction.
Speaker 4: 1% BV launches from 34.
Speaker 4: The LEV serves mix at 41%, which is already significant pricing power is fine. And we have just launched the new DS3 EV with more than 400 kilometers of WRTP range using the brand new electric motor, so-called M3, that we manufacture in the...
Speaker 4: a French plant of Tremori. If we move now to our unique and iconic luxury brand, Maserati, the list we could say is that Maserati is back.
Speaker 4: We have improved significantly the profitability at 360dB, now reaching 8.7% AY margin and more to come of course.
Speaker 4: Because we believe that Maserati needs to be pulling the company up.
Speaker 4: and not lagging behind the average profitability of the company, so there is more.
Speaker 4: lagging behind the average profitability of the company so there is more on our plans.
Speaker 4: We see that we have been doing great in Europe . On the other regions, there are some challenges that we are right now addressing. Pricing part is fine. We are bringing back an absolute fantastic product, which is the new GT, the Gran Turismo.
Speaker 4: Not only it's an iconic car, but I can tell you as I've been driving this car for a while.
Speaker 4: The performances are stellar, the combination of NVH, ride, handling.
Speaker 4: gear shifting breaks.
Speaker 4: shifting breaks in the infotainment.
Speaker 4: It's absolutely fantastic product and we are very proud of GDG as much as we are now Deploying the new gale all over the world
Speaker 4: and that is going to happen this year on a very profitable product. And that will open the road for the full-gore PureBV recalibrate that will be revealed on the second half of this year.
Speaker 4: While we are doing this, the new MC20 CLO has been receiving third-party accolades demonstrating that it's fantastic.
Speaker 4: the sports car, very competitive and absolutely on the edge of the technology of this specific segment.
Speaker 4: Ladies and gentlemen, Maserati is back. Maserati is back. Doing the right things in the right way.
Speaker 4: Azirati is back. Azirati is back. Doing the right things in the right way. Strong focus on quality.
Speaker 4: strong focus on the pricing discipline, making sure that we bring modernized iconic products that our customers love, and we love when they're happy.
Speaker 4: Let's move now to our affiliate business, also a lot of great things going on.
Speaker 4: In terms of financial services, we are ramping up in our US financial services. We have now enrolled around 90% of our US dealers.
Speaker 4: And we targeted to cover 80% of these volumes by the end of Q1 2023. So ourselves.
Speaker 4: financial arm in the US is now going by the day and this is going to be very supportive of ourselves and of course a strong profit contributor. The Pion Car Vehicle is a success story.
Speaker 4: in 22, of course, with some good market conditions.
Speaker 4: And we are now expanding dealer online sales through spotty card to North America this year.
Speaker 4: and RME's group continues to reinforce its leadership.
Speaker 4: Now in Austria and Italy buy some more M&A.
Speaker 4: And we have seen that now that the cache is not free anymore.
Speaker 4: some good opportunities have appeared and we are grasping those opportunities. In terms of circular economy, sales are going by 22%.
Speaker 4: The plan is now being executed with many different business models depending on the components.
Speaker 4: that are used in the SQL economy business. And we have been partnering with Kinomic in the business of retro-fitting LCVs to electric graph lines.
Speaker 4: Last but not least, partner services, which is the biggest part of the CTA business, has been growing in sales on a double-digit level.
Speaker 4: And we continue to optimize the cost in terms of distribution by taking care of the warehouses and reducing the number of air warehouses.
Speaker 4: while at the same time protecting the service rate.
Speaker 4: protecting the service rate to our dealers.
Speaker 4: So a lot of good things in the affiliate business, strong contribute to the historical travel prochaine. Another documentary.
Speaker 4: In terms of software strategy, the least we could say is that everything we have told you in July 2020.
Speaker 4: strategy, the least we could say is that everything we have told you in July 2022.
Speaker 4: In our electrification journey is no life.
Speaker 4: We are developing the three software platforms, Telebrain, Tele-Snowtcocated, Tele-Autodlyte.
Speaker 4: We are doing the job. We have now 1500 software engineers on track to have 4500 by 2024.
Speaker 4: We have educated and trained 700 graduates from our software and data academy.
Speaker 4: which means we wrote some conventional engineers to the software world. We are very specific.
Speaker 4: we wrote some conventional engineers to the software world. We are very specific training.
Speaker 4: which content is controlled by an independent advisory board to make sure that we bring the best people to select.
Speaker 4: the right topics on which we should be training our people. So this software and that academy training as a
Speaker 4: demonstrated a very strong potential and we are on track to deliver
Speaker 4: the size of the software engineering capability that we need, given the tech dimension of our company.
Speaker 4: We see that by the end of next year we'll have the first physical evidence of everything we are doing here. And at the same time, we have been expanding our capabilities by grasping some opportunities like the acquisition of AI-motiv.
Speaker 4: which will be a strong accelerator of our other developments. This has been concluded and now AI-Botivism support are full of our software platform developments, specifically in this case on AdDAS. We have also created the business unit to take care of our data business with mobility sites.
Speaker 4: And we already have 13 million cars connected in operation.
Speaker 4: That was by the end of 22 and we are on track to deliver the 34 million cars connected by the end of 2013 and as you know this is a strong foundation for additional service-related business in the future. Needless to say that we have been signing some very strong partnerships with the companies we see on this slide. Amazon, Boxcon and Qualcomm. We are on track to deliver the 34 million cars connected by the end of 2013 and as you know this is a strong foundation for additional service-related business in the future.
Speaker 4: We are delighted to work with these very expert partners. I think we are doing a good job in creating value together. We see that Stella Brain is going to be a breakthrough in terms of...
Speaker 4: performance and cost competitiveness by reducing the number of issues per vehicle by more than 50%.
Speaker 4: We see that the net revenues of the software business.
Speaker 4: is growing by 25% in 22 against 21 on track for the 20 billion that we have committed to you by 2030.
Speaker 4: So all of this is moving so far you don't see yet the physical evidence that it will come very soon.
Speaker 4: I just want to be transparent for you and show you that we are doing what we told you. We will go into the river. If we look at the full electrification ecosystem, it's a rewarding slide. A little bit busy.
Speaker 4: But quite rewarding and not only we are Glowing our DV cells by 41% which I think in the automotive industry is a very nice number if not the best
Speaker 4: We are currently selling 23 pure BV models. By the end of this year, 23 will be at 32.
Speaker 4: By the end of next year, we'll be doubling against 22 at 47 models, BV. But does it mean that the execution capability of talent is?
Speaker 4: in delivering the ramp up of the BV models that we bring to the market. And we told you 75 plus models by 2030. Just means that we are perfectly on track. As you imagine, 47 in 2024.
Speaker 4: is absolutely the right number to be at 75 by 2030. So the execution capability of the company is a reality. It's not a surprise for me, but perhaps for some of you.
Speaker 4: And that just would like you to recognize this reality. In the meanwhile, our giga factories are on.
Speaker 4: We have selected the five sides, the Rancas of Loughton, Thermali, Windsor and the Kokomo, in the France, Germany, Italy, Canada and the US.
