Speaker #1: Ladies and gentlemen, welcome to the Ayvens Q3 2026 Results Conference Call. Today's speakers will be Philippe Derovera, CEO, and Patrick Sommelier, Deputy CEO and CFO.
Speaker #1: I now hand over to Mr. Philippe Derovera. Please go ahead, sir.
Speaker #2: Thank you. Good morning, ladies and gentlemen. Welcome to the Ayvens Q3 2026 results conference call. I am hosting this call with Patrick. First, we will present the highlights of Q3, then Patrick will comment on our financial results, and we will then take your questions.
Speaker #2: Your questions? Let’s now go directly to slide 5 on the highlights of the financial performance. Thanks to strong margins and disciplined cost reduction, Ayvens is delivering in Q3 2026 a solid financial performance in a volatile used car market environment.
Speaker #2: The Group is on track with its financial roadmap. Underlying margins increased further, reaching 620 pips, up 27 pips versus Q3 2025. Conversely, our net UCS result decreased to -€169 per unit, compared to €536 in Q3 2025 and -€62 in Q2.
Speaker #2: This reflects the constraints of used car markets impacted by the sustained high oil prices and interest rates, driving down our gross result per unit to 118 euros versus 1,110 euros in Q3 2025.
Speaker #2: Our continued focus on cost reduction has generated strong positive views. This has led to a further improvement in our underlying cost to income ratio, at 49.2% versus 52.8% in Q3 2025.
Speaker #2: Bottom line: net income group shares stood at 240 million euros versus 273 million euros in Q3 2025, LOTs stood at 13.2%, CT1 ratios stood at 12.8% as of September end versus 12.6% as of end of June.
Speaker #2: Our 2026 share buyback program of 450 million, which was launched at the end of July, is advancing well, and execution to date is close to 50%.
Speaker #2: On debt-capital markets, Ayvens successfully completed its September €550 million green securitization in Belgium, marking the first green auto ABS issued in Europe. This transaction attracted strong investor appetite.
Speaker #2: Let's now turn to slide 6, on the 9 months 2026 results. The Group's 9 months 2026 results show that Ayvens is on track to achieve our full-year targets.
Speaker #2: Margins are improving, totaling 2.3 billion euros, up 3.8% versus 9 months 2025. Net UCS results dropped 91% at 29 million, with a decrease of 400 million in gross UCS results, which reflects the deteriorating macro trends in the used car market.
Speaker #2: Costs are down 8.1%. The decreased results from higher cost synergies lower CTA on strong cost monitoring. Underlying cost to income ratio landed at 51.1% versus 56.1% in 9 months 2025.
Speaker #2: Net income group shares stood at €754 million, a limited decrease of 1.2% versus nine months 2025, with better margins, lower costs, and lower effective tax rate compensating for lower net UCS results.
Speaker #2: Both LOTs at 13.6% on earnings per share at €0.90 improved versus 9 months 2025. These improvements were supported by the distributions of excess capital to shareholders of 2025 and 2026, with the exception of dividends on share buybacks, for a total of €1.4 billion.
Speaker #2: Overall, the 9-month 2026 results demonstrate the robustness of our model and the relevance of the strategic actions we've taken in this volatile environment. Let's now turn to slide 7 on fleet and earning assets.
Speaker #2: Earning assets stood at 52.8 billion euros, up 200 million euros versus both September 2025 and June 2026. Q3 2026 funded fleet decreased by 5,000 units versus June 2026, a much slower pace than in the first half of 2026 when deflecting total 50,000 units.
Speaker #2: Fleet management contracts stood at 574,000 vehicles, down 5,000 vehicles versus June 2026. Looking at deliveries by powertrain over the quarter, the share of battery electric vehicles in our passenger cars and LCVs deliveries slightly declined, compared to Q2 2026, at 30%, versus 31% in Q2 2026, which was slightly up compared to Q3 2025 at 28%.
Speaker #2: PHEV penetration was also down at 10%, versus 12% in Q2 2026 and 11% in Q3 2025, while the share of hybrids progressed to 31%, versus 28% in Q2 2026 and 26% in Q3 2025.
Speaker #2: And now I'll hand over to Patrick to present you the details of the Q3 2026 financial results.
Speaker #3: Thank you, Philippe, and good morning, ladies and gentlemen. So let me start with the evolution of our gross operating income on the left-hand side.
