Earnings call transcript: Iveco Group Q1 2025 sees revenue decline and stock dip

Iveco Group NV reported its Q1 2025 earnings with consolidated net revenues of €3 billion, marking a 10% year-over-year decline. The company’s earnings per share met expectations at €0.31. However, the revenue fell short of the forecasted €3.7 billion, leading to a negative market reaction. The stock price fell 4.35% in pre-market trading, reflecting investor concerns over the revenue miss and broader market challenges. According to InvestingPro data, Iveco maintains strong liquidity with a current ratio of 6.42, indicating robust short-term financial health despite market headwinds.

Key Takeaways

• Iveco’s Q1 2025 revenue decreased by 10% year-over-year.
• The stock price dropped by 4.35% following the earnings announcement.
• Adjusted EBIT for industrial activities stood at €117 million, with a 4% margin.
• Strategic partnerships and innovations were highlighted, including a new battery management system.
• Market share in the LCV segment remained strong at 12.1%.

Company Performance

Iveco Group’s performance in Q1 2025 was marked by a significant decline in revenue compared to the previous year. The company faced headwinds in the European market, with production levels and dealer inventories being adjusted to align with current demand. Despite these challenges, Iveco maintained a strong order intake, particularly in the chassis cab segment. InvestingPro analysis reveals that Iveco trades at an attractive P/E ratio of -3.2, suggesting potential value opportunity for investors looking at the machinery sector. The company’s overall Financial Health Score stands at 2.26, rated as ’FAIR’ by InvestingPro analysts.

Financial Highlights

• Revenue: €3 billion, down 10% year-over-year.
• Earnings per share: €0.31, meeting expectations.
• Adjusted EBIT: €152 million, representing a 5% margin.
• Free cash flow absorption: €794 million.
• Available liquidity: €4.7 billion.

Earnings vs. Forecast

Iveco’s actual earnings per share met the forecast at €0.31. However, the company missed its revenue forecast of €3.7 billion, achieving only €3 billion. This represents a significant shortfall, indicating challenges in market demand and operational adjustments.

Market Reaction

Following the earnings release, Iveco’s stock price fell 4.35% in pre-market trading. The stock’s decline reflects investor disappointment with the revenue miss and concerns about the broader market environment. The stock’s performance is within its 52-week range but shows sensitivity to current market conditions.

Outlook & Guidance

Iveco maintained its full-year 2025 adjusted EBIT guidance between €980 million and €1.03 billion. The company expects industrial activities’ net revenues to remain flat, with a focus on market recovery in the second half of the year. Strategic initiatives include potential spin-offs in the defense business and continued partnerships to bolster its product portfolio. InvestingPro has identified several positive indicators for Iveco, including its position as a prominent player in the machinery industry and analysts’ predictions of profitability this year. Subscribers can access 6 additional ProTips and comprehensive analysis through the Pro Research Report, offering deeper insights into Iveco’s market position and growth potential.

Executive Commentary

CEO Olof Persson emphasized strategic partnerships and innovation: "We will continue to forge new strategic partnerships to strengthen our future." Persson also highlighted operational improvements: "We are now increasing the speed coming from Q1 into Q2."

Risks and Challenges

• European market contraction: Reduced demand in light commercial vehicles and trucks.
• Supply chain disruptions: Potential impact on production and delivery timelines.
• Currency fluctuations: Particularly with the U.S. Dollar in Argentina operations.
• Competitive pressures: Maintaining market share amid declining industry trends.
• Economic uncertainty: Global economic conditions affecting consumer and business confidence.

Q&A

During the earnings call, analysts focused on Iveco’s inventory management and market share strategies. Questions also addressed the potential separation of the defense business and expectations for production recovery. Executives confirmed low single-digit profitability in heavy-duty trucks and discussed strategic responses to market challenges.

Full transcript - Iveco Group NV (IVG) Q1 2025:

Conference Operator: Good day, ladies and gentlemen, and welcome to today’s Eveco Group twenty twenty five First Quarter Results Conference Call and Webcast. We would like to remind you that today’s conference call is being recorded. After the speakers’ remarks, there will be a question and answer session. At this time, I would like to turn the call over to Federico Donati, Head of Investor Relations. Please go ahead, sir.

Federico Donati, Head of Investor Relations, Iveco Group: Thank you, Razia, and good morning, everyone. I would like to welcome you to this webcast and conference call for the Ebeco Group’s first quarter financial results for the period ending thirty first March twenty twenty five. This call is being broadcast live on our website. It is copyrighted by Ebeco Group. I’m sure you appreciate that any other use recording or transmission of any portion of this broadcast without the concept of Iveco Group is not allowed.

Hosting today’s call are Iveco Group CEO, Olof Persson and our CFO, Anatan Ganelli. In their presentation, Olof and Anna will be using the material published on the Ebeco Group website earlier this morning. Additionally, please note that any forward looking statement we might make during today’s call are subject to the risks and uncertainties mentioned in the safe harbor statement included in the presentation material. Additional information relating to factors that could cause actual results 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 measure.

Additional information, including reconciliation to the most directly comparable IFRS financial measure, is included in the presentation material. Finally, let me please remind you that the transfer of ownership of the firefighting business unit to listed private equity holding company, Mutares, was closed and completed as planned on the 01/03/2025. ’1 off effects from the transaction are excluding from all the 2024 adjusted metrics. I will now turn the call over to our CEO, Olof.

Olof Persson, CEO, Iveco Group: Thanks, Federico, and let me add my own note of welcome to all of you joining our call today. As expected, the business context of the first quarter was marked by a lower industry demand levels across European truck segments. As such, we acted fast to protect and reaffirm our business perspective and full year guidance. I’m proud of the organization’s decisive response and long term focus. We made tough calls early.

We adjusted production levels and realigned inventories both within the company and throughout our dealer network. We also completed the phase out of previous generation models while completing the introduction of our new model year 2024 in light commercial vehicles. These actions had short term impacts on financials, but they were absolutely necessary, putting us in a solid position for the rest of the year. Throughout the truck sector, we had to face market softness. Our European production was down 32% year over year, which also reflected our transition to the new vehicle generation and preparations for a ramp up in demand that we expect later this year, coupled with progressive increased production.