Speaker 4: We have some very expert partners in addition to ACC like LG and Samsung. You see the gigawatt hours capacity of those plants.
Speaker 4: We are on track to be at 400 GW by 2030.
Speaker 4: And one of the big things that was highlighted a few months ago, which was how do we secure the raw materials, has been progressing significantly?
Speaker 4: You see here a list of five companies with which we have signed some strategic deals.
Speaker 4: about securing the supply of lithium, hydroxide, the supply of manganese, sulfate, nickel, and cobalt. And we have been securing the supply of those raw materials.
Speaker 4: because we don't want to run out of battery supply the day the market starts really to achieve what we expect it will achieve.
Speaker 4: At the same time, we continue to develop our ecosystem of electric components.
Speaker 4: In motors, our JV with a Nidec is now live producing the L3 elastic motor that I was mentioning already equipping RB segment BVs.her, I am now ready.
Speaker 4: bringing the electrified DCT to the market this year. Factorial, working on solid state batteries for 2026.
Speaker 4: and CIVIO in which we took a stake to have access to the best fuel cell technology on the stack.
Speaker 4: So all of this is now being set up. As you imagine a few years ago, nothing of this existed. So I just would like to recognize the very strong contribution for our planning team, our purchasing team, our manufacturing team.
Speaker 4: I can tell you in the backyard, we have been working 24-7 to get this done and it's also a demonstration that we are not talking about transformation it, we are doing it.
Speaker 4: We are talking about it, we are just doing it. It's important that we understand that. Let's now go to one of our most exciting products, the new OLED Ram 15 under the rev.
Speaker 4: We are talking about it, we are just doing it. It's important that we understand that. Let's now go to one of our most exciting products, the new OLED Ram 1500 and the RAV. You have seen it at the CS.
Speaker 4: It will come by the end of next year. Great deal of functionalities, fantastic design.
Speaker 4: It's fantastic to form it in terms of combining payload, towing speed of charge and range.
Speaker 4: And I can tell you to a certain extent the fact that we are coming to the market after a few of our respected.
Speaker 4: Competitors is something that we are fully leveraging to bring the most competitive EVP pickup truck to the market.
Speaker 4: This is of course a big challenge for our North American teams and their talent and their focus will make the difference. This is what we try to convey to you at the CS in January this year. From here I have concluded some of the...
Speaker 4: Most impactful highlights I would like to end over to our CFO Richard Parmo that is going to give you all the necessary explanations on the numbers.
Speaker 4: over to us here for Richard Parmo that is going to give you all the necessary explanations on the numbers. Richard, please. Thank you Carlos.
Speaker 6: So moving to page 20, the main metrics for the financials, our concise achievements are down 2% as mentioned, to 5.8 million units with lower shipments in Europe , down 8% year over year, possibly offset by improvements in our other segments.
Speaker 6: In fact, industry volumes in North America and Europe were down 7% and 12% respectively, or if you look at the EU 30, down 6%, which was in line with our outlook. Middle East and Africa regions were slightly down while the other regions saw moderate industry growth. Our combined sales.
Speaker 6: We're down 11% with most brands showing lower sales year over year. Despite consolidated shipments being down 2%, our net revenues were up 18% at 180 billion. Thanks to strong discipline on pricing, vehicle mix and positive effects translation.
Speaker 6: Adjusted operating income was 23.3 billion, up 29% with a margin of 13%. Our industrial free cash flows was mentioned reached 10.8 billion, up 78%, including the momentum of the 7.1 billion of net cash synergies, which exceeded our merger target two years in advance. This further strengthens our balance sheet with our industrial net financial position, increasing to...
Speaker 6: in the repurchase transaction from General Motors regarding their warrants and that was all largely upset by the strong positive free cash over the year.
Speaker 6: In terms of capital returns to shareholders, we intend to pay a 4.2 billion euro dividend, which is one euro and 34 per share in following the shareholder approval, and consistent with our dividend policy objective.
Speaker 6: that maintains a payout ratio of 25% of net profit. And secondly, we announced today that we will begin a share buyback program of up to 1.5 billion euros to be executed during 2023 in the open market. Moving to page 21, we show the rest of the P&L.
Speaker 6: So from AOI to operating income, we reached 20 billion euros. We incurred in unusual charges of 3.3 billion in 2022, with approximately 1.3 billion in the second half.
Speaker 6: For the full year, the year cools for restructuring, accounts for about third of that number, and were primary related to European operations. Approximately one billion was recognized for an extension of the Takata Airbag's recall campaign, primarily in Europe and North America. And another 0.7 billion was related to the increase in the provision for US cafe penalties that we booked in the first...
Speaker 6: increased cash returns on our financial investments as interest rates increase.
Speaker 6: Our equity method is income with 0.5 billion lower this year due to the 300 million non-cash impairment recognized in H1 related to the GACS, the landage JV, exit and an estimated loss of 130 million as we go through the sale of our FCA bank portfolio to credit agriculture which transaction will be completed.
Speaker 6: in the first half of 2023. Tax expense was up 790 million at 2.7 billion, resulting in a 14% effective tax rate more or less aligned with the prior year.
Speaker 6: The result income was $6.16.8 billion.
Speaker 6: Moving to page 22, we look at the revenue development. As it was mentioned, we're up 18%. If we take out FX translation, we're up 11%. There are 2.8 billion negative impact on volumes driven by a 234,000 unit decrease in Europe , partially upset by cumulative 90,000 unit increase across the other regions.
Speaker 6: Net pricing actions that delivered an 8% performance gain year over year or 12 billion euros with all segments contributing positively and split relatively evenly across our three engines North America Extended Europe and South America plus M.E.A. Plus China and India and Asia Pacific Vehicle line mix was also positive adding another 4.9 billion euros
Speaker 6: coming from Europe and North America and in Europe in particular partly due to our higher electrified vehicle penetration. 10 billion was added due to FX translation of the stronger dollar and Brazilian rail more than offsetting the devaluation of digital era. Completing the war we had a positive 2.9 billion.
Speaker 6: In the other category, primarily due to lower volumes of sales with buyback commitments in our European business and parcel service revenue growth. Moving to page 23.
Speaker 6: category, primarily due to lower volumes of sales with buyback commitments in our European business and parts and service revenue growth. Moving to page 23. Looking at the A.O.I. development.
Speaker 6: And we get from our 11.8% margin last year to our 13.0% margin this year. Lower industry volumes in North America and Europe had a negative impact of about 2.8 billion compared to the prior year. Net pricing actions, as mentioned in all segments, led us to a 12.4 billion positive item. Vehicle line mix was positive due to 0.8 billion in Europe and 0.8.
Speaker 6: impact in H2 but roughly in line with our full-year estimate.
