Amotiv Q2 2026 Amotiv Ltd Earnings Call | AllMind AI Earnings | AllMind AI
Q2 2026 Amotiv Ltd Earnings Call
Speaker #1: Thank you for standing by, and welcome to the Emotive Limited FY26 H1 results call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session.
Operator: Thank you for standing by, and welcome to the Amotiv Limited FY 26 H1 results call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question via the phones, you will need to press the star key, followed by the number 1 on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the Ask a Question box and click Submit. I would now like to hand the conference over to Mr. Graeme Whickman, CEO. Please go ahead.
Operator: Thank you for standing by, and welcome to the Amotiv Limited FY 26 H1 results call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question via the phones, you will need to press the star key, followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the Ask a Question box and click Submit. I would now like to hand the conference over to Mr. Graeme Whickman, CEO. Please go ahead.
Speaker #1: If you wish to ask a question via the phones, you will need to press the star key followed by the number 1 on your telephone keypad.
Speaker #1: If you wish to ask a question via the webcast, please enter it into the Ask a Question box and click Submit. I would now like to hand the conference over to Mr. Graeme Whickman, CEO.
Speaker #1: Please go ahead.
Speaker #2: Thank you, and welcome to the earnings call of Emotive Results for the half-year ended 31st December. I'm Graeme Whickman, CEO and director, and I'm here with Aaron.
Graeme Whickman: Thank you, and welcome to the earnings call of Amotiv results for the half year ended 31 December. I'm Graeme Whickman, CEO and Managing Director, and I'm here with Aaron Canning, the company's Chief Financial Officer. As per normal, the recording of this call, along with the material, will be available later today on the website. So, I'll start the call by touching on the key messages and the group performance, a review of the operating divisions, then I'll turn over to Aaron to cover off the financial section in more detail. And then we'll conclude with a short trading update and outlook before conducting the Q&A. So let's turn to slide 3. I believe we've delivered a solid result in what is a challenging operating environment.
Graeme Whickman: Thank you, and welcome to the earnings call of Amotiv results for the half year ended 31 December. I'm Graeme Whickman, CEO and Managing Director, and I'm here with Aaron Canning, the company's Chief Financial Officer. As per normal, the recording of this call, along with the material, will be available later today on the website. So, I'll start the call by touching on the key messages and the group performance, a review of the operating divisions, then I'll turn over to Aaron to cover off the financial section in more detail. And then we'll conclude with a short trading update and outlook before conducting the Q&A. So let's turn to slide 3. I believe we've delivered a solid result in what is a challenging operating environment.
Speaker #2: Canning, the company's Chief Financial Officer. As per normal, the recording of this call, along with the material, will be available later today on the website.
Speaker #2: So I'll start the call by touching on the key messages, and then I'll turn over to Aaron to cover off the financial section in more detail.
Speaker #2: And then we'll conclude with a short trading update and outlook before conducting the Q&A. So let's turn to slide 3. I believe we've delivered a solid result in what is a challenging operating environment.
Speaker #2: I think it reflected discipline, execution, and the benefits of a multi-year diversification strategy in terms of where we garner our revenue. Emotive Unified continues to deliver incremental benefits, with ongoing cost, margin, and operational initiatives mitigating segment-level macro pressures through a more streamlined and efficient operating model.
Graeme Whickman: I think it reflected, discipline, execution, and the benefits of a multiyear, diversification strategy in terms of where we garner our revenue. Amotiv Unified continues to deliver incremental benefits with ongoing cost, and margin, and operational initiatives, mitigating segment-level macro pressures through a more streamlined and efficient operating model. We had strong, cash conversion, and coupled with disciplined capital management that supported reinvestment in the business while returning capital to shareholders. Against all that backdrop, the FY 2026 guidance remains unchanged. Group revenue growth is expected, with underlying EBITDA growth of circa AUD 195 million. Now, turning to slide four, where we detail some group performance.
Graeme Whickman: I think it reflected, discipline, execution, and the benefits of a multiyear, diversification strategy in terms of where we garner our revenue. Amotiv Unified continues to deliver incremental benefits with ongoing cost, and margin, and operational initiatives, mitigating segment-level macro pressures through a more streamlined and efficient operating model. We had strong, cash conversion, and coupled with disciplined capital management that supported reinvestment in the business while returning capital to shareholders. Against all that backdrop, the FY 2026 guidance remains unchanged. Group revenue growth is expected, with underlying EBITDA growth of circa AUD 195 million. Now, turning to slide four, where we detail some group performance.
Speaker #2: We've had strong cash conversion, and, coupled with disciplined capital management, that supported reinvestment in the business while returning capital to shareholders. Against all that backdrop, the FY26 guidance remains unchanged.
Speaker #2: Group revenue growth is expected, with underlying EBITDA growth of circa $195 million. Now, turning to slide 4, where we detail some group performance. Well, the revenue diversification has been a core pillar of our strategy, so it's pleasing.
Graeme Whickman: Well, the revenue diversification has been a core pillar of our strategy, so it's pleasing to see the revenue growth of just over 3%, underpinned by new business wins, ongoing product investments, and a high contribution from offshore markets. This provided an offset to some of the headwinds in four-wheel drive and LPE, while our powertrain conversion continues to outstrip what is a resilient system growth. Underlying EBITDA of AUD 98.3 million, up marginally on the PCP. It was impacted a little bit by lower four-wheel drive margins, due to domestic inflationary pressures and the ramp-up of South African plant, by the way, a market that we remain excited about in terms of its future prospects.
Graeme Whickman: Well, the revenue diversification has been a core pillar of our strategy, so it's pleasing to see the revenue growth of just over 3%, underpinned by new business wins, ongoing product investments, and a high contribution from offshore markets. This provided an offset to some of the headwinds in four-wheel drive and LPE, while our powertrain conversion continues to outstrip what is a resilient system growth. Underlying EBITDA of AUD 98.3 million, up marginally on the PCP. It was impacted a little bit by lower four-wheel drive margins, due to domestic inflationary pressures and the ramp-up of South African plant, by the way, a market that we remain excited about in terms of its future prospects.
Speaker #2: To see the revenue growth of just over 3%, underpinned by new business wins, ongoing product investment, and a high contribution from offshore, to some of the headwinds and forward drive markets.
Speaker #2: This provided an offset in LPE. While our powertrain conversion continues to outstrip what is a resilient system growth. Underlying EBITDA of $98.3 million, up marginally on the PCP.
Speaker #2: It was impacted a little bit by lower forward drive margins due to domestic inflationary pressures and the ramp-up of the South African plant. By the way, a market that we remain excited about in terms of its future prospects.
Speaker #2: And then we've got some select pricing implemented in Q2, and that's expected to support the forward-drive margins in the second half. The Emotive Unified initiatives across the group delivered meaningful cost benefits.
Graeme Whickman: Then we've got some select pricing implemented in Q2, and that's expected to support the four-wheel drive margins in the second half. The amount of unified initiatives across the group delivered meaningful cost benefits, and these partially mitigated the margin pressure from domestic cost inflation. This program has got really good momentum, and further incremental benefits have been identified and expected to support H2 a little bit there, and then certainly into future earnings. Great cash flow, very strong. Capital management drove EPSA up 5%, and dividend growth of just over 8%. At the same time, leverage was maintained comfortably within the target range, and circa AUD 48 million was returned to shareholders in the period, inclusive of both dividends and buyback.
Graeme Whickman: Then we've got some select pricing implemented in Q2, and that's expected to support the four-wheel drive margins in the second half. The amount of unified initiatives across the group delivered meaningful cost benefits, and these partially mitigated the margin pressure from domestic cost inflation. This program has got really good momentum, and further incremental benefits have been identified and expected to support H2 a little bit there, and then certainly into future earnings. Great cash flow, very strong. Capital management drove EPSA up 5%, and dividend growth of just over 8%. At the same time, leverage was maintained comfortably within the target range, and circa AUD 48 million was returned to shareholders in the period, inclusive of both dividends and buyback.
Speaker #2: And these partially mitigated the margin pressure from domestic cost inflation. This program has got really good momentum, and further incremental benefits have been identified and are expected to support H2 a little bit there.
Speaker #2: And then certainly into future earnings. Had great cash flow, very strong capital management drove EPSA up 5%, and dividend growth of just over 8%.
Speaker #2: At the same time, leverage was maintained comfortably within the target range, and circa $48 million was returned to shareholders in the period, inclusive of both dividends and buyback.
Speaker #2: Safety is always a pride point for the group, and therefore, it's pleasing to see continued improvement in the tripper, which has trended down to just 9.7-ish.
Graeme Whickman: Safety, always a pride point for the group, and therefore, it's pleasing to see continued improvement in the TRIFR, which has trended down to just 9.7-ish. As an aside, our work on reducing emissions also delivered tangible benefits in the period. Now, turning to slide 5, we outline the progress made on our strategic imperatives, which represent the key areas of shareholder value creation. If you look from left to right, as mentioned earlier, we're pleased to see the momentum and cost realizations from Amotiv Unified programs, which were first announced to the market back in May at our Thailand site visit. Now, we'll cover this in a bit more detail later on, Aaron will.
Graeme Whickman: Safety, always a pride point for the group, and therefore, it's pleasing to see continued improvement in the TRIFR, which has trended down to just 9.7-ish. As an aside, our work on reducing emissions also delivered tangible benefits in the period. Now, turning to slide 5, we outline the progress made on our strategic imperatives, which represent the key areas of shareholder value creation. If you look from left to right, as mentioned earlier, we're pleased to see the momentum and cost realizations from Amotiv Unified programs, which were first announced to the market back in May at our Thailand site visit. Now, we'll cover this in a bit more detail later on, Aaron will.
Speaker #2: And as an aside, our work on reducing emissions also delivered tangible benefits in the period. Now, turning to slide 5, we outline the progress made on our strategic imperatives, which represent the key areas of shareholder value creation.
Speaker #2: If you look from left to right, as mentioned earlier, we're pleased to see the momentum in cost realizations from Emotive Unified programs, which were first announced to the market back in May at our Thailand site visit.
Speaker #2: Now, we'll cover this in a bit more detail later on—Aaron will. But these activities garnered benefits across three of our divisions—all three—as well as also our corporate head office costs.
Graeme Whickman: But these activities garnered benefits across three of our divisions, all three, as well as also our corporate head office costs. I'm actually really excited that the commissioning of the third Thailand plant is underway, adding capacity to the already well-utilized existing adjacent facilities up in Thailand. This low-cost jurisdiction positions us well to win business in Europe and UK, and we touched a little bit on that at the full year, and I'm gonna talk a bit more about that later on. As discussed earlier, revenue diversification has been an important driver of this result with ongoing penetration of offshore markets, resulting in a 14% growth in revenue outside of Amotiv's ANZ domestic market. Our operational excellence efforts were well rewarded in the half.
Graeme Whickman: But these activities garnered benefits across three of our divisions, all three, as well as also our corporate head office costs. I'm actually really excited that the commissioning of the third Thailand plant is underway, adding capacity to the already well-utilized existing adjacent facilities up in Thailand. This low-cost jurisdiction positions us well to win business in Europe and UK, and we touched a little bit on that at the full year, and I'm gonna talk a bit more about that later on. As discussed earlier, revenue diversification has been an important driver of this result with ongoing penetration of offshore markets, resulting in a 14% growth in revenue outside of Amotiv's ANZ domestic market. Our operational excellence efforts were well rewarded in the half.
Speaker #2: I'm actually really excited that the commissioning of the third Thailand plant is underway, adding capacity to the already well-utilized existing adjacent facilities up in Thailand.
Speaker #2: And this low-cost jurisdiction positions us well to win business in Europe and the UK. And we touched a little bit on that at the full year.
Speaker #2: And I'm going to talk a bit more about that later on. As discussed earlier, revenue diversification has been an important driver of this result.
Speaker #2: With ongoing penetration of offshore markets resulting in 14% growth in revenue outside of Emotive's ANZ domestic market, our operational excellence efforts were well rewarded and halved.
Speaker #2: Safety improved. Headway was made on reducing emissions, with circa 850 kilowatts of solar energy commissioned at our forward drive Kiesper plant. As a result of some of the unified warehouse consolidation initiatives, Powertrain and UnderCar saw an increase in die-hard post the latest phase of the Truganina DC consolidation.
Graeme Whickman: Safety improved, headway was made on reducing emissions, with circa 850kW of solar energy commissioned at our four-wheel drive Keysborough plant. As a result of some of the unified warehouse consolidation initiatives, Powertrain and Undercar saw an increase in DIFOT to post the latest phase of the Truganina DC consolidation. So very happy with the way that's coming together. And then finally, in terms of capital management, the buyback we announced in 24 October 2024 was completed in the half. At the same time, we increased the dividend at a higher rate than the, than EPSA. Now, moving to slide 6, we touch on Amotiv 2030 strategic plan for the group, unveiled at the last AGM. Now, as you can see from the slide, we've reduced and simplified our strategic priorities from the prior GUD 2025 strategy, aligning them with our divisions.
Graeme Whickman: Safety improved, headway was made on reducing emissions, with circa 850kW of solar energy commissioned at our four-wheel drive Keysborough plant. As a result of some of the unified warehouse consolidation initiatives, Powertrain and Undercar saw an increase in DIFOT to post the latest phase of the Truganina DC consolidation. So very happy with the way that's coming together. And then finally, in terms of capital management, the buyback we announced in 24 October 2024 was completed in the half. At the same time, we increased the dividend at a higher rate than the, than EPSA. Now, moving to slide 6, we touch on Amotiv 2030 strategic plan for the group, unveiled at the last AGM. Now, as you can see from the slide, we've reduced and simplified our strategic priorities from the prior GUD 2025 strategy, aligning them with our divisions.
Speaker #2: So, very happy with the way of capital management. The buyback we announced in October '24, that's coming together. And then finally, in terms, completed in the half.
Speaker #2: At the same time, we increased the dividend at a higher rate than EPSA. Now, moving to slide 6, we touch on Emotive 2030 strategic plan for the group.
Speaker #2: Unveiled at the last AGM. Now, as you can see from the slide, we've reduced and simplified our strategic priorities from the prior GUD 2025 strategy, aligning with our divisions.
Speaker #2: Now, this calls for us to optimize our powertrain and undercar portfolio while adding one or two adjacent non-ICE categories. Solidify and defend our Australian and New Zealand lighting, power, and electrical business while still growing a global niche lighting and power business from our established bases of both in the US and Europe.
Graeme Whickman: Now, this calls for us to optimize our Powertrain and Undercar portfolio, while adding one or two adjacent non-ICE categories. Solidify and defend our Australian and New Zealand lighting, power, and electrical business, while still growing a global niche lighting and power business from our established bases of both in the US and Europe. Building a leading integrated four-wheel drive and accessories and trailering business in Australia, while leveraging key expertise to build a focused global business. You know, and I would term that as sweating the assets, both from an engineering and also manufacturing point of view. Then finally, simplify and improve via Amotiv Unified to make us more efficient and effective. Now, from my point of view, Amotiv remains an attractive pure play, all centered around automotive, as you know.
Graeme Whickman: Now, this calls for us to optimize our Powertrain and Undercar portfolio, while adding one or two adjacent non-ICE categories. Solidify and defend our Australian and New Zealand lighting, power, and electrical business, while still growing a global niche lighting and power business from our established bases of both in the US and Europe. Building a leading integrated four-wheel drive and accessories and trailering business in Australia, while leveraging key expertise to build a focused global business. You know, and I would term that as sweating the assets, both from an engineering and also manufacturing point of view. Then finally, simplify and improve via Amotiv Unified to make us more efficient and effective. Now, from my point of view, Amotiv remains an attractive pure play, all centered around automotive, as you know.
Speaker #2: Building a leading integrated forward drive and accessories and trailing business in Australia, while leveraging key expertise to build a focused global business. And I would term that as sweating the assets, both from an engineering and also manufacturing point of view.
Speaker #2: And then, finally, simplify and improve via Emotive Unified to make us more efficient and effective. My point of view: Emotive remains an attractive pure play.
Speaker #2: All centered around automotive, as you know, servicing large and resilient addressable markets. Supported by market-leading brands of largely ICE-agnostic products. Which, in turn, is supported by some really strong new product development credentials, both in terms of investment and also strong market positions.
Graeme Whickman: Servicing large and resilient addressable markets, supported by market-leading brands of largely ICE-agnostic products, which in turn are supported by some really strong, you know, new product development credentials, both in terms of investment and also strong market positions, something we don't take for granted. The group's led by experienced management team, focused on improving shareholder returns through disciplined investments, backed by a strong and, I think, resilient balance sheet. Happy to settle that. There's lots of work to do, but we're all excited at the prospect. You know, 2030, from a strategy point of view, is designed to create a clear path to leveraging our automotive pure play, to grow and create value for shareholders, underpinned by, I think, a clear set of attractive investment thematics. Now, let me turn my attention to some divisional updates.
Graeme Whickman: Servicing large and resilient addressable markets, supported by market-leading brands of largely ICE-agnostic products, which in turn are supported by some really strong, you know, new product development credentials, both in terms of investment and also strong market positions, something we don't take for granted. The group's led by experienced management team, focused on improving shareholder returns through disciplined investments, backed by a strong and, I think, resilient balance sheet. Happy to settle that. There's lots of work to do, but we're all excited at the prospect. You know, 2030, from a strategy point of view, is designed to create a clear path to leveraging our automotive pure play, to grow and create value for shareholders, underpinned by, I think, a clear set of attractive investment thematics. Now, let me turn my attention to some divisional updates.
Speaker #2: Something we don't take for granted. The group's led by an experienced management team focused on improving shareholder returns. Through disciplined investment, it's backed by a strong and, I think, resilient balance sheet.
Speaker #2: Having said all that, there's lots of work to do. But we're all excited at the prospect. 2030, from a strategy point of view, is designed to create a clear path to leveraging our automotive pure play.
Speaker #2: To grow and create value for shareholders, underpinned by, I think, a clear set of thematics. Now let me turn my attention to some divisional updates.
Speaker #2: Right, starting with Forward Drive. Well, revenue was up 5.5%, driven by new business, including a full period of South African revenues that weren't present in the PCP.
Graeme Whickman: Right, starting with four-wheel drive. Well, revenue was up 5.5%, driven by new business, including a full period of South African revenues that weren't present in the PCP. And this was also complemented by some continued Oz tow bar wins. I think this is an incredible performance against a highly challenging backdrop. You know, pickups were flat in the half, net of Shark in Australia and New Zealand, and down 7% net of Shark in January alone in ANZ. So January was an interesting month. The mix also of OEMs was challenging in Australia, as an example, in the half, with 5 of the top 10 pickups down in the half between 3% and 37%.
