Iveco Group (IVG) has announced a strong start to 2024, with significant profitability improvements and a high order backlog across its business units. In the first quarter, the company achieved an adjusted EBIT margin of 6.1% for its industrial activities, marking a 170 basis point increase over the same period last year. Solid financial performance and strategic partnerships have positioned Iveco Group to pursue its revised ambitions for the 2024-2028 period with confidence.
Key Takeaways
- Iveco Group's adjusted EBIT margin for industrial activities rose to 6.1%, a 170 basis point improvement from Q1 2023.
- The truck, bus, and powertrain business units all reported growth, except for Powertrain which saw a 12.9% decrease in net revenues.
- The order backlog for trucks is high, with the bus unit's orders covering all of 2024 and extending into 2025.
- Partnerships with BASF and Hyundai and new supply agreements bolster the company's strategic position.
- Iveco maintains market share leadership in various truck segments and sees growth in intercity and electric city buses.
- Financial guidance for 2024 remains unchanged, with group adjusted EBIT between €920 million and €970 million.
Company Outlook
- Full-year 2024 financial charges are projected to be below 2023 levels, around €350 million.
- The company's preliminary industry volume outlook for 2024 predicts stable or slightly increased volumes for light-duty trucks and buses, while heavy-duty trucks may see a 10% to 15% decline.
- Iveco Group confirms its full-year 2024 financial guidance, with expectations for industrial free cash flow between €350 million and €400 million.
Bearish Highlights
- The Powertrain business unit experienced a 12.9% decrease in net revenues in Q1 2024.
- Free cash flow performance for Q1 2024 was negative at €436 million.
Bullish Highlights
- The company reported significant profitability improvements across all business units.
- Iveco Group's strategic partnerships and new supply agreements are expected to drive future growth.
- The defense business has a strong order backlog of around €4.5 billion, with plans for scaling up to meet demand.
Misses
- The Powertrain unit's decrease in net revenues represents a challenge amidst overall positive financial results.
Q&A highlights
- The CEO addressed questions regarding the company's guidance, overproduction, and profitability, underscoring the company's solid performance and strategic direction.
- The recent change in Iveco Group's CEO is not expected to impact the company's medium and long-term goals.
Iveco Group's first quarter of 2024 has set a positive tone for the year, with the company leveraging strategic partnerships and a strong order backlog to navigate the challenges of the market. With a focus on maintaining liquidity and positive cash generation, the company is well-positioned to continue its growth trajectory and meet its financial targets for the year. The transfer of ownership of Magirus GmbH is underway and slated for completion by January 2025, marking another strategic move for Iveco Group as it forges ahead under new leadership.
Full transcript - None (IVCGF) Q1 2024:
Operator: Good day, ladies and gentlemen, and welcome to today's Iveco Group 2024 First Quarter Results Conference Call and Webcast. We would like to remind you that today's call is being recorded. After the speakers' remarks, there will be a question-and-answer session. [Operator instructions] At this time, I would like to turn the call over to Federico Donati, Head of Investor Relations. Please go ahead, sir.
Federico Donati: Thank you, Laura. Good morning everyone. We would like to welcome you to the webcast and conference call for Iveco Group first quarter financial results for the period ending 31st March, 2024. This call is being broadcasted live on our website and is copyrighted by Iveco Group. Any other use, recording or transmission of any portion of this broadcast without the express written concept of the Iveco Group, is strictly forbidden. Hosting today's call are Iveco Group CEO, Gerrit Marx and our CFO, Anna Tanganelli. Gerrit and Anna will use the material made available for download on the Iveco Group website early this morning. Additionally, please note that any forward-looking statement we might be making during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor statement included in the presentation material. Additional information pertaining to factors that could cause as a result to differ materially is contained in the company's most recent annual report as well as other recent reports and filings with the authorities in The Netherlands and Italy. The company presentation may include certain non-IFRS financial measures. Additional information, including reconciliation to the most directly comparable IFRS financial measures is included in the presentation material. Reiterating here again what we already disclosed during our recent Capital Market Day in March, Iveco Group and Mutares (ETR:MUXG) announced the signing of a definitive agreement for the transfer of ownership of Magirus and all of its assets and legal entities performing the Firefighting Body Works and Superstructure business. Subject to the regulatory approval, the transaction is expected to be completed no later than January 2025. In accordance with IFRS 5, as the sale was signed in March, Magirus met the criteria to be classified as a business held for sale. It also met the criteria to be classified as discontinued operations. As a consequence, from now on, 2024 financial data shown in the press release and this presentation exclude Magirus and refer to continuing operations only, unless otherwise stated. In accordance with applicable accounting standards, the figures in the income statement and the statement of cash flow for 2023 comparative periods have been recast consistently. I will now turn the call over to our CEO, Gerrit.