Speaker 6: We were also negatively impacted by energy cost inflation in Europe and other supply economics in the second half SGA was down in in large Europe by 0.6 billion and in North America by 0.2 You can buy continued cost containment and Simplification of the organization structure R and D costs were up about 300 million
Speaker 6: And in the last bucket we have an impact to 3.4 billion due to the change in dealer stock levels year over year, which is, which was at a significant reduction in inventories in 21 and an increase in 22 as we replenished our dealer inventory levels, which we will look out in the further slides. Good progress on the further diversification of our profit drivers.
Speaker 6: margins were 12% down 210 basis points versus H1. This reduction was driven by a reduction in North America margins as well as European margins and South America. In both North America and in large Europe sequential pricing was still positive but was offset by the negative volumes and higher sequential industrial costs which caught up with the price increases as we had taken earlier in the cycle.
Speaker 6: Moving to page 24, we start with the regions North America. North America had a very strong year reaching 16.4% margins with both increases in the top line and in marginality.
Speaker 6: The industry with down more than 7% with our sales down 11 has commented earlier, with jeep down 11 and ram down 13%.
Speaker 6: consolidated tripments and the last were up 2% year over year to 1.9 million units as dealer inventory levels recovered from the especially low levels of 2021.
Speaker 6: We had a substantial improvement in our net revenues, up 23% due to the impacts of strong net pricing, positive vehicle mix due to increased ground waggeneer and waggeneer volumes and the transition to the new grand charity from the prior version, as well as approximately 9 billion of favorable FX translation. Terms of profitability, increased raw materials, components and logistics costs.
Speaker 6: negative than H1 due to all materials, manufacturing performance and other inflation effects from direct materials and logistics. However, with the continued strong net pricing, we posted a strong 14.7% H2 margin. Moving to the next page we look at in large Europe .
Speaker 6: We were impacted in the region by continued unfilled semi-conduct orders as well as out biologistic challenges in the second half of the year leading to market share losses in EU 30 down 3 points sequentially to 18.2% for the second half. Our teams are continuously working to resolve these challenges.
Speaker 6: With respect to logistics, we have secured additional capacities and continue to strengthen our mid and long-term partnerships with third-party transportation customers while at the same time improving our fulfillment processes. Despite lower shipments down to 234,000 units or 8%, we were able to increase our net revenues by 7% to 63.3 billion through net pricing actions up 7%, and favorable vehicle mix supported by our renewed and electrified line-up.
Speaker 6: We also benefited from the successful launch of the Alfa Romeo Tanale, which represented more than half of the volumes around the Romeo and H2. Thanks to this performance on the top line and positive effects from cost containment actions and used car profitability, we were able to more than offset the negative impact of industrial costs, of which 2.9 billion came from raw materials.
Speaker 6: and 0.9 billion from energy inflation with the remaining primarily related to component and logistic cost increases. AOI margin closed just below the double digit market 9.9% for the full year and outstanding result achieved just two years after the merger and boating well for the future profitability in the region. The Quential margins were down from the 10.4 and H1.
Speaker 6: due to volume down 98,000 units and industrial costs increasing due to raw materials and other inflation on components, logistics and energy.
Speaker 6: Moving to Middle East and Africa, on page 26, the region doubled its adjusted operating income to 1.1 billion, continuing the trend from 2021, which was up over 80%. Despite industry sales declining 1% our market share improved 20 basis points.
Speaker 6: Thanks to growth in sales for Opel Fiat and RAM. Consolidated shipments were up 4% to 280,000 units, mainly due to higher shipments for Opel, models such as Mocha Corsa and the Crossland X.
Speaker 6: Net revenues are up 24% at 6.5 billion. With net pricing actions and market mix, more than offsetting the negative impact from the Turkish lira devaluation.
Speaker 6: and lab profitability of 17.8% A.O.I. margin was achieved in H2 representing a 230 basis points sequential improvement and leading to a full year margin of 16.7%. Further, underpinning our view of the BrightPressed Prospects for this region. Moving to page 27.
Speaker 6: We look at South America, where the team also achieved significance in growth in A.O.I. up 130% in 2022, following a five-fold improvement in 2021. We reinforced our leading position in the region and its key markets with market shares in Brazil, Argentina and Chile standing at around 33%, 31%, and 11% respectively. In addition to the Fiat and G-Brown leadership,
Speaker 6: We also benefited from the success of Persia and Ram brands, which improved their shares in the region by 60 and 20 basis points respectively. Consultated shipments were up 3%, 859,000 units, primarily due to strong demand for three of all our all-new locally produced vehicles, the Fiat Pulse, the Jeep Commander and the Citroen C3, as well as higher Persia Persia to our 8 volumes.
Speaker 6: Net revenues increased by 46% to 15.6 billion euros, supported by strong net pricing and vehicle mix as well as FX translation.
Speaker 6: Our strong commercial performance in the region allowed us to offset 1 billion of additional industrial costs including 0.8 billion for raw materials, leading to more than 2 billion A.O.I., more than doubling from last year.
Speaker 6: margins were strong at 13.1% up from 8.3% last year. During the page 28, we look at China and India nature Pacific and Maserati. Strong net pricing in China and India's Pacific was the main driver for the 48% increase in adjusted operating income, along with favorable vehicle mix mostly due to higher volumes for G-Glan Cherokee L, Meridian and Ram 1500.
Speaker 6: A net pricing effort throughout the year helps us to reach a 15.5% AOMR in the second half of the year, up 210 basis points versus H1 and bring the full year margin to 14.5%. Also great steps forward from MotherRati, achieving double did AOMR at 10.1% for the year, AOMR has doubled to 200 million euros, thanks to favourable net pricing and will come next due to the success of the MC20 and the all-new Grekkale. AOMR has doubled to 200 million euros, thanks to favourable net pricing and will come next due to the success of the year, up 210 basis points versus H1 and bring the full year margin to 14.5%.
Speaker 6: Moving to our cash flow on page 29. Cash flow was up 78% to 10.8 billion as we mentioned with a strong contribution from 7.1 billion net cash synergies. A wee bit damnaging with a 16.7% for the year, 1.5% better than last year.
Speaker 6: and bought an additional 6.1 billion of profitability over year. Caffex and capitalized R&D were 1.7 billion lower, primarily due to timing and synergy realizations, which were around 4 billion in the year. Adding expense to R&D, total capex on R&D spending represented about 6.6% of 2022 net revenues down from
Speaker 6: from last year at 8.6%. We expect the percentage to be back at around 8% of revenues in 2023. We also had a 4.8 billion negative impact from the change in networking capital due to a 134,000 increase in company vehicle inventories and increased trade receivables mainly due to a reduction in the level of factory, partial set by higher trade payables.
Speaker 6: Negative working capital balance was reduced from 13.8 billion to 9.4 billion due to the reduced factory and increased vehicle inventory. Moving to the vehicle inventory on page 30, as we've talked about, we continue to face outbound logistics challenges primarily in Europe , which impacted vehicle deliveries to our dealers and customers, particularly in the second half. Since the end of few three, we've reduced our company own inventory from 275.
Speaker 6: to 230,000 units, with dealer inventory is increasing from 651 to 844,000 units. We expect the situation in Europe to continue to improve through the first half of this year with a substantial improvement in Q1.
