Q2 2026 Exor NV Earnings Call
Speaker #2: Welcome, and thank you for joining EXOR's Half-Year 2026 Results Conference Call. Please note that the presentation materials and the related press release are available for download on EXOR's website.
Speaker #2: www.exor.com, under the Investors and Media Financial Results section. Any forward-looking statements made during this call are covered by the Safe Harbor Statement included in the presentation material.
Speaker #2: As a reminder, all participants are in listen-only mode. Later, there will be a brief question-and-answer session. Please note that this conference is being recorded.
Speaker #2: At this time, I would like to turn the conference over to EXOR's Chief Financial Officer, Guido de Boer. You may begin.
Speaker #3: Thank you for opening this call, and welcome everyone to the Half-Year 2026 Results Call. EXOR: there are two main highlights that we would like to present to you today.
Guido de Boer: Thank you for opening this call, and welcome all to the Half Year 2026 Results Call for EXOR. Two main highlights that we would like to present to you today. We announced last year that we would progress with simplifying our portfolio, and we've progressed at speed with doing that. The most sizable one, Iveco, you've all followed closely, where earlier in the H1, the sale of the defense business completed to Leonardo. Also a few weeks ago, CNH formally launched its tender offer for Iveco, with closing to happen in 2 months.
Speaker #3: We announced last year that we would progress with simplifying our portfolio, and we've moved at speed in doing that. The most sizable one, Iveco, you've all followed closely, where earlier in the half-year, the defense business completed with Leonardo, and also a few weeks ago, Tata formally launched its tender offer for Iveco, with closing expected in two months.
Speaker #3: Also, during the period, we completed the divestments of JD Lightmet and NURO, and I'm pleased to tell you that in the past days we signed an agreement to sell our stake in Welltech, where we've owned the company through a business cycle, managing to run that business in a very good way, at a price which will be substantially in line with what we put in our fair value balance sheet.
Guido de Boer: Also, during the period, we completed the divestments of GEDI, Lifenet, and NUO. I am pleased to tell you that the past days we signed an agreement to sell our stake in Welltec, where we've owned the company through a business cycle, managing to run that business in a very well way, with a price which will be substantially in line with what we put in our fair value balance sheet, which returned a MOIC of 2.4 times. We expect that to close in the H1 2027. That leaves us in an extremely strong position in turbulent times, and leaves us in a good position to benefit from those turbulent times with a balance sheet that is extremely solid with EUR 4 billion of deployable cash approximately. To give you the bridge of that, we started the year of EUR 1.4 billion of cash.
Speaker #3: Which returned a MOIC of 2.4x, and we expect that to close in the first half of 2027. That leaves us in an extremely strong position in turbulent times and puts us in a good position to benefit from those turbulent times.
Speaker #3: With a balance sheet that is extremely solid, with approximately $4 billion of deployable cash. To give you the bridge for that, we started the year with $1.4 billion of cash.
Speaker #3: The proceeds from these divestments, and some other divestments like reinsurance vehicles and distributions from the French arm, deliver around €2.7 billion of proceeds. Then, with some net cash inflow from dividends and some capital calls we make for Ligotto, we'll end up with approximately €4 billion of cash.
Guido de Boer: The proceeds from these divestments and some other divestments like reinsurance vehicles and distributions from rental arm deliver around EUR 2.7 billion of proceeds. Then with some net cash inflow from dividends and some capital calls we made for Lingotto, we'll end up with approximately EUR 4 billion of cash. Of which we'll use EUR 0.5 billion in the buyback to execute in 6 months. We'll speak a bit further about that later in the call. Moving on to the key figures. During the period, our NAV declined by EUR 1.2 billion. We'll go into the detailed sources of changes to that. While our loan-to-value strengthened quite a bit, obviously, with the increase in cash position. NAV per share fundamentally moved in line with our NAV as we did not do any buyback in the period.
Speaker #3: Of which we'll use $500 million in a buyback to execute it in the next six months, and we'll speak a bit further about that later in the statement.
Speaker #3: So, moving on to the key figures: during the period, our NAV declined by $1.2 billion. We'll go into the detailed sources of changes performed.
Speaker #3: While our NAV, while our loan-to-value strengthened quite a bit, obviously with the increase in cash position. NAV per share fundamentally moved in line with our NAV, as we did not.
Speaker #3: Buyback in the period. Our total shareholder return was below that, because of a widening in the composition of our portfolio, which changed due to a few important items.
Guido de Boer: Our total shareholder return was below that because of the widening of the spread. Composition of our portfolio changed of a few important items. Ferrari strengthened a bit from 32% to 34%. An important mover was CNH as well with a very strong performance in the period, moved from 8% to 10%. Obviously also cash up to 6% during the period. If we then move to the breakdown of the change in GAV, there is a lot of numbers on this slide. The key one that explains the performance in the period is the change in value by listed company. We will break down all the other buckets in detail. We want to be extremely transparent and show you all the levers of performance.
Speaker #3: Ferrari strengthened a bit from 32% to 34%. An important mover was CNH as well, with a very strong performance in the period, moving from 8% to 10%.
Speaker #3: And obviously, also cash—up to 6% during the period. If we then move to the breakdown of the change in GAV, there are a lot of numbers on this slide.
Speaker #3: The key one that explains the performance in this period is the change in value for our listed company. We'll break down all the other buckets in detail.
Speaker #3: So we want to be extremely transparent and show you all the levers of performance, so we'll dive into that a bit further. But all of them led, in the period, to an increase in cash and cash equivalents from $1.4 billion to $2.2 billion.