These actions affected margins and free cash flow, but they were embedded within the full year planning and aligned with our overall strategy. Order intake in Europe and Latin America was strong for both light and heavy duty. Our book to bill ratio was well above one in Europe for the first time since first quarter of twenty twenty three. This came together with our proactive steps to adjust our production capacity and realign dealer inventory. We are now increasing our production level and are well positioned to capture every future opportunity.

Powertrain continued to operate in a tough market in general for both off and on road applications. Nevertheless, strict cost management and the execution of the group’s efficiency program produce a leaner cost base and lower breakeven point position the business for an agile response when the demand recovers. Bus and Defense segments continued to deliver strong results following their specific market cycles. They saw continuous margin improvements on a year over year basis backed by solid order books and favorable industry momentum. What’s equally important is that we didn’t pause our forward momentum.

We sealed two strategic partnerships in our truck business with Ford, AutoSun and Stellantis. In this second quarter, we have entered a joint venture to accelerate green mobility through gates and we secured a major contract with the Dutch Ministry of Defense. Finally, as you have already seen from the press release earlier this morning, following the detailed assessment announced on the 02/07/2025, the Board of Directors decided to proceed with the separation of the group’s defense business via spin off. This is expected to take place within 2025, subject to final approval by the Board and the shareholders of Evoqua Group and the required regulatory authorities. At the same time, Eveco Group has recently received preliminary expression of interest from potential strategic buyer for its defense business.

The Board has therefore mandated management to continue the preparation for the spin off while exploring such preliminary interest. In short, during the first quarter, we did what had to be done in a timely manner and with discipline, With strong order books, operational agility, a diversified business model and strategic partnership firmly in place, we laid strong foundations for future growth. Our full year guidance remains intact. Our liquidity position is solid, and we are confident that our actions in Q1 have laid the groundwork for a stronger second half and a successful year. If we then move to Slide five, let’s take a closer look at our truck business, summarizing the two partnerships we formed during the first quarter of twenty twenty five.

On the March 11, we signed a binding agreement with Ford AutoSan for the design and engineering of next generation cabin for our heavy duty trucks lineup. The joint development agreement is a contractual framework for co development of a new heavy duty truck cabin as well as common sourcing where applicable. Both companies will make and assemble the cabins at their own facilities, customizing specific styling design concepts and selling the products under their respective brands, four trucks and a vehicle. This solution enables compliance with the forthcoming EU Direct Vision standard and will result in significant savings investment, providing us also with a competitive advantage in terms of total cost of ownership. The focus will be on cabin comfort, safety, aerodynamics and modularity, and also on cost efficiency and the cabin will be prepared for all powertrains.

Then on March 14, we entered into a partnership with Stellantis for the commercialization in Europe of the two E VECO branded electric vans, of which a rendering is shown in the slide, which will be produced by Stellantis ProOne. This collaboration will make us the only company with a full lineup of electric vehicles in both the midsize and large van segments. The launch is scheduled for mid-twenty twenty six, and the partnership is based on a ten year agreement. These partnerships were not included in what we presented at our Capital Markets Day and will further solidify our position as a leader in the light duty truck segment while improving our position in heavy duty truck. Now with Slide six, I’ll explain more about the joint venture agreement between DLL and E Vehicle Group.

Gate was conceived as an innovative business model with a primary goal of supporting the energy transition for our customer. Gate facilitates access to green mobility, providing rental solutions for vans and trucks that are tailored to customers’ specific needs. The joint venture will continue to help customers build green fleets, strengthening activities that began in Italy in 2023 and that were extended to France and Germany in 2024. This strategic partnership is designed to boost the energy transition in Europe by amplifying access to low to zero emission commercial vehicles. Over time, the joint venture intends to offer similar solutions for low to zero emission vehicles for other brands beyond vehicle.

This new joint venture will provide Gate with the financial support it needs to accelerate its growth strategy and help it achieve its ambitious objectives more quickly. This is a significant advantage for Eveco Group as the funding will be supported by DLL, while the joint venture will manage the rental ecosystem. Moving then on to Slide seven, let’s take a look at the truck industry volumes and market shares. In the first quarter of twenty twenty five, European industry volumes experienced a decline versus the same period last year. Light commercial vehicles were down by 13% versus last year and medium and heavy trucks saw a decrease of 17% compared to the same period in 2024.

With regards to LCV, it ought to be mentioned that last year’s performance was inflated by a pre buy effect, making the year over year decline more pronounced. Despite the overall decline in volumes, our LCV market shares in the first quarter of twenty twenty five remained at a solid 12.1%. Within the Chassis Cab segment, we achieved almost onethree of the market share at 31.2%, up 1% versus last year, while at the upper end of the segment, our market share was 71.8%, up 7.5% versus the same period last year. Turning then to medium and heavy trucks. Our market share increased to 9.1% in the first quarter of twenty twenty five, up from 8.7% in Q1 twenty twenty four.

Within this category, our heavy truck market share rose to 8%, marking an improvement of 50 basis points year over year. These figures highlight our solid market shares coupled with our disciplined pricing strategy, one that has been maintained even in the challenging market environment. Moving on to Slide eight. Our Truck segment has shown a solid growth in order intake across segments, confirming strong momentum for our model year 2024 across all ranges with a book to bill ratio consistently above one. In the first quarter of twenty twenty five, the European order intake for light duty truck increased by 7% versus Q1 twenty twenty twenty four and was up 22 sequentially.

The book to bill ratio stood at 1.09, reflecting a 44 basis point improvement over last year. In South America, the order intake for light duty trucks tripled compared to Q1 twenty twenty four with a book to bill ratio of 1.51, up 75 basis points year over year. For medium and heavy duty trucks, the European order intake in the first quarter of twenty twenty five rose by 33% compared to Q1 twenty twenty four with a book to bill ratio of 1.17, marking a 47 basis point increase year over year. This growth confirms the strong momentum for our model year 2024 range. In South America, the order intake for medium and heavy duty trucks more than doubled compared to Q1 in 2024, with a book to bill ratio at 1.38, up 30 basis points year over year.