Speaker 6: During our industry outlook and guidance on page 31, we see moderate growth in all regions, even if the backdrop continues to be volatile. With regards to our guidance, we expect to continue to operate with double-digit AOI margins in 2023, leveraging our strong momentum and operating efficiencies gained over the past two years.
Speaker 6: The offset headwinds, which include improving but still disruptive semi-conductors availability, supply chain and logistics constraints, especially in H1, as well as higher energy and labor costs. As mentioned earlier in 2022, we incurred total industrial cost inflation items of around 9.5 billion, of which 6.5 billion were wall materials, which we more than offset was strong, positive pricing.
Speaker 6: In 2023, we expect a much lower wall material impact in particular due to more favorable steel price. Carrier of a pricing will be a tailwind, but we do not envisage further price increases at the level seen in the last two years. We will continue to maintain strict pricing discipline.
Speaker 6: Opportunities for industrial efficiencies need to be addressed as the supply situation continues to slowly improve and the outbound logistics issues are resolved. Industrial 3 cash flows will be positive, will increase the investment in cap-aix on R&D, plus higher levels of investment in battery JVs and associated supply chain.
Speaker 4: offset by improving work in capital compared to 2022. Thank you for your attention and I'll hand back to Carlos. Well thank you, thank you Richard for this detailed explanation. Let's now step back and wrap up this first part of our presentation and have a look at the way we are executing our therefore 2030 strategic plan. Looking at the three major pillars care, tech and value.
Speaker 4: It is fair to say that on the care pillar, we are on our way to achieve our carbon net zero result by 2038. We reduce our carbon footprint by 11 percent in one year only in 22. We improved our quality, our product quality sharply by reducing by 30 percent the number of incidents in the first three months of usage. We are on our way to achieve our carbon footprint by 11 percent in one year only in 22.
Speaker 4: We have now 27% of our leadership positions which are held by women and we target 30% by 25 and 1% of our HR processes have been aligned with diversity and inclusion commitment. So on the care pillar we are on track. On the tech pillar, as you have seen, our BV cells are up 41%. And we will double the number of PVs on cell by 24 against 22.
Speaker 4: and the ramp up of our BZ models is absolutely on track with the plan. We are now taking strong positions as a front runner on the other end of fuel cell part lanes. We consider that we are progressing well on our three world class software platforms as much as on our AI partnership with the AI motif acquisition.
Speaker 4: and we have invested in no less than 10 startups using our Stellantis Venture Arm and three of those projects will be launched this year.
Speaker 4: In terms of value creation, we are moving forward and fast forward with our US financial service operations. This is exactly what we wanted to deliver and I must say that we are pleased with the progress. We have seven active businesses which have been prioritized to
Speaker 4: complement the core business and those businesses are going year-over-year. We see that all regions are now growing and delivering record profitability. And we see also that our overseas club outside of Europe and North America is now getting ready to become the third engine of our company with a 34% net revenue growth year-over-year.
Speaker 4: going year over year. We see that all regions are now growing and delivering record profitability. And we see also that our overseas club outside of Europe and North America is now getting ready to become the third engine of our company with a 34% net revenue growth year over year. So, life.
Speaker 4: What should we take away from this presentation? I would like to share with you three numbers. We are one company, one talentis. We are all moving in the same direction at the same pace. We are all moving in the same direction at the same pace.
Speaker 4: The direction is given by the strategic plan. People get it and we are blessed with the 7.1 billion euros of net cash merger synergies, which means that this merger is the bottom-up driven merger. Now we would like again to thank our employees for their maturity.
Speaker 4: for their understanding of what this represents for the future of our company. Point number two, we are fast progressing on their 420-30 and of course the 41% PV sales growth rate is demonstrating that but the fact that between now and next year we are going to double the number of PV models is also very representative of the fact that we are not talking about transformation, we are doing it.
Speaker 4: And last but not least, our company is more than ever, an all-weather company. A company that is highly resilient, highly focused, hard-working, we all move in the same direction at the same pace because we are one company. And the best way to express that is to remind you that most probably we are the benchmark of the automotive industry with a 40% break-even point in our business.
Speaker 4: 40% against revenues, of course. That means that the company is really strong, it's robust, it's transforming itself, it has the right technology, the right people, the right leadership, that means that we represent a significant potential for the future. We very much thank you for your attention, for your focus, we are now ready for your question. Thank you.
Speaker 2: Thank you ladies and gentlemen if you would like ask a question please press star one on your telephone key but thank you. We'll now take our first question from Thomas Besson at Kaplasia Roo your line is open please go ahead. Thank you.
Speaker 7: I have three questions please. First, I'd like to start on cash returns. Could you explain what growth finally you decision to go for a specific 23 by lack of a billion five and give us your view on the possibility to eventually spin other at the at one point in 2024, 2025?
Speaker 7: should the market continue to value Luxury OEMs so differently to Massa Toneckus. Second question, I'd like to have a bit more comments about 2020-23 in inflationary headwinds and offsets for Stellantis as well as comments on what we should expect in terms of Stellantis market share development.
Speaker 7: by region, notably in Europe , as you solve your logistic issues and you get the normalization of your production. And finally, a small question about contributions to be expected and cash requirements needed for some of your side businesses. Notably the US Stinco and Symbio, I think you've mentioned you took a stake in the company. I think it's still a big discussion, so if you can say a bit more about that.
Speaker 4: buyback decision that by the way was discussed at the board level and decided with this full support of the board and I will take it back for the simbio case later on. So what can we expect from 2023? First the growing interest rates are now...
Speaker 4: triggering some kind of slowdown of the economy. We can see it. We can see that some of the raw materials are cooling down in terms of inflation and some of them are even going down, which means that this is going to be a good contribution to the reduction of the total production costs, which is exactly what we have in the plan which is
Speaker 4: to reduce our total production cost at a faster pace than the erosion of pricing power. That's what we are trying to see and to execute and I think this is already showing some results. We see that our total production cost tends to stabilize over the last few months, which is the expected consequence of the rise of the interest rates. And we believe that that will continue in that direction.
Speaker 4: Of course, as you pointed out, there is now a rebalancing between the supply and the demand. We have now a significant amount of cars in our dealer network YAHDS.
Speaker 4: I think we are close to 1 million cars in the Deer Network, which means that the supply is back.
Speaker 4: which means now the supply in the dealer yard. I'm not talking about the pipe or in transit. I'm talking about what you can find in the leadership. The supply is there, which means that we have already the sales and marketing tools to start fixing the market share in Europe . While we continue to execute more robust fix,
Speaker 4: on the outbound logistic, which is not over. We are working on the IS platform, the outbound logistic platform that we call internally, the OPT platform. We still have a few bugs.
Speaker 4: that we are now taking care of and there is a specific task force taking care of those bugs for that software platform to be fully operational and rigorously operational.
Speaker 4: We are asking more and working more with our partners to have a better capacity on their side. We are also reinforcing our own capability. As you know, we have an outbound logistic company that we call IFAS.