Gerrit Marx: Thanks Federico and welcome to all of you joining our call today. 2024, our third year as a listed group is headlined acceleration after we delivered our foundational and transformational years in 2022 and 2023, respectively. Today, we will provide you with commentary around our results for the first quarter of 2024. This follows our Capital Markets Day that we hosted in Turin on the 14th of March. We outlined our revised ambitions for the 2024 to 2028 period and disclosed for the first time more granular data on our truck, bus and defense business units previously grouped along with the Firefighting business unit now reporting as discontinued operations under one single reporting segment called Commercial & Specialty Vehicles. Individual ambitions and pathways were provided live on stage by the P&L and cash flow accountable Presidents of each business unit, including powertrain and financial services, of course. From now on, we will provide you with revenues and EBIT margin performance for each of our five distinctly different business units, which follows specific seasonality throughout the year, as you can see in the materials on our website regarding our historical quarterly financial performance from 2022 and 2023. As we announced in our press release issued earlier this morning, we started the year with consistent profitability improvements across all our business units, leading to an adjusted EBIT margin for the industrial activities at 6.1%, 170 basis points above the first quarter of 2023. During the first months of the year, we did not experience any unusual increase in order cancellations or net price erosion above and beyond expectations in light of the slower market. As anticipated, we opened the order book for our new model year 2024 lineup in all truck segments, managing the transition from our model year 2022, while continuing to cautiously shorten our order books in the normalizing market environment, particularly as regards heavy-duty trucks. The order backlog in trucks remained rather high with around 18 weeks of production already sold for light commercial vehicles and around 14 to 15 weeks of medium and heavy-duty trucks at the end of March 2024. When looking at our bus business unit, our order backlog covers all of 2024 and is now stretching well into 2025, covering almost entirely the first half of next year. In Defense, we already disclosed that our order backlog referring only to orders already funded by our customers, covers basically the entire top line for the business plan period with a solid potential upside at the back end of our plan as allocated. Multiyear spending for military vehicles by European countries is projected to increase in the near-term. Finally, in Powertrain, we are well on track to reach our target of 100 basis points margin increase per year, in line with the commitment we made during our recent Capital Markets Day on the back of our efficiency plan and a greater contribution from aftermarket activity. When looking at our financial services business, delinquencies on book for less than 30 days remained at a historically low 2%, which is sequentially flat and 50 basis points better than last year. As already discussed extensively in our interactions with sell and buy side, the supply chain situation is admittedly still a source of minor surprises, although much more predictable when compared to the first half of 2023. This is enabling us to manage our production schedule quite smoothly with no major disruptions. Any potential indirect negative impact from the Ukrainian and Palestinian conflicts need to be constantly and carefully monitored as well as the Suez and Panama Canal channel situations. Although at the moment, none of the above has caused any material slowdowns or disruptions in the supply chain. Finally, as anticipated in our previous earnings calls, together with our partners, we have made significant efforts to solve bodybuilder capacity bottlenecks that slowed down the timing of deliveries to customers and affected other OEMs as well. We still have some work to do in the second quarter, but we expect the situation to level out soon with normalized deliveries throughout the third quarter. Let me now provide some numbers from the first quarter of 2024. Our free cash flow absorption was at €436 million compared to last year's recast absorption of €546 million. Our available liquidity level remained solid at €4.7 billion, broadly flattish versus the end of December 2023. Anna will provide more details on this later in the presentation, also highlighting the free cash flow delta performance on a year-over-year basis. Looking at the Iveco Group financial performance for the first quarter of 2024. Our consolidated revenues were in line with last year and the consolidated adjusted EBIT margin was at 6.9%, up 170 basis points versus first quarter 2023. Our adjusted diluted EPS was at $0.57 at the end of the first quarter 2024, which is $0.32 more than first quarter 2023. During the Annual General Meeting held on the 17th of April 2024, the shareholders approved our proposal to distribute a cash dividend of €0.22 per outstanding common share. This was paid on the 24th of April 2024. The Board also authorized the repurchase of up to 10 million common shares with a maximum total allocation of €130 million for a period of 18 months from the date of the AGM. The new authorization replaces the previous one granted by the Annual General Meeting of Shareholders on the 14th of April 2023. As you have seen from our press release issued on the 21st of April 2024, Olof Persson, will succeed me as the CEO of Iveco Group, starting the 1st of July 2024, where I will take my new role as CEO of CNH based out of Chicago. I will comment more on this transition in my closing remarks, but let me just say upfront that Olof has been not only a valued member and the commercial vehicle expert of our Board since January 2022, but also has been a close mentor to me and to the senior leadership team as we navigated these past years and crafted our pathways forward. His extensive executive leadership experience, deep industry knowledge, and understanding of our group will ensure continued strong momentum for the plans we recently presented. This handover is a consistent continuation of all the work the Iveco Group team has delivered so far and presented at our Capital Markets Day in March. Let me go now to the next slide, number 4, on which we have highlighted Iveco Group's main achievements in the first quarter of this year. All of these items related press releases are already public. So, I will draw your attention to just a