Guido de Boer: We will dive into that a bit further, but all of them led, in the period, an increase from cash and cash equivalents from EUR 1.4 billion to EUR 2.2 billion. As mentioned from EUR 300 million of investments, largely behind the commitment to Lingotto. Around half a billion of disposals. The dividends we did and in other changes, the EUR 676 million is the dividend inflow that we had, less expenses. We then move to the core bucket of investments that we have, our list of companies. There you see the key driver of our performance was a strong decline in the share price of Stellantis during the period. The other three big companies almost performed well, with a notable mention for CNH. Iveco seems like a weak performer here. We would like to note that they distributed the EUR 427 million of special dividend following the divestment of Leonardo.
Speaker #3: As mentioned, from €300 million of investments, largely behind the commitment at Lingotto, and around half a billion of disposals. The dividend we did, and in other changes—€676 million is the dividend inflow that we had, less expenses.
Speaker #3: So, if we then move to the core bucket of investments that we have—our listed companies—you see the key driver of our performance was a strong decline in the share price of Stellantis during the period.
Speaker #3: The other three big companies all performed well, with a notable mention for CNH. Iveco seems like a weak performer here. We'd like to note that they distributed a $427 million special dividend following the divestment of Leonardo.
Guido de Boer: For TSR, they showed a strong green performance. Juventus and Carrefour were weak during the period. Via Transportation, which recently IPO'd, and they showed similar trends of many US tech companies that IPO in weakened, have now since rebounded, and it is underlying strong results. We then move on to unlisted companies. We disposed in the period, GEDI and NUO. After the period, we also sold Lifenet and Welltec, as I just mentioned. In total, around EUR 900 million of reduction of these unlisted companies and shifting more to a listed portfolio. The change in value, you see Instant Media. We will speak later also about the direct holding in BM Media, because the change in value of Instant Media is largely driven by the change in value of the listed BM Media. Then moving to Lingotto and others. The Intersection Fund declined by approximately EUR 370 million.
Speaker #3: So for TSR, they showed a strong green performance. Juventus and Clarivate were weak during the period. Via Transportation, which recently IPOed, showed a similar trend to many U.S. tech companies that IPOed and weakened.
Speaker #3: And Epsom has now since rebounded, and its underlying performance shows strong results. So if we then move on to unlisted companies, we disposed of JD and NURO in the period, and after the period we also sold LifeNet and Welltech, as I just mentioned.
Speaker #3: So, in total, around $900 million of reduction of these unlisted companies and shifting more to a listed portfolio. The change in value you see instantly there. We'll speak later also about the direct holding in Biomed here, because the change in value is instantaneously and largely driven by the change in the listed Biomed here.
Speaker #3: Then, moving to Lingotto and others, the Intersection Fund declined by $370 million, approximately. You might recall that last year, they went up $1.2 billion.
Guido de Boer: You might recall that last year they went up EUR 1.2 billion. This is a logical volatility that drives in the market and very confident given that they have never had a down year before, and they also drive to positive in these months. Lingotto Horizon was the good positive surprise, where they have one investment in their portfolio, which saw a unicorn round. Because we are one of the early investors, that shows a very nice uplift there. Value-debt portfolio and the others moved steadily during the period. The investments we did were existing commitments for Horizon Innovation and Mosaic, and we invested in a very promising new hedge fund talent that is starting a new hedge fund with a capital of EUR 200 million that deployed in this period. Then we have the bucket of other assets, which before, at the start of the period, amounted to EUR 2.3 billion.
Speaker #3: So this is a logical volatility that will happen in the market, and I'm very confident given that they've never had a down year before. They'll also drive to a positive in these months.
Speaker #3: Lingotto Horizon was the good positive surprise, where they have one investment in their portfolio which saw a unicorn round, and because we're one of the early investors, that shows a very nice uplift of value of that portfolio.
Speaker #3: And the others moved steadily in line during the period. The investments we did were existing commitments for Horizon Innovation and Mosaic. And we invested in a very promising new hedge fund talent that was starting a new hedge fund with capital of $200 million that's deployed in this period.
Speaker #3: Then we have the bucket of other assets, which at the start of the period amounted to $2.3 billion. We've been disposing of quite a bit of the assets in that category as well, and that's an ongoing process we plan to continue.
Guido de Boer: We have been disposing quite a bit of the assets in that category as well, and that is an ongoing process we plan to do. Key proceeds in the funds managed by third parties were EUR 55 million of reinsurance vehicles, still left over from the PartnerRe disposal, and EUR 38 million of distributions from Ora Global, the former Exor Ventures arm. Other assets were loans extended to GEDI, and as part of the sales, GEDI, these were also. On the changes in value, also on the venture capital arm, they have made investments in some of the early AI companies, both in AI businesses themselves as well as in infrastructure. These all look to be unicorn investments, and that is driving a strong upward revision of the valuation of Ora Global. Listed companies, down by EUR 237 million.
Speaker #3: Key proceeds in the funds managed by third parties were $55 million from reinsurance vehicles, still leftover from the partner re-disposal, and $38 million of distributions from Aura Global, the former EXOR Ventures.
Speaker #3: Other assets were loans extended to JD, and as part of the sale of JD these were also on the changes in value. Also, on the venture capital arm, they've made investments in some of the early AI companies, both in AI businesses themselves as well as in infrastructure.
Speaker #3: And these all look to be unicorn investments, and that's driving a strong upward revision of the valuation of Aura Global. Listed companies are down by $237 million; $180 million of that is related to Biomed, and also Forvia, on the back of the weakness in automotive—like I mentioned, from Stellantis.