Speaker 4: This company has a significant potential to grow and we are reinforcing our investments in that company to make sure that we Put ourselves out of trouble very soon. My estimation is that those operational issues will be fixed Within the first quarter of this year so very soon. I will make sure that we fix them in the robust way so that they don't
Speaker 4: backfire on us later on. While I'm saying this, I also need to recognize that the number of cars we have in the Deer Reount is already quite significant, so there is room to improve our market share in the Deer Reount.
Speaker 6: That's what I can answer to your question. I would like to go back to the share by back topic and over to Richard please. Thank you, Carl. When we talked about our plan, therefore, in 2030, we talked about buying back around 5% of our share capital through the period, the plan, through 25. We brought back...
Speaker 6: 69 million shares as we bought back the shares for the exercise of the GM warrants. So basically the 1.5 billion would be the complement to get us to 5%.
Speaker 6: I think that's really the very basic logic of the 1.5 billion. I think where we are today with our balance sheet, very strong, very good cash flow performance in 2022. And strong momentum in the business, we believed that it was a reasonable signal to shareholders and the market of the confidence of the company. So no other particular magic behind the 1.5 billion other than it's a complement of the 5%.
Speaker 6: So 24-25, I think we'll see as we continue to operate, right? It's all about performance and cash flow. Our cash flow was very strong in 22. Notwithstanding we had, as you saw on the walk across 4.8 billion of negative impact from working capital, we will have higher investments, as I mentioned, in 2023 both for our CapEx and R&D and for the capitalization of...
Speaker 6: Some of the electrification related joint ventures on batteries in particular and the US ring co, which you asked about, and I'll tell you the number this year should be about 0.7 billion euros of injection of equity into the ring co in the US this year. So I think we're very confident about the cash flow generation for this year, but we're not going to commit to a...
Speaker 4: Well, thank you, Richard. That was another statement. What is clear is that we are proving you to know that when there is a good cash generation.
Speaker 4: We have no mental lock on share buybacks. It's just for your reference, it can happen, it can happen as soon as the results of the company are creating a situation where we are confident. We see that we can go on a difficult period if need be. Again, thanks to our very low breakeven point. And if the opportunity comes, then we reward our shareholders with the appropriate.
Speaker 4: for the future as we are going to be and keep our leading position on fuel cell powered vents in the world and talking not only about Europe but also in the US. So I think it's a good win-win for win-win-win.
Speaker 4: for the three shareholders and we are going to align our forces to go even faster. In using the good scientific education that we have not only in France but around the world on this matter. So it's just a compliment.
Speaker 4: to what we have already started doing. As you know, I would like to remind you that we are going on a high volume production from the beginning of next year in order and plans. That's what we can answer to your three important questions. Thank you. Thank you. We'll now take our next question from George Gelias at Goldman Sachs.
Speaker 8: The line is open, please go ahead. Thank you, and thank you for taking my question. I had two questions really surrounding slide 16 on electrification. Obviously you've seen a very big improvement in your battery electric vehicle volumes and your market leader in commercial vehicles in Europe and second overall. But when we look at the profitability in Europe , you're still very close to a 10% margin. So the first question I had was, could you just give us some insight into how the gross margin on your battery electric vehicles are fairing compared to your ice vehicles today? And how you think that will evolve as you put all the different pieces of this ecosystem.
Speaker 4: We drive the business to achieve the margins that we need to get from our investment. We are driving the margins of the THVs and we are driving the margins of the DVs, which means that at one point in time what we may...
Speaker 4: Discover the two of us is that there is the need to ensure a higher price competitiveness because, for instance, of new entrants. And not only we are optimizing all of the costs of our electric power trains as we are fully vertically integrated. But on top of that, we also consider that we need to work on more breakthrough ideas like the one I mentioned to you about the EV Smart Car Platform-based vehicles that will represent another breakthrough in terms of cost for EVs at the core of the market.
Speaker 4: So we are addressing from both ends. One end is to say we don't take margin as a result of everything else. We drive margins and then we allocate what needs to be allocated so that the margins are to a certain extent protected. What is clear is that we need not only to take care of the amount of margin but also the rate of profitability because on average the net revenue per unit of EVs is higher than the ITs. We are not taking margin as a result of everything else.
Speaker 4: So we are working on that. But so far margins are not the big problem. The big problem will come later, which is the affordability of the V for the middle classes. That is coming, that is coming within a few years. As we see the new entrance may set a certain level of pressure on the market. That is why we are preparing with the EV Citroen C3 Smart Car Platform based as an example. That of course that can be used for other brands.
Speaker 4: So, we take it from there and so far the sales of BVs, as you have seen, have not impacted us on our earnings, because our earnings are just record as you have seen. That's how we see it, not easy, certainly. Not one single direction, it's not only about selling the value of what we create through a high pricing. It's also understanding that new entrants are coming. And against those new entrants, we need specific, grateful plans that...
Speaker 4: Fortunately, we couldn't anticipate because if we are manufacturing the UC-23EV right now in India, it's because we decided that three or four years ago. So that was hopefully a good anticipation of what could happen with you entrance.
Speaker 6: That's my answer to your question. Let me end over to Richard for the CAPEX question. Thank you, Carl. So the CAPEX and R&D of 8% does not include CAPITAL injected into the joint ventures, George. So that would include obviously the...
Speaker 6: for batteries and other components and the US Freenco. So I would expect that number to be for this year around 2%, maybe a little less revenue. So we're talking about a total envelope of up to 10% between the CAPEX and R&D Dunning House and the equity injections into the joint ventures. That's it. Very good to see you, Sansa. Thank you, Richard. I appreciate it. Let's move to the next one. Thank you.
Speaker 2: Thank you, we'll now take our next question from Vince Bond at Automotive News. In line, he's open, please go ahead.
Speaker 2: Thank you, we will now take our next question from Vince Bond at Automotive News. In line, he's open, please go ahead. Thank you.
Speaker 9: And so your Belvedere Assembly Plant is going to be idle next week. What is your message to the workers who are going to be laid off?
Speaker 9: And so your Belvedere Assembly Plant is going to be idle next week. What is your message to the workers who are going to be laid off? Sorry, which plant were you talking about?
Speaker 9: The Belvedere Assembly Plant. Ah, so we are enjoying the... The G-Cherokee Plant. Right, your information must be wrong because I was not in Belvedere recently, so I don't know where you got that information from, but I was... Oh, oh, no, no, no. I didn't say that. So the plant is being idle next week. What is your message to the workers who are being laid off? Well, my message is very simple.
Speaker 4: by the way, not only to the workers, but to you or so. It's very simple. We as citizens have decided to go in electrification path.
Speaker 4: which is very, very expensive. This has been decided by the governments on the basis of what the parliaments have decided. So I just would like to tell you that the decision to go on a full electrification path is not a decision that has been made by the car makers, is a decision that has been made by the states by the governments. Through the democratic process of the...
