Earnings call transcript: Eurogroup Laminations Q4 2024 misses revenue forecast

Eurogroup Laminations (EGLA) reported its fourth-quarter 2024 earnings, revealing a revenue miss against market expectations. The company achieved €222 million in revenue, falling short of the forecasted €247 million. According to InvestingPro data, the stock is trading near its 52-week low of €2.53, with a current market capitalization of €440.3 million. The stock’s recent performance aligns with broader market challenges, having declined over 34% in the past year. InvestingPro analysis indicates the company appears undervalued at current levels.

Key Takeaways

• Eurogroup Laminations missed its revenue forecast for Q4 2024.
• The stock price decreased by 0.24% post-earnings announcement.
• EV and automotive revenues grew by 18%, showcasing strong sector performance.
• Industrial business revenues declined by 14%, posing a challenge.
• Strategic expansions in India and China signal future growth opportunities.

Company Performance

Eurogroup Laminations demonstrated mixed performance in Q4 2024. While the company saw an overall revenue increase of 4% from the previous year, it fell short of market expectations. The EV and automotive segments were standout performers, with revenues increasing by 18%, driven by the global shift towards electrification. However, the industrial business segment faced a 14% decline, highlighting ongoing challenges in that area.

Financial Highlights

• Total revenues: €869 million, a 4% increase from 2023.
• EBITDA adjusted: €116 million, representing a 13.3% margin.
• EV and Automotive revenues: €562 million, an 18% growth.
• Industrial business revenues: €307 million, a 14% decrease.
• Net debt: €226 million, with a net leverage ratio of 1.9x.

Earnings vs. Forecast

Eurogroup Laminations’ Q4 2024 revenue of €222 million was below the forecasted €247 million, marking a significant miss. This shortfall could indicate operational challenges or market conditions that were not fully anticipated by analysts.

Market Reaction

Following the earnings release, Eurogroup Laminations’ stock experienced a slight decline of 0.24%. The stock’s performance remains near the lower end of its 52-week range, reflecting investor caution amid the revenue miss and competitive pressures in the European market.

Outlook & Guidance

Looking ahead, Eurogroup Laminations projects a 10% revenue growth for 2025, with an EBITDA margin target of around 12%. The company remains focused on expanding its presence in the EV and e-mobility sectors, particularly in China and India, through strategic acquisitions and partnerships. InvestingPro analysts maintain a positive outlook, with consensus forecasts predicting profitability this year. The stock currently trades at a P/E ratio of 20.68, reflecting market expectations for future growth. Discover more exclusive insights and detailed valuation metrics with InvestingPro’s comprehensive analysis tools.

Executive Commentary

"We want to confirm our commitment because the energy transition and the world electrification is a clear direction," stated Marco Guarduini, CEO. This underscores the company’s strategic focus on capturing growth in the electrification market. Matteo Perna, CFO, added, "We are considering a robust growth both in China and in USMCA whilst a reduction in Europe," highlighting a strategic pivot towards markets with higher growth potential.

Risks and Challenges

• Competitive pressures in the European market could hinder growth.
• The decline in industrial business revenues presents a challenge.
• Potential supply chain disruptions may impact future performance.
• Currency fluctuations in emerging markets could affect profitability.
• Regulatory changes in key markets like China and India might pose compliance challenges.

Q&A

During the earnings call, analysts expressed concerns over the competitive landscape in Europe and the company’s ability to maintain its growth momentum. Eurogroup Laminations addressed these by emphasizing its strategic focus on emerging markets and its robust order pipeline, which is expected to drive future growth.

Full transcript - Eurogroup Laminations SpA (EGLA) Q4 2024:

Conference Moderator: Good morning, everyone, and welcome to Eurogroup Lamination Full Year twenty twenty four Financial Results Presentation. Before I hand over to your host today, please be advised there will be an opportunity to ask questions at the end of the presentation. In order to do so, please use the raise hand function on your screen or for those dialing in, it’s star nine on your keypad. I have now a pleasure handing over to Ilaria Candotti, Head of Investor Relations. Please go ahead, Ilaria.