Guido de Boer: EUR 180 million of that is related to BM Media and also Forvia on the back of the weakness in automotive, like I mentioned. Stellantis was down EUR 50 million, which explains the grand result of that change. That is for tour d'horizon of the performance of our portfolio, and gladly answering further questions in call. As I mentioned, the change in cash and cash equivalents. The breakdown I showed you at a high level before, EUR 861 million of dividends. We received a bit more of dividends, but we chose to take half of the dividend of Philips in shares. That you will not see here in the cash and cash equivalents, but that explains the bridge between dividends and dividend actually received. The disposals you see here that we just mentioned, investment and shareholder distributions equal dividends in this period.
Speaker #3: Was down 50. The grand majority of that change. So that's a brief tour d'horizon of the performance of our portfolio, and I'm glad to answer further questions.
Speaker #3: As I mentioned, the change in cash and cash equivalents—the breakdown I showed you at a high level before—includes €861 million of dividends. We received a bit more in dividends, and we chose to take half of the dividend from Philips in shares.
Speaker #3: But that you won't see here in the cash and cash equivalents, but that explains the bridge between dividends and dividends actually received. The disposals you see here that we just mentioned—investments and investment shareholder distributions equal dividends in this period.
Speaker #3: Given our sizable cash position, we also repaid one of our private placements, just to make sure we treat our investment interest returns as efficiently as possible.
Guido de Boer: Given our sizable cash position, we also repaid one of our private placements, just to make sure we treat our interest returns as efficiently as possible. These borrowings were carrying a higher interest rate than from our cash position. That is why we prepaid debt, ending with EUR 2.2 billion of cash. On the debt side, not much to report as I like it, being prudent on from our debt position. We have a debt position of EUR 3.7 billion, in line with what we had last year. Maybe see a bit of movement in other financial liabilities, EUR 140 million. That is just the timing of an FX transaction we did, which started at the end of the period and completed on the first day of July. It is an accounting entry. The bottom line number is EUR 3.7 billion. We have no redemptions anymore in 2026, nor in 2027.
Speaker #3: And these borrowings were carrying a higher interest rate than from our cash position, so that's why we repaid that, ending with $2.2 billion of cash at the half year.
Speaker #3: On the debt side, not much to report, as I like being prudent with our debt position. So, we have a debt position of $3.7 billion.
Speaker #3: In line with what we had last year. You may see a bit of old movements in other financial liabilities—€140 million. That's just the timing of an FX transaction we did, which started at the end of the period and completed on the first day of July, so that's been accounted for.
Speaker #3: Entry, the bottom line number is $3.7 billion. We have no redemptions anymore in 2026 nor in 2027. So, in these turbulent times on the debt and capital markets, I'm happy that we're fully funded on that side, and the first redemption to follow will be in 2028 with a very well spread out maturity profile.
Guido de Boer: In these turbulent times in the debt and capital markets, happy that we are fully funded on that side, and first redemption to follow in 2028 with a very well spread out maturity profile for the coming next 12 years. That is that on the debt side. Let me now turn to the capital allocation decisions we took in the board yesterday, doing a EUR 500 million on market buyback program. We will execute that in the next six months. You will see also in the announcement that we are very explicit that both because the shares trade at a substantial discount to our NAV and do not reflect our assessment of the intrinsic value of our portfolio, we made this decision. We also said before we do this because it is at a substantial discount as our NAV because we feel that this is a good resource allocation.
Speaker #3: For the coming next twelve years. So that's that on the debt side. Let me now turn to the capital allocation decisions we took in the Board yesterday.
Speaker #3: We're conducting a $500 million on-market buyback, and we'll execute that in the next six months. You'll also see in the announcement that we are very explicit: both because the shares trade at a substantial discount to our NAV and don't reflect our assessment of intrinsic value for the portfolio, we made this decision.
Speaker #3: We also said before, we do this because it's at a substantial discount to our NAV, because we feel that this is a good resource allocation—investing in our portfolio, which we like.
Guido de Boer: Investing at our portfolio, which we like, at half of the cost is an investment that makes a lot of sense. We also chose to make the statement a bit stronger because I think we are actually in a triple whammy situation. The discount is at a very high level. At 56% is a long time that we reached that. Our companies are at depressed levels, and we have a cash position that is well utilized. So we feel this is part of our toolbox, but also a part of our ongoing toolbox that we continuously evaluate to do. It is not an opportunistic transaction. We also chose not to do this as a tender offer on the market, a program which has started today, and which will continue until the full year results in 6 months.
Speaker #3: At half of the cost, it's an investment that makes a lot of sense. We also chose to make the statement a bit stronger because I think we are actually in a triple whammy situation where the discount is at a very high level.
Speaker #3: Fifty-six percent is a long time for us to reach that. Our companies are at depressed levels, and we have a cash position that is well utilized.
Speaker #3: So, we feel this is part of our toolbox, but also part of our ongoing toolbox that we continuously evaluate to use. It's not an opportunistic transaction.
Speaker #3: We also chose not to do this as a tender offer, but as an on-market program, which has started today and will continue until the full-year results.
Speaker #3: In six months, it's important for us because we are committed to driving NAV per share growth, as we've already done, outperforming both on an absolute and relative basis.
Guido de Boer: It is important for us because we are committed to driving NAV per share growth as we have always done, outperforming both on an absolute and relative basis. As I mentioned, buybacks are and will remain a critical part of our capital allocation. With those closing remarks, I would love to hand it over to the Q&A.
Speaker #3: And as I mentioned, buybacks are and will remain a critical part of our capital. So, with those closing remarks, I would love to hand it over to the Q&A.