few of the key achievements. In January, we announced the selection of our first partner for recycling the lithium-ion batteries of the group's electric vehicles, BASF, the world's leading chemical company and biggest chemical supplier for the automotive industry. BASF will mechanically process the batteries to black mass and then extract raw materials for use in manufacturing new batteries. Working together will reduce our CO2 footprint and push forward a circular economy, which is at the heart of all our thinking when it comes to sustainability. As mentioned earlier, we held our Capital Markets Day on the 14th of March, where we unveiled our new 2024 to 2028 strategic business plan and the unlimited pathways for each of our five business units. As you know, the decision to hold the event just two years after our first Investor Day in November 2021, was driven by the group's recent achievements. By the end of 2023, we had already met our key targets set for 2026 or were ahead of proposed trajectories. Also in March, we announced the expansion of our group-wide partnership with Hyundai Motor Company (OTC:HYMLF). Together, we signed an enlarged letter of intent to explore innovation in the electric heavy-duty truck sector for both battery electric and fuel cell electric vehicles. In line with our new reporting structure, I will spotlight the primary achievements in the first quarter of each of our industrial business units, beginning with the truck business unit. Last February, we signed a new supply agreement with Hyundai for an Iveco-badged all-electric light commercial vehicle for Europe, the new chassis cab, which we are going to define yet another iconic Iveco brand name will be supplied by Hyundai Motor (OTC:HYMTF) Company from its global eLCV platform and will be exclusively customized, distributed and, serviced in Europe by Iveco Group through its sales channels. This will extend our light commercial vehicle chassis cab range for good transport to an even lighter category of less than 3.5 tons in gross vehicle weight. Also in February, Iveco received an order to supply 178 S-Way compressed natural gas trucks equipped with our FPT Industrial engines for DHL's Post & Parcel Germany division. The order will make use of the most mature solution on the market for reducing emissions while securing a highly efficient performance. It might be worth highlighting that today, an LNG-powered heavy-duty long-haul truck offers a TCO advantage over its diesel version of about €1,000 per month with normalized petrol prices. This segment will continue to play an important role in the decarbonization of transport as Iveco always said. Furthermore, Iveco entered into an important partnership with Ford (NYSE:F) Trucks, signing a memorandum of understanding in March to explore collaboration in developing a new heavy-duty truck cab structure compliance with upcoming regulations and capable to efficiently host all future powertrain choices for on-road heavy-duty trucking. The non-binding MOU is a preliminary step in assessing the potential for co-development of new products and technologies. As regards to our bus business unit, we won two large tenders during the first quarter of 2024. In January, Iveco bus won it the largest zero emission vehicle contract in Italy for the supply of 411 battery electric buses to Rome's public transport company. The tender also comprises a 10-year full-service maintenance plan for each. Then in February, secured a contract to supply 200 e-buses to the public transport operator of Marseille. This order will help the city advance on its energy transition goal of becoming 100% electric by 2027. Looking now at defense. In March, we had the official handover of the first unit to the Austrian Minister of Defense, our IDV 4x4 multi-utility vehicles. The unit is configured as a radio command post vehicle designed to meet the customers' broad spectrum of operational requirements, while complying with NATO standards. This is the first of a total of 260 vehicles and marks a new segment for IDV with many other customers showing a great deal of interest in this cost-effective and versatile platform to replace large fleets of dated legacy vehicles. Our powertrain business unit saw important accomplishments as well. In January, FPT Industrial supplied state-of-the-art engines for power generation at the construction site for the three-month tunnel and an18-kilometer tunnel that will provide the fastest connection between Scandinavia and Central Europe and become the world's longest immersed tunnel. In March, FPT Industrial set a new record with the production of its 200,000 engine in Cordoba, Argentina. This milestone came just two years after reaching the 150,000 mark and reflects the strategic partnership we have in the area. The Cordoba plant is recognized for operational excellence and sustainable processes. Moving on to Slide 7. We show the total industry volume percentage change versus first quarter 2023. As you can see, we have not changed our disclosure guarding industry changes, considering the sensitive data of the Defense segment, which at par with other industrial businesses is not disclosable. Moving to the quarterly performance of the industry. Europe, excluding the U.K. and Ireland was up double-digits in light-duty trucks, while medium and heavy-duty were down 3%. For buses, the industry in Europe was flat versus the previous year's first quarter. Latin America industry volumes were down by double-digits in both light-duty trucks and buses and saw a single-digit decrease in medium and heavy-duty trucks. On a worldwide basis, the market experienced double-digit volume growth for light-duty trucks and was down by single-digits in both medium and heavy-duty trucks and buses. The next slide, number 8, has our recurring quarterly update on channel inventory statistics. Company inventories were sequentially up, both in light-duty trucks and medium, and heavy, reflecting our normal seasonality. Looking at dealer inventory, as anticipated in my opening remarks, our teams have already done a very good job in this first quarter. We expect the bodybuilder bottlenecks to level out progressively during the third quarter, allowing us to finally deliver the products currently held up in body build activity for end customers. As you can see from the takeaway message at the bottom of the slide, the percentage of dealer and company inventories already sold to customers across segments, has remained solid at around 70% of the actual dealer inventory and 76% of the company inventory. Lastly, looking at production activity versus retail, we overproduced retail sales of