Then moving on to Slide 10, where you can see the main achievement of our bus business unit for Q1 twenty twenty five. In France, Two national procurement hubs catalogued 800 e vehicle bus units, including Crossway, Evadis and Minibus models. This allows local authorities, municipalities and operators to leverage an alternative procurement modality authorized by the government for these vehicles. They can simply place an order through one of these hubs, significantly streamlining the procurement process. On the April 14, the Crossway Low Entry Elek won the Bus Planner Innovation Award 2025 in Germany in the intercity category.

This award is a further testament to our ability to innovate and our commitment to excellence in the bus industry. In addition, we achieved a 2% market share increase in the electric city bus sub segment versus the same period last year, continuing the upward trajectory in this pivotal sub segment. Let’s move on to the next slide, number 11, with the bus industry volumes and market shares. Our leadership in the intercity segment in Europe was further boosted during the first quarter twenty twenty five, increasing by 4.9 percentage points compared to Q1 twenty twenty four to a very solid market share of 55.8%. This strong position was supported by the introduction of electric versions.

In the European city bus segment, we maintained a solid 12.9 market share during Q1 twenty twenty five. We anticipate an acceleration of deliveries in the second half of twenty twenty five in line with the seasonality of tenders. Our growth in the electric seat bus sub segment was particularly encouraging, registering 11.8% in market share at the end of Q1 twenty twenty five. And in Q1 twenty twenty five, eveco bus maintained its number position in the European market with a 21.8% market share. This reflects our ongoing efforts to enhance our market presence and deliver high quality innovative products to our customers.

Moving on to Slide 12, I’ll focus on the strong book to bill ratio in our bus business, which proves significant visibility. In the first quarter of twenty twenty five, our bus order intake increased by 15% compared to Q1 twenty twenty four, while deliveries remained largely flat. Our book to bill ratio was 1.41 at the end of Q1 twenty twenty five, up 19 basis points year over year. This ratio is a key indicator of business health as it provides good visibility into our likely future revenue streams. We have increased the speed of execution of our order book, particularly for electric city buses by introducing a second shift at our No And I plant as of April.

This move allows us to meet the growing demand for sustainable transport solutions. Moving to Slide 14, we turn our attention to the main achievements of powertrain business in Q1 twenty twenty five. On the January 24, FPT’s Industrials N67 natural gas engine powered the Sustainable Truck of the Year award winner, the VECO Eurocargo CNG. The N67 engine makes the EuroCargo CNG the only truck in Europe to offer natural gas across the full range. It is compatible with both CNG and biomethane, the latter enabling additional emission reductions.

On the February 10, we marked the entry of our e powertrain portfolio into the marine sector with the launch of EBS37 EVO modular battery pack. This product offers impressive energy density, while at the same time reducing battery weight. It can be installed to power both full electric and hybrid applications. And finally, on the March 31, our latest battery management system, the EB5 achieved the top level of industry ISO standard for certification. Designed entirely in house, this battery management system is currently in volume production for the model year ’24 eVehicle eDaily as well as for a number of other customers’ vehicles.

These milestones underscore our commitment to innovation and sustainability driving us forward in the powertrain business. Moving to Slide 15. The continued slowdown in demand driven by lower total industry volumes and ongoing customer destocking actions has had a stronger impact in off road segments. Engine volumes were down 22% in the first quarter compared to Q1 twenty twenty four, reflecting the challenging industry environment. However, the execution of our efficiency program and additional cost containment have enabled us to adapt production to market demand and thereby strengthening our resilience.

Powertrain’s new leaner cost structure will also position the business unit well to capture expected market recovery we’ll see in the upcoming quarters. Moving to Slide 17, let’s look at the Q1 development with our Defense Business On the March 31, we signed a strategic alliance between If Vehicle Defense Vehicles and Metlen, a Greek mining and metal specialist formalized through a memorandum of understanding. This collaboration aims to modernize the Hellenic Army’s military truck fleet, including renewing the existing fleet of protected and unprotected military trucks for the three Hellenic Armed Forces branches. This partnership reinforces IDV’s position as leading European manufacturer of military trucks and combat vehicles and METLAN’s expertise in complex metal constructions and high-tech defense programs. Also in Europe, IDV was awarded a tender by the Dutch Ministry of Defense for supply and logistics support of seven eighty five military logistic vehicles.

The deal was finalized this month and the vehicles will be delivered between 2027 and 2029. The seven eighty five military trucks will be delivered in three version, semi trailer tractor, logistic commonality across different platforms and among many other EU member states. The award includes option for an additional seven eighty five vehicles and integrated logistics support over a minimum period of fifteen years. This new award reaffirms the strong partnership between IDV and the Dutch Ministry of Defense following the contract for the supply of twelve eighty three multi core multi role tactical vehicles with deliveries started in late twenty twenty three. On Slide 18, we highlight the solid foundation of our defense business.

In the current environment, we are ramping up production to benefit from industrial efficiencies. With the rearmed euro plan, several governments are considering the possibility of boosting existing programs with additional funds to avoid a delay that opening new processes would involve. Our long term strategy, focus on strong internationalization and fostering client loyalty through sizable multiyear contracts. This approach not only lowers risk and provides long term revenue reinsurance, it also offers the prospect of capturing the upside of any increase in defense spending. Next slide is for the communication made this morning about defense.

And following the detailed assessment announced on the 02/07/2025, the Board of Directors decided to proceed with the separation of the group’s defense business via spin off. This is expected to take place within 2025, subject to final approval by the Board and the shareholders of Eveco Group and the required regulatory authorities. At the same time, Eveco Group has recently received preliminary expressions of interest from potential strategic buyers for its defense business. The board has therefore mandated the management to continue the preparation for the spin off while exploring such preliminary interest. Slide 21 takes us to the electric vehicle portfolio quarterly performance.