Speaker 4: listening to the parliament decisions and proposals, the states have decided to go ill-trick. As you know, this is true for Europe , it is true for North America. From there, we have the responsibility to bring safe...
Speaker 4: to the parliament decisions and proposals, the states have decided to go illatic. As you know this is true for Europe , it is true for North America. From there we have the responsibility to bring safe, clean,
Speaker 4: and affordable solutions to protect freedom of mobility in our societies. In that term, our mission is to bring clean, safe, and affordable solutions to ensure freedom of mobility to our citizens. This is exactly what we are doing. When we do this, and we execute on physical evidence,
Speaker 4: What it means to bring a safe, clean and affordable vehicle, we see that there is a very significant challenge on costs. Not our decision. It is the cost of the technology, specifically the cost of the technology when you start.
Speaker 4: you start developing brand new technology. This additional cost needs to be absorbed in a way or another. If you don't absorb the cost, then either the market is going to shrink dramatically because the middle classes will not be able to buy EVs.
Speaker 4: If the market shrinks, then the industry needs to shrink. Or you don't pass the cost to the consumer, you put yourself in the red, and you need to restructure your company because you have put your company in trouble. So you see in both directions, from a social perspective, it's not very good. So what we need to do is to absorb in a few years because the time window is imposed on us. We need to optimize the way we go to markets. We need to optimize the way we manufacture our babies.
Speaker 4: We need to optimize the way we source the components of our devs to make sure that we absorb the additional cost of this technology to protect it for the ability. So anything we will be doing, not specifically with the other there but everywhere in the world, will be aiming at
Speaker 4: absorbing the additional cost of a technology that was decided by the states, by all the states in a democratic process. And our job.
Speaker 4: Just to make it affordable make it safe and to make it Absolutely clean. That's our draw. So we take responsibility for transforming the company to Adapt to this new world. Yes, we do we take responsibility for Transforming the company to adapt to a new world this new world has been decided by the citizens That's not been decided by our companies. Our companies are in support of something
Speaker 4: that has been decided by the system. So every time we do something, we try to do it in a very humanistic way. And I think we have demonstrated that over the last years. We have demonstrated that we drive change in a humanistic way. And we respect our people because they are the highest core value of our company. At the same time, it would be the meagotic. And we respect our people because we are the highest core value of our company.
Speaker 4: by the system. So every time we do something, we try to do it in a very humanistic way. And I think we have demonstrated that over the last years. We have demonstrated that we drive change in a humanistic way. And we respect our people because they are the highest core value of our company. At the same time, it would be the meagotic not to tell them the truth.
Speaker 4: The truth is the societies have decided a new way of enjoying mobility. Our job is to make that new way clean, safe and affordable.
Speaker 4: truth is, the societies have decided a new way of enjoying mobility. Our job is to make that new way clean, safe and affordable. Right now it's not affordable at all.
Speaker 4: Right now, the big problem of electrification is to make it affordable, which means absorbing the additional cost, which means transforming the company to be able to bring that affordability to our citizens and our customers. That's what we are doing. And I have no problem to tell you this in a very respectful and friendly manner, as much as I have no problem to say the same thing to all of my employees. Let's move to the next question. Thank you. We'll now take our next question from Stephen Wrightman, Associate General Raleigh. Your line is open. Please go ahead.
Speaker 10: Yes, good afternoon. I have two questions. First of all, on the changing data stocks. Obviously, I had a big impact in the first half, particularly North America, and a much smaller impact in the second half of this year. I'm wondering if you give us some indication of how you expect this item to move in 2023. And secondly, if you comment on production and the reception of the Grand Waggeneer of the Waggeneer, understand those vehicles have faced quite severe component shortages, which is respected, particularly production of the Grand Waggeneer.
Speaker 4: What's the outlook for 2023? Thank you very much. Those are two great questions. With all the respect, my opinion on the first one is slightly different. I think that our company is enjoying a very strong order book right now. So what I would like to do for the first half is to...
Speaker 4: to bring back to my other book a fee for a fee for inventory supply, which means making sure that all the cars I could not make in the past because I didn't have all the parts are not lagging behind because those customers are being a gracious and very kind to wait.
Speaker 4: And I would like to express to them my appreciation and express also my deep sorry for that. I would like to thank them for being patient, for being loyal to our brand and we are trying to fix that.
Speaker 4: so that we bring a reasonable lead time to most of our orders. And we have a significant order book. So I think the first half will be mostly about using the order book we have, and putting the right sequence, the right C-4 sequence in delivering the order book. And then in Q2, depending on how the world economy is moving, we'll see what is the order intake rate of Q2. So we'll see what is the order.
Speaker 4: which will be decisive to what will happen in age 2. So what I would like to answer to your fair point is that I think on the first half we are going to be protected by our older book.
Speaker 4: We are going to use this period to get more order and more better fee-fold sequence in our inventories, recognizing that we have a lot of cars waiting in the dealer yards right now. So there is no lack of supply, but in some cases we may not have the right supply. Or in some cases mostly in Europe because there is a significant bill to tolerate, we would be asking a few customers to wait too long and we want to fix that very quickly.
Speaker 4: So that's the first half. Second half will be dependent on the other intake rate of the second quarter, which means spring. And that will depend on what? If you will depend on the consumer sentiment, it will depend on how the world economy will be growing or not. Are we slowing down too much or not slowing down too much? It's very much dependent on the decisions that are going to be made on interest rates, as you know very well. So I think it's too soon to decide what the second half will be. I think we'll have to wait for the Q2 order intake trend.
Speaker 4: But we can say that for each one we have a significant older book that we are going to enjoy, fortunately. Thank you. For the Biden here, second question. We have the near is now back. Yes, we have some supply disruptions.
Speaker 10: I think we have fixed them and the wardenery is back. That's what we can say. Thank you. Next question. Thank you. We'll now take our next question from Philippe at Jeffreys. Your line is open. Please go ahead. Yes. You're a good afternoon. It's Philip Schwa, Jeffreys. I just wanted to couple of questions. One, I think you answered, POM, earlier about market share recovery in Europe . I'm just wondering how you look at market share in North America. Thank you.
Speaker 10: given that you don't have EVs yet in meaningful volume to maintain, no, sharing that segment. So what are you intending to maintain your share in North America? And the other question I have was, on your, it's interesting when I listen to comic or everybody claims to be leader in commercial vehicles, and I think you are leaders, but everybody makes similar claims. As the profitability industry has improved in general, can you kind of comment about how you also-
Speaker 4: no driving profitability in commercial vehicles as the world moves to electrification. And also I'm curious if commercial vehicles are still a creative group margins at this stage given that the general level of profitability has gone up. Thank you very much. Well those are great questions and I am pleased to answer to them. First of all, the fact that we are the leaders in the LCBs, at least in Europe and Latin America is an O-brainer but I will let you check and double check if needed. But in Europe and in Latin America it's an O-brainer that we are the LCB leaders.
Speaker 4: the numbers are stunning. Then on the market share in North America, what I can tell you is that we were perhaps a little bit slow to move from a distribution of scarcity to a full supply of the market.
