Iveco Group Q1 2025 slides: Revenue falls 10%, maintains guidance on strong orders

Iveco Group NV (BIT:IVG) shares fell over 5% on Thursday after the company reported a 10% decline in Q1 2025 revenue, though management maintained full-year guidance citing strong order intake and expected second-half recovery.

Executive Summary

The commercial vehicle manufacturer reported consolidated net revenues of €3.0 billion for Q1 2025, down 10.1% year-over-year, with adjusted EBIT margin contracting to 5.0% from 6.9% in the same period last year. Despite these challenges, adjusted diluted EPS improved to €0.31 compared to a loss of €0.26 in Q1 2024.

As shown in the following summary of Q1 2025 performance, the company highlighted several key developments including manufacturing realignment, strategic partnerships, and significant margin improvement in the Bus and Defence segments:

"We diligently executed and invested in realigning our manufacturing activities and inventories as well as fully completing the LCV phase-out/phase-in of New Model Year 2024 in dealer network," said Iveco Group in its presentation, adding that the company is "well positioned in both Powertrain and Truck, to leverage on expected H2 market recovery."

Quarterly Performance Highlights

The company’s performance varied significantly across business segments. While Truck and Powertrain faced headwinds with revenue declines of 16% and 19% respectively, the Bus segment grew 15% and Defence surged 31% compared to Q1 2024.

The following breakdown of net revenues by industrial activities illustrates these divergent segment performances:

Adjusted EBIT margins also showed mixed results across segments. The Truck segment saw its margin drop to 3.0% from 6.5% in Q1 2024, while Powertrain declined to 5.5% from 6.2%. However, Bus improved slightly to 5.4% from 5.1%, and Defence showed strong profitability growth, reaching 12.9% compared to 10.3% last year.

This segment-by-segment margin performance is detailed in the following chart:

Free cash flow from industrial activities deteriorated to negative €794 million compared to negative €358 million in Q1 2024, primarily due to working capital increases of €898 million as shown in this cash flow breakdown:

Strategic Initiatives

Iveco Group announced several strategic partnerships during the quarter. The company signed a binding agreement with Ford Otosan (IS:FROTO) for the design and engineering of the next-generation cabin for heavy-duty trucks, and partnered with Stellantis (NYSE:STLA) for the commercialization of two IVECO-branded electric vans in Europe, targeting a mid-2026 launch.

Additionally, Iveco formed a joint venture called GATE with DLL, in which DLL will acquire a 51% stake. This partnership aims to support the energy transition in Europe by strengthening financial backing and extending reach beyond Italy, France, and Germany.

In a significant strategic move, Iveco’s Board of Directors decided to proceed with the separation of the Defence business via a spin-off:

"Following the assessment announced on 7th February 2025, the Board of Directors decided to proceed with the separation of the Group’s Defence business via a spin-off," the company stated, adding that management will "continue the preparation for the spin-off, while exploring such preliminary interests from strategic buyers."

Market Position and Order Trends

Despite challenging market conditions with European industry volumes down 13% in Light Commercial Vehicles (LCV) and 17% in Medium & Heavy (M&H) trucks versus Q1 2024, Iveco maintained solid market shares across segments.

The following chart illustrates the company’s market position in key segments:

A particularly encouraging sign was the strong order intake across segments, with book-to-bill ratios exceeding 1.0x in both LCV and M&H segments, suggesting potential revenue recovery in coming quarters:

The detailed order intake data shows significant growth in key markets, particularly in South America where order intake was 3.0x higher for LCV and 2.1x higher for M&H compared to Q1 2024:

In the Bus segment, Iveco strengthened its leadership in the European Intercity market with a 55.8% share (+4.9 percentage points year-over-year) and showed continued growth in City buses, particularly in the electric sub-segment which reached 11.8% market share (+2.0 percentage points versus Q1 2024).

Forward Outlook

Despite the challenging first quarter, Iveco Group confirmed its full-year 2025 financial guidance, projecting consolidated adjusted EBIT between €980-1,030 million and industrial activities free cash flow between €400-450 million:

The company’s industry volume outlook for 2025 suggests continued challenges in the European truck market with expected declines of 5-10% for both LCV and M&H segments, while South America is expected to grow approximately 10% for LCV and 5% for M&H:

"We are well positioned in both Powertrain and Truck, to leverage on expected H2 market recovery, while continuing to keep momentum in Bus and Defence," the company stated in its CEO takeaway messages, adding that the "Efficiency Programme acceleration [is] proceeding apace, with expected full year savings fully confirmed."

The market reaction to Iveco’s results was negative, with shares falling 5.09% to €15.40 on the day of the announcement, suggesting investors may be concerned about the significant revenue and margin declines despite management’s optimistic outlook for the second half of the year.

Full presentation:

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