The ELCV segment has maintained a good level of performance despite softening in market demand. The E Bus segment boasts a strong order book, which is now full up to the second quarter of twenty twenty six. We aim to address this with ramping up of deliveries in the forthcoming quarters. We saw a slight slowdown in the E Axle and Battery segment, primarily due to market demand. Our extensive electrical product portfolio and in house expertise put us in a unique position to be able to deliver a wide range of propulsion solutions to meet our customers’ needs.

With that, I will hand the call over to Anna.

Anna Ganelli, CFO, Iveco Group: Thank you, Olof. Good morning, everyone. Let’s now take a look at the highlights of our first quarter twenty twenty five financial results on Slide 23. Q1 20 20 five closed with consolidated net revenues slightly in excess of €3,000,000,000 and net revenues of industrial activities of €2,960,000,000 both contracting by approximately 10% year over year, mainly due to lower volumes in Europe for truck and powertrain and the negative FX translation effect mainly in Brazil, only partially offset by a positive year over year price realization. Financial Services net revenues totaled €114,000,000 in the first quarter, down 21.4% compared to prior year.

Group consolidated adjusted EBIT closed at €152,000,000 with a 5% margin and the adjusted EBIT of industrial activities closed at €117,000,000 with a 4% margin, both contracting versus Q1 twenty twenty four. Net financial expenses amounted to €39,000,000 in this quarter, compared to €21,000,000 in Q1 twenty twenty four, which had been positively affected by hyperinflation accounting impact in Argentina. Please note that, in order to minimize going forward the volatility of our results in the country in consequence of this specific accounting principle, we have decided to establish, starting from 01/01/2025, the U. S. Dollar as functional currency, also for our local Trucks legal entity, previously reporting in Argentinian pesos.

As a result, from this quarter onwards, hyperinflation accounting will no longer be applicable in Argentina. Reported income tax expenses were €12,000,000 in Q1 twenty twenty five, with an adjusted effective tax rate of 26, resulting in a consolidated adjusted net income of €84,000,000 with an adjusted diluted EPS of €31 The adjusted net income attributable to Iveco Group closed in line with the consolidated figure, both down €72,000,000 versus last year. Moving to our free cash flow performance in the quarter Q1 twenty twenty five closed with a €794,000,000 cash flow absorption, mainly driven by the impact of lower year over year sales volumes, which stressed our usual working capital seasonality. Finally, available liquidity, including undrawn committed credit lines, remained solid at €4,700,000,000 on March 31, including €1,900,000,000 of undrawn committed facilities. Let’s now focus on net revenues of industrial activities on slide 24.

As you can see from the chart on the right hand side of this slide, all regions contracted compared to prior year, excluding South America, which was up 32%, confirming this region’s positive exit speed from 2024 into 2025. Looking at our net revenues evolution by business unit, Bus and Defense were solidly up versus prior year, at around plus 15 and plus 31% respectively, while truck and powertrain contracted versus Q1 twenty twenty four by -sixteen percent and -nineteen percent respectively. More in detail, truck net revenues totaled just short of €2,000,000,000 in this quarter, as a result of the largely expected volumes contraction in Europe in the first month of twenty twenty five, and despite the continuously positive price realization in the region, however fully offset by an adverse year over year foreign exchange rate trend in Brazil. Bus net revenues were up, as said, almost 16% in Q1 twenty twenty five, reaching €478,000,000 thanks to higher volumes, a better mix resulting from the continuous ramp up of electric vehicles production and deliveries, and positive pricing. Net revenues of Defense continued to grow substantially in the period, posting a plus 31% versus prior year, and reaching two seventy eight million euros driven by higher volumes and a positive product mix effect.

Finally, powertrain net revenues were down 19% year over year to €784,000,000 mainly as a result of the continuously challenging off road industry performance, with sales to external customers accounting for 42% in this quarter. Turning to slide 25, I’ll now briefly comment on the main drivers underlying the year over year performance in our adjusted EBIT margin of Industrial Activities. Volume and mix contributed negatively for €170,000,000 in the period, mainly driven, as said, by lower volumes in Europe for our truck and powertrain business units, with lower deliveries of light duty trucks, negatively affecting the overall truck profitability. As previously mentioned by Olof, almost one third of the total negative volume and mix impact in this quarter resulted from a less efficient fixed cost absorption, as a consequence of significantly lower production levels compared to prior year, particularly in truck. Net pricing, on the other hand, continued to be positive, confirming our strong commitment to maintaining a diligent pricing discipline also in this market environment.

Finally, the year over year improvement in SG and A costs of €19,000,000 shows the effectiveness of the implementation of the efficiency actions announced by Olof during our full year 2024 earnings call. Let’s now take a look at each Industrial Business Unit adjusted EBIT margin performance in the quarter on slide 26. Truck closed with a 3% adjusted EBIT margin as a result, as said, of the largely expected volumes contraction in Europe, combined with a negative mix linked to lower light duty truck deliveries, only partially compensated by solid cost containment actions. Pricing in Europe remained positive in the period, net of the marketing activities required to support the now completed full introduction in the market of the model year 2024 product range. BUS Q1 twenty twenty five adjusted EBIT margin closed at 5.4%, up 30 basis points versus prior year, thanks to higher volumes, a better mix resulted from the continuous ramp up of electric vehicles production and deliveries and positive pricing.

Defense adjusted EBIT margin posted a two sixty basis point uplift versus prior year, reaching almost 13% through higher volumes and a positive aftermarket contribution. Finally, powertrain adjusted EBIT margin closed at 5.5% in the first quarter, down 70 basis points compared to prior year, due to the severe volume drop in the period, partially compensated by continuous cost management actions. Let’s now have a look at the performance of our Financial Services business unit during the quarter on slide 27. Q1 20 20 five adjusted EBIT closed at EUR35 million, with a managed portfolio, including unconsolidated JVs, of EUR7.9 billion at the end of the period, of which retail accounted for 43% and wholesale 57%, substantially flat compared to thirty first of March twenty twenty four. Important to be highlighted here is that the slight increase of 20 basis points in stock of receivables past due by more than thirty days, as a percentage of the overall on book portfolio, was entirely a result of a lower wholesale portfolio.