Speaker 4: We are now back to a good supply in the market and that means that of course we need to go back from managing scarcity to going back to the sales marketing pure tactics that we knew a few years ago
Speaker 4: I think on that corner we could have driven a little bit faster. At the same time we have been keeping very strong pricing power, which has also been one of the things that we have been protecting and we need to recognize that and take eventually some pressure on the share because of that. So I think market share in N.A. is just the consequence of the way we have been going around the corner.
Speaker 4: going from a lack of supply to a full supply of the market, going from a distribution of scarcity to a fully supplied market in terms of bringing the products to the consumers. And hopefully that will be improving very, very soon. You also asked me about the profitability of LCVs. It's a very good product. It's on the edge.
Speaker 4: average of what we have in the company so it's just a big big business and by the way we have just given our LCD business unit more autonomy in terms of decision-making to make sure that they have their capability to adapt at a faster pace.
Speaker 4: to the market conditions and we have also a new leadership in place to be even more aggressive on the social marketing side. But of course, we will continue to protect, if not enhance, our leadership in Europe and also in Latin America and somewhere else in the world. We have specifically big plans to develop our RAM, pickup track, penetration and market share in many parts of the world, of course, starting with the US but more than the US.
Speaker 4: and some more surprises will come for our competitors in terms of deploying the RAM brand across the world. Thank you. Next question. Thank you. Thank you. We'll now take on next question from Jose.
Speaker 11: And JP Morgan, your line is open, please. Go ahead. Thank you. It's also a little bit more on high Carlos Richard. A couple of questions, please. The first one, Carlos on margins in North America. Can you discuss a little bit the outlook for 23? How do you think about the possibility of maintaining margins in North America in 23 at the level of 22?
Speaker 11: And then second question on the Ram fif hundred emetric, obviously a very competitive product. Can you comment on maybe the possibility that the targets to match or you now outperform the performance metrics we are seeing from peers, including the test LA have a truck, Thank you.
Speaker 4: Great questions, Jose. Let me take it in the same order. Marginz in NA.
Speaker 4: Great questions, Jose. Let me take it in the same order. Marginz in NA. The good thing about NA.
Speaker 4: is that we have found that there is a significant room of improvement.
Speaker 4: that we have found that there is a significant room of improvement in our own plants.
Speaker 4: in terms of what we call internally the transformation cost. So there is an internal component and an external component. One internal component is the fact that our manufacturing system, when we look at the best practices we have around the world for our talentists, we see that we have great opportunities in North America.
Speaker 4: our local leadership team has recognized that. They have seen what those opportunities were. They have visited the other plants of the territories and they have seen that some good things could be done to be much more efficient than what we are today. So that's the part of opportunity that we have in our hands is to improve the transformation cost of our own.
Speaker 4: manufacturing system in North America. That's what the second one is that we are now being very, very specific in the way we are using our marketing dollars to make sure that we bring the support where it be but not in a way that is, I would say vague, we are trying to be precise in terms of marketing tactics to use the money where we need to use it where the market demands, but in some other cases it's just a waste of money.
Speaker 4: We are trying to be quite picky on that one and of course we have strong total production cost What we call war rooms? Char places where all the cost functional teams gather Share ideas to reduce the total production cost of the products so that we protect our margins Using the total production cost including the transformation cost in our plants
Speaker 4: And we will see when we balance the H1, if we were able to do that or not. What is clear also is that the interest rate rise is quite helpful to cool down a sort of number of inflation factors and we see some of those inflation factors to be now is appearing, which could be good news for NA. On the pick up track, what we have been doing is...
Speaker 4: on a voluntary basis, we are being quite vague in the performance KPIs of our pick up track, our BV pick up track. Why? Because we don't want to get the information to work of editors. But what I can tell you is that we have spent many, many hours, including me.
Speaker 4: looking at the performance of our competitors and making sure that when we look at a composite index of charging speed range payload towing we bring the best offer of the market.
Speaker 4: And I'm very excited by the quality of our engineering. Some of it was demonstrated through the concept car you have seen in Las Vegas in January . I think they are doing a great job. Now we need to let them work.
Speaker 4: keep their focus, let them be focused on what they do and hopefully things will appear by the end of 24. I'm very positive about their competitiveness.
Speaker 4: let them be focused on what they do and hopefully things will appear by the end of 24. I'm very positive about the competitiveness of what we are doing.
Speaker 4: But of course, as always, planning is 10%, execution is 90%. So right now we are focused on the execution. Thank you all, Zayn. Next question, please. Thank you.
Speaker 12: We'll take our next question from Martin O. Dianne Brogge at Equator. Your line is open. Please go ahead. Thank you. Good afternoon. Good morning, everybody. The first question is on prices. So how's the land this is behaving on prices considering the competitive environment? You mentioned the land this will remain disciplined, but could you elaborate a bit more on what is going on today and what should we expect for the rest of the year?
Speaker 12: The second question is on your main worries. I remember in the last call logistic issues in Europe and components shortage was where the two main issues, but both seemed to go in the right direction.
Speaker 12: So what are your main worries today and the last on guidance I'm sorry to go straight on quantitative issues, but
Speaker 12: trying to get a quantitative indication, are you comfortable with a consensus estimate which are in the region of 18 billion adjusted in the 6-7 billion free cash flow for the current year?
Speaker 4: The third question is a $1 billion question. I will leave that one for Richard, the third one. And of course, I will let him comment the prices and the discipline. Let me talk about the worries because that's something I can talk about. Fundamentally, you know, in our industry, we are not worried anymore. You may think this is crazy, but it's not about being worried or even concerned. It's about...
Speaker 4: Just think about the sequence of crisis. Look at the pandemic, then the semiconductor, then inflation, regulations,
Speaker 4: interest rates, etc. This industry has been heavily brutalized. So one of the things we should be mindful is that car companies are made of people.
Speaker 4: It's important. That's why it's important for me to tell my people today the time proud of them. This industry has been facing crisis after crisis, year after year.
Speaker 4: It's important. That's why it's important for me to tell my people today the time part of them. This industry has been facing crisis after crisis, year after year, for the last few years.
Speaker 4: And then we just threw out the industry, old and new regulations. We are very shortly time, regardless of what the state of the art would need. We need to recognize that this is a situation that may create problems at one point in time. So I think it's time to say, hey, why don't you try to create a little bit more stable environment so that people can work in a proper way? But you see. So if you talk about worries, I would say I'm ready for the automotive industry worldwide.
Speaker 4: because it seems that the respect this industry has been decreasing. As we saw this industry, more and more challenges, and everybody just considers that this industry has a no limit in its ability to digest challenges and crisis. I think that's not fair for the people that are working automotive industry.
Speaker 4: I think we should respect them and just recognize that there is a limit to human beings. And if there was one thing I would say not for my company, my company is really, I think one of the survivors of this sequence, but I think for the overall industry, we need to start perhaps respecting the people.