Graeme Whickman: Right, starting with four-wheel drive. Well, revenue was up 5.5%, driven by new business, including a full period of South African revenues that weren't present in the PCP. And this was also complemented by some continued Oz tow bar wins. I think this is an incredible performance against a highly challenging backdrop. You know, pickups were flat in the half, net of Shark in Australia and New Zealand, and down 7% net of Shark in January alone in ANZ. So January was an interesting month. The mix also of OEMs was challenging in Australia, as an example, in the half, with 5 of the top 10 pickups down in the half between 3% and 37%.
Speaker #2: And this was also complemented by some continued OZ tow bar wins. I think this is a credible performance against a highly challenging backdrop. Pickups were flat in the half, net of Shark in Australia and New Zealand.
Speaker #2: And down 7% net of Shark in January alone in ANZ. So January was an interesting month. The mix also of OEMs was challenging in Australia, as an example.
Speaker #2: In the half, with five of the top 10 pickups down in the half between 3% and 37%. And then you sort of cast your eye to January, because remember we are generating revenue in the half, even though those vehicles are being sold in January.
Graeme Whickman: And then you sort of cast your eye to January, because remember, we are generating revenue in the half, even though those vehicles are being sold in January. If we looked at the performance in January, six of the top 10 pickups were down, actually even more pronounced, between 14 and 38%. So, a little bit softer than what we were expecting. Cruisemaster, so if I turn my attention to caravans, continued to gain share, which positions us nicely for what is a weak caravan RV market when that eventually turns. I think overall, the result reflects a cyclical and the inflation headwinds that the team are facing. It also reflects the ability of this division to win global business, and this has been leading us to invest in the growing and prospective offshore revenue pipeline.
Graeme Whickman: And then you sort of cast your eye to January, because remember, we are generating revenue in the half, even though those vehicles are being sold in January. If we looked at the performance in January, six of the top 10 pickups were down, actually even more pronounced, between 14 and 38%. So, a little bit softer than what we were expecting. Cruisemaster, so if I turn my attention to caravans, continued to gain share, which positions us nicely for what is a weak caravan RV market when that eventually turns. I think overall, the result reflects a cyclical and the inflation headwinds that the team are facing. It also reflects the ability of this division to win global business, and this has been leading us to invest in the growing and prospective offshore revenue pipeline.
Speaker #2: And if I looked at the performance in January, six of the top 10 pickups were down. Actually, even more pronounced, between 14% and 38%.
Speaker #2: So, a little bit softer than what we were expecting. Cruise Master. So, if I turn my attention to caravans, we continue to gain share, which positions us nicely for what is a weak caravan RV market when that eventually turns.
Speaker #2: I think overall the result reflects a cyclical trend and the inflation headwinds that the team are facing. It also reflects the ability of this division to win global business.
Speaker #2: And this has been leading us to invest in the growing and prospective offshore revenue quite widely. Underlying EBITA was down just over 15%, or down 12% if you were to back out the impact of a doubtful debt provision for an RV customer.
Graeme Whickman: Underlying UVA was down just over 15%. Down 12%, if you were to back out the impact of a doubtful debt provision for an RV customer, that was around AUD 1 million. With that similar approach, the actual EBITDA margins were down 290 basis points. Now, the key driver, which was delayed price realization relative to domestic cost inflation, and we signaled this to the market previously. At that same time, when we were talking to you, we spoke about out-of-cycle OEM pricing, and that was secured in the end of Q2 to address a period of heightened inflationary pressure within the domestic manufacturing operations. As a result, margins are expected to improve from H2. There's also been a country mix impact as we consolidate South Africa for the full first period.
Graeme Whickman: Underlying UVA was down just over 15%. Down 12%, if you were to back out the impact of a doubtful debt provision for an RV customer, that was around AUD 1 million. With that similar approach, the actual EBITDA margins were down 290 basis points. Now, the key driver, which was delayed price realization relative to domestic cost inflation, and we signaled this to the market previously. At that same time, when we were talking to you, we spoke about out-of-cycle OEM pricing, and that was secured in the end of Q2 to address a period of heightened inflationary pressure within the domestic manufacturing operations. As a result, margins are expected to improve from H2. There's also been a country mix impact as we consolidate South Africa for the full first period.
Speaker #2: That was around a million. And with that similar approach, the actual EBITDA margins were down 290 basis points. Now, the key driver was the delayed price realization relative to domestic cost inflation.
Speaker #2: And we signaled this to the market previously. At that same time we were talking to you, we spoke about out-of-cycle OEM pricing, and that was secured.
Speaker #2: At the end of Q2, to address a period of heightened inflationary pressure within domestic manufacturing operations. As a result, margins are expected to improve from H2.
Speaker #2: There's also been a country mix impact as we consolidate South Africa for the fall first period. Now, this new facility has excess capacity again—not new news to our investors.
Graeme Whickman: Now, this new facility has excess capacity, again, not new news to our investors. As it's in the early stage of ramp up, you'll be reminded it's been stood up on the basis of 2 SKUs. But we remain confident in the ability to win business in that jurisdiction, and improve utilization and margins. And of course, while it's profitable, as detailed in our FY 25 full year results, South Africa is below the margins of a mature four-wheel drive operation. Within the four-wheel drive, Amotiv Unified also positively contributed to earnings through the right sizing of the New Zealand operations, which are now profitable.
Graeme Whickman: Now, this new facility has excess capacity, again, not new news to our investors. As it's in the early stage of ramp up, you'll be reminded it's been stood up on the basis of 2 SKUs. But we remain confident in the ability to win business in that jurisdiction, and improve utilization and margins. And of course, while it's profitable, as detailed in our FY 25 full year results, South Africa is below the margins of a mature four-wheel drive operation. Within the four-wheel drive, Amotiv Unified also positively contributed to earnings through the right sizing of the New Zealand operations, which are now profitable.
Speaker #2: As it's in the early stage of ramp-up, you'll be reminded it's been stood up on the basis of two SKUs. But we remain confident in the ability to win business in that jurisdiction and improve utilization of margins.
Speaker #2: And of course, while it's profitable, as detailed in our FY25 four-year results, South Africa is below the margins of a mature forward-drive operation.
Speaker #2: Within the forward drive, Emotive Unified also positively contributed to earnings through the right-sizing of the New Zealand operations, which are now profitable. So if I start to look forward, we expect the combined impact of pricing actions and high volumes, such as Hilux, H2, and Navara, and FY27.
Graeme Whickman: So if I start to look forward, we expect the combined impact of pricing actions and higher volumes such as Hilux in H2 and Navara in FY 2027, and particularly from offshore, the likes of U-Haul and some European business, coupled with the unified efforts to improve margins from H2 and specifically beyond. Interestingly, we had some comments from our shareholders in the past and wanted to understand a little bit more about the Chinese situation. Well, the depth and breadth of our relationships with Chinese OEMs continue to improve through the half. You can see on the chart, on the slide, that the Chinese OEMs are becoming a larger part of the addressable market in Australia and New Zealand. Much has been made of the successful launch of the BYD Shark.
Graeme Whickman: So if I start to look forward, we expect the combined impact of pricing actions and higher volumes such as Hilux in H2 and Navara in FY 2027, and particularly from offshore, the likes of U-Haul and some European business, coupled with the unified efforts to improve margins from H2 and specifically beyond. Interestingly, we had some comments from our shareholders in the past and wanted to understand a little bit more about the Chinese situation. Well, the depth and breadth of our relationships with Chinese OEMs continue to improve through the half. You can see on the chart, on the slide, that the Chinese OEMs are becoming a larger part of the addressable market in Australia and New Zealand. Much has been made of the successful launch of the BYD Shark.
Speaker #2: And particularly from offshore, the likes of U-Haul and some European business. Coupled with the unified efforts to improve margins from H2, and specifically beyond.
Speaker #2: Interestingly, we had some comments from our shareholders in the past and wanted to understand a little bit more about the Chinese situation. Well, the depth and breadth of our relationships with the Chinese OEMs continue to improve through the half.
Speaker #2: You can see on the chart on the slide that the Chinese OEMs are becoming a larger part of the addressable market in Australia and New Zealand.
Speaker #2: Much has been made of the successful launch of the BYD Shark. Unlike some of the other Chinese OEMs, BYD has taken the approach of self-supplying tow bars.
Graeme Whickman: Unlike some of the other Chinese OEMs, BYD has taken the approach of self-supplying tow bars. But the balance of the Chinese OEM, which represents, you know, 72%, as you can see on the chart, of units in CY 2025, that's CY 2025, have outsourced this function, and we are already pending or already are customers of the four-wheel drive business, which means we're well positioned for any OEM mix change within the Australian car park. As mentioned earlier, capacity also has been added to our Thai facility. The four-wheel drive team have a really strong track record of winning and retaining business and is focused on scaling these offshore operations to drive revenue growth and recover fixed cost investments, supporting that margin improvement I mentioned over time.
Graeme Whickman: Unlike some of the other Chinese OEMs, BYD has taken the approach of self-supplying tow bars. But the balance of the Chinese OEM, which represents, you know, 72%, as you can see on the chart, of units in CY 2025, that's CY 2025, have outsourced this function, and we are already pending or already are customers of the four-wheel drive business, which means we're well positioned for any OEM mix change within the Australian car park. As mentioned earlier, capacity also has been added to our Thai facility. The four-wheel drive team have a really strong track record of winning and retaining business and is focused on scaling these offshore operations to drive revenue growth and recover fixed cost investments, supporting that margin improvement I mentioned over time.
Speaker #2: But the balance of the Chinese OEM, which represents 72%, as you can see on the chart, of units in CY25—that's CY25—have outsourced this function and are already pending or already are customers of the Forward Drive business.
Speaker #2: Which means that we're well positioned for any OEM mix change within the Australian carpark. As mentioned earlier, capacity also has been added to our Thai facility.
Speaker #2: The Forward Drive team have a really strong track record of winning and retaining business. And it's focused on scaling these offshore operations to drive revenue growth and recover fixed cost investment.
Speaker #2: Supporting that margin improvement I mentioned over time. As evidence of this, I'm really pleased to announce that we secured our first European tow bar contract.
Graeme Whickman: As evidence of this, I'm really pleased to announce that we secured our first European tow bar contract. That's being supplied out of Thailand, so it's utilizing and sweating that asset based on the engineering capability we already have, and that's our first material. When I say material, I mean in terms of an OEM contract that we've been able to secure. And that volume will be expected to come in FY 2027, and we expect to perhaps get some more European contracts. And that's market share gains. That's taking business off the likes of First Brands and Westfalia. In the US, export volumes from Thailand continue to build, with growing U-Haul demand expected to support volumes into FY 2027. So I'll stop there and perhaps now move to slide 9 and the LPNE division.
Graeme Whickman: As evidence of this, I'm really pleased to announce that we secured our first European tow bar contract. That's being supplied out of Thailand, so it's utilizing and sweating that asset based on the engineering capability we already have, and that's our first material. When I say material, I mean in terms of an OEM contract that we've been able to secure. And that volume will be expected to come in FY 2027, and we expect to perhaps get some more European contracts. And that's market share gains. That's taking business off the likes of First Brands and Westfalia. In the US, export volumes from Thailand continue to build, with growing U-Haul demand expected to support volumes into FY 2027. So I'll stop there and perhaps now move to slide 9 and the LPNE division.
Speaker #2: That's being supplied out of Thailand, so it's utilizing and sweating that asset based on the engineering capability we already have. And that's our first material—when I say material, I mean in terms of an OEM.
Speaker #2: Contract that we've been able to secure, and that volume will be expected to come in FY27. We expect to perhaps get some more European contracts.
Speaker #2: And that’s market share gains. That’s taking business off the likes of First Brands and Westphalia. In the US, export volumes from Thailand continue to build.
Speaker #2: With growing U-Haul demand expected to support volumes into FY27, I'll stop there and perhaps now move to slide nine and the LP&E E division.
Speaker #2: Currently, the ANZ market conditions remain challenging for LP&E, particularly across the reseller channels. Against this backdrop, the group benefited from continued execution of the Emotive Unified.
Graeme Whickman: Now, the ANZ market conditions remain challenging for LPNE, particularly across the reseller channels. Against this backdrop, the group benefited from continued execution of the Amotiv Unified and increasing offshore revenue diversification, which provided a meaningful offset. Revenue reflects volume growth in the US and Europe, which mitigated some of the soft reseller demand in ANZ. By category, lighting delivered growth of 1%. Well done to the Vision X team in the US and Europe, and that offset the muted Australian reseller demand. Power management revenue increased 3%, reflecting ongoing investment in product innovation and continued growth in the US market. And then electrical accessory revenue decreased 4%, impacted by softer Australian reseller demand, some ranging changes, but really some emerging signs of flight to value.
Graeme Whickman: Now, the ANZ market conditions remain challenging for LPNE, particularly across the reseller channels. Against this backdrop, the group benefited from continued execution of the Amotiv Unified and increasing offshore revenue diversification, which provided a meaningful offset. Revenue reflects volume growth in the US and Europe, which mitigated some of the soft reseller demand in ANZ. By category, lighting delivered growth of 1%. Well done to the Vision X team in the US and Europe, and that offset the muted Australian reseller demand. Power management revenue increased 3%, reflecting ongoing investment in product innovation and continued growth in the US market. And then electrical accessory revenue decreased 4%, impacted by softer Australian reseller demand, some ranging changes, but really some emerging signs of flight to value.
Speaker #2: And increasing offshore revenue diversification, which provided a meaningful offset. Revenue reflects volume growth in the US and Europe, which mitigated some of the soft reseller demand in ANZ.
Speaker #2: By category, lighting delivered growth of 1%. Well done to the Vision X team in the US and Europe. And that offset muted Australian reseller demand.
Speaker #2: Power management revenue increased 3%, reflecting ongoing investment and product innovation, and continued growth in the US market. Electrical accessory revenue decreased 4%.
Speaker #2: Impacted by softer Australian reseller demand. Some ranging changes, but really some emerging signs of a flight to value. The unified benefits were delivered through a leaner Australian operating model, with total operating costs down circa 12% compared to PCP.
Graeme Whickman: The Unified benefits were delivered through a leaner Australian operating model, with total operating costs down circa 12% compared to PCP. And as a result, underlying EBITDA increased nearly 9.5%, with margin expansion of 210 bps, largely driven by those Unified benefits. If I turn my attention to looking ahead, while the ANZ reseller dynamics are expected to persist in the second half, while Europe and the US are expected to continue to grow, the full benefit of the Q2 US tariff-related price increases expected to flow through into H2, with modest price increases anticipated from Q4. The net result is that we expect underlying EBITDA in H2 to be marginally softer than H1, but slightly above, certainly, the PCP. Now, let's turn to the final division, Powertrain, and Undercar.
Graeme Whickman: The Unified benefits were delivered through a leaner Australian operating model, with total operating costs down circa 12% compared to PCP. And as a result, underlying EBITDA increased nearly 9.5%, with margin expansion of 210 bps, largely driven by those Unified benefits. If I turn my attention to looking ahead, while the ANZ reseller dynamics are expected to persist in the second half, while Europe and the US are expected to continue to grow, the full benefit of the Q2 US tariff-related price increases expected to flow through into H2, with modest price increases anticipated from Q4. The net result is that we expect underlying EBITDA in H2 to be marginally softer than H1, but slightly above, certainly, the PCP. Now, let's turn to the final division, Powertrain, and Undercar.
Speaker #2: And as a result, underlying EBITA increased nearly 9.5%, with margin expansion of 210 bps, largely driven by those unified benefits. That turns our attention to looking ahead.
Speaker #2: Well, the ANZ reseller dynamics are expected to persist in the second half, while Europe and the US are expected to continue to grow. The full benefit of the Q2 US tariff-related price increases is expected to flow through into H2.
Speaker #2: With modest price increases anticipated from Q4, the net result is that we expect underlying EBITA and H2 to be marginally softer than H1, but slightly above, certainly, the PCP.
Speaker #2: Now let's turn to the final division, Powertrain and Undercar. This is a really pleasing result. Well done to the Powertrain and Undercar division. It reflects the continued resilience of the wear and repair market.
Graeme Whickman: This is a really pleasing result. Well done to the Powertrain and Undercar division. It reflects the continued resilience of the wear and repair market, supported by some really strong brand strength and ongoing efforts to diversify revenue. That revenue grew by almost 5%. It was driven by volume and the annualization of pricing actions across select product categories. A broadening product portfolio increased PD investment, drove outperformance, and when I say outperformance, I'm thinking about that relative to system growth. Interestingly, the New Zealand revenue grew by 12%, and that was driven by enhanced distribution and ranging outcomes. Efficiency and margins were supported by ongoing unified consolidation benefits and reduced EV investment. This resulted in an underlying EBIT growth of 6.7%, so nearly 7%.
Graeme Whickman: This is a really pleasing result. Well done to the Powertrain and Undercar division. It reflects the continued resilience of the wear and repair market, supported by some really strong brand strength and ongoing efforts to diversify revenue. That revenue grew by almost 5%. It was driven by volume and the annualization of pricing actions across select product categories. A broadening product portfolio increased PD investment, drove outperformance, and when I say outperformance, I'm thinking about that relative to system growth. Interestingly, the New Zealand revenue grew by 12%, and that was driven by enhanced distribution and ranging outcomes. Efficiency and margins were supported by ongoing unified consolidation benefits and reduced EV investment. This resulted in an underlying EBIT growth of 6.7%, so nearly 7%.
Speaker #2: Supported by some really strong brand strength and ongoing efforts to diversify revenue, that revenue grew by almost 5%. It was driven by volume and the annualization of pricing actions.
Speaker #2: Across select product categories, a broadening product portfolio increased PD investment. Drove outperformance, and when I say outperformance, I'm thinking about that relative to system growth.
Speaker #2: Interestingly, the New Zealand revenue grew by 12%, and that was driven by enhanced distribution and ranging outcomes. Efficiency and margins were supported by ongoing unified consolidation benefits and reduced EV investment.
Speaker #2: And this resulted in underlying EBIT growth of 6.7%, so nearly 7%. EV investment was further moderated through the first half, in line with the changing market dynamics.
Graeme Whickman: EV investment was further moderated through the first half, in line with the changing market dynamics, and we'd spoken about what we were gonna do at an early stage. With that business on track to reach break even by the end of FY 2027 on a runway basis. Looking ahead, further unified initiatives will be implemented through the second half as the business continues to consolidate site operation and improve returns. This also includes the consolidation of Infinitev operations into the IMG group. Operating cost benefits flowing from the first half, headcount reductions, the rationalization of the ACS warehouse into Truganina, and the commencement of group procurement benefits, including freight. So that sort of wraps up the divisions.