Speaker #1: Thank you. We will now begin the question-and-answer session. If you have a question, please press star then one and one on your touch-tone phone.
Operator: Thank you. We will now begin the question and answer session. If you have a question, please press star then 1 and 1 on your touch tone phone. Once again, if you have a question, please press star then 1 and 1 on your touch tone phone. Please stand by while we compile the Q&A queue. Thank you. We will now take the first question. Please stand by. First question is from Alberto Villa from Intermonte. Please go ahead.
Speaker #1: Once again, if you have a question, please press star, then one and one, on your touch-tone phone. Please stand by while we compile the Q&A queue.
Speaker #1: Thank you. We will now take the first question. Please stand by. The first question is from Alberto Villa of Intermonte. Please go ahead.
Alberto Villa: Hi. Thanks for taking my questions. I have actually two. One is related to the situation at Stellantis. There is a plan and a recovery expected in Q4 and the coming years, but the situation in terms of cash of the company has deteriorated. So I was wondering if there is a scenario in which Stellantis might need to raise cash. What is the position of Exor as a shareholder on that. I have read that there is a lot of commitment in the report on some investments like Ferrari and so on. I was wondering, what is the commitment on Stellantis? The second question is on the performance of Lingotto, was very positive last year, not so positive this year. I was wondering if there is any specific reason behind that. Thank you very much.
Speaker #2: Hi, thanks for taking my questions. Actually, I have two. One is related to the situation at Stellantis. There is a plan and a recovery expected in the fourth quarter and in the coming years, but the situation in terms of cash for the company has deteriorated.
Speaker #2: So, I was wondering if there is a scenario in which Stellantis might need to raise cash. What is the position of EXOR as a shareholder on that?
Speaker #2: I've read there is a lot of commitment noted in the report on some investments, like Ferrari and so on. I was wondering what is the commitment on Stellantis.
Speaker #2: The second question is on the performance of Benghotta. It was very positive last year, but not so positive this year. I was wondering if there is any specific reason behind that.
Speaker #2: Thank you very much.
Speaker #3: All right, thanks, Alberto, for this good question. On Stellantis, we fully endorse the plan that we've seen announced by the management, and we're very confident in their execution of it.
Guido de Boer: All right. Thanks, Alberto, for these good questions. On Stellantis, we fully endorse the plan that has been announced by the management, and we are very confident in the execution of it. It is an uncertain market. How they will do on their cash position and their capital increase, I am not aware of any of those plans and honestly, also not really a question I can answer. These are more topics to raise to Stellantis management. No view on these topics. Lingotto, I think no particular reason. The performance last year was very strong on the back of the hedge fund. Hedge funds have volatility, and we are very happy as a long-term investor to embrace volatility if the long-term performance is good. This fund has returns since inception, I think an IRR of 24%, so calculate those numbers since 2018. A stellar performance.
Speaker #3: It's an uncertain market. How they'll do on their cash position in the capital increase—I am not aware of any of those plans. And honestly, it's also not really a question I can answer; these are more topics to raise to Stellantis management.
Speaker #3: So, no view on these topics. Lingotto, I think, no particular reason. The performance last year was very strong from the back of the hedge fund.
Speaker #3: Hedge funds have volatility, and we are very happy, as a long-term investor, to embrace volatility if the long-term performance is great. So, this fund has returned since inception, I think, an IRR of 24%.
Speaker #3: Calculate those numbers since 2018—a stellar performance. So, if there is a blip in one month, there's no concern at all. This is the volatility that's inherent with such a strategy.
Guido de Boer: If there is a blip in one month, there is no concern about. This is the volatility that is inherent with such a strategy. For Intersection, that is just par for the course for the type of strategy that it is. I was very encouraged to see the strong performance of Horizon. Horizon is a fund that invests in private investments. It is now fully invested in monetization period. So that is usually the moment where you start seeing the large value step-ups. Seeing our investors at Lingotto delivering on this is very encouraging. I hope this answers your questions, Alberto.
Speaker #3: So for intersection, that's just par for the course for the type of strategy that it is. I was very encouraged to see the strong performance of Horizon.
Speaker #3: Horizon is a fund that invests in private investments. It's now fully invested and in the monetization period, so that's usually the moment when you start seeing large value step-ups.
Speaker #3: And seeing our investors at Lingotto delivering on this is very encouraging. So, I hope this answers your questions, Alberto.
Speaker #2: Okay, thank you. If I can add an additional question: you performed various divestments in the first half of 2026 and also afterwards. I was wondering if there is any opportunity for further divestments between your listed and unlisted companies.
Alberto Villa: Okay. Thank you. If I can, an additional one. You performed various divestments in the H1 of 2026 and also afterwards. I was wondering if there is any opportunity for further divestments between your listed and unlisted companies. Thank you.
Speaker #2: Thank you.
Speaker #3: Yeah, we're also always evaluating our portfolio and, as mentioned in previous calls, we always look at all of our investments. We're a long-term investor, so we're not going to invest in diverse funds.
Guido de Boer: Yeah. We are always evaluating our portfolio. I mentioned that in previous calls. We always look at all of our investments. We are a long-term investor, so we are not going to invest on a divestment time. But we always look at, are we the best owner of these businesses for the long term, or is there a good opportunity from someone? So that is always the case. I hope you understand I give a generic answer rather than a specific one. But you have seen that we have been very action-oriented.
Speaker #3: But we always look at whether we are the best owner of these businesses for the long term, or if there is a good opportunity. So that's always the case, and I hope you understand.