Return on assets remained solid at 2.1%. Moving to our free cash flow and net industrial cash evolution on Slide 28. First of all, as you have probably already seen in the press release, starting from this quarter, we have decided to further improve and simplify the representation of our free cash flow buildup. I sincerely hope you will appreciate this revised, more self explanatory breakdown. In any case, Frederico and our Investor Relations team are always available to provide you with a reconciliation versus the previous representation in case needed.

Q1 twenty twenty five free cash flow absorption was €794,000,000 largely the result of lower year over year production and sales volumes, which further stressed our usual working capital seasonality. Adjusted EBITDA also contracted versus prior year by €56,000,000 while financial charges and taxes contributed positively in the period for €23,000,000 Investments totaled €129,000,000 in Q1 twenty twenty five, substantially in line with last year. Moving now to my last slide for today, Page 29. Available liquidity as of 03/31/2025 stood solidly at €4,700,000,000 with €2,800,000,000 in cash and cash equivalents and €1,900,000,000 of undrawn committed facilities. Looking at our debt maturity profile, the majority of our debt will be maturing from 2027 onwards, and our cash and cash equivalent levels, which total €2,500,000,000 as of 03/31/2025, continue to more than cover all the cash maturities foreseen in the coming years.

Thank you. I will now turn the call back to Olo for his final remarks.

Olof Persson, CEO, Iveco Group: Thank you very much, Anna. Let’s conclude this presentation by looking both the outlook for the industry and our own financial guidance. I will also provide some key takeaways messages from what you have heard today. In terms of total industry outlook for current year, we are reaffirming the preliminary industry outlook that we provided back in February. For light duty track, we are forecasting an industry that ranges between flat to down 5% versus full year 2024.

And with our current visibility, we anticipate it to be skewed more to the lower end of the range. For medium duty truck, we expect to be slightly down at about 30,000 units and for heavy duty truck between two and eighty thousand and two hundred and ninety thousand units. In South America, we expect the industry to grow by 10% in light duty truck and to be up five percent in medium and heavy duty truck. In the rest of the world, both sub segments are forecasted to be flat or slightly down. And finally, we expect demand for buses to remain flat across the regions.

The next slide has our full year 2025 financial guidance, which, as per our previous guidance, does not reflect any impact from the potential spin off we announced for our defense business. Our full year 2025 preliminary financial guidance is based on the current industry outlook and our solid order backlogs together with consistent pricing discipline and a strong focus on cost management. As a result, we are confirming at the consolidated level group adjusted EBIT at between $980,000,000 and $1,030,000,000 euros And for the industrial activities, net revenues, including currency effects, to be flat year over year, adjusted EBIT from industrial activities at between EUR $850,000,000 and 900,000,000 and industrial free cash flow to be between EUR 400,000,000 and €450,000,000 We will continue to sensibly manage cost and our production capacity for trucks in Europe, a market which we expect to progressively increase on a year over year basis in the coming quarters. And now on Slide 33, let me provide the usual takeaway messages from today’s earnings call. First, in this quarter, we reset our manufacturing activities and inventories and completed the light commercial vehicle phase out phase in of model year 2024 throughout our dealer network.

This plays the company at the right level and position us well for an expected increase in demand during the second half of the year. Secondly, with the effort we made in the first quarter, combined with what’s already accomplished in the latter part of last year, we feel comfortable that both our powertrain and truck business units are well positioned to leverage on an expected market recovery that we believe will begin during the second half of the year, coupled with a progressive increase in production levels. We also project that our bus and defense businesses will continue to keep the momentum. Thirdly, we will continue boosting Eveco Group’s product position, maintaining our focus on excellence in quality and also strengthening our brand position. Fourth, we are proceeding at pace with the acceleration of our efficiency program and reprioritization of some of our investments, and we fully confirm the expected EUR150 million in comprehensive savings, CapEx and OpEx for the current year.

In conclusion, we will continue to forge new strategic partnerships to strengthen our future. Eveco Group’s partnership strategy has been and will continue to be pivotal for the continued achievement for of our long term ambitions. The partnership recently signed by our truck business unit with Stellantis ProOne will offer a unique electric vehicle product lineup, covering the entire light duty truck segment between two point five and seven point four nine tons. And the partnership with Ford AutoSan to design and engineer the next generation of cabins for heavy duty trucks will result not only in significant savings in investment, but will also produce a new top line modular cabin family with state of the art technology, far superior to the cabins previously planned. The agreement signed between Gate and DLL is a pivotal milestone in our strategy that will enable Gate to move more efficiently and faster in helping customers gain access to green mobility.

Under DLL guardianship, the service will be reinforced and expanded in key European markets. Finally, the contract of order to our defense business unit by the Dutch Ministry of Defense further strengthened an already solid order book and underpins the foundations for years to come. Before opening up for questions, I’d like to conclude by saying that the first quarter of twenty twenty five, we achieved a number of accomplishments, preparing us for the remaining part of the year. And rest assured that we will continue to remain focused on our priorities and or our commitment to always go beyond. Thank you.

Federico Donati, Head of Investor Relations, Iveco Group: That concludes our prepared remarks, and we can now open it up for questions. To be mindful of the time, we kindly ask that you hold off on any detailed modeling and accounting question on which you can follow-up directly with me and the Investor Relations team after the call. Tasia, please go ahead.

Conference Operator: Thank you. We are now going to proceed with our first question. The first questions come from the line of Daniela Costa from Goldman Sachs. Please ask your question.

Daniela Costa, Analyst, Goldman Sachs: Hi, good morning. Thank you for taking my questions. I want to touch on three topics, but the questions are fairly quick. The first topic is just on now that you’re basically done with the model transition and the phasing out of the old models, can you maybe clarify how much has been the headwind from that in the quarter? And shall we see sort of a recovery from that pretty quickly on?