Graeme Whickman: EV investment was further moderated through the first half, in line with the changing market dynamics, and we'd spoken about what we were gonna do at an early stage. With that business on track to reach break even by the end of FY 2027 on a runway basis. Looking ahead, further unified initiatives will be implemented through the second half as the business continues to consolidate site operation and improve returns. This also includes the consolidation of Infinitev operations into the IMG group. Operating cost benefits flowing from the first half, headcount reductions, the rationalization of the ACS warehouse into Truganina, and the commencement of group procurement benefits, including freight. So that sort of wraps up the divisions.
Speaker #2: And we'd spoken about what we were going to do at an earlier stage, with that business on track to reach break-even by the end of FY27 on a runway basis.
Speaker #2: Looking ahead, further unified initiatives will be implemented through the second half. As the business continues to consolidate side operations and prove returns, this also includes the consolidation of Infinitive operations into the IMG Group.
Speaker #2: Operating cost benefits flowing from the first half. Headcount reductions. The rationalization of the ACS warehouse into Truganina. And the commencement of group procurement benefits.
Speaker #2: Including freight. That sort of wraps up the divisions. Perhaps I'll now ask Aaron, and hand over to Aaron, to give a bit more detail to some of the finances in the pack.
Graeme Whickman: Perhaps I'll now ask Aaron and hand over to Aaron to give a bit more detail to some of the finances in the back. Aaron?
Graeme Whickman: Perhaps I'll now ask Aaron and hand over to Aaron to give a bit more detail to some of the finances in the back. Aaron?
Speaker #2: Aaron: Thank you, Graeme. And good morning, everyone. My name's Aaron Canning. I'm the Emotive CFO, and I'll take you through the first half financial results in more detail.
Aaron Canning: Thank you, Graeme, and good morning, everyone. My name's Aaron Canning. I'm the Amotiv CFO, and I'll take you through the first half financial results in more detail. On slide 12, we highlight our group financials. As Graeme has touched on, revenue grew 3.3%. Importantly, that was all organic growth. The four-wheel drive business benefited from new business wins, as well as the inclusion of South Africa for the first full half, growing 5.5%. The powertrain and undercar business grew 4.9%, really driven by a broad range of categories from filtration, brakes, and gaskets, which was pleasing to see. The LPNE division, as Graeme has touched on, was marginally down, driven by a softer ANZ reseller demand, offset by continued growth in both Europe and the US.
Aaron Canning: Thank you, Graeme, and good morning, everyone. My name's Aaron Canning. I'm the Amotiv CFO, and I'll take you through the first half financial results in more detail. On slide 12, we highlight our group financials. As Graeme has touched on, revenue grew 3.3%. Importantly, that was all organic growth. The four-wheel drive business benefited from new business wins, as well as the inclusion of South Africa for the first full half, growing 5.5%. The powertrain and undercar business grew 4.9%, really driven by a broad range of categories from filtration, brakes, and gaskets, which was pleasing to see. The LPNE division, as Graeme has touched on, was marginally down, driven by a softer ANZ reseller demand, offset by continued growth in both Europe and the US.
Speaker #2: On slide 12, we highlight our group financials. As Graeme has touched on, revenue grew 3.3%. Importantly, that was all organic growth. The Forward Drive business benefited from new business wins, as well as the inclusion of South Africa for the first full half.
Speaker #2: Growing 5.5%. The powertrain and undercar business grew 4.9%. Really driven by a broad range of categories, from filtration, brakes, and gaskets, which was pleasing to see.
Speaker #2: The LP&E division, as Graeme has touched on, was marginally down, driven by softer ANZ reseller demand, offset by continued growth in both Europe and the US.
Speaker #2: Gross profit declined by half a percent, with margins lower due to the inflationary increases in Forward Drive, which have yet to be offset by the OE price increases that were announced in Q2.
Aaron Canning: Gross profit declined by 0.5%, with margins lower due to the inflationary increases in four-wheel drive, which have yet to be offset by the OE price increases that were announced in Q2. These will show up in the second half. US tariffs also impacted the LPNE margins, as our double-digit price increases announced in May 2025, post-tariff updates, did not come into effect until midway through Q2, as we honored customer back orders at pre-tariff pricing. We expect all of that margin to flow through to the second half, and we continue to monitor the US tariff environment and are prepared to make any further pricing changes, if required, to protect our margins.
Aaron Canning: Gross profit declined by 0.5%, with margins lower due to the inflationary increases in four-wheel drive, which have yet to be offset by the OE price increases that were announced in Q2. These will show up in the second half. US tariffs also impacted the LPNE margins, as our double-digit price increases announced in May 2025, post-tariff updates, did not come into effect until midway through Q2, as we honored customer back orders at pre-tariff pricing. We expect all of that margin to flow through to the second half, and we continue to monitor the US tariff environment and are prepared to make any further pricing changes, if required, to protect our margins.
Speaker #2: These will show up in the second half. US tariffs also impacted the LP&E margins, as did our double-digit price increases announced in May 2025. Post-tariff updates.
Speaker #2: Did not come into effect until midway through Q2, as we honored customer backorders at pre-tariff pricing. We expect all of that margin to flow through to the second half.
Speaker #2: And we continue to monitor the U.S. tariff environment, and are prepared to make any further pricing changes if required to protect our margins. Operating costs, pleasingly, were lower by over 2%.
Aaron Canning: Operating costs, pleasingly, were lower by over 2%, more than offsetting inflationary increases, largely due to disciplined cost management and the benefits from our Amotiv Unified program flowing through. Depreciation and amortization were broadly consistent period-on-period, and our underlying EBITDA, at AUD 98.3 million, is marginally ahead of the PCP by 1.3%. Importantly, it keeps us on track for an unchanged full-year 2026 earnings guidance, which Graeme will speak to in more detail later. Significant items total AUD 8.3 million and largely relate to restructuring activities linked to executing on Amotiv Unified initiatives. In the half, a further 50 employees departed the business, predominantly across our Powertrain and Undercar and Lighting, Power, and Electrical divisions, as we continue to simplify and optimize the operating model in these divisions.
Aaron Canning: Operating costs, pleasingly, were lower by over 2%, more than offsetting inflationary increases, largely due to disciplined cost management and the benefits from our Amotiv Unified program flowing through. Depreciation and amortization were broadly consistent period-on-period, and our underlying EBITDA, at AUD 98.3 million, is marginally ahead of the PCP by 1.3%. Importantly, it keeps us on track for an unchanged full-year 2026 earnings guidance, which Graeme will speak to in more detail later. Significant items total AUD 8.3 million and largely relate to restructuring activities linked to executing on Amotiv Unified initiatives. In the half, a further 50 employees departed the business, predominantly across our Powertrain and Undercar and Lighting, Power, and Electrical divisions, as we continue to simplify and optimize the operating model in these divisions.
Speaker #2: More than offsetting inflationary increases, larger due to disciplined cost management, and the benefits from our Emotive Unified program. Depreciation and amortization were broadly consistent period on period.
Speaker #2: And our underlying EBITA at $98.3 million is marginally ahead of the PCP by 1.3%. And importantly, it keeps us on track for an unchanged full year 2026 earnings guidance.
Speaker #2: Graeme will speak to this in more detail later. Significant items totaled $8.3 million, and largely relate to restructuring activities linked to executing on Emotive Unified initiatives.
Speaker #2: In the half, a further 50 employees departed the business, predominantly across our Powertrain and Undercar, and Lighting, Power and Electrical divisions. As we continue to simplify and optimize the operating model, these breakdowns of significant items are provided in the divisions.
Speaker #2: On the more detailed appendix on slide 26, we remain disciplined when it comes to managing significant items. And it's worth noting we are one year into our three-year Emotive Unified journey.
Aaron Canning: A more detailed breakdown of significant items are provided in the appendix on slide 26. We remain disciplined when it comes to managing significant items, and it's worth noting we are one year into our three-year Amotiv Unified journey. Although we do expect further one-off costs in the future, we see this as moderating over the medium term. There were no non-cash impairments in the half, and we remain comfortable with the carrying value of our core brands and intangibles. In terms of tax, we had an effective tax rate of 29.1% in the half, marginally up on the PCP, with some minor movements in the period. A further breakdown of these movements is provided in the appendix on slide 27. We expect the full year effective tax rate to be broadly in line with the current levels, around 29%.
Aaron Canning: A more detailed breakdown of significant items are provided in the appendix on slide 26. We remain disciplined when it comes to managing significant items, and it's worth noting we are one year into our three-year Amotiv Unified journey. Although we do expect further one-off costs in the future, we see this as moderating over the medium term. There were no non-cash impairments in the half, and we remain comfortable with the carrying value of our core brands and intangibles. In terms of tax, we had an effective tax rate of 29.1% in the half, marginally up on the PCP, with some minor movements in the period. A further breakdown of these movements is provided in the appendix on slide 27. We expect the full year effective tax rate to be broadly in line with the current levels, around 29%.
Speaker #2: Although we do expect further one-off costs in the future, we see this as moderating over the medium term. There were no non-cash impairments in the half.
Speaker #2: And we remain comfortable with the carrying value of our core brands and intangibles. In terms of tax, we had an effective tax rate of 29.1% in the half.
Speaker #2: Marginally up on the PCP, with some minor movements in the period. A further breakdown of these movements is provided in the appendix on slide 27.
Speaker #2: We expect the full-year effective tax rate to be broadly in line with the current levels, around 29%. Our statutory net PAD at $46 million represents 39.4% growth on the PCP.
Aaron Canning: Our statutory net PAT, at AUD 46 million, represents 39.4% growth on the PCP, with the prior year impacted by higher significant items, including a AUD 10.4 million non-cash impairment. Underlying EPSA grew 5.3%, largely due to earnings growth and lower shares on issue on completion of our buyback in the half. The board have approved an interim dividend of AUD 0.20 per share, representing over 8% growth or a 52% payout ratio. As Graeme has touched on, pleasingly, we've been able to return over AUD 48 million to our shareholders in the period, with a combination of over AUD 18 million invested to complete the 5% buyback program and nearly AUD 30 million in dividends paid in September 2025. Directing your attention to Slide 13, Net Working Capital.
Aaron Canning: Our statutory net PAT, at AUD 46 million, represents 39.4% growth on the PCP, with the prior year impacted by higher significant items, including a AUD 10.4 million non-cash impairment. Underlying EPSA grew 5.3%, largely due to earnings growth and lower shares on issue on completion of our buyback in the half. The board have approved an interim dividend of AUD 0.20 per share, representing over 8% growth or a 52% payout ratio. As Graeme has touched on, pleasingly, we've been able to return over AUD 48 million to our shareholders in the period, with a combination of over AUD 18 million invested to complete the 5% buyback program and nearly AUD 30 million in dividends paid in September 2025. Directing your attention to Slide 13, Net Working Capital.
Speaker #2: Higher significant items, including a prior year impacted by a $10.4 million non-cash impairment. Underlying EPSA grew 5.3%, largely due to earnings growth and lower shares on issue on completion of our buyback in the half.
Speaker #2: The board have approved an interim dividend of 20 cents per share, representing over 8% growth or a 52% payout ratio. As Graeme has touched on, pleasingly, we've been able to return over $48 million to our shareholders in the period.
Speaker #2: With a combination of over $18 million invested to complete the 5% buyback program, and nearly $30 million in dividends paid in September 2025. Directing your attention to slide 13.
Speaker #2: Net working capital, as a percentage of revenue, improved by 1 percentage point to 28.7%. Improved collections partially offset inventory growth and inventory balances for the period.
Aaron Canning: Net working capital percentage of revenue improved one percentage point to 28.7%. Improved collections partially offset inventory growth and inventory balances for the period, with total working capital growing at 3.1%. I'll unpack this in a little bit more detail by division. Inventory increased just under AUD 19 million since June, or 8%. It's predominantly driven by the LPNE division, which has carried higher inventory levels for our Vision X business in the US and Europe, post-US tariff changes. In Australia, we have sought to rebalance our inventory holdings commensurate with reseller demand. This is still a work in progress, and Australia represents an opportunity for us to improve our inventory position through the second half as we build our sales and operational planning capability. Four-wheel drive saw marginal increases.
Aaron Canning: Net working capital percentage of revenue improved one percentage point to 28.7%. Improved collections partially offset inventory growth and inventory balances for the period, with total working capital growing at 3.1%. I'll unpack this in a little bit more detail by division. Inventory increased just under AUD 19 million since June, or 8%. It's predominantly driven by the LPNE division, which has carried higher inventory levels for our Vision X business in the US and Europe, post-US tariff changes. In Australia, we have sought to rebalance our inventory holdings commensurate with reseller demand. This is still a work in progress, and Australia represents an opportunity for us to improve our inventory position through the second half as we build our sales and operational planning capability. Four-wheel drive saw marginal increases.
Speaker #2: With total 3.1%. I'll unpack this in a little bit more detail by division. Inventory increased just under $19 million since June, or 8%.
Speaker #2: It's predominantly driven by the LP&E division, which has carried higher inventory levels for our Vision X business in the US and Europe, post-US tariff changes.
Speaker #2: In Australia, we have sought to rebalance our inventory holdings, commensurate with reseller demand. This is still work in progress, and Australia represents an opportunity for us to improve our inventory position through the second half.
Speaker #2: As we build our sales and operational planning capability, Forward Drive saw a marginal increase. It's important to note, in that division, the majority of finished goods inventory is made to order in that business.
Aaron Canning: It's important to note in that division, the majority of finished goods inventory is made to order in that business, and it also include the inclusion of South Africa for the period and some timing of inventory purchases. The Powertrain and Undercar division also saw some increases as we continued our work on consolidating our logistics and warehousing footprint as part of Amotiv Unified. As such, we built inventory through the first half to manage this transition as we expect to make some further changes in Q3 as we rationalize our warehousing operations for our clutch and EV businesses. We expect the current inventory levels to unwind in this division through the balance of the year. Our payables were broadly aligned with PCP, and pleasingly, our receivables have decreased by 4% or over AUD 8 million dollars-...
Aaron Canning: It's important to note in that division, the majority of finished goods inventory is made to order in that business, and it also include the inclusion of South Africa for the period and some timing of inventory purchases. The Powertrain and Undercar division also saw some increases as we continued our work on consolidating our logistics and warehousing footprint as part of Amotiv Unified. As such, we built inventory through the first half to manage this transition as we expect to make some further changes in Q3 as we rationalize our warehousing operations for our clutch and EV businesses. We expect the current inventory levels to unwind in this division through the balance of the year. Our payables were broadly aligned with PCP, and pleasingly, our receivables have decreased by 4% or over AUD 8 million dollars-...
Speaker #2: And it also includes the inclusion of South Africa for the period, and some timing of inventory purchases. The Powertrain and UnderCar division also saw some increases.
Speaker #2: As we continued our work on consolidating our logistics and warehousing footprint, as part of Emotive Unified, we have built inventory through the first half to manage this transition.
Speaker #2: As we expect to make some further changes in Q3 as we rationalize our warehousing operations for our Clutch and EV businesses, we expect the current inventory levels to unwind in this division through the balance of the year.
Speaker #2: Our payables were broadly aligned with PCP. And, pleasingly, our receivables have decreased by 4%, or over $8 million, against a reported revenue growth of over 3%.
Aaron Canning: Against a reported revenue growth of over 3%, largely due to better compliance and a concerted effort around collections. Compared to the PCP, we do not have the one-off collection issue repeat in this period. And importantly, we see further opportunities to improve our collections through the balance of this financial year. For transparency, we executed similar levels of debt factoring around AUD 16 million in this period, versus the PCP in December 2024, and again in June 2025. Pleasingly, our cash conversion remains strong. It's just under 92% and ahead of our guidance. Directing your attention to the chart on the bottom right-hand side of the slide, you can see the strength and the resilience of the business across a number of periods, and regardless of the cycle and broader macro environment.
Aaron Canning: Against a reported revenue growth of over 3%, largely due to better compliance and a concerted effort around collections. Compared to the PCP, we do not have the one-off collection issue repeat in this period. And importantly, we see further opportunities to improve our collections through the balance of this financial year. For transparency, we executed similar levels of debt factoring around AUD 16 million in this period, versus the PCP in December 2024, and again in June 2025. Pleasingly, our cash conversion remains strong. It's just under 92% and ahead of our guidance. Directing your attention to the chart on the bottom right-hand side of the slide, you can see the strength and the resilience of the business across a number of periods, and regardless of the cycle and broader macro environment.
Speaker #2: Largely due to better compliance and a concerted effort around collections. Compared to the PCP, we do not have the one-off collection issue repeat in this period.
Speaker #2: And importantly, we see further opportunities to improve our collections through the balance of this financial year. For transparency, we executed similar levels of debt factoring.
Speaker #2: Around $16 million in this period versus the PCP in December 2024, and again in June 2025. Pleasingly, our cash conversion remains strong—just under 92%.
Speaker #2: And ahead of our guidance. Directing your attention to the chart on the bottom right-hand side of the slide, you can see the strength and the resilience of the business across a number of periods.
Speaker #2: And regardless of the cycle and broader macro environment, as we look to the full year, we do not see this changing. We expect our cash conversion to be in line.
Aaron Canning: As we look to the full year, we do not see this changing, and we expect our cash conversion to be at line and or ahead of our cash allocation target of 75% or more. As we turn to Slide 14, capital investment. Our investment in product development has ticked up in the period to 3.8%. It's been a key driver in under- and underpinning our performance and our powertrain and undercar result, and also supporting future wins in four-wheel drive. We expect similar levels of investment through the second half of this year. Our CapEx has moderated and down 22% versus PCP, largely in four-wheel drive, which in the prior period included investments in South Africa and Thailand. As previously advised, we expect the full-year CapEx investment to be up to 10% lower than last year.
Aaron Canning: As we look to the full year, we do not see this changing, and we expect our cash conversion to be at line and or ahead of our cash allocation target of 75% or more. As we turn to Slide 14, capital investment. Our investment in product development has ticked up in the period to 3.8%. It's been a key driver in under- and underpinning our performance and our powertrain and undercar result, and also supporting future wins in four-wheel drive. We expect similar levels of investment through the second half of this year. Our CapEx has moderated and down 22% versus PCP, largely in four-wheel drive, which in the prior period included investments in South Africa and Thailand. As previously advised, we expect the full-year CapEx investment to be up to 10% lower than last year.
Speaker #2: And/or ahead of our cash allocation target of 75% or more. As we turn to Slide 14, capital investment. Our investment in product development has ticked up in the period to 3.8%.