Speaker #3: Thank you. That was a generic answer rather than a specific one. But, if you've seen, we've been very action-oriented.
Speaker #2: Thank you.
Alberto Villa: Thank you.
Speaker #3: All right. Thank you.
Guido de Boer: All right. Thank you.
Speaker #1: Thank you. We will now take our next question. This is from John Perez from Kepler Shubhra. Please go ahead.
Operator: Thank you. We will now take our next question. This is from Jon Pérez from Kepler Cheuvreux. Please go ahead.
Speaker #2: Hi, John Perez from Kepler Shubhra. Thank you for the presentation. Just one question from me on portfolio construction in the context of the next investment.
Jon Pérez: Hi. Jon Pérez from Kepler Cheuvreux. Thank you for the presentation. Just one question from me on portfolio construction in the context of the next investment. The press release mentioned about EUR 4 billion of cash ready to be deployed. In the past, I think I recall the sectors that were mentioned were healthcare, luxury, and tech. I would be keen to hear about how you think of portfolio construction, considering the rest of the current portfolio, and whether there are specific thematics that you would be happy to get exposure to with your next investment, how you think about a long-term moat in the current environment, and whether there are specific risk factors that you would like to avoid. Any clue on the timeline would be welcome as well. Thank you.
Speaker #2: So, the press release mentioned about $4 billion of cash ready to be deployed in the past. I think I recall the sectors that were mentioned were healthcare, luxury, and tech.
Speaker #2: I would be keen to hear about how you think of portfolio construction, considering the rest of the current portfolio, and whether there are specific thematics that you would be happy to get exposure to with your next investment.
Speaker #2: How do you think about the long term most in the current environment, and whether there are specific risk factors that you would like to avoid? And any clue on the timeline would be welcome as well.
Speaker #2: Thank you.
Speaker #3: Thank you, John, for these thoughtful questions. Portfolio construction is obviously a critical part of what we do. During partner disposal, we said these are the three sectors.
Guido de Boer: Thank you, Jon, for these thoughtful questions. Portfolio construction is obviously a critical part of what we do. During PartnerRe disposal, we said these are the three main sectors. They are still sectors that we like a lot and where we have a lot of domain expertise, and where we know where the hidden gems are hidden. But it does not mean that we will only invest in these sectors. What we are primarily looking at is a large list of companies in which we can acquire a shareholding of 15% to 20% for an investment of at least EUR 2 billion. EUR 2 billion being approximately 5% of our gross assets. The thinking of that is we want to have the right level of diversification in our portfolio. At 5%, an investment makes an impact. That is why we have a lower threshold of EUR 2 billion for these investments.
Speaker #3: There are still sectors that we like a lot, where we have significant domain expertise, and where we know where the hidden gems are.
Speaker #3: But that doesn't mean that we'll only invest in these sectors. What we're primarily looking at is large listed companies in which we can acquire a shareholding of 15 to 20%.
Speaker #3: For an investment of at least $2 billion—$2 billion being approximately 5% of our gross asset value. So, the thinking behind that is we want to have the right level of diversification in our portfolio.
Speaker #3: At 5%, it's an investment that makes an impact, so that's why we have a lower threshold of $2 billion for this investment. But it's largely in listed companies, where we then have an influence similar to what we have in our other listed companies.
Guido de Boer: It is largely in listed companies where we have then an influence similar as we have in our other listed companies, and it is what can we contribute as a shareholder? Being an active shareholder where we can add value, either in turbulent times, to offer long-term stability to the company or in companies that go very well, but need a shareholder also to keep the management sharp and driving long-term performance. That is overall what we look at, and then we look at individual sectors, where there is structural tailwinds, and within those sectors, companies that have a right to win, and where there is also a fit with the ownership structure as we do and the way we drive value creation with those. That in general, our philosophy around searching for the next large opportunity. We are patient shareholders, but we are also patient investors.
Speaker #3: And it's about what we can contribute as a shareholder. Being an active shareholder, where we can add value, either in turbulent times or to offer long-term stability to the company.
Speaker #3: Or in companies that are performing very well, but still need a shareholder to help keep management sharp and focused on driving long-term performance. So that's overall what we look at.
Speaker #3: And then we look at individual sectors where there's a structural tailwind. And within those sectors, companies that have a right to win, and where there's also a fit with the ownership structure that we do, and the way we drive value creation with those.
Speaker #3: So that's, in general, our philosophy around searching for the next large companies. We are patient shareholders, but we're also patient investors. And as I mentioned in my opening, these are quite turbulent times, and turbulent times bring opportunities for the patient.
Guido de Boer: As I mentioned in my opening, these are quite turbulent times, and turbulent times bring opportunities for the patient. We are not in a rush to deploy. It is about finding the right company at the right price, at the right time. I will not give any timing on when we envisage the next investment. Obviously, sooner rather than later. Obviously, we want to deploy capital, but we are patient to wait for the right company. I hope that answered your questions, Jon.
Speaker #3: So we're not in a rush to deploy. It is about finding the right company at the right price, at the right time. So I will not give any timing on when we envisage the next investment.
Speaker #3: Obviously, sooner rather than later. Obviously, we want to deploy capital, but we are patient to wait for the right opportunity. So I hope that answered your questions, John.
Speaker #2: Yes. Thank you very much.
Jon Pérez: Yes. Thank you very much.
Speaker #3: Thank you.
Guido de Boer: Thank you.
Speaker #1: Thank you. We will now take our next question. Please stand by. The next question is from Felipe Goossens from De Groef Petercam. Please go ahead.