Speaker #3: At €739 million, it is down 13.1% compared to Q3 2025, driven by the decrease in the net UCS results. Margins decreased 2%, at €761 million versus €776 million in Q3 2025, due to a marked impact of hyperinflation in Turkey this quarter.
Speaker #3: Conversely, underlying margins increased by 4.6% and reached €817 million, the highest level since the creation of Ayvens. This was supported by both higher leasing margins and higher services margins.
Speaker #3: Net UCS result stood at -21 million euros, versus positive 75 million euros in Q3 2025 and -8 million euros in Q2 2026. I will come back to the UCS evolution in a few minutes.
Speaker #3: Let's now move on the next slide on margins. So total margin stood at 761 million euros, which is down 15 million euros versus Q3 2025.
Speaker #3: But the include a -58 million euro impact from hyperinflation in Turkey, as the gap between CPI and the auto price index in the country has widened further.
Speaker #3: CPI in Turkey is now projected at 30% for the full year 2026, in line with the country's latest projections, while used car prices are expected to remain broadly flat.
Speaker #3: Turning to underlying margins, they stood at 817 million euros versus 782 million euros in Q3 2025. In basis point of earning assets, margins reached 620 this quarter versus 593 in Q3 2025 and 603 for the first 9 months of the year.
Speaker #3: So this is a strong performance, which comes mostly from the increase in leasing margin, with lower interest charge across all funding sources, and our focus on the most profitable segments.
Speaker #3: But service margins also increased, supported by better short-term rental activity. Let's move to the next page on UCS and depreciation results. Starting with the total UCS results, the evolution is represented on the right-hand side of the slide.
Speaker #3: So you see that the net UCS results shown as the blue lines graph decreased to -21 million euros, compared to positive 75 in Q3 2025 and -8 in Q2.
Speaker #3: This is primarily the result of a significant decrease in the gross UCS results, represented by the black line. So, this gross UCS result stood at €15 million versus €155 million in Q3 2025 and €42 million in Q2 2026.
Speaker #3: This reflects the same trend as in the first half of the year. Increase in interest rates impacted the overall demand of used cars, and higher oil prices have shifted used car demand away from high towards less.
Speaker #3: As a result, profit on ice and hybrid vehicles, which represent most of our sales volume, have decreased with losses while losses on battery electric vehicles have significantly reduced.
Speaker #3: This mixed effect is reflected in the decrease in the gross UCS results per unit shown on the left-hand side of the slide. It decreased from €1,110 per unit in Q3 2025 to €226 in Q2 2026, and €118 in Q3 2026.
Speaker #3: Turning now to depreciation adjustments, the amount was -€36 million versus -€18 million in Q3 2025 and -€15 million in Q2. This -€36 million is the sum of pre-items, which are detailed on slide 16 of our appendix slides.
Speaker #3: So there is -35 million euros of new prospective depreciation on the running fleet in continuation of the fleet revaluation performed in H1 2026. So these relate mostly to our running fleet of BEVs.
Speaker #3: There is -16 million euros of reversal of past positive prospective depreciation on the vehicles that were sold this quarter, and this number was -39 in Q3 2025.
Speaker #3: And there is a positive 14 million euros on other reversals, which is mainly relating to the vehicles sold in Turkey and representing the release of the impairment previously booked in the context of hyperinflation.
Speaker #3: The equivalent number for Q3 2025 was a positive €6 million. Let's now turn to the next page on operating expenses. Operating expenses continued to decrease in Q3 2026.
Speaker #3: They reached €407 million, down 5.1% compared to Q3 2025, whereas they stood at €429 million. This decrease is driven by both CTA and underlying OPEX.
Speaker #3: CTA amounted to €5 million, down €12 million versus Q3 2025, while underlying OPEX stood at €402 million this quarter versus €412 million in Q3 2025.
Speaker #3: This decrease was notably supported by growing OPEX synergies at €52 million this quarter versus €39 million in Q3 2025. These decreasing operating expenses, combined with strong underlying margins, led to a cost-to-income ratio of 49.2% versus 52.8% in Q3 2025.
Speaker #3: So, on the next slide, we have the remainder of the income statement, starting with the cost of risk on the left-hand side, which stood at €25 million, representing 19 basis points. This is in line with the previous quarter, except for Q2, which benefited from a favorable one-off.