Speaker #2: It's been a key driver in underpinning our performance, and our powertrain and undercar result, and also supporting future wins in forward drive. We expect similar levels of investment through the second half of this year.
Speaker #2: Our capex is moderated and down 22% versus PCP, largely in forward drive, which in the prior period included investments in South Africa and Thailand.
Speaker #2: As previously advised, we expect the full-year capex investment to be up to 10% lower than last year. In terms of our capex split between growth and maintenance,
Aaron Canning: In terms of our CapEx split between growth and maintenance, it is broadly balanced. It's in line with our capital allocation framework metrics and ensures we balance investment in maintaining what we have today, with investment initiatives to generate future growth. On Slide 15, our foreign exchange exposure was well managed. The first half was impacted by a stronger USD versus the PCP. However, this was well managed within a volatile spot market. For the remainder of this financial year, we are now effectively fully hedged, with further hedging being executed in January. We also have taken the opportunity in the last few weeks, in particular, to take advantage of the AUD strength, and we've locked in meaningful coverage for the first half of FY 2027.
Aaron Canning: In terms of our CapEx split between growth and maintenance, it is broadly balanced. It's in line with our capital allocation framework metrics and ensures we balance investment in maintaining what we have today, with investment initiatives to generate future growth. On Slide 15, our foreign exchange exposure was well managed. The first half was impacted by a stronger USD versus the PCP. However, this was well managed within a volatile spot market. For the remainder of this financial year, we are now effectively fully hedged, with further hedging being executed in January. We also have taken the opportunity in the last few weeks, in particular, to take advantage of the AUD strength, and we've locked in meaningful coverage for the first half of FY 2027.
Speaker #2: It is broadly balanced. It's in line with our capital allocation framework metrics and ensures we balance investment in maintaining what we have today with investment initiatives to generate future growth.
Speaker #2: On slide 15, our foreign exchange exposure was well managed. The first half was impacted by a stronger USD versus the PCP. However, this was well managed within the remainder of this hedged.
Speaker #2: Financial year, we are now effectively fully— with further hedging being executed in January. We also have taken the opportunity in the last few weeks.
Speaker #2: In particular, to take advantage of the AUD strength. And we've locked in meaningful coverage for the first half of FY27. If there continues to be any further AUD strength above current levels, this will mostly be an H2 27 impact.
Aaron Canning: If there continues to be any further AUD strength above current levels, this will mostly be an H2 2027 impact for Amotiv. In terms of our offshore earnings, it continues to provide a natural head to FX exposure, particularly as we increase our US dollar and Asia currency earnings. US dollar earnings grew 41% versus PCP, building our natural hedge in the period. Combined US dollar and non-ANZ earnings now represent 32% of our total post-tax earnings in the half, and we see growth in offshore earnings continuing to be more meaningful through the second half, and beyond. Onto Slide 16. Our balance sheet remains in great shape. The group's balance sheet remains in strong position, with gearing at 1.95 times, increasing by 0.2 turns since December 2024.
Aaron Canning: If there continues to be any further AUD strength above current levels, this will mostly be an H2 2027 impact for Amotiv. In terms of our offshore earnings, it continues to provide a natural head to FX exposure, particularly as we increase our US dollar and Asia currency earnings. US dollar earnings grew 41% versus PCP, building our natural hedge in the period. Combined US dollar and non-ANZ earnings now represent 32% of our total post-tax earnings in the half, and we see growth in offshore earnings continuing to be more meaningful through the second half, and beyond. Onto Slide 16. Our balance sheet remains in great shape. The group's balance sheet remains in strong position, with gearing at 1.95 times, increasing by 0.2 turns since December 2024.
Speaker #2: For Emotive, in terms of our offshore earnings, it continues to provide a natural hedge to FX exposure, particularly as we increase our US dollar and Asia currency earnings.
Speaker #2: US dollar earnings grew 41% versus PCP, building our natural hedge in the period. Combined US dollar and non-ANZ earnings now represent 32% of our total post-tax earnings in the half.
Speaker #2: And we see growth in offshore earnings continuing to be more meaningful through the second half and beyond. Onto slide 16. Our balance sheet remains in great shape.
Speaker #2: The group's balance sheet remains in a strong position, with gearing at 1.95 times, increasing by 0.2 turns since December 2024. It remains well within our capital allocation framework target range of 1.5 to 2.25 times.
Aaron Canning: It remains well within our capital allocation framework target range of 1.5 to 2.25 times. Our leverage increased marginally since June, largely due to the completion of the buyback program. I said earlier, we invested a little over AUD 18 million in completing that in the period, and some further investments in new jurisdictions in the form of working capital and operating expenses. The business continues to deliver stable and predictable cash flow earnings as I noted earlier. Our leverage guidance remains unchanged, with the expectation the business will delever through H2. Our debt profile remains long dated and with nearly two-thirds of it fixed at market leading rates. As such, recent and any future changes in the Australian domestic interest rate environment will have a relatively low impact on our cost of funds.
Aaron Canning: It remains well within our capital allocation framework target range of 1.5 to 2.25 times. Our leverage increased marginally since June, largely due to the completion of the buyback program. I said earlier, we invested a little over AUD 18 million in completing that in the period, and some further investments in new jurisdictions in the form of working capital and operating expenses. The business continues to deliver stable and predictable cash flow earnings as I noted earlier. Our leverage guidance remains unchanged, with the expectation the business will delever through H2. Our debt profile remains long dated and with nearly two-thirds of it fixed at market leading rates. As such, recent and any future changes in the Australian domestic interest rate environment will have a relatively low impact on our cost of funds.
Speaker #2: Our leverage increased marginally since June, largely due to the completion of the buyback program. I said earlier we invested a little over $18 million in completing that in the period.
Speaker #2: And some further investments in new jurisdictions in the form of working capital and operating expenses. The business continues to deliver stable and predictable cash flow earnings.
Speaker #2: As I noted earlier, our leverage guidance remains unchanged, with the expectation the business will deliver through H2. Our debt profile remains long dated, and with nearly two-thirds of it fixed at market-leading rates.
Speaker #2: As such, recent and any future changes in the Australian domestic interest rate environment will have a relatively low impact on our cost of funds.
Speaker #2: As a guide, a 25 basis point increase or decrease will have a 0.3 impact on a full year result for us. We remain in strong support from our lender group.
Aaron Canning: As a guide, 25 basis point increase or decrease will have a 0.3 impact, impact on a full year result for us. We remain strong support from our lender group, and strong appetite for further support should we need it. In terms of our cost of funds on the right-hand side, it's reduced marginally in the period by 11 basis points, largely reflecting the domestic interest rate environment. Onto Slide 17. In terms of our capital allocation framework, we performed strongly against the majority of these metrics. In February of last year, we announced this framework. The framework provides visibility on how we will deploy capital against, as you can see, a set of return metrics, both for organic and inorganic investments. Importantly, these metrics, in particular, return on capital employed, now form part of management's long-term incentive program.
Aaron Canning: As a guide, 25 basis point increase or decrease will have a 0.3 impact, impact on a full year result for us. We remain strong support from our lender group, and strong appetite for further support should we need it. In terms of our cost of funds on the right-hand side, it's reduced marginally in the period by 11 basis points, largely reflecting the domestic interest rate environment. Onto Slide 17. In terms of our capital allocation framework, we performed strongly against the majority of these metrics. In February of last year, we announced this framework. The framework provides visibility on how we will deploy capital against, as you can see, a set of return metrics, both for organic and inorganic investments. Importantly, these metrics, in particular, return on capital employed, now form part of management's long-term incentive program.
Speaker #2: And strong appetite for further support should we need it. In terms of our cost of funds on the right-hand side, it's reduced marginally in the period by 11 basis points.
Speaker #2: Largely reflecting the domestic interest rate environment. Onto slide 17. In terms of our capital allocation framework, we performed strongly against the majority of these metrics.
Speaker #2: In February of last year, we announced this framework. The framework provides visibility on how we will deploy capital against, as you can see, a set of return metrics.
Speaker #2: Both for organic and inorganic investments. Importantly, these metrics—in particular, return on capital employed—now form part of management's long-term incentive program. For the first half, we performed in line with or ahead of all metrics, with the exception of return on capital employed.
Aaron Canning: For the first half, we performed in line or ahead of all metrics, with the exception of returning capital employed. This remains a key area of focus for us, and we're unhappy with our current performance in that area. We continue and will continue to measure ourselves on a pre-APG impairment metric. On a reported basis, you can see the result provided in the footnotes to the slide. Furthermore, today, we are announcing we expect to generate an incremental AUD 10 million annualized gross benefit from the Amotiv Unified program on exit of this financial year. On that particular topic, I will now cover off the Amotiv Unified update as part of a broader update, on our outlook. I'll now direct you to slide 19. In February 2025, we announced our transformation program called Amotiv Unified.
Aaron Canning: For the first half, we performed in line or ahead of all metrics, with the exception of returning capital employed. This remains a key area of focus for us, and we're unhappy with our current performance in that area. We continue and will continue to measure ourselves on a pre-APG impairment metric. On a reported basis, you can see the result provided in the footnotes to the slide. Furthermore, today, we are announcing we expect to generate an incremental AUD 10 million annualized gross benefit from the Amotiv Unified program on exit of this financial year. On that particular topic, I will now cover off the Amotiv Unified update as part of a broader update, on our outlook. I'll now direct you to slide 19. In February 2025, we announced our transformation program called Amotiv Unified.
Speaker #2: This remains a key area of focus for us, and we're unhappy with our current performance in that area. We continue, and will continue, to measure the impairment metric.
Speaker #2: On a reported basis, you can see the result provided in the footnotes to the slide. Furthermore, today we are announcing we expect to generate an incremental $10 million annualized gross benefit from the Emotive Unified program on exit of this financial year.
Speaker #2: And on that particular topic, I will now cover off the Emotive Unified update as part of a broader update on our outlook. On our directly to slide 19.
Speaker #2: In February 2025, we announced our transformation program called Emotive Unified. This is a three-year program made up of a number of projects, with execution staggered into three waves.
Aaron Canning: This is a three-year program made up of a number of projects, with execution staggered into three waves. Exiting FY 25, we delivered AUD 15 million in gross annualized benefits, with AUD 5 million reinvested into marketing, product development, and new roles. This net 10 million of benefits is included in our FY 26 guidance. We are announcing today an incremental, in addition to that, an incremental 10 million annualized gross benefits to be realized on exit of FY 26. These further benefits will support 5 million investment into simplifying our IT platforms, further warehouse consolidations, and program management resourcing through the second half of this year. The timing of these benefits, at an additional net 1 million EBITDA benefit in FY 26, highlighted in the table on the bottom right of the page. These benefits are helping offset our revised modest pricing increases expected in the second half.
Aaron Canning: This is a three-year program made up of a number of projects, with execution staggered into three waves. Exiting FY 25, we delivered AUD 15 million in gross annualized benefits, with AUD 5 million reinvested into marketing, product development, and new roles. This net 10 million of benefits is included in our FY 26 guidance. We are announcing today an incremental, in addition to that, an incremental 10 million annualized gross benefits to be realized on exit of FY 26. These further benefits will support 5 million investment into simplifying our IT platforms, further warehouse consolidations, and program management resourcing through the second half of this year. The timing of these benefits, at an additional net 1 million EBITDA benefit in FY 26, highlighted in the table on the bottom right of the page. These benefits are helping offset our revised modest pricing increases expected in the second half.
Speaker #2: Exiting FY25, we delivered $15 million in gross annualized benefits, with $5 million reinvested into marketing, product development, and new roles. This net $10 million of benefits is included in our FY26 guidance.
Speaker #2: We are announcing today an incremental, in addition to that, an incremental $10 million in annualized gross benefits to be realized on exit of FY26. These further benefits will platform, further warehouse support, $5 million investment into simplifying our IT consolidations, and program management resourcing through the second half of this year.
Speaker #2: The timing of these benefits, at an additional net $1 million EBITDA benefit in FY26, is highlighted in the table on the bottom right of the page.
Speaker #2: These benefits are helping offset a revised, modest pricing increase expected in the second half. These combined net benefits of the million announced today and the $10 million that we previously announced are included in our FY26 guidance.
Aaron Canning: These combined net benefits of the AUD 1 million announcing today and the AUD 10 million that we previously announced, are included in our FY 2026 guidance. I'll now hand you back to Graeme to discuss this guidance and trading update in more detail.
Aaron Canning: These combined net benefits of the AUD 1 million announcing today and the AUD 10 million that we previously announced, are included in our FY 2026 guidance. I'll now hand you back to Graeme to discuss this guidance and trading update in more detail.
Speaker #2: I'll now hand you back to Graeme to discuss this guidance and trading update in more detail. Thanks, Aaron. Appreciate the detail, as I'm sure the listeners did as well.
Graeme Whickman: Thanks, Aaron. Appreciate the detail, as I'm sure the listeners did as well. As you say, let's get into the trading update and outlook. So after the four weeks of January, if you just take January in isolation, ANZ pickups were down 7% net of BYD. And as mentioned, in Australia, six of the ten pickups were down. This outcome is slightly below our expectations, and I guess that's important to note only because obviously we're collecting revenue from the January performance ahead of that, given we supplied ahead of a sale, so to speak. Lighting, Power, and Electrical, the AUV resellers and OE channels remain subdued.
Graeme Whickman: Thanks, Aaron. Appreciate the detail, as I'm sure the listeners did as well. As you say, let's get into the trading update and outlook. So after the four weeks of January, if you just take January in isolation, ANZ pickups were down 7% net of BYD. And as mentioned, in Australia, six of the ten pickups were down. This outcome is slightly below our expectations, and I guess that's important to note only because obviously we're collecting revenue from the January performance ahead of that, given we supplied ahead of a sale, so to speak. Lighting, Power, and Electrical, the AUV resellers and OE channels remain subdued.
Speaker #2: As you say, let's get into the trading update and outlook. So after the four weeks of January, if you just take January in isolation, ANZ pickups were BYD.
Speaker #2: Down 7% net. And as mentioned, in Australia, 6 of the 10 pickups were down. This outcome is slightly below our expectations. And I guess that's important to note, only because obviously we're collecting revenue from the January performance ahead of that, given we supply ahead of a sale, so to speak.
Speaker #2: Lighting Power and Electrical—the AU resellers are now in channels—remain subdued. So, whether it's a reseller or indeed the truck or the bus or the RV market, not a lot has changed there.
Graeme Whickman: So whether it's a reseller or indeed, you know, the truck or the bus or the RV market, not a lot has changed there. But pleasingly, we are seeing continued momentum in the US and EU. And then from a powertrain point of view, the wear and repair remains resilient, with the forward workshop bookings, they're stable at sort of 1 to 2 weeks, nothing changing there, which is great. From an outlook point of view, our guidance is unchanged. Regardless of some headwinds and some tailwinds, we're still holding our point of view around the revenue growth. It's expected to grow in FY 2026, and the underlying EBITDA of circa AUD 195. As I said, it still remains a challenging environment.
Graeme Whickman: So whether it's a reseller or indeed, you know, the truck or the bus or the RV market, not a lot has changed there. But pleasingly, we are seeing continued momentum in the US and EU. And then from a powertrain point of view, the wear and repair remains resilient, with the forward workshop bookings, they're stable at sort of 1 to 2 weeks, nothing changing there, which is great. From an outlook point of view, our guidance is unchanged. Regardless of some headwinds and some tailwinds, we're still holding our point of view around the revenue growth. It's expected to grow in FY 2026, and the underlying EBITDA of circa AUD 195. As I said, it still remains a challenging environment.
Speaker #2: But pleasingly, we are seeing continued momentum in the US and EU. And then, from a powertrain point of view, the wear and repair remains resilient.
Speaker #2: With the forward workshop bookings, they're stable at sort of one to two weeks—nothing changing there, which is great. From an outlook point of view, our guidance is unchanged.
Speaker #2: Regardless of some headwinds and some tailwinds, we're still holding our point of view around the revenue growth. It's expected to grow in FY26.
Speaker #2: And the underlying EBITA of circa $195 million. As I said, it still remains a challenging environment. Forward drive new vehicle sales are trending slightly softer, but H2 margins within this division are expected to improve.
Graeme Whickman: Four-wheel drive new vehicle sales are trending slightly softer, but H2 margins within this division are expected to improve due to the H1 pricing actions. LPE, the headwinds in ANZ are expected to persist. The H2 underlying EBITDA is expected to be marginally softer than H1. Powertrain, the wear and repair categories are expected to remain resilient. As outlined in the Amotiv Unified slide, the incremental FY 26 net benefit of AUD 1 million is included in our AUD 195 million guidance. That's provided a bit of an offset to revised pricing approach to account for more modest price increases in H2. The H1 and H2 EBITDA ex SKU expect to be broadly balanced. Cash conversion expect to be in line with capital allocation.
Graeme Whickman: Four-wheel drive new vehicle sales are trending slightly softer, but H2 margins within this division are expected to improve due to the H1 pricing actions. LPE, the headwinds in ANZ are expected to persist. The H2 underlying EBITDA is expected to be marginally softer than H1. Powertrain, the wear and repair categories are expected to remain resilient. As outlined in the Amotiv Unified slide, the incremental FY 26 net benefit of AUD 1 million is included in our AUD 195 million guidance. That's provided a bit of an offset to revised pricing approach to account for more modest price increases in H2. The H1 and H2 EBITDA ex SKU expect to be broadly balanced. Cash conversion expect to be in line with capital allocation.
Speaker #2: Actions. LP&E, due to the H1 pricing headwinds, and ANZ are expected to persist. The H2 underlying EBITA is expected to be marginally softer than H1.
Speaker #2: Powertrain, the wear and repair categories are expected to remain slight; the incremental FY26 net benefit of $1 million is included in our 195 guidance.
Speaker #2: That’s provided a bit of an offset to the revised pricing approach to account for more modest price increases in H2. The H1 and H2 EBITA skew is expected to be broadly balanced.
Speaker #2: Cash conversion is expected to be in line with capital allocation. The balance sheet strength will be maintained, and we expect to deliver in H2. And, as Aaron just mentioned, we've got an incremental $10 million of annualized gross benefits as we exit FY26.
Graeme Whickman: The balance sheet strength to be maintained and, and we expect to delever, in H2. And as Aaron just mentioned, we've got incremental AUD 10 million of annualized gross benefits as we exit, FY 2026. So that's really the outlook and also the trading update completed. Of course, it would, it would be rude of me not to finish the presentation, though, by not thanking the, the Amotiv team, who worked so hard through that first half. And so from a board point of view, from Aaron and I, just wanted to thank those people. I know some of them actually listen to this call because they have great interest in our results, as you would expect. So with that, now I'll, hand over to the moderator, who will coordinate the questions that, we have online. Thank you.