Ilaria Candotti, Head of Investor Relations, Eurogroup Lamination (EGLA): Good morning, everyone, and thank you for being here today at our conference call on EGLA full year 2024 results and the Strategic Plan for this period twenty twenty five-twenty twenty eight. I would like to remind you that as always, both the presentation and the press release are available on the AGLA Group website under the Investor Relations section. I’m here today with Sergio Iori, Chairman of Egla Mark Guarduini, CEO Pizidore Guardala, Deputy CEO and Matteo Perna, our CFO. Today’s agenda will be structured as follows: Marco Duini will open the presentation with the twenty twenty four highlights. Then Marco Perna will follow with the description of the financials for the year.

Afterwards, Marco will introduce the new plan with the current market scenario and the strategic guidance for the mid term period. Matteo Perna will then conclude with the 2024 outlook and the twenty twenty five-twenty twenty eight financial guidelines. At the end, we will open the usual Q and A section. At this point, I’m pleased to leave the floor to Marco. Please, Marco, for your thoughts.

Marco Guarduini, CEO, Eurogroup Lamination (EGLA): Thank you, L’Arria. Thank you to everyone to be part of this day. We can start with the highlights. So for us, 2024 remains

Matteo Perna, CFO, Eurogroup Lamination (EGLA): a positive year with robust results.

Marco Guarduini, CEO, Eurogroup Lamination (EGLA): The driver of this robust results is for sure the AD and automotive growth that was very strong in China and allowed us as well to increase our market share in both North America and Europe. The industrial business was impacted by a negative price effect due to the raw material and Europe. The European market remained a weak market. The profitability is resilient, thanks to the contribution of the EV and automotive EBITDA and thanks to the flexibility that we were capable to introduce in our cost base. So the total revenues of the year were $869,000,000 and the EBITDA adjusted results was 116,000,000 Moving to the most important part in term of outlook.

We still have a robust and strong order book. The order book is now for 5,300,000,000.0 and the pipeline is 4,800,000,000.0. These two data are reflecting the increase of the automotive verification that is remaining firm for the future, where China is, of course, the leader. And we see as well in the short term in Europe and North America readjustment. The strong focus that we have in our next future is concentrated in the Chinese OEM that are leading, let’s say, the market in China, but as well the automotive revolution in the rest of the world.

With regards to the strategic initiative, we have, of course, already started many activities that are Asia centric. So we have closed the deal and executed the deal related to India to our Indian project with Kuma Precision Stamping and we acquired the control. And now we are as well moving in the assessment for the Indian mobility market. In addition to this, we have as well finalized the acquisition of the 30% for the minorities of the minorities that we have in our joint venture in China. And this is preparing us for new partnership opportunity in the Chinese market.

I now pass the word to Matteo so that he can enter in the financial highlights.

Matteo Perna, CFO, Eurogroup Lamination (EGLA): So thank you very much, Marc. So a snapshot on 2024 full year results, revenues at EUR169 million. So we see the trend of 4% increase compared to 2023. And this is the result of the different evolution of the two segments. So EV and Automotive growth was in the range of approximately 18%, whilst the industrial business decrease was 14%.

EBITDA adjusted in line as per 2023, implying a margin of 13.3. The total amount of adjustments is approximately EUR 5,700,000.0. EBIT, EUR 66,000,000. Evolution of the EBIT, it’s of course impacted by the evolution of the D and A. So D and A have increased by approximately €11,000,000 compared to 2023.

Net free working capital, EUR $233,000,000, including EUR 13,000,000 related to the consolidation of Omar as of the December. CapEx, EUR 86,000,000, which 80% is debarked to the V and automotive and finally, net debt EUR $226,000,000, including as well approximately EUR 28,000,000 impact related to the acquisition of Kumar and as well the consolidation of their net debt. The net leverage ratio based on adjusted EBITDA, it’s in the range of 1.9 times. If we move to the next slide please. So, you see the total amount of revenues for the VIN automatic business in 2024 was EUR $562,000,000.

So 18% increase compared to 2023, whilst the industrial business was $3.00 €7,000,000. Over the last quarter, we have generated approximately €220,000,000 total revenues, of which EUR 147,000,000 was the part related to the Veehan Automotive, whilst EUR 74,000,000 was the part related to the industrial business. In terms of business mix, you see that now EVN OUT is representing approximately 65% of the total amount of revenues. Just to let you know that industrial was more than 60% as of the end of twenty twenty two. We have sold approximately 3,800,000 motor course over 2024.