Operator: Thank you. We will now take our next question. Please stand by. Next question is from Filippe Goossens from Degroof Petercam. Please go ahead.
Speaker #2: Yes, good afternoon, Guido. Thanks for taking my questions. Actually, I have two today, if I may. The first one may be building on the previous question in terms of portfolio composition.
Filippe Goossens: Yes. Good afternoon, Guido. Thanks for taking my questions. I actually have two today, if I may. The first one, maybe building on the previous question in terms of portfolio composition, and my question is specifically with regard to concentration risk. Today, if we look at Ferrari, it is about 39% of your GAV. So it is your largest position, and you have always positioned the Ferrari investment, and I fully concur with that, as a luxury brand. It is not a car manufacturer, which is good today because we all know the challenges that the car industry is facing. So it is a luxury brand that has performed very well for you.
Speaker #2: And my question is specifically with regard to concentration risk. So today, if we look at Ferrari, it's about 39% of your NAV. So that's your largest position.
Speaker #2: And you have always positioned the Ferrari investment—and I fully concur with that—as a luxury brand. It's not a car manufacturer, which is good today because we all know the challenges that the car industry is facing.
Speaker #2: So, it's a luxury brand that has performed very well for you. But at 38%, I wonder how you feel about that 38%, because if you look at some other players in the luxury brand segment today—LVMH, Hermès—if we had said at the beginning of the year these companies could be down almost 40% in market cap year-to-date, we would never have believed it.
Filippe Goossens: But at 38%, I wonder how you feel about that 38%, because if you look at some other players in the luxury brand segment today, LVMH, Hermès, if we had said at the beginning of the year, these companies could be down almost 40% in market cap year to date, we would never have believed it. So it is a great brand, it is a luxury brand, but it is 38% of your portfolio. How do you think about that? If you could walk us through that, in terms of how you evaluate that at the board meetings. I just would love to understand that a little bit more, if you could help me here.
Speaker #2: So it's a great brand. It's a luxury brand. But it's 38% of your portfolio. How do you think about that? If you could kind of walk us through that in terms of how you evaluate that at the board meetings I just would love to understand that a little bit more.
Speaker #2: If you could help me here.
Speaker #3: Great question. Do we have another question, or was this the last one?
Guido de Boer: With pleasure. Great, and did you have another question, or was this-
Speaker #2: Yes, yes. Second question, Guido. In the letter from your chairman or CEO, Altman, was reference made to an approval reached with Philips, which would open the way to a potential increase in your stakeholding? If you could maybe just elaborate a little bit on that.
Filippe Goossens: Yes. The second question, Guido. In the letter from your chairman or CEO, Dick Houtman, was a reference made to an approval reached with Philips, which would open the way to a potential increase in your stakeholding. If you maybe can just elaborate a little bit on that. I would imagine that would be within the constraints of what you just shared before, meaning large listed companies, between 15% and 20%. Does it fit within that context that we should look at that potential increase in the Philips stake?
Speaker #2: I would imagine that would be within the constraints of what you just shared before, meaning large listed companies between 15% and 20%. Does it fit within that context that we should look at that potential increase in the Phillips stake?
Speaker #3: Yeah, no, I'll comment on that. Maybe I'll take that one. So, I think the renewal of the partnership with Philips is, I think, a testament to our investment working well and our partnership with the company working well.
Guido de Boer: Yeah. I will comment on that and maybe to take the other one first. I think the renewal of the partnership with Philips is, I think, a testament to our investment working well and our partnership with the company working well, thus adding value to the governance of Philips. That has been evidenced also with the company opening up to increase our stake further. So previously we had a limit of 20% that now increased to 22%. That does not mean that there is any action now taken to increase that or that it is imminent. But we have the opportunity, and we see that as a vote of trust from Philips that they value our ownership. So I would say that is the key takeaway from that investment.
Speaker #3: Just adding value to the governance also. That has been evidenced with the company opening up to increase our stake. Previously, we had a limit of 20%, but that has now increased to 22%.
Speaker #3: That doesn't mean that there is any action now taken to increase that or that it's imminent. But we have the opportunity, and we see that as a vote of trust from Phillips—that they value our ownership.
Speaker #3: So, I would say that that is the key takeaway from that investment.
Speaker #2: Okay. And that would happen, Guido, that would happen in the form of open market purchases if you were to decide to increase that, or would you look at a block trade, or... yeah.
Filippe Goossens: Okay. And that would happen, Guido, that would happen in the form of open market purchases if you were to decide to increase that or-
Guido de Boer: I do not-
Filippe Goossens: would you look at the block trade or Yeah. Okay.
Speaker #2: Okay.
Speaker #3: So, we have not decided anything on if and when that would happen. But first, if.
Guido de Boer: We have not decided anything on if and when that will happen. But first if, and then when we do it, we use whatever we need. But it is not on the table.
Speaker #2: Okay.
Speaker #3: And then, when we do it, we use whatever we need for it. But it's not on the table now.
Speaker #2: Okay. Fair enough. Thank you.
Filippe Goossens: Okay, fair enough. Thank you.
Speaker #3: Ferrari, I think, is a very good question. So maybe to repeat what I said, following the block trade that we did on Ferrari for $3 billion—and now, a year and a half ago.
Guido de Boer: Ferrari, I think it is a very good question. Maybe to repeat what I said following the block trade that we did on Ferrari at EUR 3 billion now a year and a half ago. At that time, the concentration of Ferrari was reaching 50%. At 50%, and also the multiples the company was trading, exactly what you were saying is a sizable risk. If half of our portfolio traded this value and there is a potential for the share price to decline at such a level, it is prudent to reduce the cost. That is what we have done at the time, and these were the considerations. At this moment, the multiple at which Ferrari trades is significantly below the multiple it was trading at when we did that transaction.