Graeme Whickman: The balance sheet strength to be maintained and, and we expect to delever, in H2. And as Aaron just mentioned, we've got incremental AUD 10 million of annualized gross benefits as we exit, FY 2026. So that's really the outlook and also the trading update completed. Of course, it would, it would be rude of me not to finish the presentation, though, by not thanking the, the Amotiv team, who worked so hard through that first half. And so from a board point of view, from Aaron and I, just wanted to thank those people. I know some of them actually listen to this call because they have great interest in our results, as you would expect. So with that, now I'll, hand over to the moderator, who will coordinate the questions that, we have online. Thank you.
Speaker #2: So that's really the outlook and also the trading update completed. Of course, it would be rude of me not to finish a presentation, though, by not thanking the Emotive team who worked so hard through that first half. And so, from a board point of view—from Aaron and I—just wanted to thank those people.
Speaker #2: I know some of them actually listen to the school because they have great interest in our results, as you would expect. So with that, now I'll hand over to the moderator, who will coordinate the questions that we have online.
Speaker #2: Thank you.
Speaker #3: If you wish to ask a question via the phones, you will need to press the star key followed by the number 1 on your telephone keypad.
Aaron Canning: Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the Ask a Question box. Your first question on the phone today is from Mitchell Sonogan with Macquarie. Please go ahead.
Operator: Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the Ask a Question box. Your first question on the phone today is from Mitchell Sonogan with Macquarie. Please go ahead.
Speaker #3: If you wish to ask a question via the webcast, please type your question into the Ask a Question box. Your first question on the phones today is from Mitch Sonagan with Macquarie.
Speaker #3: Please go
Speaker #4: Yeah. Good morning, Graeme and Aaron. Thanks for taking the questions. Just first, while I'm on the FY26 guidance, I'm just trying to understand a little bit the moving parts.
Mitchell Sonogan: Yeah, good morning, Graeme and Aaron. Thanks for taking the questions. Just the first one, just on the FY 26 guidance, I'm just trying to understand a little bit the moving parts, so pretty specific on the LPE guidance. But on four-wheel drive, you've talked to new vehicle sales being slightly softer. We expect better margins in the second half. Do you mind just giving some color on your expectations and what you've got in terms of forward visibility at this point in time? Thanks.
Mitchell Sonogan: Yeah, good morning, Graeme and Aaron. Thanks for taking the questions. Just the first one, just on the FY 26 guidance, I'm just trying to understand a little bit the moving parts, so pretty specific on the LPE guidance. But on four-wheel drive, you've talked to new vehicle sales being slightly softer. We expect better margins in the second half. Do you mind just giving some color on your expectations and what you've got in terms of forward visibility at this point in time? Thanks.
Speaker #4: So, pretty specific on the LPE guidance. But on forward drive, you've talked to new vehicle sales being slightly softer but expect better margins. In the second half, do you mind just giving some color on your expectations and what you've got in terms of forward visibility at this point in time?
Speaker #4: Thanks.
Graeme Whickman: Well, I'll answer the forward visibility, and I'll just hand over to Aaron in terms of the composition of the second part of the question. I guess it links to perhaps other questions that no doubt will be asked around, say, the January performance in terms of new vehicle sales. So when you look at new vehicle sales in January, you know, they were down, you know, net of BYD, 7% in ANZ, but then you sort of peel that back a little bit. Ranger was down 20, Hilux 15, I think D-MAX was sort of 14. Triton was up, Navara down about 35, that revenue obviously has already been recognized in most of that context. We did expect January to be slightly softer anyway.
Graeme Whickman: Well, I'll answer the forward visibility, and I'll just hand over to Aaron in terms of the composition of the second part of the question. I guess it links to perhaps other questions that no doubt will be asked around, say, the January performance in terms of new vehicle sales. So when you look at new vehicle sales in January, you know, they were down, you know, net of BYD, 7% in ANZ, but then you sort of peel that back a little bit. Ranger was down 20, Hilux 15, I think D-MAX was sort of 14. Triton was up, Navara down about 35, that revenue obviously has already been recognized in most of that context. We did expect January to be slightly softer anyway.
Speaker #2: I'll answer the forward visibility, and I'll just hand over to Aaron. In terms of the composition of the second part of the question—and I guess it links to perhaps other questions that no doubt will be asked around, say, the January performance.
Speaker #2: In terms of new vehicle sales, when you look at new vehicle sales in January—as I mentioned briefly—they were down, net of BYD, 7% in ANZ.
Speaker #2: But then you sort of peel that back a little bit. Ranger was down 20. Hilux, 15. I think D-Max was sort of 14. Triton was up.
Speaker #2: Navara down about 35. That revenue, obviously, has already been recognized in most of that context. We did expect January to be slightly softer anyway.
Speaker #2: December was relatively strong. And January can always be a bit of a funny month in terms of vehicle sales. The forward visibility that sort of sits behind our point of view around the guidance across the group is generally between 2 and 3 months in terms of—I'm talking about new vehicle sales. And I think your question specifically is around probably Forward Drive more than anything, Mitch, in that regard.
Graeme Whickman: December was relatively strong, and January can always be a bit of a funny month in terms of vehicle sales. The forward visibility that sort of sits behind our point of view around the guidance across the group is generally between two and three months in terms of- I'm talking about new vehicle sales, and I think your question specifically is around probably four-wheel drive more than anything mentioned in that regard. So, you know, we have forward visibility of those sorts of sales. It's interesting that, and perhaps others will ask around interest rates.
Graeme Whickman: December was relatively strong, and January can always be a bit of a funny month in terms of vehicle sales. The forward visibility that sort of sits behind our point of view around the guidance across the group is generally between two and three months in terms of- I'm talking about new vehicle sales, and I think your question specifically is around probably four-wheel drive more than anything mentioned in that regard. So, you know, we have forward visibility of those sorts of sales. It's interesting that, and perhaps others will ask around interest rates.
Speaker #2: So we have forward visibility of those sorts of sales. It's interesting that, and perhaps others will ask around interest rates. It's interesting that the likes of Triton have actually been on a bit of a tear, and they've actually been perhaps a bit more aggressive in terms of their discounting over the last two or three months.
Graeme Whickman: It's interesting that the likes of Triton has actually been on a bit of a tear, and they've actually been perhaps a bit more aggressive in terms of their discounting over the last two or three months, whereas Toyota, Ford, and others have sat a little bit on the sidelines, but starting to come back in, so I expect that to happen a little bit more. Aaron, from a guidance point of view, did you just want to cover off the composition?
Graeme Whickman: It's interesting that the likes of Triton has actually been on a bit of a tear, and they've actually been perhaps a bit more aggressive in terms of their discounting over the last two or three months, whereas Toyota, Ford, and others have sat a little bit on the sidelines, but starting to come back in, so I expect that to happen a little bit more. Aaron, from a guidance point of view, did you just want to cover off the composition?
Speaker #2: Whereas Toyota and Ford and others have sat a little bit on the sidelines, but are starting to come back in. So, I expect that to happen a little bit more.
Speaker #2: Aaron, from a guidance point
Speaker #2: composition? Yeah.
Aaron Canning: Yeah, I will do. Hi, Mitch. Look, just in terms of the second half of four-wheel drive, we've obviously got a couple of tailwinds into the second half. We announced the pricing around out-of-cycle OE pricing, so that'll all bite in the second half. We do expect to take some more pricing in the second half around aftermarket. We've obviously got the Hilux, new Hilux coming into the second half as well. And we've also got some Amotiv Unified benefits into the second half, some quite meaningful benefits, particularly around things like freight, that are going to come into the second half. So sort of bundling all those up together, you know, we are expecting a better margin performance in H2.
Aaron Canning: Yeah, I will do. Hi, Mitch. Look, just in terms of the second half of four-wheel drive, we've obviously got a couple of tailwinds into the second half. We announced the pricing around out-of-cycle OE pricing, so that'll all bite in the second half. We do expect to take some more pricing in the second half around aftermarket. We've obviously got the Hilux, new Hilux coming into the second half as well. And we've also got some Amotiv Unified benefits into the second half, some quite meaningful benefits, particularly around things like freight, that are going to come into the second half. So sort of bundling all those up together, you know, we are expecting a better margin performance in H2.
Speaker #4: I will do. Hi, Mitch. Look, just in terms of the second half of forward drive, we've obviously got a couple of tower winds into the second half.
Speaker #4: We announced the pricing around how to cycle OE pricing, so that'll all bite in the second half. We do expect to take some more pricing in the second half around aftermarket.
Speaker #4: We've obviously got the Hilux, new Hilux coming into the second half as well. And we've also got some Emotive Unified benefits into the second half.
Speaker #4: Some quite meaningful benefits, particularly around things like freight, are going to come into the second half. So, sort of bundling all those up together, we are expecting a better margin performance in H2.
Aaron Canning: I would say that's not going to fully offset the margin erosion we saw in the first half versus PCP, but it's going to be materially stronger than the first half.
Speaker #4: I would say that's not going to fully offset the first half versus PCP, but it's going to be materially stronger than the first.
Aaron Canning: I would say that's not going to fully offset the margin erosion we saw in the first half versus PCP, but it's going to be materially stronger than the first half.
Speaker #4: half. Yeah.
Mitchell Sonogan: Yeah, very clear. Thanks, guys. Just a second one on that. Just in terms of the powertrain undercar, you've talked about first half, second half, every day, expect to be broadly balanced. Yeah, again, Graeme, just maybe a little bit of color there. Any reasons why we shouldn't expect a little bit of improvement half on half, given it has been pretty steady and resilient, and a good outcome in the first half?
Mitchell Sonogan: Yeah, very clear. Thanks, guys. Just a second one on that. Just in terms of the powertrain undercar, you've talked about first half, second half, every day, expect to be broadly balanced. Yeah, again, Graeme, just maybe a little bit of color there. Any reasons why we shouldn't expect a little bit of improvement half on half, given it has been pretty steady and resilient, and a good outcome in the first half?
Speaker #2: Very clear. Thanks, guys. Just a second one on that. Just in terms of the powertrain undercar, you've talked about first half, second half EBITDA expected to be broadly balanced.
Speaker #2: Yeah, again, Graeme, just maybe a little bit of color there. Any reasons why we shouldn't expect a little bit of improvement half-on-half, given it has been pretty steady and resilient and a good outcome in the first?
Speaker #2: half? Yeah.
Graeme Whickman: Yeah, so the broadly balanced comments, more the group, is what I was referring to in terms of the outlook. I didn't speak to the powertrain half on half. You can probably get there by deduction of sorts anyway. You know, we expect powertrain to continue to be resilient. We're not calling out specifically anything around powertrain in terms of half on half. We mentioned LPNE, and obviously we've mentioned four-wheel drive; therefore, the deduction you can do for yourself. For the reasons that we've been speaking about, and I touched on earlier on when I was chatting and reviewing this slide, we've got further benefits that have come through in terms of Truganina consolidation. We've also got benefits of putting the IMG and the Infinitev businesses together.
Graeme Whickman: Yeah, so the broadly balanced comments, more the group, is what I was referring to in terms of the outlook. I didn't speak to the powertrain half on half. You can probably get there by deduction of sorts anyway. You know, we expect powertrain to continue to be resilient. We're not calling out specifically anything around powertrain in terms of half on half. We mentioned LPNE, and obviously we've mentioned four-wheel drive; therefore, the deduction you can do for yourself. For the reasons that we've been speaking about, and I touched on earlier on when I was chatting and reviewing this slide, we've got further benefits that have come through in terms of Truganina consolidation. We've also got benefits of putting the IMG and the Infinitev businesses together.
Speaker #5: So the broadly balanced comments are more the group is what I was referring to in terms of the outlook. I didn't speak to the powertrain half on half.
Speaker #5: You can probably get there by deduction of sorts anyway. We expect powertrain to continue to be resilient. We're not calling out specifically anything around powertrain in terms of half-on-half.
Speaker #5: We mentioned LP&E, and obviously we mentioned forward drive. So, therefore, the deduction you can do for yourself for the reasons that we've been speaking about.
Speaker #5: And I touched on earlier on when I was chatting and reviewing this slide, we've got further benefits that have come through in terms of plugging in a consolidation.
Speaker #5: We've also got benefits of putting the IMG and the Infinite businesses together. So we do expect a decent performance out of Powertrain in the second half.
Graeme Whickman: So we do expect a decent performance out of Powertrain in the second half.
Graeme Whickman: So we do expect a decent performance out of Powertrain in the second half.
Speaker #2: Yeah, thanks. And just probably more thinking about just running right into FY27. But just, yeah, I guess in terms of any quick commentary on corporate costs, should we expect a similar run rate into the second half and FY27?
Mitchell Sonogan: Yeah. Thanks. And just probably more thinking about just run rate into FY 2027. But just, yeah, I guess in terms of any quick commentary on corporate costs, should we expect a similar run rate into the second half and FY 2027? And Aaron talked to the AUD 10 million gross benefits for the Amotiv Unified. Just wondering what costs will be required in 2027 to achieve those ones as well. Thanks, guys.
Mitchell Sonogan: Yeah. Thanks. And just probably more thinking about just run rate into FY 2027. But just, yeah, I guess in terms of any quick commentary on corporate costs, should we expect a similar run rate into the second half and FY 2027? And Aaron talked to the AUD 10 million gross benefits for the Amotiv Unified. Just wondering what costs will be required in 2027 to achieve those ones as well. Thanks, guys.
Speaker #2: And Aaron talked to the $10 million gross benefits for the Emotive Unified. Just wondering what costs will be required in '27 to achieve those ones as well?
Speaker #2: Thanks, guys.
Aaron Canning: Yeah. Why don't I help you out, Mitch? You're obviously looking to have a bit more color around divisional second half performance. So let me just... I'll expand it and answer to your question. So four-wheel drive, we've touched on better margins in second half. LPNE, a little softer in the second half. Powertrain, as Graeme said, we've got a few things in the second half that are gonna support that business. In corporate, we are going to put some more cost in the second half. You heard me touch on things like resourcing around program management, really to support our Unified program. So I expect our corporate costs will go up in the second half versus the first half.
Aaron Canning: Yeah. Why don't I help you out, Mitch? You're obviously looking to have a bit more color around divisional second half performance. So let me just... I'll expand it and answer to your question. So four-wheel drive, we've touched on better margins in second half. LPNE, a little softer in the second half. Powertrain, as Graeme said, we've got a few things in the second half that are gonna support that business. In corporate, we are going to put some more cost in the second half. You heard me touch on things like resourcing around program management, really to support our Unified program. So I expect our corporate costs will go up in the second half versus the first half.
Speaker #4: Yeah. What I'm going to help with—
Speaker #4: You out, Mitch, and you're obviously looking to have a bit more color in around divisional second half performance. So let me just—I'll expand and answer to your question.
Speaker #4: So, forward drive, we've touched on better margins in the second half. LP&E, a little softer in the second half. Powertrain, as Graeme said, we've got a few things in the second half.
Speaker #4: They're going to support that business. In corporate, we are going to put some more costs in in the second half. You heard me touch on things like resourcing around program management.
Speaker #4: Really to support our Unified program. So I expect our corporate costs will go up in the second half. This is the first half. And then into 2027, yes, obviously with the further benefits we've announced on Unified today, that's largely going to be a 2027 story.
Aaron Canning: And then into 2027, yes, we've obviously, with the further benefits we've announced on Unified today, you know, that's largely going to be a 2027 story, as only AUD 1 million net of those are turning up this year. So, we haven't finalized our reinvestment levels for 2027, but I would say that that AUD 10 million is providing, will provide some buffer to further headwinds around cost and inflation into 2027, to support continued growth into 2027.
Aaron Canning: And then into 2027, yes, we've obviously, with the further benefits we've announced on Unified today, you know, that's largely going to be a 2027 story, as only AUD 1 million net of those are turning up this year. So, we haven't finalized our reinvestment levels for 2027, but I would say that that AUD 10 million is providing, will provide some buffer to further headwinds around cost and inflation into 2027, to support continued growth into 2027.
Speaker #4: As only 1 million net of those are turning up this year. So we haven't finalized our reinvestment levels for 2027. But I would say that that $10 million is providing, will provide some buffer to further headwinds around cost and inflation into ’27, to support continued growth into—
Speaker #4: 27. Okay.
Mitchell Sonogan: Okay. Thanks, guys. And just one super quick one. We talked to the EV investment, still having a loss in 26. Can you maybe just tell us what that loss is, given your guide into a break even in FY 27? And I'll jump off. Thank you very much.
Mitchell Sonogan: Okay. Thanks, guys. And just one super quick one. We talked to the EV investment, still having a loss in 26. Can you maybe just tell us what that loss is, given your guide into a break even in FY 27? And I'll jump off. Thank you very much.
Speaker #2: Thanks, guys. And just one super quick one. You talked to the EV investment still having a loss in '26. Can you maybe just tell us what that loss is, given you're guiding to break even in FY27?
Speaker #2: And I'll jump off. Thank you very much.
Speaker #4: Yeah, look, we guide to it being break-even on a run-rate basis exiting '27. So, the '27-year one won't be break-even, but we'll exit the year being break-even.
Aaron Canning: Yeah, look, we're going to it being break even on a run rate basis, exiting 2027. So the 2027 year one won't be break even, but we'll exit the year being break even. Look, it's less than AUD 2 million, and it's more than AUD 1 million. So it's pretty close in terms of where it's currently tracking. We're very happy with the EV business. Revenue growth is strong. We're making further changes around our operating footprint in terms of warehouse consolidation. That's going to happen in the H2.
Aaron Canning: Yeah, look, we're going to it being break even on a run rate basis, exiting 2027. So the 2027 year one won't be break even, but we'll exit the year being break even. Look, it's less than AUD 2 million, and it's more than AUD 1 million. So it's pretty close in terms of where it's currently tracking. We're very happy with the EV business. Revenue growth is strong. We're making further changes around our operating footprint in terms of warehouse consolidation. That's going to happen in the H2.
Speaker #4: Look, it's less than $2 million and it's more than $1 million, so it's pretty close in terms of where it's currently tracking. We're very happy with the EV business.
Speaker #4: Revenue growth is strong. We're making further changes around our operating footprint in terms of warehouse consolidation. That's going to happen in the second half.
Graeme Whickman: ... Graeme touched on, you know, a moderated investment in that space, and we're just being very cautious in relation to the changing dynamics of the car park. But, over the long term, it's a business that we see huge potential in, and we're just going to balance that investment, with, the revenue growth we're getting out from that business. So, yeah, on exit, on a run rate basis, niche profitable, in FY 2027, not profitable though, but I've given you sort of some, some tram lines there for the quantum.