Speaker #3: In the middle graph, you see that profit before tax stood at 306 million euros versus 319 million euros in Q3 2025. This decrease being mostly driven by the decrease in net UCS results of 96 million euros year on year.
Speaker #3: Net income, gross share, decreased by a much lower magnitude at €240 million versus €273 million, supported by a lower effective tax rate at 21.3% this quarter versus 29.7% in Q3 2025.
Speaker #3: And this low level of effective tax rate in Q3 is resulting from two one-off gains. First, we conducted a successful negotiation leading to the transfer of tax losses from a former Dutch lease plant entity to Ayvens.
Speaker #3: Second, the group benefited from a positive impact in Turkey. It relates to the reversal of deferred tax liability linked to inflation-related asset revaluation gains.
Speaker #3: Following the election of Ayvens, to recognize these gains as non-distributible equity, under local tax regulations. For the full year, we anticipate the effective tax rate to be at similar levels as in nine months 2026.
Speaker #3: The group return on tangible equity stood at 13.2% for the quarter, versus 13.6%, and 13.6% for the nine months of 2026. And this is in line with our full-year guidance.
Speaker #3: If I now turn to our last slide on RWA and capital—compared to Q2, RWA increased by €200 million, driven by earning assets.
Speaker #3: So, in line with earning assets, our CET1 ratios stood at 12.8% versus 12.6% in Q2 2026 and 13.2% in Q4 2025. The graph on the right-hand side illustrates our ongoing capital generation and commitments towards shareholder returns.
Speaker #3: Over nine months of 2026, the group generated 84 basis points of capital on top of the ordinary dividend, and 81 carbon provisions, out of which 22 basis points were in Q3 2026.
Speaker #3: This, as alerted, the group to return 137 basis points of excess capital to shareholders at the end of Q2, in the form of share buybacks for 89 basis points and an exceptional dividend for the remaining 48 basis points.
Speaker #3: So this concludes our presentation. Thank you for listening. And we are now ready to take your questions.
Speaker #1: Ladies and gentlemen, if you wish to ask a question, please press star 1 on your telephone keypad. To ensure clarity on the line, please make sure you are in a quiet environment and speak with a clear and loud voice when asking your questions.
Speaker #1: Please limit yourself to two questions at a time. First question is from Jacques Enregular, Kepler Chevreux.
Speaker #2: Yes, good morning, gentlemen. I had two questions. The first one, I'm referring to slide 41 of your strategic plan for 2020–2029, which was about the new and used car sales price evolution.
Speaker #2: At that time, you had said, "Okay, I see 'hybrid' slightly up, and 'Fed' and 'BEV' downward scenario." I mean, obviously, that second bit is probably still going to happen, but the 'I see slightly up,' are you actually changing that in light of the fact that the ICE car price is really going sharply down by the OEMs?
Speaker #2: And does that change have any sort of impact on the particular outlook you gave? That's the first question. And the second one is about hyperinflation in Turkey, which seems to be a never-ending saga.
Speaker #2: When do we see the end of it, or can we assume that minus 58, I think, is probably the worst we'll see, at least for this year?
Speaker #2: Thank you.
Speaker #3: Thank you, Jacques Henry, for the two questions. I will answer the first one, and I will ask Patrick to answer the question on hyperinflation in Turkey.
Speaker #3: So on the CMD, yeah, we gave indication on the scenario poor strengths. I agree with you that BEV prices will obviously continue to decrease.
Speaker #3: What is interesting is to see the recent developments on a number of factors affecting the cost of production on BEVs. The first one is, you can see that there is inflation on chips, and it is very significant.
Speaker #3: That if you take the last 12 months, that some materials like lithium increased a lot in prices. So it means that compared to our basic scenario and sorry, on the third topic is, in Europe, we see that the pressure of the OEM to decrease prices due to their need to reach a CO2 target has declined because now they are much more comfortable to reach a CO2 target.
Speaker #3: So if we take the recent maybe two months or we can see that maybe our assumption on BEV can be slightly modified in the sense of being less conservative, a bit more optimistic on the evolution of prices.
Speaker #3: They will decline, but maybe not as much as we were thinking. Conversely, on the IC, it could be the opposite. But the number of factors is quite significant.