both light-duty trucks and medium and heavy by 29% and 9%, respectively, responding to our still long order books and preparations for cutting over from model year 2022 to model year 2024. Let's move on to the next slide with order intake and delivery statistics as of the end of the first quarter of 2024. We still have a rather large and strong order book in trucks covering almost 18 weeks of production and light-duty trucks and around 15 weeks for medium and heavy-duty trucks. Our model year 2024 has been very well received by customers. Orders are at 80% of the total collected during the quarter for light-duty trucks and at more than 40% for medium and heavy-duty trucks, where we delayed the opening of the order book to fully leverage on our successful model year 2022. Deliveries of the new model year will gain momentum in the second half of 2024 as we proceed with the rollout of customer engagement. We are continuing to work to lower weeks of production already sold with the aim of reaching an optimal level of 8 to 10 weeks for light and 10 to 12 weeks for medium and heavy-duty trucks. In our bus business, the book-to-bill was at 1.21, covering all of 2024 and almost the entire first half of next year. Looking at deliveries in the first quarter. Trucks were up 9% on a worldwide basis versus first quarter 2023, with light commercial vehicles up 32% and medium and heavy-duty trucks down 26%. Buses were down 7% versus last year. Europe was up 15% in trucks with light-duty trucks up 34% and medium and heavy down 25% versus first quarter 2023. Bus deliveries in Europe were up 4%. When looking at order intake level for trucks, it was down by design versus last year, mainly on the back of our continuous effort to purposely lower weeks of production already sold through a tight pricing discipline. This was to preserve profitability on the back of a very solid and historically high order book and to accommodate the phase-out and phase-in of model year 2024. As a result of this effort, worldwide total book-to-bill truck and bus was at 0.73 at the end of the first quarter. The next slide, Slide 10, shows our market share performance in Europe, excluding the U.K. and Ireland in our truck segments and buses. Starting with light-duty, we ended the quarter solid at 13% of the market share in the 3.5-ton to 7.49 ton segment. We maintained our market share leadership in the chassis cab subsegment, ending the quarter at 30.4% and solidified our historical leadership in the upper end of the light-duty 6 to 7.5 ton segment with a market share of 64%. In heavy-duty, we ended the first quarter with a broadly flat market share versus the first quarter of 2023 at 7.5%. And in medium and heavy combined market share was up 20 basis points to 8.7% versus the same period of last year. In heavy-duty trucks running on CNG and LNG, we ended the quarter at 38.2% of the market share in this cautious subsegment of the market despite compelling TCO advantages. The registrations were rather low in the previous quarters and quite spotty by country, leading to volatility in our market share, where we traditionally hold 50% and more of the segment. For bus, we increased market share both for intercity buses and city buses. In intercity, we further solidified our leadership closing the quarter at 50.5% market share in Europe, up 130 basis points versus the same period last year. In city bus, we closed the quarter at 13.7%, up 90 basis points versus first quarter 2023. Not on the slide, but important to be mentioned, our electric city bus segment closed the quarter at about 10% market share, up 200 basis points versus last year, demonstrating the strong success of our product in the market. I will now hand the call over to Anna, who will take you through our first quarter financial highlights, after which I will conclude with final remarks.
Anna Tanganelli: Thank you, Gerrit and good morning everyone. Let's now take a look at the highlights of our first quarter 2024 financial results on Slide 12. Before we start, let me please remind you that all the financials shown in the next slide, refer to our continuing operations only as our Firefighting business unit has been classified as discontinued operations following the signing of a definitive agreement for its transfer of ownership in March of this year. As a result, in accordance with applicable accounting standards, also 2023 figures have been recast consistently. Q1 2024 closed consolidated net revenues of €3.4 billion and net revenues of industrial activities of €3.3 billion, both in line with prior year, supported by a continuous positive price realization, mainly in trucks, which fully offset the negative FX impact as well as impact of decreasing volumes in powertrain and in South America. Financial Services net revenues totaled €145 million in the quarter, up 46.5% compared to prior year. Consolidated adjusted EBIT was up €59 million or plus 34% versus Q1 2023, closing at €233 million with an adjusted EBIT margin of 6.9%, up 170 basis points year-over-year. Adjusted EBIT of industrial activities reached €201 million, up €55 million versus prior year, posting a record first quarter at 6.1% margin, up 170 basis points versus Q1 2023. Financial charges decreased substantially in the quarter, closing at €21 million, thanks to the positive impact of hyperinflationary accounting in Argentina. And as a result of the series of actions we have implemented to contain our foreign exchange exposure in the country as well as to reduce our overall cost of hedging following the devaluation of the Argentinian peso occurred in December last year. In light of this positive first quarter result, while we remain cautious on the evolution of Argentinian economics, namely foreign exchange rate and inflation for the remaining part of the year, we now expect full year 2024 financial charges to be below 2024 levels at around €350 million. Reported income tax expenses for Q1 2024 were €53 million with an adjusted effective tax rate of 28% in line with full year 2023. Consolidated adjusted net income for the period closed at €153 million, up €77 million compared to prior year and including €115 million of negative one-off impact related to the transfer of ownership of Magirus. As a result, adjusted diluted EPS was €0.57, up $0.32 compared to first quarter 2023. As usual, in this slide, we report the adjusted net income attributable to Iveco Group, which totaled €156 million in Q1 2024 and excludes the profit attributable to noncontrolling interests. Moving to our free cash flow performance. In this first quarter of 2024, seasonal absorption was €436 million, €110 million