And I have to say that we have as well increased our market share in both Europe and North America. If we move now to the next slide, you see the contribution of the EBITDA adjusted by segment. So EV and Automotive, total adjusted EBITDA was EUR 80,000,000, implying a 14.2% EBITDA adjusted margin over revenues, whilst the margin expressed by the industrial business unit were almost in line as per 2022. So we are in the range of 11.8%. So we’ve already spoken about the increase of D and A, which is the result of execution of the CapEx plan that we are executing and we have made approximately EUR 86,000,000 CapEx in 2024.

And therefore, we can move to the next slide please. So in terms of net debt evolution, you see as of the December, we started our net debt €111,000,000 and this is based on €51,000,000 related to the financial lease liability, so the IFRS 16 effect, whilst the 59 was the part not related to IFRS 16. In this bridge, we’re showing to you simplified evolution of our cash flow and you see the vast majority of the cash was absorbed by the execution of the CapEx, EUR 86,000,000. EUR 50 4 million was the part related to the change in net trade working capital. And again, we see as well including the part rate to the consolidation of Kumar.

And finally, we have as well highlighted the part of the net debt impacted by the Kumar acquisition, the consolidation of Kumar net financial position and as well the completion of the buyback program, which was completed as of the June 2024 and as well as the dividend distribution that we made in 2024. The overall approximately 65% of the total long term debt is at its edge And the higher financial costs were mainly related to the increase of our financial debt, long term financial debt. I think that we can move to the next session.

Marco Guarduini, CEO, Eurogroup Lamination (EGLA): Yes. Thank you, Monteo. And we want to, of course, introduce our strategic plan 2025 and 2028. It’s important to underline that the need for this strategic plan is coming from the market evolution that we experienced in the last time. We saw in the last two years a major shift from West to East, where China emerged as a global technological hub, not only for the automotive, but as well for all the new technologies that are key for the future of technology.

We experienced as well a major shift in the ability to supply electrical steel production. So you North America and Europe did not made the same investment that were made in Asia and in the rest of the world. And Russian supply chain has been disrupted. We have as well noted an increase of competition from Chinese and Korean players that entered in Europe and North America. And the inflationary pressure that was created in experience in Europe and North America as well in create a larger gap of competitiveness between this region and Asia.

In addition to this, all the volatility and uncertainty that was as well created in geopolitical changes and as well in the shift in the regulatory frameworks created differences that have to be considered and have to be as well accepted as basis for our plan. What we want to confirm is our commitment because the energy transition and the world electrification is a clear direction supported by all the macroeconomical trends. And our strategic plan wants to reflect this shift with the objective to maintain this leadership. If you move to the next page. So the first consideration is about our business model.

Our business model has to be updated, improved based on the fact that we have new focus, new focus for the businesses. The key and automotive is, of course, remaining a clear trend. But when we approach a new region, we have to enlarge understand this concept to the e mobility solution. Just as an example, when we go to India, India is a market where the two three wheelers are dominating the market and is important to be capable to support and to take the opportunity of this market. So the extension of this focus is bringing us to define

Michele Baldelli, Analyst: the

Marco Guarduini, CEO, Eurogroup Lamination (EGLA): e mobility solution. For another important focus is related to the infrastructure. And this is covering a new segment that are the Power and Distribution Transformer. With regards to the geographical focus on top to the three regions that we covered already in our previous strategic plan, in this plan we want as well to concentrate in India and we want as well to concentrate in the upgrade that we want to make in China. Next page, please.

What it is important is to remind the potential markets in which we operate. And it’s important to restate that the penetration of the electrification in the automotive industry is progressing and is progressing at a different rate in all the regions. So in Europe by 22%, in North America by 26% and in Greater China by 11%. Of course, the size the actual size is different in China And the number that China is covering are almost superior to the combination between Europe and North America. And you see as well the market share that the electrification is reaching in 2028 in Europe, in North America and in Greater China.

When we relate to the electrification, we consider not only the BEV but as well the plug in and the full hybrid. So 49% in Europe in 2028 versus 23% that was last year, 46% in North America versus 18% and in Greater China from 42 to 66%. So this is an important element for our strategy plan. Next page is concentrated in as well the rest of the Oman industrial segments, including transformer. And you see that as well in all these segments, the market is foreseen to have a growth that is, let’s say, less sexy than the EV and the automotive, but is related again to the energy transition that is a driver for the West economies and as well in the emerging markets.