That’s the first one. Second one was just can you give us the backlog in defense where it stands right now? And just an update on that. And then the third question, you mentioned that you’re looking in parallel at the spin and some of these preliminary interest that you have got. If eventually you were to end up with a sale, how should we think about what you would do with the proceeds from that?

What are the priorities for capital allocation post such an event? Thank you.

Olof Persson, CEO, Iveco Group: Okay. Thank you. Thank you. I think when it comes to the model year 2024 and the introduction, as you know, we concluded that in the heavy duty segment basically by end of last year, and we were clearly sort of communicating to you and to the market that we still had some job done during Q1 in the light duty. Now this is done.

We did this time. And we did it in a rather sort of contracting market situation, which meant that we had to do both the sort of transformation or transfer of the ModiA ’22 and ’24, at the same time, making sure we’re managing the inventory and our own inventories. That is done now. It’s behind us. We’re having a good level of inventory both by sort of internally and by the dealers, and we are now prepared to go ahead.

So that is behind us. On the model year 2024, just as I think was mentioned by Anna as well on the pricing and the pricing discipline, we have been through the this rather challenging market condition, very disciplined in the market. We have and I have said that a number of times during the Q4 and Q1, a number of marketing activities in order to make sure that we get the vehicles out. That is also behind us now. So basically, we are sort of have gone through that transformation with the model year 2024 totally now.

And now it’s just a matter of continue to develop this, which we believe is a very, very good product into the market going forward.

Anna Ganelli, CFO, Iveco Group: Hi, Daniela, it’s Anna here. So on the I think the second question, if I got correctly, was the defense backlog, right?

Daniela Costa, Analyst, Goldman Sachs: Exactly.

Anna Ganelli, CFO, Iveco Group: Yes. So it’s right now, well, let’s say, right now, as of end of twenty twenty four, it was well above EUR 4,000,000,000, and we have a target to further increase that backlog going into 2025.

Daniela Costa, Analyst, Goldman Sachs: Got it. Thank you. Sorry, on the model year, you have also commented the production increase from here year on year. Have you said how much of the production increase year on year and quarter on quarter perhaps now that you’re fully done with the launch?

Olof Persson, CEO, Iveco Group: No. So basically, what we have said and we do that all the time, we are very, very conscious about the production speed in order to meet the market requirements. And sequentially, we are now increasing the speed coming from the Q1 into Q2. And then we have the visibility we have in terms of order backlog order intake, order backlog and interest out of the market. So we will adapt the production going forward.

But as we said, I mean, view into the second half of the year is that we’re going to see a sequential pickup of the market.

Daniela Costa, Analyst, Goldman Sachs: Got it. Thank you very much.

Anna Ganelli, CFO, Iveco Group: And then lastly, on the defense, let’s say, processes. So as you’ve seen in the press release, right now, as a result of the assessment we launched in February of this year, the board has now formally decided to proceed with the separation of defense via PIN. So what we will now do is to proceed with all activities required to progress this process, including the finalization of all financial, legal, tax and social aspects. Then obviously, recently we do have received several preliminary expressions of interest from various strategic players. As you can understand, we cannot disclose values nor any other information in relation to this proposal at this point, so once we have progressed on both activities, we will obviously promptly inform you, including any potential impact on our financials, and eventually on the related proceeds and use of those proceeds.

Daniela Costa, Analyst, Goldman Sachs: Okay, thank you very much.

: Thank you.

Conference Operator: We are now going to proceed with the next question. And the questions come from the line of Monica Bosio from Intesa Sanpaolo. Please go ahead.

Monica Bosio, Analyst, Intesa Sanpaolo: Yes, good morning and thanks for taking my questions. The first one is the other trend in the EV Beauty in Europe. The market share gains is encouraging. And should we expect over the next month further gain in market share? Or do you see as more likely consolidation of the 9% share for the full year?

That’s my first question. The second one is still on the duty. I remind you that at the end of twenty twenty four, Anna said that the margins for heavy duty were in the low single digit area. Can you give us an indication for the first quarter? And then my last question is on the defense business.

If I’m not wrong, the value of the contract with the Dutch government has not been announced, but I’m expecting something in the region of 400,000,000. Am I right? Just a flavor from you. And should we expect for this contract margins in line with the division or maybe something better given that there is also the maintenance operations within? Thank you very much.

Olof Persson, CEO, Iveco Group: Thank you. On the market share heavy duty in Europe, we are, of course, pleased to see that we are gaining market shares coming now with the model year ’24 and the acceptance of the vehicle by our customer both in terms of the fuel efficiency, the TCO, the drivability, the comfort and all that. Now going forward, market shares are very tricky. We are, I mean, fully committed. We have a product that we believe is up there with absolute best.

We have a good pricing discipline. We are pushing forward with all the different sales activity. What that will result in terms of market share, we will see. But rest assured that, I mean, we feel very comfortable and comfortable with actually now pushing forward since we have done the introduction. So good work there, I think, and looking forward to see how this develop in the forward.

I leave the second question to you, Anna. Yes.

Anna Ganelli, CFO, Iveco Group: So on heavy duty profitability, it’s still also in Q1 around the low single digit arena, I would say, Monica, hello there. So I would stay in line with what I told you end of last year. On the IGV contract, well, we cannot comment unfortunately anything more than what was in the press release, so I cannot help you on that. I’m sorry about that.

Monica Bosio, Analyst, Intesa Sanpaolo: Okay, I understand. Okay, thank you. Just a follow-up on the efficiency measures, Can I imagine that the first quarter is not yet factoring in any efficiency measures? And when should we expect a more visible impact on from your EUR 150,000,000 program for this year?