lower than prior year, thanks to the remarkable profitability uplift across all our businesses, combined with a disciplined cash flow management, which partially offset our structural business model cyclicality. Finally, available liquidity, including undrawn committed credit lines remained solid at €4.7 billion, substantially flat versus 2023 year end. Let's now focus on net revenues of industrial activities on Slide 13. Looking at Q1 2020 net revenues split by region, as you can see from the pie chart on the top right-hand side of this slide, Europe and rest of the world were flat or slightly up year-over-year while net revenues in South and North America decreased by 31% and 6%, respectively, compared to prior year. As for the net revenues evolution by business unit, all our businesses, with the exception of Powertrain, posted a growth in sales versus the previous year. In particular, truck net revenues were up 2.3% year-over-year, totaling €2.3 billion, mainly driven by a continuously positive price realization in both life commercial vehicles as well as the medium and heavy. Bus net revenues increased by 1.7% to €414 million, also on the back of a positive price realization and a favorable mix. Net revenues of defense grew substantially compared to prior year at plus 34%, reaching €230 million, thanks to higher volumes and a positive mix. Powertrain net revenues were down 12.9% year-over-year to €969 million, mainly due to a decrease in volumes in the period with sales to external customers accounting for 45% in Q1 2024. Turning to Slide 14. Let's now briefly comment on the main drivers underlying the year-over-year improvement in our adjusted EBIT of industrial activities. As previously highlighted, net pricing continued to be positive in the quarter. And combined with a substantial reduction in product costs across the board more than offset the negative impact of lower volumes, mainly assets in South America and in Powertrain and the continuously adverse foreign exchange rate scenario compared to prior year. As a result, adjusted EBIT margin of Industrial Activities closed with a record 6.1%, up 170 basis points versus the same period of last year. Let's now take a look at each industrial business unit adjusted EBIT margin performance in the quarter on Slide 15. First of all, all our businesses posted a robust profitability uplift, both versus prior year as well as compared to the last 12-month period, confirming the growth path outlined in our strategic business plan. In particular, starting from truck. Adjusted EBIT margin was up 130 basis points year-over-year, reaching a record 6.5%, thanks to a significant improvement in product costs over the period, combined with the continuously positive price realization, only partially offset by lower volumes in South America and in medium and heavy-duty vehicles in Europe and still adverse FX impact mainly in Argentina. As for Defense, adjusted EBIT margin posted a remarkable 650 basis point increase versus prior year, crossing the double-digit threshold at 10.3%, driven by a favorable mix, higher volumes as well as a positive pricing. Bus adjusted EBIT margin closed at 5.1%, up 190 basis points versus Q1 of last year, driven by a positive mix and also on the back of a port solid price realization. Finally, Powertrain adjusted EBIT was up 70 basis points, reaching 6.2%, thanks to lower product and structure costs, which fully offset the impact of the decrease in volumes. Let's now briefly comment on the performance of our Financial Services business unit during the quarter on Slide 16. Q1 2024 adjusted EBIT closed €32 million, up €4 million versus prior year, supported by an increase in the managed portfolio, including unconsolidated joint ventures, which reached €7.9 billion as of 31st March 2024, of which retail accounted for 39% and wholesale for 61% and up €1.3 billion compared to 31st March, 2023. What's worth to highlight here is that the stock of receivables past due by more than 30 days as a percentage of the overall on-book portfolio remained at a historical low of 2% versus 2.5% of 31st March, 2023. Finally, return on assets, as shown in the chart on the top right-hand side of this slide, remains solid at 2%. Moving to our Q1 2024 free cash flow and net industrial cash evolution on Slide 17. As said, in the first quarter of this year, free cash flow of industrial activities was negative at minus €436 million. In line with our historical seasonal working capital evolution, but partially offset by significantly positive contribution from adjusted EBITDA of €430 million, up €74 million compared to last year and by a strong reduction in our financial charges. As a result, as said of the series of actions we have implemented to contain our foreign exchange exposure in Argentina and to reduce our overall cost of hedging. Cash out for taxes and pure interest income and expenses were €37 million in the period, substantially in line with prior year, with the increase in base rates accounting for €9 million versus Q1 2023. Our seasonal working capital absorption was broadly at the same level of last year, with Q1 2024 inventories negatively impacted by the phase-out phase-in of our model year 2024 in trucks as well as by the order book growth in bus and defense, combined with a lower contribution from the change in trade payables versus last year, mainly as a result of the higher payments due in the quarter linked to the increase in investments in Q4 of last year. Change in provisions and similar contributed positively €426 million compared to prior year, thanks as said to the strong reduction in financial charges, including the positive impact of the Argentinian hyperinflationary accounting. Investments in the quarter were €125 million, substantially in line with Q1 2023 with total investments for the full year 2024 confirmed at around €1 billion. Finally, please note that the foreign exchange and other line item includes the purchase in the period of certain U.S.-linked bonds in Argentina namely the BOPREAL, as part of the previously mentioned actions and hedging strategy implemented in the country. Moving now to my last slide for today, Page 18. Our available liquidity is of 31st March, 2024, stood at €4.7 billion. This includes €2.6 billion in cash and cash equivalents and €2 billion of undrawn committed facilities. Looking at our debt maturity profile, it is immediately visible from the chart with our cash and cash equivalent levels continue to more than cover all the cash maturities foreseen in the coming years, totaling €1.7 billion. Thank you and I will now turn the call back to Gerrit for his final remarks.