It’s important to say that we are capable to monitor and to follow very carefully all these segments across all the region. Next page, please. So based on these considerations that are related to the market, we see three activities that are done that are the strategic direction that we want to follow in the development of our work. First of all, is to be capable to be close to the market and unlock any opportunity of growth covering the region and the segments. And we want as well to increase our diversification in order to be capable across the region and segments to reduce all the risk and with the ability to develop solution to the customer that are increasing our value and as well preserving our A last point of activity is this step up in China operation that we have already, let’s say, announced and that we are implementing.

With regards to the activity that are internal in this strategic plan, we want to continue to invest in our technological leadership by investing our resourcing in new solution and new developments in all R and D and innovation activities. In addition to this, we have a clear focus to improve our efficiency in our operation and as well maximizing the flexibility and the standardization and the saturation of our asset. Last point that is extremely important for all of us is, of course, to maximize our cash flow efficiency. And this has two main focus is, of course, to secure the right return in the right investment and, of course, optimize our working cash flow. If we move to the next page, we have created this strategic framework image that want to summarize the focus and the guideline that we are following in the next years.

So we plan to grow in the eMobility business and maintaining our market position following the development of the market in Europe and North America. In China, in the next years, we want to exploit the penetration in this market. And of course, we are preparing our launch and development for the Indian market. With regards to the home and industrial solution, in a manner, we are, of course, optimizing all our activity commercially and as well operationally. While in North America, we see the opportunity to preserve our ability to grow.

And of course, the big opportunity are again in China and in India where we see the possibility to grow in the next year. With regards to this new business focus that is part of the Home and Industrial segment, we have, of course, a very strong plan that is supporting our expansion in the transformer business, thanks to our Chinese operation, but as well to use this our Indian operation, but as well to use this operation in order to grow our volume in North America and in Europe. So this is, of course, these are all the activity related to the market and at corporate level following the strategic guidance that we mentioned, we want to the key words are strengthen, organize, streamline and innovate. And speed is as well another words that we have and want to lead our future. So at this point, I’ll pass to Matteo the last page.

Matteo Perna, CFO, Eurogroup Lamination (EGLA): Yes. Thank you, Marco. So well, on the basis of the updated strategy and all the job that we have made to support our new business plan, We do think that there are four key strategic pillars underlying our guidance for both 25% and for the midterm. One, growth. Growth is still embedded in our plan.

It’s a double digit growth. So approximately 10% expected for 2025 and between 1015% over the midterm. Two, we had to secure as well our margin. So in light of the pressure that we’re feeling, especially in Europe, and as well in light of the uncertainty there, let’s say, current market scenario, we decided to remain very cautious on 2025. And therefore, we do think that our margin adjusted would be in the range of per percent, whilst we confirm our 14% over the midterm.

CapEx, we are now, let’s say, in detail of the CapEx plan that we started in 2022, which was aimed to basically more than triple the installed capacity. CapEx this year will be in the range of EUR 70,000,000. Whilst going forward, we do think that in light of our current installed capacity and as well the experience that we have made in increasing the flexibility of our installed capacity for between 45% in terms of capital intensity would be the amount of CapEx that we will execute going forward. The last point, it says, well, very important. It’s with respect to the cash generation.

So we do think that in 2025, our operating fixed rate flow will be above zero, so will be positive. And of course, this is the result of the execution of our top line. But as well, all the actions that we are taking on the to optimize our necessary working capital, which is an essential part of our budget for this year and as well on the new business plan. And again, for the target that we are considering for the midterm outlook, our objective is to have a ROCE, thrust of taxes in the range between 1520%. Of course, we’ll be the result of an increased EBITDA of and therefore, more selective approach on CapEx reducing as well the partly to the fixed asset.

And finally, the execution of our optimization of the working capital program, which will be focused mostly in Europe and in North America. So on the basis of this, we have defined the set of guidance that we are now presenting to the market.

Marco Guarduini, CEO, Eurogroup Lamination (EGLA): Thank you, Aetel. So I think now

Ilaria Candotti, Head of Investor Relations, Eurogroup Lamination (EGLA): Then the Q and A section.

Conference Moderator: Thank you. Thank you to the management team. We now have an opportunity to ask questions. Our first question today comes from Mr. Jegra.

Please the floor

Alberto Jegra, Analyst: to you. Good morning everybody. Can you hear me?

Conference Moderator: Yes, indeed.

Alberto Jegra, Analyst: So my first question is on the 2025 guidance. How much is the perimeter effect and without can you tell us what should we expect in the automotive and the industrial segment then, your top line seems to me a bit conservative compared to what you showed showed us, as the current market expectation for the market. So, seems that you are going to underperform, the market if you can comment on that, last on 2025 margin, if you can give us more color on the moving parts that lead to the 12% margins in 2025.