Speaker #3: At that time, the concentration of Ferrari was reaching 50%. So at 50%, and also given the multiples the company was trading at—exactly what you were saying—is a sizable risk.
Speaker #3: If half of our portfolio traded at this value and there's a potential for the share price to decline at such a level, it is prudent to reduce the concentration.
Speaker #3: So that's what we did at that time, and these were the considerations. At this moment, the multiple at which Ferrari trades is significantly below the multiple it was trading at when we did the transaction.
Speaker #3: So the 30.7% or 30.9% gap that it represents now is still far below the 50%, and also the multiple is not at the same level.
Guido de Boer: The 37% or 39% of GAV that it represents now is still far below 50% and also the multiple is not the same level. It is not the same situation. But we always look at our portfolio from what is the upside, but also obviously the downside.
Speaker #3: So it's not the same situation, but we always look at our portfolio in terms of what is the upside, but also, obviously, the downside.
Speaker #2: Yeah, very good. Thanks for that clarification, Guido. Maybe just a quick follow-up, if I may. In your search for attractive additional investment opportunities as you build out your portfolio, if the right transaction were to present itself and you didn't have sufficient liquidity to do that transaction, would you be willing to consider monetizing part of your Ferrari investment—so that you would basically kill two birds with one stone?
Filippe Goossens: Yeah, very good. Thanks for that clarification, Guido. Maybe just a quick follow-on, if I may. In your search for attractive additional investment opportunities as you build out your portfolio, if the right transaction were to present itself and you do not have sufficient liquidity to do that transaction, would you be willing to consider monetizing part of your Ferrari investment so that you would basically kill two birds with one stone? One, raise the funds needed to make a very accretive transaction, and secondly, to reduce the concentration risk in the portfolio.
Speaker #2: One, raise the funds needed to make a very accretive transaction, and secondly, reduce the concentration risk in the portfolio.
Speaker #3: We are an investor. So we do what every investor does: if we see an attractive opportunity to invest in, we will do that. And then we'll review our sources of funding.
Guido de Boer: We are an investor, so we do what every investor does. If we see an attractive opportunity to invest in, we will do that, and then we will review our sources of funding. We first of all, look, obviously, if we have cash or still headroom on the debt side, and if we do not, and we really like the new opportunity more than the least attractive one at that moment in our portfolio, we will look to monetize something in our portfolio. That is an approach that is exactly similar as any investor does. We are not different there.
Speaker #3: So we first of all look, obviously, if we have cash or still headroom on the debt side. And if we don't, and we really like the new opportunity more, then the least attractive one at that moment in our portfolio will look to monetize something in our portfolio.
Speaker #3: So that is a process that is exactly similar to what any investor does. So we're not different there.
Speaker #2: Okay, fair enough. Thank you so much, Guido. Very helpful.
Filippe Goossens: Okay, fair enough. Thank you so much, Guido. Very helpful.
Speaker #3: But it's not that Ferrari is on top of the list. We think Ferrari is an amazing company. We're very happy.
Guido de Boer: But it's not that Ferrari isn't on the list. We think Ferrari is an amazing company. We're very happy.
Filippe Goossens: Okay. I see that. I agree with you. Okay. Thank you so much, Guido.
Speaker #2: Okay, I see that. I agree with you. Thank you so much, Guido.
Speaker #3: Thank you.
Guido de Boer: Thank you.
Speaker #1: Thank you. As a reminder, if you would like to ask a question, please press star 1 and 1 on your touchtone phone. We will now take the next question.
Operator: Thank you. As a reminder, if you would like to ask a question, please press star 1 and 1 on your touchtone phone. We will now take the next question. This is from the line of Martino De Ambrogi from Equita. Please go ahead.
Speaker #1: This is from the line of Martino D'Ambrogio from Equita. Please go ahead.
Speaker #2: Thank you. Good afternoon, Guido. The first is just a very quick clarification. The firepower of $4 billion—this does not include the buyback, which is on top.
Martino De Ambrogi: Thank you. Good afternoon, Guido. The first is just a very quick clarification. The firepower of EUR 4 billion, this does not include the buyback, which is on top?
Speaker #3: So the firepower is $4 billion, and from that you would deduct $500 million for buyback. So after the buyback, there's $3.5 billion.
Guido de Boer: The firepower is EUR 4 billion, and from that you would deduct EUR 500 million for buyback. After buyback, there is EUR 3.5 billion.
Speaker #2: okay. Okay. So it's 3.5.
Martino De Ambrogi: Okay. So it is EUR 3.5 billion.
Speaker #3: And by then, we're at the start of the year, so we'll start getting dividend inflows again. So that's basically the calculation: $1.4 billion current cash, $2.7 billion of expected cash inflows from disposals, around $300 million of net free cash flow, and $300 million of commitments. That gets you to around $4 billion.
Guido de Boer: By then we are at the start of the year, so then we will start getting dividend inflows again. That is basically the capital. So EUR 1.4 current cash, EUR 2.7 of expected cash inflows from disposals, around EUR 300 million of net free cash flow, and EUR 300 million of commitments gets you to around EUR 4 billion, less EUR 500 million, is EUR 3.5 firepower.
Speaker #3: Less than $500 million is three and a half net firepower.
Speaker #2: Okay. The second is a follow-up on what you commented in the past. So, you are looking primarily, but not only, to ask about luxury and tech in luxury. In your previous calls, you mentioned it is difficult to find something interesting.