Gerrit Marx: Thank you, Anna. And let's conclude with the industry and financial outlook as well as some final takeaway messages. Our preliminary industry volume outlook for 2024 reflects our current visibility and is broadly in line with what was already disclosed by some of our peers who released their financials before us as well as what was already disclosed in our full year earnings call. On a worldwide basis, both light-duty trucks and buses are forecasted flat or slightly up year-over-year, and heavy-duty trucks are expected to be down at least 10% to 15% with larger variances of such decline by markets. Europe, excluding the U.K. and Ireland, is expected to range from flat to slightly up in both light-duty trucks and buses, and heavy-duty trucks are expected to be down between 15% to 20%. The next slide, number 21, has our full year 2024 preliminary financial guidance. As stated at the top of the chart, this financial guidance excludes Magirus, our Firefighting business unit and has been confirmed in its entirety and what was disclosed during our Capital Markets Day. Based on the strong start of the year, the current industry outlook, solid order backlogs and no signs of unusual levels of order cancellations, the company is confirming its guidance as follows: at a consolidated level, group adjusted EBIT at between €920 million and €970 million. And for Industrial Activities net revenues, including currency effects, to be down around 4%, adjusted EBIT from industrial activities at between €790 million and €840 million; industrial free cash flow at between €350 million and €400 million. Investments in property, plants, and equipment and capitalized intangible assets at around €1 billion. In conclusion, let me summarize the messages we gave today in our presentation, providing some takeaway messages. First, our current full year 2024 estimates, preliminary financial guidance has been confirmed on the back of a convincing start of the year and evolving order backlog. This guidance includes a prudent view of the second half of the year as we need more visibility on how the market declined, particularly in heavy-duty trucks, unfolds in pricing pressure and volumes. Additionally, our industrial activities free cash flow, full year expectation mindfully includes a certain level of prudence, particularly when looking at the still unpredictable dynamics in hyperinflationary countries, predominantly Argentina. Second, as already disclosed in our previous earnings call, embedded in our guidance is profitability improvement for our powertrain bus and defense business units, while our truck business unit will leverage on model year 2024 and on the sustained performance of the light commercial vehicles to mitigate the negative impact of the European market slowdown in heavy-duty trucks. We will take decisions on how to navigate our production capacities, especially in Q3 to sensibly manage cost and cash in a seasonally weak quarter ahead of us. Third, we will continue our efforts to manage our order books and preserve profitability as well as further reinforce our control over cash. We expect body builder bottlenecks to level out gradually starting from the end of second quarter and into the second half of the year, depleting the related inventory. Our model year 2024 across truck segment is receiving very good feedback from customers with deliveries to gain momentum in the latter part of 2024. Robust order books for both our bus and defense business units are continuing reinforcing expectations. Fourth, our commitment to maintain a sound level of available liquidity is continuing and intact. The same applies to our firm objective to maintain positive cash generation every year, which includes a sound level of investments synergistically optimized through our delivering partnerships with strategic trends. Fifth, the transfer of ownership of Magirus GmbH and its affiliate performing Firefighting business is proceeding and subject to regulatory approval. The transaction is expected to be completed no later than January 2025. And sixth, the recent announcement about the change of Iveco Group's CEO will not trigger any change in our medium and long-term targets. These are all confirmed in their entirety crafted and carried by strong independent leaders and management teams pursuing individual pathways for each of our business units. Since the foundation of Iveco Group, Olof Persson has been deeply involved in every major decision we have taken as well as in the preparation of our updated strategic business plan recently presented to you. The transition will be smooth and full continuity with what we have promised to the market. Each of our business unit presidents own their respective pathway and is accountable for the individual P&L and free cash flow. Given this is my last earnings call as CEO of Iveco Group, I would like to add a few personal words before opening up the microphone for questions. I joined Iveco back in 2019 when our Iveco Group businesses were embedded in the CNH industrial structure of that time. And from there, many transformations have happened. We began operations two years ago as an independently listed company, receiving some skepticism at the time about us and our ability to deliver. Quarter-after-quarter, everyone at the Iveco Group has gone beyond the obvious to build our credibility, always delivering what we promised and often exceeding it. I'm really proud to have led such an incredible team of humble fighters and feel as creators collectively. We outpaced and here and they are also outsmarted much larger groups, whom we cannot and do not need to outspend to compete. Our team repeatedly demonstrated that we have what it takes to skillfully turn every challenge into an opportunity. It is not easy for me to leave such an incredible group, but I'm happy to pass it on to Olof. His extensive executive leadership experience, deep industry knowledge and profound understanding of our group will keep the company on the pathway to success. I know that Olof, the senior leadership team, and all of Iveco Group's people will continue to go beyond leveraging on the solid foundations that we have built together to ensure continued profitability and market growth. I'm sincerely grateful to every colleague for sharing your talent and solidarity, and I look forward to seeing how far beyond you will go from here. From the 1st of July on, I will return to CNH as CEO, continuing the journey, Scott Wine and the CNH global leadership team have laid out with three consecutive years of record earnings and a very strong product and digital pipeline to come as the Iveco Group's FPT customer for powertrain solutions and financial services partner for EMEA, CNH and Iveco Group will remain connected for more fearless co-creations to come. I'm truly humbled and excited about this next chapter in my professional pathway. This concludes our prepared remarks, and we can now open it up for questions. To be mindful of the time, we kindly ask you that you hold off on any detailed modeling and accounting questions on which you can follow up directly with Federico and the Investor Relations team after the call. Operator, please go ahead with questions.
Operator: Thank you. [Operator instructions] Thank you. We will take our first question from Daniela Costa of Goldman Sachs. Your line is open, please go ahead.
Daniela Costa: Hi, good morning. Thank you. I have three questions, if it is possible. I'll ask them one at a time. But first, on your commentary regarding the guidance and the uncertainties in the second half. So, I wanted to understand you in the market guidance, you're actually slightly upgrading the LCV in Europe. So, why don't we see a sort of a reflection that on the company guidance? Is this related to the pricing side or something else sort of that you view could be worse off in the second half? You can elaborate first on that?
Gerrit Marx: Hi, Daniela. The market uptick in light, I think we are taking a pretty cautious view on how the heavy-duty market is going to unfold in the second half. I mean as we walk into this year further, we do see some markets developing quite differently in this decline. All of them are down, yes, but hence, we have seen some opportunities on the light, and we are remaining quite cautious on the heavy. So, I think those two in our forecasts are offsetting each other.
Daniela Costa: Okay. And then in terms of like you overproduced, I think I believe you were earlier saying 29% in LCV. Can you talk about production plans for the rest of the year? And what's been the margin implications of this overproduction in 1Q?