Matteo Perna, CFO, Eurogroup Lamination (EGLA): Thank you, Alberto. So on M and A impact in 2025, we are considering more than EUR 50,000,000 of revenues deriving from Kovacom and therefore the rest it’s organic and 100% it’s in the industrial business. Then on our top line estimate for 2025, I had to say that our estimate is considering a robust growth both in China and in USMCA whilst a reduction in Europe. And this is based on the latest visibility that we have on the market plus as well the prudence that we have is well embedded in our guidance. Then on margin, 12%, yes, 12% is basically the result of, if we divide between volume and the price effect, the volume are accounting approximately EUR 14,000,000 compared to the part of the BDA lower to the consensus, whilst approximately EUR 11,000,000 is the part related to the price and the mix.

We had to I had to say that, again, in light of the current market scenario and then the current volatility, we have been very cautious in the definition as well of the prices for the European market. And this is well made to secure our market share in light of this competitive landscape in Europe and where we can, let’s say, add some color on this. But on the other side, I have to say that we have as well embedded a certain additional cost, which can be incurred in case of a potential impact arriving from the tariff.

Alberto Jegra, Analyst: Thank you. Thank you, Matteo.

Conference Moderator: Thank you, Mr. Jegra. Next question comes from Mr. Emmanuel Le Negre. Please refer to you.

Emmanuel Le Negre, Analyst: Yes. Thank you. Can you hear me?

Conference Moderator: Yes, we can indeed.

Emmanuel Le Negre, Analyst: Okay. Thank you. Thank you for the presentation and for the Q and A. I have a couple of questions. The first one is on your CapEx plan.

You said that you are in the tail of your CapEx cycle. What should we think about the focus of the investments for 2025 and the year side? And the second one is more of a strategic question. Your new focus will be more and more on China. So So do you have any update on the memorandum understanding you you signed the last summer?

Thank you.

Matteo Perna, CFO, Eurogroup Lamination (EGLA): Yeah. So let let’s get started from the second question. And, we are in the full execution of the program that we are defining to penetrate the Chinese market. So, a few days ago, we announced the signing of the buyback of the 30 out of the total 31% stakes in both Euromysi iTech and Euromysi Laminational Jaxing. So the two Chinese companies, one, Erumize Tech related to the VIA automotive business, whereas the other focus on the industrial business.

And that was, let’s say, an essential part in order to fully deploy and the possibility to secure as well the local partnership with the partners that we have already, let’s say, disclosed to your market. So we are proceeding, let’s say, consistently to our plan and we are moving forward as well now in the definition of the next step of such programs. Venmohele, the other part was on CapEx. Yeah. So this year, we are considering approximately EUR 70,000,000 of CapEx of which more than EUR 20,000,000 will be executed in Europe.

And again, this is related to two main new SOP per auto in Europe, which are expected to start in the last quarter of this year. And I have to say that following the execution of these two CapEx, we are fine with the target installed capacity that we have currently in Europe. Then we have as well slightly less than EUR 20,000,000 in Mexico, and this is related to the new important ramp up and new project that we are considering for this year and as well for EUR 26,000,000 in USMCA. And finally, the rest is China. Of course, China as well moving forward would be, say, the only geography which will have a significant amount of growth CapEx consistently with expected market penetration, that we are targeting as well in our plan.

Marco Guarduini, CEO, Eurogroup Lamination (EGLA): Maybe just to add to the point related to China, reiterate that we are progressing our plan to upgrade our ecosystem in China. So all the moves that we are doing are a step in this direction. So the latest information that was disclosed was about the share that we bought by our Japanese partner. And as underlined in my highlights, this is unlocking the possibility for potential partnership in China.

Emmanuel Le Negre, Analyst: Okay. Thanks. Thank you very much. Just a clarification on this. The 70,000,000 CapEx of target you gave for 2025, does this include the cash out for the minorities in China or these are on top?

Matteo Perna, CFO, Eurogroup Lamination (EGLA): No. No. No. These are on top. So these are not within 70,000,000.

Emmanuel Le Negre, Analyst: Okay. Okay. Thank you.

Matteo Perna, CFO, Eurogroup Lamination (EGLA): And just to let you know that the cash out rate is in the range of 13,130,000.00 in Brough.