Aaron Canning: Graeme touched on, you know, a moderated investment in that space, and we're just being very cautious in relation to the changing dynamics of the car park. But, over the long term, it's a business that we see huge potential in, and we're just going to balance that investment, with, the revenue growth we're getting out from that business. So, yeah, on exit, on a run rate basis, niche profitable, in FY 2027, not profitable though, but I've given you sort of some, some tram lines there for the quantum.
Speaker #4: Graeme touched on a moderated investment in that space. And we're just being very cautious in relation to the changing dynamics of the car part.
Speaker #4: But over the long term, it's a business that we see huge potential in, and we're just going to balance that investment with the revenue growth we're getting up from that business.
Speaker #4: So yeah, on exit, on a run-rate basis, Mitch, profitable. In FY27, not profitable though. But I've given you sort of some tramlines there for the quantum.
Speaker #6: Thank you. Your next question comes from Andrew Hodge with Canaccord Genuity. Please go ahead.
Operator: Thank you. Your next question comes from Andrew Hodge with Canaccord Genuity. Please go ahead.
Operator: Thank you. Your next question comes from Andrew Hodge with Canaccord Genuity. Please go ahead.
Speaker #6: ahead. Morning, Graeme.
Andrew Hodge: Morning, Graeme. Morning, Aaron. Thanks for the presentation. Look, a couple of my questions have been answered there, so I'll just ask around the currency, just in terms of, Aaron, you mentioned, second half 2026 improvement from the sequentially, but down on the PCP. So could you just remind us where you were hedged in second half 2025?
Andrew Hodge: Morning, Graeme. Morning, Aaron. Thanks for the presentation. Look, a couple of my questions have been answered there, so I'll just ask around the currency, just in terms of, Aaron, you mentioned, second half 2026 improvement from the sequentially, but down on the PCP. So could you just remind us where you were hedged in second half 2025?
Speaker #2: Morning, Aaron. Thanks for the presentation. Look, a couple of my questions have been answered there, so I'll just ask around the currency, just in terms of—Aaron, you mentioned second half '26 improvement sequentially.
Speaker #2: But down on the TCP. So, can you just remind us where you were hedged in the second half of '25?
Speaker #5: Yeah. Why don't I just give you a more definitive answer? It's less than a million dollars. The impact, Andrew, so it's pretty marginal. I'm talking second half on second half, right?
Graeme Whickman: Yeah. Why don't I just give you a more definitive answer? It's less than AUD 1 million.
Graeme Whickman: Yeah. Why don't I just give you a more definitive answer? It's less than AUD 1 million.
Andrew Hodge: Okay
Andrew Hodge: Okay
Graeme Whickman: ... the impact. Andrew, so it's pretty marginal. I'm talking second half on second half, right? I think is your question.
Graeme Whickman: The impact. Andrew, so it's pretty marginal. I'm talking second half on second half, right? I think is your question.
Speaker #5: Thanks for your question.
Speaker #5: Thank you for your question. Yeah, yes.
Andrew Hodge: Yes.
Andrew Hodge: Yes.
Graeme Whickman: Yeah.
Graeme Whickman: Yeah.
Speaker #2: And then into '27, have you started hedging first half '27 yet?
Andrew Hodge: And then into 2027, have you started hedging first half 2027 yet?
Andrew Hodge: And then into 2027, have you started hedging first half 2027 yet?
Speaker #5: Yes.
Speaker #2: And should we be thinking about, I mean, subject to how far hedged are you? And what's a reasonable expectation of the level that you're hedging at, at the...
Graeme Whickman: No.
Graeme Whickman: No.
Andrew Hodge: And should we be thinking about, I mean, subject to how far hedged are you, and is
Andrew Hodge: And should we be thinking about, I mean, subject to how far hedged are you, and is
Graeme Whickman: Yeah
Graeme Whickman: Yeah
Andrew Hodge: ... is quite a reasonable expectation up to the level that you're hedging at, at the moment?
Andrew Hodge: Is quite a reasonable expectation up to the level that you're hedging at, at the moment?
Speaker #2: moment? Second part
Graeme Whickman: Second part of your question, yes. And we are sort of covered out to beginning of November.
Graeme Whickman: Second part of your question, yes. And we are sort of covered out to beginning of November.
Speaker #5: Of your question, yes. And we are sort of covered out to the beginning of—
Speaker #5: November. Great.
Andrew Hodge: Great. Thank you. And I just want to ask one question on the four-wheel drive margins. I know you've talked about the process, the OEM price rise in order to bridge some of that gap. How much at risk is the lower than expected volume? So January was lower than your expectations. If that trend continued and you lost some of the volume that you were otherwise expecting, how much of a risk is the operating leverage to that margin, even in the face of some price increases and, and, and, you know, not a repeat of the, of the bad debt?
Andrew Hodge: Great. Thank you. And I just want to ask one question on the four-wheel drive margins. I know you've talked about the process, the OEM price rise in order to bridge some of that gap. How much at risk is the lower than expected volume? So January was lower than your expectations. If that trend continued and you lost some of the volume that you were otherwise expecting, how much of a risk is the operating leverage to that margin, even in the face of some price increases and, and, and, you know, not a repeat of the, of the bad debt?
Speaker #2: Thank you. And I just want to ask one question on the four-wheel drive margins. I know you've talked about the process, the OEM price rise, in order to bridge some of that gap.
Speaker #2: How much risk is the lower-than-expected volume? So January was lower than your expectations. If that trend continued and you lost some of the volume that you were otherwise expecting, how much of a risk is the operating leverage to that margin, even in the face of some price increases?
Speaker #2: And not a repeat of the bad.
Speaker #2: debt. Well,
Graeme Whickman: Well, obviously, the bad debt goes away. We're not trying to hurdle that, but look, we've also got aftermarket pricing that sits to the general car park. We've also got some unified benefits coming through and a little bit of an exchange in the last part of the second half. And the likes of Hilux, we'll get the full half of that. So those are some of the tailwinds that sit there. In terms of the volumes, I mean, yes, there is a downside risk, clearly. Although we have 2 to 3 months' worth of visibility already, Andrew, as you would expect, in terms of Ford. So some of that's already, I would call that pseudo hedged in our minds.
Graeme Whickman: Well, obviously, the bad debt goes away. We're not trying to hurdle that, but look, we've also got aftermarket pricing that sits to the general car park. We've also got some unified benefits coming through and a little bit of an exchange in the last part of the second half. And the likes of Hilux, we'll get the full half of that. So those are some of the tailwinds that sit there. In terms of the volumes, I mean, yes, there is a downside risk, clearly. Although we have 2 to 3 months' worth of visibility already, Andrew, as you would expect, in terms of Ford. So some of that's already, I would call that pseudo hedged in our minds.
Speaker #5: Obviously, the bad debt goes away—you're not trying to hurdle that. But look, we've also got aftermarket pricing that sits to the general car park.
Speaker #5: We've also got some unified benefits coming through. A little bit of an exchange in the last part of the second half. And the likes of Hilux—we'll get the full half of that.
Speaker #5: So those are some of the tailwinds that'll sit there. In terms of the volumes, I mean, yes, there is a downside risk, clearly. Although we have two to three months' worth of visibility already, Andrew, as you would expect in terms of Ford.
Speaker #5: So some of that's already, I would call that pseudo-hedged in our minds. We're watching it closely. In January, I don't think necessarily is a good barometer of either good or bad.
Graeme Whickman: We're watching it closely, and January, I don't think necessarily is a good barometer of either good or bad. You know, December was a pretty strong month. Sometimes you have a bit of supply, and the other thing is that, as I said earlier on, that some of those OEMs are still not that active in the market, in terms of discounting. So we're watching it closely, and naturally, there's a little bit of downside risk, but we do have some other levers to pull, and we are expecting, you know, some of that margin improvement. And then if you, not that you've asked this, but when you then start to reflect on how does that exit FY 2026 and go into 2027, you know, we still haven't even spoken about the actual delay of Navara.
Graeme Whickman: We're watching it closely, and January, I don't think necessarily is a good barometer of either good or bad. You know, December was a pretty strong month. Sometimes you have a bit of supply, and the other thing is that, as I said earlier on, that some of those OEMs are still not that active in the market, in terms of discounting. So we're watching it closely, and naturally, there's a little bit of downside risk, but we do have some other levers to pull, and we are expecting, you know, some of that margin improvement. And then if you, not that you've asked this, but when you then start to reflect on how does that exit FY 2026 and go into 2027, you know, we still haven't even spoken about the actual delay of Navara.
Speaker #5: December was a pretty strong month. Sometimes you have a bit of supply. And the other thing is that, as I said earlier on, some of those OEMs are still not that active in the market in terms of discounting.
Speaker #5: So, we're watching it closely. And, naturally, there's a little bit of a downside risk. But we do have some other levers to pull, and we are expecting some of that margin improvement.
Speaker #5: And then, not that you've asked us, but when you then start to reflect on how does that exit FY26 and go into FY27, we still haven't even spoken about the actual delay of Navara.
Speaker #5: That's actually a full-year impact of Navara, which is fantastic. YouHall starts to increase. Kia comes in. So we're not so much reliant on the ANZ market.
Graeme Whickman: That's actually a full year impact of Navara, which is fantastic. You know, U-Haul starts to increase, you know, Kia comes in. So we're not as reliant on the ANZ market, and we think we'll also pick up some other European tow bar business. So we're trying to offset that ANZ cyclicality, as we speak, and some of that will be showing up in the first half of FY 2027. So sorry, it's a bit more of an answer than what you asked for, but I just wanted to give you more color.
Graeme Whickman: That's actually a full year impact of Navara, which is fantastic. You know, U-Haul starts to increase, you know, Kia comes in. So we're not as reliant on the ANZ market, and we think we'll also pick up some other European tow bar business. So we're trying to offset that ANZ cyclicality, as we speak, and some of that will be showing up in the first half of FY 2027. So sorry, it's a bit more of an answer than what you asked for, but I just wanted to give you more color.
Speaker #5: And we think that we'll also pick up some other European tow bar business. So we're trying to offset that ANZ cyclicality as we speak.
Speaker #5: And some of that shows up, and will be showing up in the first half of FY27. So, sorry, it's a bit more of an answer than what you asked for.
Speaker #5: But I just wanted to give you more color.
Speaker #2: That's great. Thank you. Thanks very much.
Andrew Hodge: That's great. Thank you. Thanks very much.
Andrew Hodge: That's great. Thank you. Thanks very much.
Speaker #6: Your next question is from Sam Teger with Citi. Please go ahead.
Operator: Your next question is from Sam Teeger with Citi. Please go ahead.
Operator: Your next question is from Sam Teeger with Citi. Please go ahead.
Sam Teeger: Oh, hi, Graeme. Hi, Aaron. I was just keen to understand the dynamics driving the different performance between PTU and LP in Australia, given they share a number of customers. Are you seeing retailers focus more on private label in electrical and accessories?
Sam Teeger: Oh, hi, Graeme. Hi, Aaron. I was just keen to understand the dynamics driving the different performance between PTU and LP in Australia, given they share a number of customers. Are you seeing retailers focus more on private label in electrical and accessories?
Speaker #2: Hi, Graeme. Hi, Aaron. We're just keen to understand the dynamics driving the different performance between PTU and LPE in Australia, given they share a number of customers.
Speaker #2: Are you seeing retailers focus more on private label in electrical and accessories?
Speaker #5: Well, look, I think when you separate out across the three areas that we speak about on the LP&E slide, and if you went to that slide, you'd see that we sort of break out lighting, power management, electrical.
Graeme Whickman: Well, look, I think when you separate out across the three areas that we speak about on the LPNE slide, and if you went to that slide, you'd see that we sort of break out lighting, power manager, electrical. We speak about lighting being up, power management being up, electrical accessories being down. And that's a reflection of the reseller demand that we see at the moment. There's a mix of home brand performance that sits behind that, Sam. But at the same time, you know, without disclosing a particular customer, we've just won the Globe business and one of those, you know, big three resellers with the Narva brand.
Graeme Whickman: Well, look, I think when you separate out across the three areas that we speak about on the LPNE slide, and if you went to that slide, you'd see that we sort of break out lighting, power manager, electrical. We speak about lighting being up, power management being up, electrical accessories being down. And that's a reflection of the reseller demand that we see at the moment. There's a mix of home brand performance that sits behind that, Sam. But at the same time, you know, without disclosing a particular customer, we've just won the Globe business and one of those, you know, big three resellers with the Narva brand.
Speaker #5: And we speak about lighting being up, power management being up, electrical accessories being down. And that's a reflection of the reseller demand that we see at the moment.
Speaker #5: There's a mix of home brand performance that sits behind that, Sam. But at the same time, without disclosing a particular customer, we've just won the globe business in one of those big three resellers.
Speaker #5: And with the NABA brand, so house brands come and go. And the performance can ebb and flow. But in times of tight economic circumstance, there is a bit of a flight to value.
Graeme Whickman: So, you know, house brands come and go, and the performance can ebb and flow, but in times of tight economic circumstance, people, there is a bit of flight to value, and we do call that out, Sam. So I think there's a bit of a mixture there. Having said that, though, we are now ranging in other areas. You know, we're doing better in some of the independents. We're into Bunnings, and a couple of other areas like AutoPro and Auto One. So we always look to offset and reduce the customer concentration, but that's how I sort of characterize it.
Graeme Whickman: So, you know, house brands come and go, and the performance can ebb and flow, but in times of tight economic circumstance, people, there is a bit of flight to value, and we do call that out, Sam. So I think there's a bit of a mixture there. Having said that, though, we are now ranging in other areas. You know, we're doing better in some of the independents. We're into Bunnings, and a couple of other areas like AutoPro and Auto One. So we always look to offset and reduce the customer concentration, but that's how I sort of characterize it.
Speaker #5: And we do call that out, Sam. So I think there's a bit of a mixture there. Having said that, though, we are now ranging in other areas.
Speaker #5: We're doing better in some of the independents. We're into Bunnings, and a couple of other areas like Auto Pro and Auto One. So we always look to offset and reduce the customer concentration.
Speaker #5: But that's how I sort of characterize it.
Speaker #2: Yeah, no, that's good. Thanks. And then on that slide, which of the LPE brands are showing most of the weakness? Is it KT Kegel's, Boab, Offroad, National Luna, or another one?
Sam Teeger: Yeah, that's good. Thanks. And then on that slide, which of the LP brands are showing most of the weaknesses? Is it KT Cables, BOAB Offroad, National Lunar, or another one, and are you thinking about any potential divestments to help improve your return on capital employed?
Sam Teeger: Yeah, that's good. Thanks. And then on that slide, which of the LP brands are showing most of the weaknesses? Is it KT Cables, BOAB Offroad, National Lunar, or another one, and are you thinking about any potential divestments to help improve your return on capital employed?
Speaker #2: And are you thinking about any potential divestments to help improve your return on capital employed?
Speaker #5: Oh, look, we're doing that day by day by day in terms of rotary. We have a point of view around what we want to achieve.
Graeme Whickman: Oh, look, we're doing that day by day in terms of ROCE. We have a point of view around what we want to achieve, and that includes brand rationalization, that includes marketing dollars being spent on particular brands where we want to put our energy. And so the likes of National and BOAB and the brands you've just spoken of, they have very, very low investment, if not little at all. Whereas we're concentrating frankly on the Narva, Projecta, and also KT. Obviously, that provides a mid-range electrical accessory range compared to the Narva. We're also in the process of taking some of those brands online. We've just launched Projecta.com. So you can now buy directly from us on certain products through that, and we're doing that internationally.
Graeme Whickman: Oh, look, we're doing that day by day in terms of ROCE. We have a point of view around what we want to achieve, and that includes brand rationalization, that includes marketing dollars being spent on particular brands where we want to put our energy. And so the likes of National and BOAB and the brands you've just spoken of, they have very, very low investment, if not little at all. Whereas we're concentrating frankly on the Narva, Projecta, and also KT. Obviously, that provides a mid-range electrical accessory range compared to the Narva. We're also in the process of taking some of those brands online. We've just launched Projecta.com. So you can now buy directly from us on certain products through that, and we're doing that internationally.
Speaker #5: And that includes brand rationalization. That includes marketing dollars being spent on particular brands, where we want to put our energy. And so, the likes of National Luna, Boab, and the brands you’ve just spoken of—they are very, very low investment, if not little at all.
Speaker #5: Whereas we're concentrating, frankly, on the NABA projector and also KT, obviously, that provides a mid-range electrical accessory range compared to the NABA. We're also in the process of taking some of those brands online.
Speaker #5: We've just launched projector.com, so you can now buy directly from us on certain products. Through that—and we're doing that internationally—so really, we're concentrating hard on NABA projector and KT.
Graeme Whickman: So, really, we're concentrating hard on Narva, Projecta, and KT. The other ones are less of a distraction, unless we're going through a brand rationalization effort as part of Unified, not just in LPN, but across the other brands as well, to ensure that we're spending the right dollars on the right brands.
Graeme Whickman: So, really, we're concentrating hard on Narva, Projecta, and KT. The other ones are less of a distraction, unless we're going through a brand rationalization effort as part of Unified, not just in LPN, but across the other brands as well, to ensure that we're spending the right dollars on the right brands.
Speaker #5: The other ones are less of a distraction. And actually, we're going through a brand rationalization effort as part of Unified, not just in LP&E, but across the other brands as well, to ensure that we're spending the right dollars on the right brands.
Speaker #2: Okay, great. And what should we expect for significant items in this second half to unlock that $10 million in incremental Emotive Unified benefits?
Sam Teeger: Okay, great. And what should we expect for significant items in this second half to unlock that AUD 10 million in incremental Amotiv Unified benefits?
Sam Teeger: Okay, great. And what should we expect for significant items in this second half to unlock that AUD 10 million in incremental Amotiv Unified benefits?
Aaron Canning: Sam, broadly similar to H1 levels, perhaps marginally lower. Most of it's going to be around work we're doing around our technology platforms, in terms of simplifying ERP platforms, and a little bit around warehouse consolidations. So it won't be any higher, but it'll be in and around the same number, possibly slightly lower.
Aaron Canning: Sam, broadly similar to H1 levels, perhaps marginally lower. Most of it's going to be around work we're doing around our technology platforms, in terms of simplifying ERP platforms, and a little bit around warehouse consolidations. So it won't be any higher, but it'll be in and around the same number, possibly slightly lower.
Speaker #3: Sam, broadly, similar to H1 levels, perhaps marginally lower. Most of it's going to be around work we're doing around our technology platforms—in terms of simplifying ERP platforms.