Gerrit Marx: Well, look, we are in the cutover phase between the model 2022 and the 2024. And right now, particularly the third quarter, to be more precise and parts of the second quarter and partially also the third quarter, these are the quarters where the two are basically sitting in our production lines side-by-side. And with this, you naturally focus on a higher output in order to have both lines, the one to run out, the other one to ramp up. So, this is a bit why we have overproduced and this is very natural in a cutover between these models that we are producing at fairly high volumes in our [Indiscernible] plants.
Daniela Costa: Thank you. And medium and heavy duty finally. Just wondering if you could give us some color on how the margin progression has been in there. And I think in prior quarters, you commented on the margin level. So, if you could help us there?
Gerrit Marx: Medium and heavy, when you take the combustion engine, which is the vehicles which we sell, at this point predominantly, they are holding up versus last year despite A, let's say, increasingly challenging market environment as also our other market participants have committed. And as you can see also from our book-to-bill ratio, we remain pretty cautious on price versus volume having benefits of a significantly smaller industrial machine that we need to feed in both of those segments. So, we are cautiously shortening, continuing the cutover from 2022 to 2024.
Daniela Costa: You're profitable in 1Q in medium and heavy?
Gerrit Marx: Medium, heavy, we are low mid-single-digit profitable in Q1 now. there.
Daniela Costa: Thank you for that. See you on the other side on [Indiscernible] Gerrit. Good luck.
Gerrit Marx: You see there Daniela.
Operator: Thank you. We'll now take our next question from Nicolai Kempf of Deutsche Bank. Your line is open, please go ahead
Nicolai Kempf: Yes, good morning. Nicolai Kempf at Deutsche Bank. First of all, congrats to a strong start to the year. My first question would be on the momentum scenes of America, what a mixed picture for some of your peers, actually reported better volumes. But I guess that's more firm to the heavy side and a very heavy side. Would you expect that to pick up momentum in the coming quarters?
Gerrit Marx: Well, in Latin America, your assumption is correct. So, the market is very heavy is a segment that we have just recently reentered with our S-Way launch. And there, we see the market to hold on a low level because the market in Lat Am is overly pretty suppressed today, well, last year already. And in the Light Commercial Vehicle business, I think if you take the mix, we are more from a volume point of view, relatively more exposed to light, and hence, that's why our volumes roll up. So, I think your observation is pretty correct.
Anna Tanganelli: And then, Gerrit, if I may, also integrate that, we are also more exposed on Argentina versus most of our peers. As you know, the market is quite small. So, there are not many localized players. And so, as a result, that's why we are quite prudent or more impacted from the downturn in Argentina predominantly as part of South America.
Nicolai Kempf: Okay. Thanks. And my second final one. Yes, I mean, your market guide implies that the volumes will come down further on H2 but on the other side, you have more models coming up. And is it then fair to assume that this should help you on pricing as well profitability in the second half of this year?
Gerrit Marx: Well, look, the model year 2024 as I mentioned in other occasions, and now also proven by competitive driving experiences we have done with all heavy-duty truck brands. Having to deduct vehicles of other brands in over the last couple of months with customers and our own dealers has proven that the model year 2024 stands out in almost every aspect of a heavy-duty truck. And with this, the feedback is very good to our model year 2024. And we have now delivered or in the process of delivering the first unit to the dealerships and to our customers who placed already orders. And we do expect the momentum around this product to increase once the vehicle is in fleets operating, delivering the promises in the day-to-day work. This is as expected. And, yes, this is a strong product. But let me just emphasize, again, the heavy-duty truck market, particularly when you look at the German speaking and the Nordic countries is predominantly a lot impacted by a slowdown. So, the average, as I highlighted, is around 15% to 20% down across Europe, but there are certain markets that are impacted even harder. And we are taking a pretty cautious view of what kind of competitive dynamics this might unfold across the region. Hence, our guidance. Hence, our very consistent prudent view on pricing and our outlook for the remainder of the year.
Nicolai Kempf: Understood. Thank you and all the best in your new role.
Gerrit Marx: Thanks.
Operator: We will now take our next question from Shaqeal Kirunda of Morgan Stanley. Your line is open, please go ahead.
Shaqeal Kirunda: Good morning. Shaqeal Kirunda from Morgan Stanley. Gerrit, wish you all the best for the new role. So, volumes in European and medium heavy-duty fell 3% year-on-year while Iveco delivery fell 25%. So, in absence of any sort of major supply chain issues, what drives this difference? Is Iveco exposed to segments which are declining more? Or is it just a model changeover effect?
Gerrit Marx: Predominantly, it's the model change order that we talked about. And there are also right now, in the heavy-duty segment, when you look at the deliveries that are currently made a predominant amount of those is with a pretty large fleet. They have usually very high levels of registrations by markets in any given month. So, there is quite some volatility at this point as the retail business and, let's say, small and national key account business for heavy-duty trucks at this point is rather cautious. So, it is predominantly the cutover and it is also related to how we position ourselves in the market and reposition ourselves in the market with the new model.
Shaqeal Kirunda: Got it. Thank you very much. And what do you think about the disparity between LCV market and the medium and heavy in Europe? Are your LCV customers not concerned about the same macro conditions as your heavy-duty customers? What keeps LCV growing?