Conference Moderator: Thank you. Thank you very much. Thank you, Mr. Negri, for your questions. Currently, we do not have any questions We do have a follow-up question from Mr.

Please the floor to you.

Alberto Jegra, Analyst: Yes, so, I have few additional questions, on the Indian mobility market that you mentioned at the beginning of the presentation, should we expect an acquisition? And if so, which kind of size are you looking at, or it would be more, another JV, something similar to, Chinese operation then on, cash generation in 2025. If if you can, better, give us a sense of what could be the improvement on your working capital, in particular, and they’re, it’s moving part. And then the final question, if you can provide some comments on the start to the year, because, we are seeing, for example, very weak data from, from Tesla on the other side, the registration of, in Europe are doing quite well. So what are you seeing in this first quarter so far in the automotive and maybe also some comments by end market for the industry?

Matteo Perna, CFO, Eurogroup Lamination (EGLA): Okay. So let’s get started on, the India eMobility. You want to

Marco Guarduini, CEO, Eurogroup Lamination (EGLA): cover it, please? Yes. So for the Indian eMobility, we want to go in a direction of a joint venture with a local partner because Indian market is a very, let’s say, unique market that requires strong presence and strong heritage. And so the view is to go through a JV and not through an acquisition. And this is the first point.

Then I can add to the outlook in the first month. Of course, the news and the information are visible to everyone. We have to say that what we have seen in these months is in line with our budget. Of course, the situation in North America is as well in some way impacted by this tariff discussion that is creating on the operational level some concern, problem to the customer. And this is, of course, requiring the right level of prudence as Matteo underlined before.

So we are following every day the evolution of the market that in term of medium long term remain clear. But of course, this kind of volatility that we see in the market in these months are taken in consideration in our guidance for 2025.

Matteo Perna, CFO, Eurogroup Lamination (EGLA): Well, on the cash flow side, I have to say, you have to consider the EBITDA that we as well declared. In terms of tax rate, you know, the tax rate was in the range of 22%. So we are considering as well a tax range in the range of 23% for 2025 in light as well of the evolution of our earning before taxes due to the consolidation of Huber and as well, let’s say, the full part related to the Chinese operation. Then in terms of net working capital, we are targeting a net working capital which is below €200,000,000 and you have to compare it to the current €230,000,000 and the vast majority of the reduction will be derived by the inventory. So the inventory is expected to be optimized compared to 2024 and as well in the evolution that we’re having a discussion with certain key suppliers.

Alberto Jegra, Analyst: Thank you.

Conference Moderator: Thank you very much, Mr. Jegra. Next question comes from Mr. Renato Gargiulo. Please, the floor to you.

Mr. Gargiulo, kindly unmute your line.

Renato Gargiulo, Analyst: Yes. Can you hear me?

Conference Moderator: Yes. We can indeed. Thank you.

Renato Gargiulo, Analyst: Okay. Perfect. Thank you. Yes. I have a question on China.

You started production for your first Chinese OEM in the last quarter or last year. Could you give us an an indication about how much of your projected annual sales this year? Or if you want to also know your midterm targets could be generated by local Chinese OEMs? Also in terms of order book, if you can give us any indication about the weight of China’s customers and when these orders could translate into revenues for you. Related to this question, in terms of condition of the contracts, for example, in terms of payment terms or profitability, do you see any major difference between the Chinese customers versus your European ones?

Then a second more general question on the macro outlook. In your outlook, you are referring to clearly also to the European regulation. What impact do you expect in Europe from the proposed change in the regulation on CO2 emissions with targets for carmakers to be achieved over a three year period or for any potential new incentive schemes, on bets. And on US tariffs, if you can remind us if you have, let’s say, a material direct exposure or or that is mainly indirect in terms of volumes for your customers? Thank you.

Matteo Perna, CFO, Eurogroup Lamination (EGLA): Okay. So many questions. So let’s get started from China. On China, you’re right. So we started in the last quarter of twenty twenty four, the first production for a so called C OEM, so a Chinese OEM.

Just to let you know that, too, the total amount of revenues that we generated for the traction business, such customer represented less than 1%. And we do expect Chinese OEMs to represent approximately 4% in 2025 budget. On the order book side, China is representing approximately EUR 1,000,000,000 of the total 5,300,000,000.0 that we have in the order book. And on the other side, I have to say that over the pipeline, we have seen a decrease both in North America and in Europe. Whilst on the other side, I have to say that the evolution of the pipeline in China has been very strong over the last

Marco Guarduini, CEO, Eurogroup Lamination (EGLA): weeks. Ben,

Matteo Perna, CFO, Eurogroup Lamination (EGLA): there was as well a question on the tariff. And Marco, I don’t know if you want to add some color on this.