Anna Ganelli, CFO, Iveco Group: Actually it is, then obviously as we said also when we announced it, it was more back ended, so you will see then gradually this implementation progress in the coming quarters. But let’s say the first actions are already there, because we obviously implemented them starting from the beginning of the year, and we are absolutely very well on track on this implementation and we are very happy with how it’s proceeding. So definitely, we’ll see more coming in the next quarters, but something is already there.

Monica Bosio, Analyst, Intesa Sanpaolo: Okay, got it. Thank you, Anna. Thank you. Thank you, Olof.

Anna Ganelli, CFO, Iveco Group: Thank you. We

Conference Operator: are now going to proceed with our next question. And the questions come from the line of Miguel Borrega from BNP Paribas. I think that question has just been withdrawn. We are now going to proceed with our next question. The next questions come from the line of Nikolay Kampf from Deutsche Bank.

Please go ahead.

Nikolay Kampf, Analyst, Deutsche Bank: Yes, good morning. It’s Nikolay from Deutsche Bank. Thank you for taking my question. Two, if I may. The first one would be on your guidance, which looks very back end loaded as of now.

Given that book to bill is back above one for almost all segments, would you see that Q2 will already be a material improvement? And my second one, could you just highlight the length of your order book for light commercial vehicles currently?

Anna Ganelli, CFO, Iveco Group: Yes. So on the guidance, as we said when we gave you the guidance, hi, Nicolas, by the way, in the beginning of the year, we So What happened? Oh, sorry. No. I thought the line was broken up.

Can you hear me well, Nicolas?

Nikolay Kampf, Analyst, Deutsche Bank: Yes, I can still hear you.

Anna Ganelli, CFO, Iveco Group: Sorry, sorry. No, as I was saying, when we gave the guidance beginning of the year, we said, obviously, we were expecting, let’s say, more softer H1 and then a stronger H2, exactly the reverse of what occurred in 2024. So I can say a material improvement in Q2, but I would say a gradual improvement for sure. Basically, ’8 would be definitely a stronger semester than than the first.

Miguel Borrega, Analyst, BNP Paribas: This was last year.

Anna Ganelli, CFO, Iveco Group: There’s a blank order book.

Olof Persson, CEO, Iveco Group: Yeah. The the the and I and I find the spelling of correction. It was the LCV you’re talking about. Right? The light commercial vehicle.

Nikolay Kampf, Analyst, Deutsche Bank: Yeah.

Olof Persson, CEO, Iveco Group: Yeah. So we’re talking around seven weeks at the March was the order book that helps. It gave us pretty good visibility.

Nikolay Kampf, Analyst, Deutsche Bank: Got it. Thank you.

: Thank you.

Conference Operator: We are now going to proceed with our next question. And the questions come from the line of Miguel Boriga from BNP Paribas. Please ask your question.

Miguel Borrega, Analyst, BNP Paribas: Hi, good morning everyone. Thanks for taking my questions. I’ve got three and we’ll ask one at a time. So first on LCV, orders are now beginning to inflect. How fast will that translate it will be translated into growth of deliveries?

I’m wondering because obviously you need a higher margin over the next nine months relative to last year to meet the full year guidance. And it seems that the growth mix will still be geared towards medium and heavy duty because orders have begun to inflect faster. So your margin will still be dragged overall in trucks. So how do you think the mix will evolve throughout the year and the light duty versus medium duty mix?

Olof Persson, CEO, Iveco Group: Well, I mean, without going into too much of the details, I mean, when we do and we do confirm our guidance, of course, the mix situation and the market situation is an integrated and very important part of that when we confirm the guidance and thereby also looking at the mix in terms of profitability. And it’s not only the heavy duty LCV, it’s also the mix within the regions, It’s the mix within the customer segments. So it is a pretty sort of delicate and rather detailed analysis you have to do to get it all together. So that’s sort of the overall. But as I said, I mean, we are looking at a guidance for the light commercial vehicles.

Start to see sequential, the order intake is picking up, right? We start to see also that small rental fleet coming back to the market. And we have to remember that we have had a pre buy effect from Q1 and Q2 last year now going on for almost a year. And that means that over time here, of course, the market will come back into buying new vehicles again having sort of been a little bit on the low side for a couple of quarters. So that is what we see.

And then the mix that we see forward is confirming our guidance.

Miguel Borrega, Analyst, BNP Paribas: Thank you. And then on the European market share in LCV, twelve percent this quarter. I understand the loss of share the last couple of quarters because of the washout of the previous model year. But where is the ambition? Is it to recover back to 14%?

Or is there a higher number that you look to achieve?

Olof Persson, CEO, Iveco Group: Well, let’s put it this way. Mean, we are on the heavy segment, as you can see. I mean, we’re very well represented there. And I think we just need to really confirm and making sure that we stay where we are on that one. On the panel van side, but also the cabover on the lower segment, I think with the model year 2024 improvements that we have done and the new functionality, drivability, etcetera, etcetera, I definitely think that we have a good opportunity to come in and sort of get market shares, right?

That is what we want to do. Exactly to say how that will pan out, as with the previous question on the heavy duty side, I think we have a good position to do that. We have a very, very strong market, and we need to continue to do that. If it’s going to be 14% or whatever, I don’t want to give guidance on that. But I feel very comfortable in the product lineup we have, not only in LCV and in the heavy duty.

It’s been an enormous work by the organization to get where we are now. A lot of money spent, a lot of marketing being done. And now we’re there, and now is the time to start to reap the effect of it. And we’re going to do that step by step over the coming quarters and the coming years.

Miguel Borrega, Analyst, BNP Paribas: Thank you. And then lastly, I wanted to understand the medium and heavy duty profitability overall. You said slightly profitable, but how do margins in Latin America compare to Europe? I ask because if I look at your order intake over the last twelve months, the number of units are not too different between LATAM and Europe. So just wondering how that has impacted your margins in medium and heavy duty overall.

Thank you very much.

Anna Ganelli, CFO, Iveco Group: So the medium and heavy duty profitability, as we said several times, has been low single digit. And I think we said that repeatedly also in Q1, we are not much far from that area. In terms of profitability between Europe and Latin America, First of all, we don’t provide this kind of detail, but I wouldn’t speculate on the major difference between the two regions, to be honest. Hello, Miguel? Are you still there?