Speaker #3: And a little bit around warehouse consolidations. So it won't be any higher, but it'll be in and around the same number, possibly slightly lower.
Speaker #2: Okay, great. And I think you've touched on it a little bit, but just wanted to clarify—the second half guidance: what's the assumption around the macro and interest?
Sam Teeger: Okay, great. And I think you've touched on it a little bit, but just wanted to clarify the second half guidance. You know, what's the assumption around the macro and interest rates?
Sam Teeger: Okay, great. And I think you've touched on it a little bit, but just wanted to clarify the second half guidance. You know, what's the assumption around the macro and interest rates?
Speaker #2: Rates? So, if I just go back to—
Graeme Whickman: If I just go back to the first question or that last question before we go to the assumptions. I think the other thing, when you talk about significant items, Aaron, I mean, the payback in terms of the dollars being spent, I think are pretty compelling. What would you say about that?
Graeme Whickman: If I just go back to the first question or that last question before we go to the assumptions. I think the other thing, when you talk about significant items, Aaron, I mean, the payback in terms of the dollars being spent, I think are pretty compelling. What would you say about that?
Speaker #5: The first question, or that last question before we go to the assumptions—I think the other thing, when you talk about significant items, Aaron, I mean, the payback in terms of the dollars being spent, I think, are pretty compelling.
Speaker #5: The first question, or that last question before we go to the assumptions, I think the other thing, when you talk about significant items, Aaron, I mean, the payback in terms of the dollars being spent, I think, are pretty—
Speaker #5: What would you say about that? Yeah.
Aaron Canning: Yeah, look, very compelling. And I sort of noted it in my speaker notes that we're very aware of one-off costs. We're not, you know, we're trying to run the business and improve the business at the same time, and we've got a very strong lens on improving shareholder returns. You can see that in our capital allocation framework, where I'm happy with where our return on capital sits. In order to make some meaningful changes, there are some costs we have to put into the business on a one-off basis. So, the clear examples of it are in the first half. You know, unfortunately, we, we said goodbye to 50 people in the first half. We didn't replace those people. The payback on that's less than a year.
Aaron Canning: Yeah, look, very compelling. And I sort of noted it in my speaker notes that we're very aware of one-off costs. We're not, you know, we're trying to run the business and improve the business at the same time, and we've got a very strong lens on improving shareholder returns. You can see that in our capital allocation framework, where I'm happy with where our return on capital sits. In order to make some meaningful changes, there are some costs we have to put into the business on a one-off basis. So, the clear examples of it are in the first half. You know, unfortunately, we, we said goodbye to 50 people in the first half. We didn't replace those people. The payback on that's less than a year.
Speaker #3: Look, very compelling. And I sort of noted it in my speaker notes that we're very aware of one-off costs. We're trying to run the business and improve the business at the same time.
Speaker #3: And we've got a very strong lens on improving shareholder returns. You can see that in our capital allocation framework. We're unhappy with where our return on capital sits.
Speaker #3: In order to make some meaningful changes, there are some costs we have to put into the business on a one-off basis. Clear examples of this are in the first half.
Speaker #3: Unfortunately, we said goodbye to 50 people in the first half. We didn't replace those people. The payback on that is less than a year, so it has a very strong correlation with our payback metrics.
Aaron Canning: It has a very strong correlation with our payback metrics.
Aaron Canning: It has a very strong correlation with our payback metrics.
Speaker #5: Yeah. A lot of those significant items are going to paybacks that are less than a year.
Graeme Whickman: A lot of those significant items have got paybacks that are less than a year.
Graeme Whickman: A lot of those significant items have got paybacks that are less than a year.
Speaker #3: Get out.
Aaron Canning: Yeah.
Aaron Canning: Yeah.
Graeme Whickman: I mean, the likes of some of the warehousing and tech stack, which is what Aaron's referring to, have paybacks within the sort of 1 to 3-year period. But, you know, we're determined to make sure when we're rolling out Unified, that our investors can see a real plain correlation, a clear correlation of a return quickly. Anyway, I just wanted to make that point before we get into... In terms of the assumptions around the full year guidance linked to the second half. I mean, look, we had expected a muted, maybe slightly better, year-over-year in terms of NVS and pickups in the total year.
Graeme Whickman: I mean, the likes of some of the warehousing and tech stack, which is what Aaron's referring to, have paybacks within the sort of 1 to 3-year period. But, you know, we're determined to make sure when we're rolling out Unified, that our investors can see a real plain correlation, a clear correlation of a return quickly. Anyway, I just wanted to make that point before we get into... In terms of the assumptions around the full year guidance linked to the second half. I mean, look, we had expected a muted, maybe slightly better, year-over-year in terms of NVS and pickups in the total year.
Speaker #5: I mean, the likes of some of the warehousing and tech stack, which is what Aaron's referring to, have paybacks within the sort of one- to three-year period.
Speaker #5: But we're determined to make sure, when we're rolling out Unified, that our investors can see a real, plain correlation—a clear correlation of a return—quickly.
Speaker #5: Anyway, I just wanted to make that point before we get into it. In terms of the assumptions around the four-year guidance linked to the second half, I mean, look, we had expected a muted, maybe slightly better, year-over-year in terms of MVS and pickups in the total year.
Speaker #5: Obviously, the second half started out a bit weaker. But with the forward visibility we have, we're sort of expecting it to be sort of there or thereabouts year-over-year in terms of MVS.
Graeme Whickman: Obviously, the second half started out a bit weaker, but with the forward visibility we have, we're sort of expecting it to be sort of there or thereabouts year over year in terms of NVS. We're not expecting. If you think about other OEM and OES business, which might translate between both four-wheel drive and LPNE, we're not expecting the RV or caravan market to suddenly spurt back. We do expect a little bit of market share gain, though, whether it be Cruisemaster or indeed LPNE. LPNE have just launched 48-volt systems in the Projecta range. You know, the biggest caravan manufacturer is very excited about that and already taken it. We've pushed that into Crusader. We've got MDC taking that. So caravan show has gone very well.
Graeme Whickman: Obviously, the second half started out a bit weaker, but with the forward visibility we have, we're sort of expecting it to be sort of there or thereabouts year over year in terms of NVS. We're not expecting. If you think about other OEM and OES business, which might translate between both four-wheel drive and LPNE, we're not expecting the RV or caravan market to suddenly spurt back. We do expect a little bit of market share gain, though, whether it be Cruisemaster or indeed LPNE. LPNE have just launched 48-volt systems in the Projecta range. You know, the biggest caravan manufacturer is very excited about that and already taken it. We've pushed that into Crusader. We've got MDC taking that. So caravan show has gone very well.
Speaker #5: We're not expecting—if you think about other OEM and OES business, which might translate between both Forward Drive and LP&E—we're not expecting the RV or caravan market to suddenly spurt back.
Speaker #5: We do expect a little bit of market share gain, though, whether it be Cruise Master or indeed LP&E. LP&E have just launched 48-volt systems in the Projector range.
Speaker #5: The biggest caravan manufacturer is very excited about that and has already taken it. We've pushed that into Crusader. We've got NDC taking that, so the caravan show has gone very well.
Speaker #5: We've just launched body control modules in the caravan market. So, whilst the caravan market's not one we're expecting to come back, we're still expecting a little bit of market share there.
Graeme Whickman: We've just launched, you know, body control modules in the caravan market. So whilst the caravan market, we're not expecting to come back, we're still expecting a little bit of market share there. Truck and bus, we're certainly not expecting to see that. That's quite low. The cyclicality is, I would say, at a really low trough, so we're not expecting that to come back. In terms of the resellers, Sam, we're not expecting that to spurt. I think, you know, the economic situation, the macro and ANZ is still very muted, as you would know, so we're not expecting that to bounce back. And we're watching with some interest around where the interest rates are ahead.
Graeme Whickman: We've just launched, you know, body control modules in the caravan market. So whilst the caravan market, we're not expecting to come back, we're still expecting a little bit of market share there. Truck and bus, we're certainly not expecting to see that. That's quite low. The cyclicality is, I would say, at a really low trough, so we're not expecting that to come back. In terms of the resellers, Sam, we're not expecting that to spurt. I think, you know, the economic situation, the macro and ANZ is still very muted, as you would know, so we're not expecting that to bounce back. And we're watching with some interest around where the interest rates are ahead.
Speaker #5: Truck and bus—we're certainly not expecting to see that. That's quite low. The cyclicality is, I would say, at a really low trough, so we're not expecting that to come back.
Speaker #5: In terms of the resellers, Sam, we're not expecting that to spurt. I think the economic situation, the macro, and ANZ is still very muted, as you would know.
Speaker #5: So we're not expecting that to bounce back. And we're watching with some interest around where the interest rates are ahead. And then we're expecting people to continue to service vehicles in terms of the wear and repair.
Graeme Whickman: And then we're expecting people to continue to service vehicles in terms of the wear and repair, and that's not abating. If anything, you know, as you know, the car park and some information in the later part of the deck, the latest information shows that the car park's approaching 12 years, and that there was a bit of deferral because of cost of living pressures over the last, you know, 12 to 18 months. That will have to show up at some point, so we're not expecting that to drop away. And our assumptions, therefore, are relatively buoyant. And then you heard from Aaron, our assumptions around some of the things that are less in our control, whether it be exchange or interest rates and other bits and bobs.
Graeme Whickman: And then we're expecting people to continue to service vehicles in terms of the wear and repair, and that's not abating. If anything, you know, as you know, the car park and some information in the later part of the deck, the latest information shows that the car park's approaching 12 years, and that there was a bit of deferral because of cost of living pressures over the last, you know, 12 to 18 months. That will have to show up at some point, so we're not expecting that to drop away. And our assumptions, therefore, are relatively buoyant. And then you heard from Aaron, our assumptions around some of the things that are less in our control, whether it be exchange or interest rates and other bits and bobs.
Speaker #5: And that's not abating. If anything, as you know, the car park and some information in the later part of the DAC, the latest information shows that the car park's approaching 12 years.
Speaker #5: And if there was a bit of deferral because of cost of living pressures over the last 12 to 18 months, that will have to show up at some point.
Speaker #5: So we're not expecting that to drop away, and our assumptions, therefore, are relatively buoyant. And then you heard from Aaron our assumptions around some of the things that are less in our control, whether it be exchange or interest rates and other bits and bobs.
Graeme Whickman: You know, we've kind of got some of that covered, and the rest of it, we'll see how it goes. So hopefully that gives you a flavor of the assumptions that sit behind the second half and importantly, the full year.
Graeme Whickman: You know, we've kind of got some of that covered, and the rest of it, we'll see how it goes. So hopefully that gives you a flavor of the assumptions that sit behind the second half and importantly, the full year.
Speaker #5: We’ve kind of got some of that covered, and the rest of it, we’ll see how it goes. So hopefully, that gives you a flavor of the assumptions that sit behind the second half and, importantly, the full—
Speaker #5: year. Yeah.
Sam Teeger: Yeah, that's helpful. Thank you.
Sam Teeger: Yeah, that's helpful. Thank you.
Speaker #2: That's helpful. Thank you.
Speaker #1: Once again, if you wish to ask a question, please press star one on your telephone, or type your question into the Ask a Question box.
Operator: Once again, if you wish to ask a question, please press star one on your telephone or type your question into the ask a question box. Your next question is a webcast question from Tim Plumbe with UBS. This reads: January ANZ pickup sales, excluding BYD, down 7%. Some OEM models a fair bit worse than that. Ford Ranger, Toyota Hilux, Prado, RAV4. What are your thoughts on this? Is this Australian consumer demand coming off, or is this OEM supply driven? How are you thinking about the remainder of the year from a volume perspective? And does this change, i.e., worsen, if RBA announces further interest rate hikes, or have you incorporated this into your thinking for second half 2026?
Operator: Once again, if you wish to ask a question, please press star one on your telephone or type your question into the ask a question box. Your next question is a webcast question from Tim Plumbe with UBS. This reads: January ANZ pickup sales, excluding BYD, down 7%. Some OEM models a fair bit worse than that. Ford Ranger, Toyota Hilux, Prado, RAV4. What are your thoughts on this? Is this Australian consumer demand coming off, or is this OEM supply driven? How are you thinking about the remainder of the year from a volume perspective? And does this change, i.e., worsen, if RBA announces further interest rate hikes, or have you incorporated this into your thinking for second half 2026?
Speaker #1: Your next question is a webcast question from Tim Plume with UBS. This reads, "January ANZ pickup sales excluding BYD were down 7%. Some OEM models were a fair bit worse than that."
Speaker #1: Ford Ranger, Toyota Hilux, Prado, RAV4—what are your thoughts on this? Is this Australian consumer demand coming off, or is this OEM supply driven? How are you thinking about the remainder of the year from a volume perspective?
Speaker #1: And does this change, i.e., worsen, if the RBA announces further interest rate hikes? Or have you incorporated this into your thinking for the second half of '26?
Speaker #5: Yeah, thanks for the question, Tim. So, you're quite right, and I think I have already articulated the nuance of some of the OEM brands within the January performance.
Graeme Whickman: Thanks for the question, Tim. So you're quite right, and I think I have already articulated the nuance of some of the OEM brands within the January performance. I mean, obviously, the first half was flat, net of BYD. But looked at the first half, Ranger down 3, D-MAX down 11, BT sort of 4-ish. So it sort of was in that sort of space, and that was more pronounced, clearly in January. You know, those same models Ranger down 20 and Hilux 15 and D-MAX 14. I think, and I think it's actually a mix of both. I think people had a bit of pause through January. And we saw January really quite a, I wouldn't say peculiar, but quite a variable month across all of our businesses. Some strong, some a bit weaker.
Graeme Whickman: Thanks for the question, Tim. So you're quite right, and I think I have already articulated the nuance of some of the OEM brands within the January performance. I mean, obviously, the first half was flat, net of BYD. But looked at the first half, Ranger down 3, D-MAX down 11, BT sort of 4-ish. So it sort of was in that sort of space, and that was more pronounced, clearly in January. You know, those same models Ranger down 20 and Hilux 15 and D-MAX 14. I think, and I think it's actually a mix of both. I think people had a bit of pause through January. And we saw January really quite a, I wouldn't say peculiar, but quite a variable month across all of our businesses. Some strong, some a bit weaker.
Speaker #5: I mean, obviously, the first half was flat—net of BYD. We looked at the first half: Ranger down three, D-MAX down eleven, BT sort of four-ish.
Speaker #5: So it sort of was in that sort of space, and that was more pronounced, clearly, in January. Those same models ranged down: 20 for Ranger, 15 for Hilux, and 14 for D-Max.
Speaker #5: I think it's actually a mix of both. I think people had a bit of pause through January. And we saw January really quite a—I wouldn't say peculiar, but quite a variable month across all of our businesses.
Speaker #5: Some strong, some a bit weaker. It seemed like workshops were coming back a bit later. People weren't necessarily spending in some of the retail-centric areas of some of our resellers.
Graeme Whickman: It seemed like workshops were coming back a bit later. People weren't necessarily spending in some of the retail-centric areas of some of our resellers, and indeed, weren't necessarily buying vehicles en masse. I think it's a bit of a, so no, it's a bit of both. I think December was a stronger month, and therefore a little bit of supply, perhaps constraint, not massive, and then a little bit of demand off. I think the interest rates, I mean, we've been much higher than where we have, obviously, with the deceleration of the rates, and if we return another 25 basis points or 50 basis points, I don't think we'll be facing anything different than what we were, you know, 6 and 12 months ago.
Graeme Whickman: It seemed like workshops were coming back a bit later. People weren't necessarily spending in some of the retail-centric areas of some of our resellers, and indeed, weren't necessarily buying vehicles en masse. I think it's a bit of a, so no, it's a bit of both. I think December was a stronger month, and therefore a little bit of supply, perhaps constraint, not massive, and then a little bit of demand off. I think the interest rates, I mean, we've been much higher than where we have, obviously, with the deceleration of the rates, and if we return another 25 basis points or 50 basis points, I don't think we'll be facing anything different than what we were, you know, 6 and 12 months ago.
Speaker #5: And indeed, weren't necessarily buying vehicles en masse. I think it's a bit of a—so now it's a bit of both. I think December was a stronger month.
Speaker #5: And therefore, a little bit of supply, perhaps constraint—not massive—and then a little bit of demand off. I think the interest rates—I mean, we’ve been much higher than where we have, obviously, with the deceleration of the rates.
Speaker #5: And if we return another 25 basis points or 50 basis points, I don't think we'll be facing anything different than what we were 6 or 12 months ago.
Graeme Whickman: I do expect, if you were to look on the pages of Ford, indeed, Triton and others, they're just starting to spur the market. Interestingly, Triton, if you look at where they came in for the half, they were actually up 11%. You look in January, they bucked the trend again. They're up 36% now. In part, that's because, again, my point, personal point of view, in part, because they've got more supply, and part, they're actually quite aggressive in the market. They are drawing customers out of the market with some reasonably aggressive driveaway prices. Ford have just put some driveaway prices in recently. Toyota not, I can't remember now exactly piece by piece. So I think we're starting to see more progressive incentivization in the market.
Speaker #5: I do expect, and if you were to look on the pages of Ford, indeed, Triton, and others, they're just starting to spurt the market.
Graeme Whickman: I do expect, if you were to look on the pages of Ford, indeed, Triton and others, they're just starting to spur the market. Interestingly, Triton, if you look at where they came in for the half, they were actually up 11%. You look in January, they bucked the trend again. They're up 36% now. In part, that's because, again, my point, personal point of view, in part, because they've got more supply, and part, they're actually quite aggressive in the market. They are drawing customers out of the market with some reasonably aggressive driveaway prices. Ford have just put some driveaway prices in recently. Toyota not, I can't remember now exactly piece by piece. So I think we're starting to see more progressive incentivization in the market.
Speaker #5: Interestingly, Triton, if you look at where they came in for the half, they were actually up 11%. You look in January, they bucked the trend again.
Speaker #5: They were up 36%. Now, in part, that's because—again, my personal point of view—in part because there's a bit more supply. In part, they're actually quite aggressive in the market.
Speaker #5: So they are drawing customers out of the market with some reasonably aggressive driveaway prices. Ford have just put some driveaway prices in recently. Toyota have not.
Speaker #5: I can't remember now exactly, piece by piece. So I think we're starting to see more progressive incentivization of the market. And of course, the other thing with Hilux is that there's not been a huge supply of them as they start to launch.