Marco Guarduini, CEO, Eurogroup Lamination (EGLA): Well, the tariff in North America are not impacting us directly, but are impacting directly the customer that is importing the material that is produced in Mexico in U. S. A. So this is totally on the customer side. And with regards

Matteo Perna, CFO, Eurogroup Lamination (EGLA): Yes. Maybe if we go back to China, that is as well one question on the condition that we have with the Chinese OEMs. But I have to say, that, in light of, you know, the discussion as well, the job that we have made from the support of the local team, we have been able so far to secure, condition which are basically in line, contrary to the condition that we have with Western OEMs. It’s important to consider and to let you know that in our plan, we are considering to to penetrate Chinese OEMs with an average selling price, which is slightly lower compared to what we are currently reporting towards Western OEMs. So it’s embedded in our plan.

And we do think that this is going away in order to penetrate the local market.

Marco Guarduini, CEO, Eurogroup Lamination (EGLA): With reference to the change in regulatory and as we discussed already in, I think, in the last call, of course, this kind of new situation is shifting from BEV

Giovanni Seldetti, Analyst: to

Marco Guarduini, CEO, Eurogroup Lamination (EGLA): BEV and FEV. So we see the penetration of the so called XEV that is increasing as I show in the data with a major portion than in the past considered from the full hybrid and the plug in hybrid. So these kind of segments will, of course, have a major weight than foreseen in the past.

Renato Gargiulo, Analyst: Okay. Thank you. If I may just a quick follow-up on one of the previous questions. Yes, we have seen, let’s say, a mixed outlook from carmakers, from Volkswagen, which has been a a bit more positive on a good start to the year and others less and we know about the weaker trend for Tesla. Can you do you have an indication about the potential sequential trend between the first half of the year and the second half sequentially?

Do you expect a different trend and an improvement over the year? Thank you.

Matteo Perna, CFO, Eurogroup Lamination (EGLA): Yeah. We do think that there is going to be an acceleration in the second part of the year.

Renato Gargiulo, Analyst: Okay. Perfect. Thank you. Very clear. Thank you.

Conference Moderator: Thank you, Mr. Gargiulo, for your questions. Next question comes from Mr. Giovanni Seldetti. Please, the floor to you.

Giovanni Seldetti, Analyst: Hello, everyone. Can you hear me?

Conference Moderator: Yes. Yes. Thank you.

Giovanni Seldetti, Analyst: Hello. Thanks for taking my question. A quick one maybe again on the guidance point to the 10% growth. You said before that the impact should be around 50,000,000 from M and A or 15,000,000 just to have a sense of how much is going to be organic and how much is going to be M and A. Then again, maybe a question on the 2N markets.

So how should we think about this 10% in the sense of what is the growth that we should think about, EVL and automotive or what is called now eMobility solution and industrial, what kind of growth should we think of organic? I mean, of course, should we think about the industrial segment? The other question is maybe on the order book that I can see that it came down slightly. I was wondering if here you can provide maybe a bit more color on if the Chinese order book is still going up with the, let’s just say, the negative delta being Europe or Western clients in general postponing or canceling some orders. The other one, the other question is, you said now that the average selling price in China with Chinese or Yem is a bit lower.

Is it that the production price there also a bit lower? Meaning that, is it like, should we think that going forward, the more you penetrate Chinese OEMs compared to Western OEMs, the more in a way dilutive is at the profitability level? Thanks.

Matteo Perna, CFO, Eurogroup Lamination (EGLA): Okay. So question number one, five-zero, so 50 is the part related to the Kumar consolidation. We said above 55. Ben, if you wanna, let’s say divide 2025 guidance by business unit, Just to let you know that we are considering all of the graph basically deriving from the industrial business to be achieved through the consolidation of Uber. And the rest in our guidance is expected to remain somewhat present.

Why is that, and this is as well including an additional approximately 5% price decrease expected in Europe in the first quarter? And then, auto would be the rest, to match the 10% CAGR that we are considering as a target. Ben, on order book reduction, you’re right. So compared to the latest data that we disclosed in November, China order book has increased. You see, the the general which has experienced the the biggest reduction compared to November, it’s USMCA.