Miguel Borrega, Analyst, BNP Paribas: Thank you. That was my last question. Thank you very much.

Anna Ganelli, CFO, Iveco Group: Okay. Sorry. Okay.

: Thank you. Thank you.

Conference Operator: We are now going to proceed with our next question. And the questions come from the line of Akshat Kakar from JPMorgan. Please go ahead.

Akshat Kakar, Analyst, JPMorgan: Good morning, Ulaf. Good morning, Ana. Akshat from JPMorgan. I have three questions, please. The first one on tariffs.

Could you talk about the impact on the business, if it has impacted you in any way in terms of production costs or supply chain disruption? And going forward, if you expect any indirect impact on the FPT business from the engines that you export out of Europe into The U. S, please? The second question is on powertrain. You have talked about an upcoming market recovery.

Could you just give us more insights on the volume offtake trends that you’re seeing from your off road customers specifically and whether you expect volume here to turn positive for the rest of the year? And the last one is again on powertrain. Is it possible for you to give us some more details in terms of the P and L contribution of e powertrain products to this business, probably in terms of revenues and profit contribution? And what are the annual level of investments that are going towards this part, please? Thank you.

Olof Persson, CEO, Iveco Group: So let me start with the last one and we work out so backwards, if that’s okay. When it comes to the as you can see on the volumes here, right, they are increasing, but they are still very small volumes. And I see the whole electrification product portfolio as an investment for the future. So basically, we now position ourselves from a technology performance point of view, making sure that we have a very competitive and good setup in order to take care of the volumes that we believe will come over the next years. I mean, we see it in city buses already.

There is a trend definitely that’s going to come in the van and the lower end of it. And but the profit contribution, I see it more, to be honest, right now as being an investment for the future. And I’m really proud where we sit because we have all the strings of the guitar to play both on the axle side, on the battery pack side and of course also on the total vehicle side, including as I was saying before with an in house battery management system. So we can really provide that when the market picks up. But right now, it’s small markets.

It’s something that we do more of an investment. And I don’t think we separate how much investment we are putting in there. But we’re doing that very efficiently as we do with all our investments. The first one on the tariffs, I can say that it is small very small from the tariffs with the situation that we do have. So not even

Anna Ganelli, CFO, Iveco Group: mentioned wouldn’t say material

Olof Persson, CEO, Iveco Group: Not material

Nikolay Kampf, Analyst, Deutsche Bank: at all. Not

Anna Ganelli, CFO, Iveco Group: really of today, then.

Olof Persson, CEO, Iveco Group: As of today. We cannot talk about the future in that respect. As of today, yes. And then you talked about the uptake in orders coming down on the off road. I mean, this is something we, of course, discussing with our external customers to see how this will develop over the years, and that basically lays the ground for the forecast and the progression of the improved sort of an increased volumes.

We should remember that the powertrain business has been suppressed or should I say really down for quite some quarters now with big year over year declines, so also in this quarter. So at some point in time, the destocking comes to an end. At some point in time, we start to see the volumes coming up. And again, we are well positioned with all the breadth of the external customers that we have. And of course, plus our own the vehicle growth plan for coming into the second half of the year.

Akshat Kakar, Analyst, JPMorgan: Thank you for the details.

Conference Operator: We are now going to take one final question. And the last questions come from the line of Martino D’Ambrodji from Equita. Please ask your question.

Federico Donati, Head of Investor Relations, Iveco Group0: Thank you. Good morning, everybody. The first is on the defense. Just to have an idea, I don’t know if you are willing to provide it, but what is the portion of free cash flow attributable to the defense for this year? Or if not for this year, just to have a rough idea, what is the free cash flow normalized?

What was in the past few years? And the second is on the spin off or divestitures. So what will you drive your decision? Is it just a matter of valuation? Are you considering to stay with a minority stake in case of divestiture?

I don’t know if you can elaborate on this. Thank you.

Anna Ganelli, CFO, Iveco Group: Hi, Martino. Ciao. I will try to I’m not sure if you will be satisfied by the answer, but I’ll try to answer. So on the free cash flow breakdown by business unit, as you can understand, we cannot share the defense cash flow contribution, not because we don’t want share the defense one specifically, but because otherwise, the next question would be what about the others? And we, as you know, are disclosing profitability and revenues, but right now, we’re not disclosing cash flow.

So we will have to be patient on this. Similarly, on the second one, so the Board this morning approved the separation of the defense via spin, so we will progress on that stream and still we have to continue with all the activities for this process. As I said earlier also to Daniela, we have to finalize still financial aspects. Then, obviously, in parallel, since we as we said also earlier, we did receive the premium expressions of interest from various strategic players, we obviously want and need to pursue those. Again, we cannot disclose neither names nor values at this point, so it’s difficult to give you an answer, a precise answer to your question right now.

But as said, we will definitely inform you and keep you updated in case of developments as soon as we are ready to do that.

Federico Donati, Head of Investor Relations, Iveco Group0: Okay, Anna. Thank you. And the follow-up is on the for all of, I suppose, once the military business is spun off or divested, Would you be happy to find a business combination for Iveco?

Olof Persson, CEO, Iveco Group: Issue we are focusing on what the Board gave us the task to do, now looking and preparing for a spin off at the same time investigating and looking at the preliminary interest we have received and that is the full focus now. That’s what going forward, nobody knows. We are fully focused on our business, what we want to do now. And that’s basically all I can say on that question. Okay.

Thank you.

: Thank you. Thank you.

Conference Operator: This concludes the question and answer session. I would now like to turn the call back to Federico Donati for any additional or closing remarks.

Federico Donati, Head of Investor Relations, Iveco Group: Thank you very much, everyone, connected, and have a nice day. Thank you.

: Thank you. Thank you.

Conference Operator: This concludes today’s conference call. Thank you all for your participation. Ladies and gentlemen, you may now disconnect.

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