Gerrit Marx: Well, look, when you break down our cab chassis light commercial vehicle business, you find a lot of subsectors that are not directly related to the transportation of, let's say, for large piece goods or for other types. And so, for example, we have refrigerated good transport. We have construction applications in this. We have specialty vehicles of all kinds, like garbage collection of sleep sweepers. The light commercial vehicle cab chassis segment is very, very diversified across multiple subsectors, and it's way more, let's say, robust against one specific indicator when it comes, for example, to pan-events in the last mile delivery or so? So, if there was, and I'm not saying there is, but if there was a slowdown in last mile delivery e-commerce, which is not we expected, it would immediately impact the pan-event business where we are not very strong. While when there is, let's say, a slowdown in construction, we have a nice exposure to food distribution and communal services or city applications. And so, it carries a nice diversification inside of itself as a segment, which makes it quite strong actually. And this is why it is where it is.
Shaqeal Kirunda: Got it. Thank you very much.
Operator: And we will now take our next question from Martino De Ambroggi of Equita. Your line is open, please go ahead.
Martino De Ambroggi: Thank you. Good morning everybody. First of all Gerrit, all the best for the new appointment also from my side. Three questions. The first one is still on the new model year 2024. What is the prices acceptance is in line with your target to close the gap with competitors in terms of pricing? Could you remind us what are and what were the proportion and where you are moving in terms of closing the gap? The second question is still on the profitability of medium and heavy trucks. Clearly, Q1 low single-digit. But assuming a more prudent view on the second half, are you confident to remain profitable for the full year for medium and heavy? And the third is on the EBIT bridge. You are presenting €94 million pricing effect for all the industrial activities. Could you split by division and provide an idea where this figure will move for the rest of the year? And still on the EBIT bridge, there is a block of €92 million ForEx and other, I suppose it's probably 100% ForEx or I don't know.
Gerrit Marx: Thank you, Martino, for your words and good wishes. I think the bridge Anna will take, but let me quickly comment on the price gap. We narrow, that was always the message I delivered. We are narrowing further the price gap to competition. This is the objective we had, and that is the discussions we are having with customers when it comes to the model year 2024. I mean, again, I mean imagine there's a certain Scandinavian brands, and they sell an equal product at, let's say, 140,000 retail price and we today are sitting at whatever 115 or something 10 or 15 in an equal position. The model year 2024 will allow us to capture a part of that get with a product that is consistently aligned with the functions of the very best in the segment. So, this is what the discussions are with the customers. And when these promises and that for customers, these are promises until they have the vehicles in their fleet, running a considerable amount of mileage. And once that is proven in their TCO, they do see that this vehicle is going to earn them the money we promise and hence, the price gap for these orders is realized. So, I'd say the price gap is narrowed to the best-in-class. So, we do not close the gap, but we narrow them. We closed them to some other competitors, but we will narrow them further to the very best in the segment where we have now a product that is fully aligned in again, every aspect of what a heavy-duty truck should provide to a customer in this segment. And on the medium and heavy, yes, I mean, the medium and heavy for the combustion engine portfolio of medium and heavies that we are selling, we expect for a full year positive profit territory for the combined medium and heavy deal segment, yes, so as we said last time. And Anna, on the EBIT bridge.
Anna Tanganelli: So, for Q1, out of the €94 million of positive pricing impact, I would say the majority, so around 80% is linked to trucks, while the rest is evenly split between bus and defense. For the full year, the proportion is different in a sense that truck for the full year year-over-year will have, I would say, a flattish pricing performance. While we will start seeing in H2, as we commented also last when we gave the guidance for the full year, we will start seeing a positive price realization in bus and in defense, I would say, predominantly in bus, but a good chunk also on defense.
Martino De Ambroggi: Thank you. And the ForEx and other block?
Anna Tanganelli: Sorry, you're right. On ForEx and other, I would say, almost 100% or let's say, substantially, it's all ForEx, as you correctly spotted.
Martino De Ambroggi: Okay. And if I may be just a flash on 10% plus profitability in defense is possible for the full year as it was in Q1?
Anna Tanganelli: Well, we will definitely be very high single-digit. Let's see if we can exceed the threshold of a double-digit. But for now, I would say the guidance is high single-digit.
Martino De Ambroggi: Thank you.
Operator: Thank you. Our final question comes from Virginia Montorsi of Bank of America. Your line is open, please go ahead.
Virginia Montorsi: Good morning and thank you for taking my question. Just a quick follow-up on defense. Can you just give us a little bit more color on the order momentum and the backlog visibility that you have as of now, given the very strong performance in Q1. Is there anything specific that we should keep in mind for the year?
Gerrit Marx: Hi. So, look, the order momentum is intact. We keep gathering orders on the, let's say, more run rate business that we have like these truck-derived military vehicles, but also we keep having pretty good momentum on the existing contracts with customers around the world. So, it's steadily tracking to plan, and I think we are around €4.5 billion order backlog at this point around that level. So, it's according to plan. The name of the game for our defense business is obviously to keep that momentum and to the one or the other fairly sizable, large, new big program coming up for awards that will only impact the outer years of the plan, obviously. But the name of the game is really to scale up the business now with this order momentum. And as I mentioned in some other calls, it was a €500 million revenue business in 2019, and it's doubled up to this point to €1 billion, and it keeps growing. And I think that demands us to make capacity investments, technology investments and to keep everything else in the business growing before €500 million business to one that exceeds substantially €1 billion. And I think that is going hand-in-hand with the increase of the order book and the confidence the customers have in us to deliver them products that us keep us safe.
Virginia Montorsi: Thank you very much.
Federico Donati: That concludes today's call. So, I would like to thank everyone and have a nice day. Thank you.
Gerrit Marx: Thank you.,
Operator: That will conclude today's conference. Thank you for your participation. Ladies and gentlemen, you may now disconnect.
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