Speaker #3: And what is interesting is, it's a change between poor trains. Our global scenario, which is an evolution of price based in the weighted average of different poor trains, doesn't change significantly in this context because when you look at the production, not on the fleet, but on the originations, that we are doing that we've been doing the last year and what we do this year, we have a balance between the poor trains that is quite interesting, which means that when you've got one poor train that goes up and the other goes down, it tends to balance the effects.
Speaker #3: So sorry for the long answers. So in short, BEV may be a bit less pessimistic on the original price compared to what we said in CMD.
Speaker #3: I see maybe the other way around, but it doesn't change for me the global scenario or my marginal at that stage. For the hyperinflation in Turkey, I will ask Patrick to.
Speaker #4: Yes, so indeed, hyperinflation in Turkey is a complex and volatile topic. The thing is that, since the beginning of the events in the Middle East and actually the war that we have had, the side effect on Turkey is that the Turkish government has been increasing its forecast for inflation in 2026.
Speaker #4: In our last August, so indeed, something which we were seeing as a slowly decreasing but still material impact is now viewed as a bit of material impact for a bit lower.
Speaker #4: So I don't see an end to an hyperinflation regime before the end of 2028. That's one. Second, I think that hyperinflation should, if the war and the situation in the Middle East doesn't increase, should get a bit lower in 2027 and even more in 2028.
Speaker #4: But again, it's very difficult to make forecasts, because the previous forecasts have been postponed by the central bank in August, and the Turkish government is even more cautious.
Speaker #4: Now, for the quarterly impact, I think Q3 is a quarter where we have a significant discrepancy, as I said, between the CPI and the auto price index. We do not anticipate such a magnitude of impact in Q4, for example.
Speaker #4: So it's a bit minus 58 stands on the high side.
Speaker #2: Thanks a lot, gentlemen.
Speaker #1: Next question is from Geoffroy Michelet Auto BHF.
Speaker #2: Thank you, gentlemen, for taking my question. So, two questions. First one: Can you speak a bit about the impact of the maturity of the fleet on the margin?
Speaker #2: Because I had in mind that the most recent vehicles in the fleet have slightly lower margins than the older vintages in the fleet. And I understand that you onboard a bit fewer new cars compared to the past, so that might also be a kind of booster on margin.
Speaker #2: Can you remind us of the reason for the differences in margin, the magnitude of the impact, and the level you would have achieved if you had the kind of growth you target for the 2029 plans?
Speaker #2: The second question is a bit on the competitive landscape, because yesterday the CEO of BNP Paribas, owner of Arval, mentioned that they have been more cautious since 2024, although they have continue to outperform in terms of market share.
Speaker #2: So can you comment on what you see on the ground in terms of commercial positioning of competition versus you and the most recent developments?
Speaker #2: Thank you.
Speaker #3: Thank you, Geoffroy, for the two questions. So, on the first one, there is a technical effect, which is when you have new cars in the fleet. When you put a car on the road, in the first year, the profitability is lower than in the fourth year of the lease.
Speaker #3: It's a way that operating lease is accounted. So it's clear that the mechanically, if your fleet is declining, it helps a little bit your margin.
Speaker #3: But we're not talking about something that is very significant. So, when you grow, that's one of the two reasons that we had indicated in the CMD—that when the fleet comes back to growth, there will be a slight softening, the other reason being the mix: BEV versus IC.
Speaker #3: But we are not talking about a big order of magnitude. And what influences the margin much more is the commercial behavior on one side and the actions that we perform on cost.
Speaker #3: And these are much more impactful than the effect on the average age of the fleet. By the way, the average age of the fleet is not something that moves very significantly and not very fast.
Speaker #3: These are so I would not take this factor as tier one factor. On your second question, which is a competitive landscape, if we talk about what we've seen this quarter, the reality is we've not seen anything moving really compared to the previous quarters.
Speaker #3: On our side, so we have not seen any competitor making a significant move. On our side, we continue to originate as a gross margin that is year-to-date exactly at the same level as what we originated the previous year.
Speaker #3: And meanwhile, we've increased our order intake by 15%, and we've seen the effect of that in the fact that, in Q3, the decrease in fleet has been much lower compared to the pace from before.