I have to say that for USMCA, we have been very cautious in light of the current scenario, the current market dynamics. So we are applying overall 40% discount compared to the volumes which were part of our order book. Then on every selling price in China, I mean, so of course, this is as well related to the fact that we want to penetrate the local market versus the Chinese OEMs in order as well to secure any potential additional business coming from Chinese OEMs as well in Europe. And that’s one consideration. On the second consideration, it’s of course, we do think that through the execution of our local partnership, we will be able to maintain our margin.

This will increase frankly our margin in China going forward.

Giovanni Seldetti, Analyst: Okay. Thank you.

Conference Moderator: Thank you, Mr. Salvetti. Our next question today comes from Mr. Michele Baldelli. Please, the floor to you.

Michele Baldelli, Analyst: Hi. Good morning to everybody. I just wanted to analyze a little bit the guidance that you gave one year ago to the current results and to discuss what was negative compared to those ones. Because to me, it is mostly driven by the industrial division. But if you can comment a little bit about this, it could be useful.

Then still I referred to the slides one year ago disclosed that there were motor course that, and by the way, you reached a 3,800,000 core sets above the 3.6 from his last year. So my question is on financial year 2025. You said that you expected at that time 7,000,000 core sets. So in 2025, what we shall assume if we can have some color around the volumes expected for 2025? And lastly, on the industrial division for this year, you said that price declines should be only in Europe.

Just to clarify why only in Europe and not also in the other regions given that still costs for the time being until at least H1 probably would be down. And then if we can expect an improvement of the pricing in the second part of the year given that the steel pricing has rebounded strong only after the Trump administration tariffs debate? Thank you.

Matteo Perna, CFO, Eurogroup Lamination (EGLA): Okay. We wanna address the first part of the question.

Marco Guarduini, CEO, Eurogroup Lamination (EGLA): Of course, maybe just to say on the industrial for sure the industrial situation last year was, let’s say, not recovering in the second half of the year and we were considering at the beginning of the year a slight recover that did not realize in Europe. And with regards to the steel price, I of course, the steel reduction that we have seen in Europe in these first months is specifically to this region in term of our business and the impact that we can see generated by the tariff or the geopolitical discussion is, of course, all not clear yet. There are many things that are happening, but so far there is not a clear trend in order to say this is already clear. So we this month is in view of this, let’s say, changes that in the geopolitics discussion requires to wait what will be the final results for all the discussion. And this is for me the point.

Matteo Perna, CFO, Eurogroup Lamination (EGLA): Ben, there was this well one part to the number of motor courses. So, last year we sold approximately 3,800,000.0, of which the 1.8 was in Europe, and 1.2 in USMC and the rest in China. In light of the evolution of the targeted top line, we do think that in 2025, we will sell more than 5,500,000 motor cores.

Michele Baldelli, Analyst: Okay. Thank you very much. If I may just a follow-up on the adjustments that you do at a group level. Can we know specifically on the two divisions how much was the adjustments for each division?

Matteo Perna, CFO, Eurogroup Lamination (EGLA): Yes. For 2024, we said 5.7% of which, more than 4% for the industrial business given that the vast majority of, you know, the extraordinary cost related to M and A were part of the industrial division, whilst slightly more than 1,000,000 was the part related to the V and auto business. For 2025, we are as well considering a 5,000,000 adjustment, of which $3,000,000 approximately for EV and automotive and to for the industrial business.

Michele Baldelli, Analyst: So it’s included also in the guidance, these adjustments?

Giovanni Seldetti, Analyst: Yes.

Michele Baldelli, Analyst: Okay. Thank you.

Conference Moderator: Thank you very much, Mr. Baldelli. So thank you, everyone, for joining today. I will now hand back to the speakers for any final comments before bringing this presentation to a close. Please go ahead.

Marco Guarduini, CEO, Eurogroup Lamination (EGLA): Thank you very much to all of you for the interest and the questions. We have clearly reported the results and the performance of 2025 that we consider positive and strong. And we have as well highlighted the new the plan for the twenty twenty five-twenty twenty eight that is a robust framework with clear guidance and direction that will reinforce the AIGLA leader position in the market in electrification. So thank you to all of you and we remain available to do all the follow-up that are needed in order to give you the comfort that you need. Thank you again for all the questions and the participation.

Conference Moderator: Thank you. This presentation will now come to a close.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.