Graeme Whickman: And of course, the other thing with Hilux is there's not been a huge supply of them as they start to launch. So, you know, our assumptions are built on a soft, slightly softer second half. We're watching carefully. We know we'll get a bit more business with Hilux because that's starting to launch, and we obviously have the sports bar in addition to the tow bar. And we'll watch closely, but we also are sucking more revenue out of a few more Australian tow bar contracts. And in the background, we expect right at the back end of the half term, that we might see just a little bit of that offshore revenue come in, just a little bit of it, and we'll see also what happens with the U-Haul business.
Graeme Whickman: And of course, the other thing with Hilux is there's not been a huge supply of them as they start to launch. So, you know, our assumptions are built on a soft, slightly softer second half. We're watching carefully. We know we'll get a bit more business with Hilux because that's starting to launch, and we obviously have the sports bar in addition to the tow bar. And we'll watch closely, but we also are sucking more revenue out of a few more Australian tow bar contracts. And in the background, we expect right at the back end of the half term, that we might see just a little bit of that offshore revenue come in, just a little bit of it, and we'll see also what happens with the U-Haul business.
Speaker #5: So, our assumptions are built on a slightly softer second half—we're watching carefully. We know we'll get a bit more business with Hilux because that's starting to launch.
Speaker #5: And we obviously have the sports bar in addition to the tow bar. And we'll watch closely, but we also are sucking more revenue out of a few more Australian tow bar contracts.
Speaker #5: And in the background, we expect right at the back end of the half, Tim, that we might see just a little bit of that offshore revenue come in, just a little bit of it.
Speaker #5: And we'll see also what happens with the Yeehawk business. So we're kind of balancing a little bit of
Graeme Whickman: So kind of balancing, a little bit of that.
Graeme Whickman: So kind of balancing, a little bit of that.
Speaker #1: Thank you. Your next—Adam Delaverde with Taylor Collision. This reads, 'Can you discuss relative utilization levels for Thai and Australian plants at Trico Motive?'
Operator: Thank you. Your next question is a webcast question from Adam Dellabit with Taylor Collison. This reads: Can you discuss relative utilization levels for Thai and Australian plants at Amotiv? Is it still patchy? How does throughput today compare to when you acquired APG? And what things can be done to improve margins independent of securing higher order volumes?
Operator: Thank you. Your next question is a webcast question from Adam Dellabit with Taylor Collison. This reads: Can you discuss relative utilization levels for Thai and Australian plants at Amotiv? Is it still patchy? How does throughput today compare to when you acquired APG? And what things can be done to improve margins independent of securing higher order volumes?
Speaker #1: question is a webcast question
Speaker #1: Is it still patchy? How does it look throughout today compared to when you acquired APG? And what things can be done to improve margins, independent of securing higher order volumes?
Speaker #5: Yeah, sure. And thanks for the question. Look, the Ty plant—its utilization is very high. Hence why we've just commissioned the third plant.
Graeme Whickman: Yeah, sure. And thanks for the question. Look, the Thai plant is, you know, utilization is very high, hence why we're just commissioned the third plant, or in the process of commissioning that. That's useful given that we've just won some European contracts and, you know, we're pitching for more European contracts. So that third plant naturally will be less utilized, but we're bursting at the seams. And that's before, Adam, you think about a full year of Hilux sports bars, which we didn't have before, and then you start to take the Navara, and we haven't spoken much about the Navara, but you know, the Navara will go from currently or in the past cycle, we used to, you know, literally deliver parts of a tow bar to a domestic operation.
Graeme Whickman: Yeah, sure. And thanks for the question. Look, the Thai plant is, you know, utilization is very high, hence why we're just commissioned the third plant, or in the process of commissioning that. That's useful given that we've just won some European contracts and, you know, we're pitching for more European contracts. So that third plant naturally will be less utilized, but we're bursting at the seams. And that's before, Adam, you think about a full year of Hilux sports bars, which we didn't have before, and then you start to take the Navara, and we haven't spoken much about the Navara, but you know, the Navara will go from currently or in the past cycle, we used to, you know, literally deliver parts of a tow bar to a domestic operation.
Speaker #5: We're in the process of commissioning that. That's useful given that we've just won some European contracts. And we're pitching for more European contracts. So that third plant, naturally, will be less utilized.
Speaker #5: But we're bursting at the seams. And that's before, Adam, you think about a full year of Hilux Sports Bar, which we now have before us.
Speaker #5: And then you start to take the Navara. And we haven't spoken much about the Navara, but the Navara will go from—currently, or in the past cycle, we used to literally deliver parts of a tow bar to a domestic operator.
Speaker #5: And this is an operation. We're now delivering the tow bar, the sports bar, the nudge bar. And that comes in FY27. So, naturally, the utilization will creep.
Graeme Whickman: We're now delivering the tow bar, the sports bar, the nudge bar, and that comes in FY 2027. So naturally, the utilization will creep. In terms of Australia, that's still a bit patchy. But we run a one-ship operation there anyway. It's not in, you know, the 40s, 50s, 60s, but it might be in the 70s and 80s, depending on which month we're looking at, because it does ebb and flow. The, you know, the average batch sizes there are a lot lower. You know, we're at seven or eight batch sizes, and that supports us, also supports the aftermarket. So it's a little bit more, bit more patchy there, Adam.
Graeme Whickman: We're now delivering the tow bar, the sports bar, the nudge bar, and that comes in FY 2027. So naturally, the utilization will creep. In terms of Australia, that's still a bit patchy. But we run a one-ship operation there anyway. It's not in, you know, the 40s, 50s, 60s, but it might be in the 70s and 80s, depending on which month we're looking at, because it does ebb and flow. The, you know, the average batch sizes there are a lot lower. You know, we're at seven or eight batch sizes, and that supports us, also supports the aftermarket. So it's a little bit more, bit more patchy there, Adam.
Speaker #5: In terms of Australia, that's still a bit patchy. But we run a one-ship operation there anyway. It's not in the 40s, 50s, or 60s. But it might be in the sort of 70s and 80s, depending on which month we're looking at, because it does ebb and flow.
Speaker #5: The average batch sizes there are a lot lower. We're at seven or eight batch sizes. And that also supports the aftermarket, so it's a little bit more patchy there.
Speaker #5: Adam. In terms of the margin, look, if you were to if you were to take it to a dollar value as opposed to a BIP value, we were down four and a half million half over half or a million of that then probably about three millions' worth of was zone caravans.
Graeme Whickman: In terms of the margin, look, if you were to take it to a dollar value as opposed to a basis point value, we were down AUD 4.5 million H1 over H2, or AUD 1 million of that was, you know, zone caravans, and then probably about AUD 3 million's worth of pricing annualize with the pricing we're about to put in place. So, you know, you, you'd get back that pretty quickly. That's not discounting the fact that we're paying, you know, our workforce another 4%, you know, our electricity bill quite higher, so you think about utilities and also the rent of that. So that pricing, sort of, that's the last seven-tenths. That pricing fixes majority of that. Then you go and start thinking about AM pricing that we've spoken briefly about outside of the OEM pricing.
Graeme Whickman: In terms of the margin, look, if you were to take it to a dollar value as opposed to a basis point value, we were down AUD 4.5 million H1 over H2, or AUD 1 million of that was, you know, zone caravans, and then probably about AUD 3 million's worth of pricing annualize with the pricing we're about to put in place. So, you know, you, you'd get back that pretty quickly. That's not discounting the fact that we're paying, you know, our workforce another 4%, you know, our electricity bill quite higher, so you think about utilities and also the rent of that. So that pricing, sort of, that's the last seven-tenths. That pricing fixes majority of that. Then you go and start thinking about AM pricing that we've spoken briefly about outside of the OEM pricing.
Speaker #5: And pricing annualized with the pricing we're about to put in place. So you'd get back that pretty quickly. That's not discounting the fact that we're paying our workforce another 4%, our electricity bill quite a bit higher.
Speaker #5: So you think about utilities and also the rent of that. So that pricing, sort of—that’s the last seven-tenths. That pricing fixes the majority of that.
Speaker #5: Then you go and start thinking about AM pricing that we've spoken briefly about outside of the OEM pricing. The new business wins—the Concrete and Nature, Hilux, and Navara, just to name two.
Graeme Whickman: The new business wins that are concrete in nature, Hilux and Navara, just to name two, increasing, you know, U-Haul and the EV bus- sorry, the Kia business in Europe, and I reckon we'll win some more. Then you've got unified benefits. You know, freight is decent and contract labor, that's to come. And then a bit of margin improvement because the Thai baht's been a bit brutal for a while. We've picked up a little bit there. So there's plenty of reasons to see this business return to, you know, not just FY 2025, but FY 2024 type margins, at a minimum, as we expand.
Graeme Whickman: The new business wins that are concrete in nature, Hilux and Navara, just to name two, increasing, you know, U-Haul and the EV bus- sorry, the Kia business in Europe, and I reckon we'll win some more. Then you've got unified benefits. You know, freight is decent and contract labor, that's to come. And then a bit of margin improvement because the Thai baht's been a bit brutal for a while. We've picked up a little bit there. So there's plenty of reasons to see this business return to, you know, not just FY 2025, but FY 2024 type margins, at a minimum, as we expand.
Speaker #5: Increasing Yeehawk and the EV—sorry, the Kia—business in Europe. And I reckon we'll win some more. Then you've got unified benefits. Freight is decent, and contract labor.
Speaker #5: That's to come. And then a bit of margin improvement, because the Ty bar has been a bit brutal for a while. We picked up a little bit there.
Speaker #5: reasons to see this business return. So there's plenty to get back to not just FY25, but FY24-type margins at a minimum. As we...
Speaker #5: expand. Thank you.
Operator: Thank you. Your next question comes from Ralph Katz, a private investor. This reads: How will the switch to electric vehicles impact Amotiv performance?
Operator: Thank you. Your next question comes from Ralph Katz, a private investor. This reads: How will the switch to electric vehicles impact Amotiv performance?
Speaker #1: Your next question comes from Ralph Katz, a private investor. This reads, "How will the switch to electric vehicles impact A Motive's performance?"
Speaker #5: Thanks, Ralph. I don't know what you've been reading or what you've been following, but the EV investment around the world is crashing at the moment.
Graeme Whickman: Thanks, Ralph. I don't know what you've been reading or what you've been following, but the EV investment around the world is crashing at the moment. You can look at Ford. They wrote off $20-something million. Stellantis, $32 billion. Sorry, I'm talking billions here, not millions. Everybody is pulling out of EV investment quicker than they can, and that's just because the payback is just brutal. They were all primarily compliance players linked to, particularly the US government's point of view around CAFE and a few other bits and pieces. Now, I'm not making a judgment on whether an EV is right, wrong, or indifferent. We, as a business, are committed to reducing our emissions and have done so.
Graeme Whickman: Thanks, Ralph. I don't know what you've been reading or what you've been following, but the EV investment around the world is crashing at the moment. You can look at Ford. They wrote off $20-something million. Stellantis, $32 billion. Sorry, I'm talking billions here, not millions. Everybody is pulling out of EV investment quicker than they can, and that's just because the payback is just brutal. They were all primarily compliance players linked to, particularly the US government's point of view around CAFE and a few other bits and pieces. Now, I'm not making a judgment on whether an EV is right, wrong, or indifferent. We, as a business, are committed to reducing our emissions and have done so.
Speaker #5: You can look at Ford. They wrote off 20-something million. Stellantis, $32 billion. Sorry, I'm talking billions here, not millions. Everybody is pulling out of EV investment quicker than they can.
Speaker #5: And that's just because the payback is just brutal. They were all primarily compliance plays linked to, particularly, the US government's point of view around CAFE and a few other bits and pieces.
Speaker #5: Now, I'm not making a judgment on whether an EV is right, wrong, or indifferent. We, as a business, are committed to reducing our emissions and have done so.
Speaker #5: And actually, at Scope 1 and 2, we're actually carbon neutral—so just as an aside. But the onslaught of EVs has slowed quite dramatically throughout.
Graeme Whickman: Actually, at Scope 1 and 2, we're actually carbon neutral, so just as an aside. But the onslaught of EVs has slowed quite dramatically, Ralph. What you are still seeing is a strong Chinese level of investment, although, you know, there's a hundred-plus brands or so in China that will go through massive consolidation. BYD recently just had a very tough period. So ultimately, at the end of the day, we're gonna see, you know, not as strong as predicted ICE adoption in this particular market. We've already moved, though. You know, our revenue, as it stands now, is roughly 75% non-ICE, so it's ICE agnostic. So we're well positioned in that regard.
Graeme Whickman: Actually, at Scope 1 and 2, we're actually carbon neutral, so just as an aside. But the onslaught of EVs has slowed quite dramatically, Ralph. What you are still seeing is a strong Chinese level of investment, although, you know, there's a hundred-plus brands or so in China that will go through massive consolidation. BYD recently just had a very tough period. So ultimately, at the end of the day, we're gonna see, you know, not as strong as predicted ICE adoption in this particular market. We've already moved, though. You know, our revenue, as it stands now, is roughly 75% non-ICE, so it's ICE agnostic. So we're well positioned in that regard.
Speaker #5: What you are still seeing is a strong Chinese level of investment. Although there are 100 brands or so in China, that will go through massive consolidation.
Speaker #5: BYD recently just had a very tough period. So ultimately, at the end of the day, we're going to see not as strong as predicted ICE adoption in this particular market.
Speaker #5: We've already moved, though. Our revenue as it stands now is roughly 75% non-ICE, so it's ICE agnostic. So we're well positioned in that regard.
Speaker #5: The adoption isn't quite as high. And where those vehicles are coming through is in small vehicles, passenger vehicles, and small SUVs, which is less important to us.
Graeme Whickman: The adoption isn't quite as high, and where those vehicles are coming through are in small vehicles, passenger vehicles, and small SUVs, which is less important to us. And where we've got pickups, the likes of electrified pickups, whether it be Ford electrified, Toyota and the like, we've been able to engineer tow bars that are lightweight and actually support them. So I think we're well positioned. I don't see that as any threat, but we've already moved to a strong non-ICE position anyway. Hopefully, that answers your question in a broader context.
Graeme Whickman: The adoption isn't quite as high, and where those vehicles are coming through are in small vehicles, passenger vehicles, and small SUVs, which is less important to us. And where we've got pickups, the likes of electrified pickups, whether it be Ford electrified, Toyota and the like, we've been able to engineer tow bars that are lightweight and actually support them. So I think we're well positioned. I don't see that as any threat, but we've already moved to a strong non-ICE position anyway. Hopefully, that answers your question in a broader context.
Speaker #5: And where we've got pickups, and the likes of electrified pickups—whether it be Ford electrified, Toyota, and the like—we've been able to engineer tow bars that are lightweight and actually support them.
Speaker #5: So, I think we're well positioned. I don't see that as any threat. But we've already moved to a strong non-ICE position anyway. Hopefully, that answers your question in a broader sense.
Speaker #5: context. There
Operator: There are no further questions at this time. I'll now hand back to Mr. Whickman for closing remarks.
Operator: There are no further questions at this time. I'll now hand back to Mr. Whickman for closing remarks.
Speaker #1: There are no further questions at this time. I'll now hand back to Mr. Whickman for closing remarks.
Speaker #5: Well, thank you. Firstly, thank you for your attention. I appreciate the questions. As I said earlier on, we feel we've delivered a really solid result in a challenging environment.
Graeme Whickman: Well, thank you. Firstly, thank you for your attention. I appreciate the questions. As I said earlier on, you know, we feel we've delivered a really solid result in a challenging environment. You know, the balance sheet's in a great place. And as you tick through many of the financial metrics, whether in the allocation framework or indeed to the broad financial metrics, you know, we're seeing a lot of green ticks. Doesn't mean that we don't have more work to do. We're always anxious and ambitious with the 2030 strategy. We're keen to see the business grow, but grow in a way that's done in a quality fashion. And I'm not just talking about revenue, I'm talking about the EBIT with clear ROCE.
Graeme Whickman: Well, thank you. Firstly, thank you for your attention. I appreciate the questions. As I said earlier on, you know, we feel we've delivered a really solid result in a challenging environment. You know, the balance sheet's in a great place. And as you tick through many of the financial metrics, whether in the allocation framework or indeed to the broad financial metrics, you know, we're seeing a lot of green ticks. Doesn't mean that we don't have more work to do. We're always anxious and ambitious with the 2030 strategy. We're keen to see the business grow, but grow in a way that's done in a quality fashion. And I'm not just talking about revenue, I'm talking about the EBIT with clear ROCE.
Speaker #5: The balance sheet's in a great place. And as you tick through many of the financial metrics, whether in allocation framework or indeed the broad financial metrics, we're seeing a lot of green ticks.
Speaker #5: It doesn't mean that we don't have more work to do. We're always anxious and ambitious. With the 2030 strategy, we're keen to see the business grow.
Speaker #5: But grow in a way that's done in a quality fashion. And I'm not just talking about revenue; I'm talking about the EBIT with clear ROGI.
Graeme Whickman: As I said earlier on, the prospects for each of the divisions still remain strong. Reiterating guidance, I think is very positive, and some exit rates around the work on Unified, I think, also demonstrates that we're not sitting still in what is an insipid market. We remain committed and active in managing the business in a way that, I think, you know, we can be pleased with. So with that, I'm sure we'll be meeting with many of you through the course of the week, and whether it's at a broker lunch, dinner, or breakfast, and then our individual shareholders. So we look forward to those conversations, both Darren and I, and we'll see you through the course of the week. Thank you.
Speaker #5: As I said earlier on, the prospects for each of the divisions still remain strong. Reiterating guidance, I think, is very positive. And some exit rates around the work on Unified, I think, also demonstrates that we're not sitting still in what is an insipid market.
Graeme Whickman: As I said earlier on, the prospects for each of the divisions still remain strong. Reiterating guidance, I think is very positive, and some exit rates around the work on Unified, I think, also demonstrates that we're not sitting still in what is an insipid market. We remain committed and active in managing the business in a way that, I think, you know, we can be pleased with. So with that, I'm sure we'll be meeting with many of you through the course of the week, and whether it's at a broker lunch, dinner, or breakfast, and then our individual shareholders. So we look forward to those conversations, both Darren and I, and we'll see you through the course of the week. Thank you.
Speaker #5: We remain committed and active in managing the business in a way that I think we can be pleased with. So, with that, I'm sure we'll be meeting with many of you through the course of the week.
Speaker #5: And whether it's at a broker lunch, dinner, or breakfast, and then our individual shareholders. So we look forward to those conversations, both Aaron and I, and we'll see you through the course of the week.
Speaker #5: Thank you.
Speaker #6: Thank you, everybody.
Mitchell Sonogan: Thank you, everybody.
Graeme Whickman: Thank you, everybody.
Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