Speaker #3: The pace of H1, as we've stated, was 50K for H1, so 25K per quarter. And third quarter, it was 5K. So it's to say that the order intake increase has not come from a change in policy of pricing that remains stable versus last year.
Speaker #2: Thank you very much.
Speaker #1: Next question is from Sarat Kumar, Deutsche Bank.
Speaker #2: Good morning. Thank you for taking my questions. Firstly, on margins, I understand that the current-year funding plan is largely complete. So I wanted to check your conviction for margins remaining around, say, 600 basis points for 2027.
Speaker #2: How do you see the impact of higher funding costs and your ability to pass it on to customers? And related to this, you had aspirations of increasing the deposits in your funding mix.
Speaker #2: So if you can share any sensitivities on how impactful this could be or how beneficial deposits are versus other sources. It could be helpful.
Speaker #2: Second, on the extraordinary capital returns, can we expect something again with full-year results over and above the 50 to 60% dividend guidance that you have provided?
Speaker #2: And lastly, a quick follow-up to the previous response on used car sales. Are you confident that UCS will still be positive, or at least not negative, for 2027?
Speaker #2: Thank you.
Speaker #3: Okay, so, in fact, there are two or three questions, if I understand correctly. I will ask Patrick to answer the second one.
Speaker #3: On the first one, the indication that we gave about interest rates is: a 100 basis point increase in interest rates is worth around €20 million.
Speaker #3: Because we've got a good capacity to pass the interest rate increase to our customers, given the kind of contract that we have. And we always have been extremely disciplined on passing the interest rate increase into our countries and in the commercial policy.
Speaker #3: Just for your reference, we've got a weekly meeting and decision on this to check that the rigor in execution is what it should be.
Speaker #3: On the deposits, it's correct that we continue to push on retail deposits. We've got you may have seen that in the Netherlands and in Germany, we've launched some promotional campaign, which is quite traditional in this sector to increase the level of deposits.
Speaker #3: And this has proven to be working in Germany and the Netherlands. It has happened very recently, so it's too early to judge. But that remains a significant part of our funding strategy, knowing that at the moment, given the tensions on the bond markets, the difference between retail deposits and bonds is at quite high points.
Speaker #3: So it makes the interest of going to retail deposits even higher compared to the past. On the UCS, well, it's a bit early to talk about 2027 on that.
Speaker #3: Our process, what we do every year is when the full-year 26 well, full-year of 26 results are published, we have the call for the full-year results at the end of February.
Speaker #3: And that will be a moment where we guide on the different elements, including the UCS. And the environment is quite volatile. I think that makes sense.
Speaker #3: Maybe to give some color, when you look at Q3 versus Q2, there is a decrease in the gross UCS, as you have recommended.
Speaker #3: What is interesting is to see that September was a much better than August. August was a low point. And September was a significantly better and above the average of the quarter.
Speaker #3: So just to say that drawing too fast conclusion on the curve can be misleading. So we will see how things evolve by the end of the year and give a guidance for 2027 at the end of Feb as we always do.
Speaker #3: Patrick, can you answer the second question?
Speaker #4: Yes. On capital, regarding the extraordinary capital dividend, capital share buyback, and return to shareholders, we are still in the process of executing the ones that we have announced.
Speaker #4: And we anticipate that, given the liquidity, it should take us until, say, the beginning of next year. And as you know, we have communicated during the Capital Market Day on a payout ratio of 50 to 60 percent.
Speaker #4: So there's a likelihood that the board, early December, will decide to increase the current 50%, but we need to wait until this period of time.
Speaker #4: But clearly, we have said it should be between 50 and 60. And as you have seen also in the capital slide, we are currently generating significant capital.
Speaker #4: One should have in mind that the profit will keep going on, but probably with a growth in NEA when the fleet returns to growth.
Speaker #4: So we have to take into account all these parameters before submitting a proposition to the board early 2027.
Speaker #2: Thank you.
Speaker #1: Next question is from Nicholas O'Sullivan, UBS.
Speaker #2: Hi. Thank you for taking my questions. Actually, I have two small ones. The first thing is you describe in the press release that Q3 underlying cost income ratio of 49% is seasonally low.
Speaker #2: So what is exact what is exactly seasonal about the 49% this quarter? Is it driven by what you said earlier, on leasing and service margin?