Martino De Ambrogi: Okay. The second is a follow-up on what you commented in the past. So you are looking primarily, but not only, to healthcare, luxury, and tech. In luxury, in your previous calls, you mentioned it is difficult to find something interesting. Are still these three sectors your main priority? Or as you mentioned, we are open to other opportunities, but as a secondary option or always looking at these three?
Speaker #2: Are these three sectors still your main priority, or as you mentioned, are you open to other opportunities as a secondary option, or are you always looking at these three?
Speaker #3: No, we're very open to other sectors, and we are also actively considering other sectors, but with the same structural tailwinds, less correlated to the current part of our portfolio, to also make sure we have diversification in business.
Guido de Boer: No, we are very open to other sectors, and we are also actively considering other sectors, but with the same structural tailwinds, less correlated to the current part of our portfolio, to also make sure we have diversification in the business. From sector-wise, and then finding companies that have opportunities for great returns within those sectors. So we are not bound with those sectors at all, but we do have a great network and understanding of those. But we are definitely not limiting ourselves.
Speaker #3: We approach our investments from a sector-wise perspective, and then identify companies within those sectors that offer opportunities for great returns. We're not bound by any particular sector, but we do have a strong network and an understanding of those sectors.
Speaker #3: So we're definitely not limiting ourselves.
Speaker #2: Okay. Looking back at the last 18 months, you already had very good firepower, but nothing happened. I remember you mentioned a prudent and patient approach and so on. But is it because there is a lack of interesting opportunities, because the prices are too high, or because you need better visibility on some of your assets, as you mentioned in the previous question? Was Stellantis the question mark for a needed eventual cash injection?
Martino De Ambrogi: Okay. Looking back in the last 18 months, you had already had a very good firepower, but nothing happened. So I remember you mentioned prudent and patient approach and so on, but is it because there is a lack of interest in opportunity because the prices are too high, because you need better visibility on some of your assets, as you mentioned in the previous question, was Stellantis the question mark for a needed eventual cash injection? So just to know what happened in the last 18 months, if you bid for something that did not materialize, or there is lack of serious opportunities.
Speaker #2: So, just to know what happened in the last 18 months—if you bid for something that didn't materialize, or if there is a lack of serious opportunities.
Speaker #3: So we did not miss any transactions. We look at Berkshire Hathaway and their cash position. So our firepower in that sense, as a percentage, is much smaller. They're also very patient, and I think this is a time where there will be many opportunities.
Guido de Boer: We did not miss any transactions. We look at Berkshire Hathaway and their cash position. So our firepower in that sense is, as a percentage, much smaller. They are also very patient. I think this is a time where there will be many opportunities. So it is an active choice of us not to deploy now. We have, obviously, potential targets. We continue to look for others, but we will remain very disciplined in putting our money to work, because we invest for the long term, so we try to find a good opportunity at a good price every time. Hope this is clear, Martino.
Speaker #3: So it's an active choice for us not to deploy now. We obviously have potential targets, and we continue to look for others. But we will remain very disciplined in putting our money to work.
Speaker #3: Because we invest for the long term, we try to find a good opportunity at a good price. Hope this is clear, Martino.
Speaker #2: Yeah, yeah, yeah. And the last one on Lingotto: is there any update on the strategy in terms of assets under management, third-party contributions, and these kinds of things?
Martino De Ambrogi: Yeah. The last one on Lingotto. Is there any update on the strategy in terms of asset under management, third parties contributions, and these kind of things?
Speaker #3: No, no update there in the half-year. As I mentioned, we're very happy with the performance, and principally, it's great that Lingotto grows assets under management because it gives it some scale.
Guido de Boer: No, no update there in the H1. As I mentioned, we are very happy with the performance. Principally, it is great that Lingotto grows assets under management, because it gives it some scale. As you might remember, because you have been around EXOR for a long time, when we announced the start of Lingotto, we invest for returns. This is not about assets under management from third party and creating management fee income. We want to make investment returns, and that is where Lingotto has been a very strong contributor to our overall returns. As we always do in the full year, you will see more information on the overall side of Lingotto.
Speaker #3: As you might remember, because you've been around Exor for a long time, when we announced the start of Lingotto, we invest for returns. This is not about assets under management from third parties.
Speaker #3: And creating management fee income. We want to make investment returns, and that's where Lingotto has been a very strong contributor to our overall returns.
Speaker #3: But as we always do, in the full year you'll see more information on the overall side of Lingotto.
Speaker #2: Okay. Thank you Guido.
Martino De Ambrogi: Okay. Thank you, Guido.
Speaker #3: All right. Thank you Martino.
Guido de Boer: All right. Thank you, Martino.
Speaker #1: Thank you. There are no further questions at this time, so I will now hand the conference back to Guido de Boer for any closing comments.
Operator: Thank you. There are no further questions at this time, so I will now hand the conference back to Guido de Boer for any closing comments.
Speaker #3: Nothing from my side, except for thanking you for being on this call and making the time. I am looking forward to reading about your views in the coming weeks of reports.
Guido de Boer: Nothing from my side except for thanking you for being in this call and making the time, and looking forward to read about your views in the combination of reports. Thank you all, and please you know where to find myself, Mike, and Niccolò in case of any questions. For the press side, Suzanne. Thank you very much and have a nice day. Bye-bye.
Speaker #3: Thank you all, and please, you know where to find myself, Mike, and Niccolò in case of any questions. For the press side, Giuliano. Thank you very much, and have a nice day.
Speaker #3: Bye bye.
Operator: Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating and you may now disconnect.