Speaker 4: that are working in this industry. They are doing their best, doing the clean energy, clean their mobility, sustainable business models. They are doing their very best, that we cannot continue to throw at their face.
Speaker 4: working in this industry. They are doing their best, doing the clean energy, clean their mobility, sustainable business models. They are doing their very best that we cannot continue to
Speaker 4: That is important. It's not specific to stand-ins because I'm so high on the resilience of my people, but it's something that strikes me. Looking at my 42 years of automotive industry. I would like to conclude here on the worries.
Speaker 6: and give it back to Richard for the $1 trillion question. The question is am I comfortable or am I worried? That may be it. I mean, you don't know. No, it's in the car industry, so I should be relatively uncomfortable, I think, based on what you just said. I think the guidance we gave is clear, Matthew, you know.
Speaker 6: Our goal is not to shrink this company, obviously. So the numbers you gave us were 18 billion of A.O.I. We did 23 last year, so that's clearly not our target. We're focusing on maintaining a very profitable business, a lot of price discipline, and we see, obviously,
Speaker 6: opportunity to do a very good result in 2023. So I think we'll focus on that. You'll see how we progress in the first half of the year. In terms of obviously the key point is probably, as you mentioned, is price trends on the one side and cost and raw materials on the other.
Speaker 6: I think we've mentioned that we expect raw material inflation to be a lot lower in 23 compared to 22. We also expect some positive carry over pricing on the top line. I don't think we expect to see the same level of further increases in prices that we have seen in 21 and 22. But we're going to work very hard to maintain our pricing levels. I think in Europe we have a very good buff.
Speaker 6: where they should be for the quality in the brands that we have. So, you know, it's a competitive game. The inventory numbers have been going up for everybody. We don't feel uncomfortable with the level of inventory today. I think we do have some mixed challenges in our inventory on grand charity as we fill out the line up.
Speaker 6: as we've launched the new grand Cherokee and also setting out the lineup of the new version of the RAM as we finished the older version at the beginning of the year. So I think as our mix normalizes, we get more lower mix product. I think that will help us to manage some of the pressure on...
Speaker 2: Thank you. Take one more question. Yes, we'll take our last question from Michael at OdophihF. You'll want me to put them in a base color.
Speaker 13: Yes, hi, Michael from NGT's for models. So maybe a quick follow-up, the associated your previous answer, Richard, on the 2023 outlook. H2 is maybe longer and the system uncertainty as you are I did during the presentation, but at least in H1 and given what you said, how should we consider profitability compared to your H2 2022 performance, which been hit by the many challenges you mentioned?
Speaker 13: So that's the first question, specific on H1. And maybe a second one, more long term for Carlos, you highlighted the better unexpected synergies to date. But the new models, which are based on the STEDA platforms and the tech pillar, as you mentioned, are only coming in 2023 and early 2024. So could you maybe guide us a bit more regarding the magnitude of the financial benefits?
Speaker 4: at tenancies that is not old-core new-core there is one core.
Speaker 4: Because we consider one co is what comes out of the benefit of this merger to use scale.
Speaker 4: as a way to improve our cost competitiveness. And you can look at scale from two angles. When angle is how good are you at generating competitive viable costs?
Speaker 4: Your angle is how good are you at the new team your R&D and KPEG 16?
Speaker 4: In both cases scale is important in both cases. So we just want to be consistent with what we have been doing which was to create.
Speaker 4: both cases scale is important in both cases. So we just want to be consistent with what we have been doing which was to create by automotive revenues the third.
Speaker 4: automotive car company in the world and use that scale which is the outcome of this merger to the best benefit of our stakeholders.
Speaker 4: That's what we are doing. So we say it's not old code, new code is one code. Then we leverage our scale. And that scale is going to benefit the cost competitiveness of the stellar platforms.
Speaker 4: By the way, there is something that you know well which is called bundling. You don't always need to wait until you have the same hardware to benefit from the scale.
Speaker 4: But that's exactly where we are going and we want to be consistent with what we have done in creating Stellantis is level just scale.
Speaker 4: Either to elute the enormous amount of investments you make on our Indian CapEx on the new technologies.
Speaker 4: to a bigger volume or to use it when you are looking for a better cost competitiveness with your partners. So we are comfortable with this consistency.
Speaker 4: We think it's consistent and we think it's the right way to go at least when you look at our strategic plan.
Speaker 4: We think it's consistent. And I think it's the right way to go, at least when you look at our strategic plan, perhaps we should remind everybody here.
Speaker 4: that our commitment while keeping a double digit AY margin is to double the net revenue. And this year we were 18% up.
Speaker 4: So we are on track and as Richard mentioned, we are not here to shrink the company. From time to time we may have bumps on the road but we are not here to shrink the company. We are here to double the net revenue and keep a high level of profitability that comes from our very demanding management of the business model.
Speaker 4: So we will keep that consistency. It's all about being persistent. At one point in time, you are going to see something that is going to pop up.
Speaker 4: As for instance, you see today that with a 41% of the V cells growth, we are among the best in the V cells growth. As perhaps you discover that we are going to move from 23 models to 47 by the end of next year, which means the execution machine of talent is now moving fast forward.
Speaker 4: And we try to be consistent with that. So far, it has been working and hopefully it will continue that way. On specifically 2023, as I told you, you have different contradictory factors and it's all about appreciating at which speed those factors are going to move from one side the rebalancing of the supply.
Speaker 4: and the demand is creating more pressure on pricing. But we are the most disciplined car maker in the world. And from the other side, the interest rate rise is creating a cool down in the economy that is helpful to reuse the total production costs, starting with the raw materials, which is also something that we start seeing. So in fact, all of this is going to be a matter of.
Speaker 4: sequence of the two factors. What is going to move faster is it the total production cost the variable cost reduction that is going to be ahead of the pricing power erosion or the opposite
Speaker 4: And of course on our side we are trying to keep it this way TPC first erosion of pricing power after that I would say for each one then for each to it all about what is going to happen in spring
Speaker 4: in terms of order intake trend. That's where we are going to see what may happen in the second half.
Speaker 4: Right now it's too soon and as you see as you know well things are much too volatile So I don't want to have a nice story to you. I just want to tell you what I think and what is our perspective on on this matter So we are here as a 40% breakeven point company
Speaker 4: Quite agile, quite demanding in the way we run the business. We look for value, we don't always look for volume and we are absolutely committed.
to deliver the therefore at 2030 plan, which is doubling our revenues and keeping a double-digit market by 20 profits by 2030. So that's what we can share with you today, and I would like to thank you very much all of you for your very thoughtful questions. They always make us think better.
I also hope that you understand that we have tried through the dividends and the share buybacks to send a strong message of confidence to our investors. We are here to make this work and it is going to work. Talentis will be one of the big winners of this big transformation and I think we have now all the components that we need to make it executable. And just would like to thank you for your support. That has been great.
to run 2022 with you and hopefully we will make a better 23. Thank you and see you very soon. Bye bye. The discussions today is called. Thank you for your participation. Stay safe, you may not discomment.