Speaker #2: Is it something in operating expenses? If you could point to what is the seasonal item here. And the second question is about so you disclosed that you have 319 million of debt securities accounted through OCI.
Speaker #2: And I just wonder if you could provide what is the composition of this portfolio accounted through OCI, especially if that is sovereign debt or French OAT.
Speaker #2: Thank you.
Speaker #3: Thank you, Nicholas. I will ask Patrick to start answering the second question, and I will come to the first question on the cost-income ratio.
Speaker #4: Yes, indeed. So part of the debt securities we have in OCI is related to the investment portfolio of the in the proprietary insurance company for which the share of French government is very limited.
Speaker #4: When I say very limited, it's below 10%. So that's what it is. And there's also the effect of cash flow hedge on securitized transactions.
Speaker #4: So, it's a mix of these two components with, as I said, a very limited exposure to French government bonds.
Speaker #3: Yes.
Speaker #2: So as to the question on cost to income ratio, what you well, the purpose of the message was not to extrapolate on Q4 the same level, generally speaking, Q4 is a bit higher.
Speaker #2: So it's just to remind that within the year, all quarters do not have the same seasonality. We are not taking talking about special one-off in Q3, but there is in solidity in year.
Speaker #2: We have confirmed the cost-to-income ratio for the full year, and obviously I think we should be a bit better than the 52% that was mentioned, even where we are at the end of September.
Speaker #2: Okay, thank you. And if I may ask a follow-up: Q4 last year had a bit more costs on a quarter-on-quarter basis. Are we going to see the same trend?
Speaker #2: If you need to make investments or incur additional one-off costs?
Speaker #3: Well, what I just said is there is seasonality in the year. Q3 tends to be better. Q4 tends to be a bit higher.
Speaker #3: We will be better than the 52% that was in our guidance. And there is no other big specific items to be mentioned.
Speaker #4: Well, indeed, all the suppliers are keen to send their invoices before the end of the year and generally it comes in Q4. This is the main explanation.
Speaker #3: But we book anyway.
Speaker #2: Okay. Thank you very much.
Speaker #1: Next question is a follow-up from Geoffroy Michelet of the BHF.
Speaker #2: Yes, thank you for taking the follow-up. You mentioned in your speech that you had a higher short-term rentals business, which enabled the margin, which boosted a bit the margin.
Speaker #2: Can you elaborate a bit on the context of this activity? Is it more lease extension for existing clients who are waiting for a car, or is it something else?
Speaker #2: Thank you very much.
Speaker #4: Yes. Geoffroy, I know it's indeed it's as you know, we have a policy to steer better all the various components of service margin. One of which being short-term rentals.
Speaker #4: So, as we steer better, we have had better results in the short-term. So that means, for example, that the capacity utilization of the short-term fleet is slightly better, and also the various components of this line of activity.
Speaker #4: So it's just what it is that we see, which is causing an increase in service margin. Explaining the increase in service margin, we can see between Q3 and Q3—let's give an example.
Speaker #4: Not to be misleading about what is this short-term rental activity. The typical example, when you've got a customer that will have a car with a leasing starting within six months, typically we provide a car for the transition period while he's waiting for his new car.
Speaker #4: So, this is part of this short-term rental activity. And one of the factors of success in this activity is, as Patrick was emphasizing, the utilization rate. When the utilization rate is high...
Speaker #4: You make much more profit than when the utilization rate is low. So, one of the actions that we've got on the service margin—because it goes into service margin—is to drive this utilization rate higher compared to what it was in the past.
Speaker #4: And this is proving to be effective.
Speaker #2: Thank you. That's very clear. Maybe one last follow-up. Given where you are now on margin, and since it seems to be a bit sustainable at this point, don't you think that the implied margin assumption for your 2029 plan is somehow a bit conservative at this point in time?
Speaker #4: Well, I think that we've published a CMD one month ago. So it would be a bit strange to change things just in October. So let's work on our fundamentals, which is what we are doing, the fundamentals of leasing margin, service margin on OPEX, to deliver our plan, other comments at that stage.
Speaker #2: Thank you.
Speaker #1: We have no more questions registered at this time. Mr. De Rovira, the floor is back to you for any closing remarks.
Speaker #4: Well, no specific closing remark. I just wanted to thank you all for your attention and questions. Thank you. Goodbye.
Speaker #3: Thank you.
