Earnings call transcript: Iveco Group Q2 2025 misses EPS, revenue beats

Iveco Group NV reported its Q2 2025 earnings, revealing a mixed performance with revenue surpassing expectations while earnings per share (EPS) fell short. The company’s revenue reached €3.8 billion, exceeding the forecast of €3.52 billion, but EPS came in at €0.39, missing the projected €0.4472. Following the announcement, Iveco’s stock fell 4.47% in after-hours trading, reflecting investor concerns over the earnings shortfall despite strong revenue figures. According to InvestingPro data, the company maintains a Fair market valuation, with a current P/E ratio of -6.3 and a Financial Health Score of 2.34, rated as FAIR by analysts.

Key Takeaways

• Iveco Group’s Q2 2025 revenue exceeded expectations by 7.39%.
• EPS of €0.39 missed forecasts by 12.79%, impacting investor sentiment.
• Stock price declined by 4.47% in after-hours trading.
• The company revised its 2025 EBIT guidance to €880-980 million.
• Strategic initiatives include a potential merger with Tata Motors and a defense business sale.

Company Performance

Iveco Group’s Q2 2025 performance highlighted a robust revenue stream, driven by its electric vehicle launches and market leadership in the bus segment. Despite a 3.5% year-over-year decline in net revenues, the company maintained a solid position in the European light commercial vehicle market with an 11.8% share. However, challenges in the South American truck market and a reduced forecast for medium-duty trucks in Europe posed headwinds.

Financial Highlights

• Revenue: €3.8 billion, down 3.5% YoY
• Group adjusted EBIT: €215 million with a 5.7% margin
• Net income: €106 million
• Free cash flow: €145 million
• Available liquidity: €4.7 billion

Earnings vs. Forecast

Iveco’s Q2 2025 earnings report showed a revenue beat, with actual figures at €3.78 billion against a forecast of €3.52 billion, marking a 7.39% surprise. However, EPS fell short at €0.39 compared to the expected €0.4472, representing a 12.79% miss. This performance was inconsistent with previous quarters where the company had typically met or exceeded EPS forecasts.

Market Reaction

Following the earnings announcement, Iveco’s stock experienced a 4.47% decline in after-hours trading, closing at €19.01. This movement reflects investor concerns over the EPS miss despite a strong revenue performance. The stock’s current price is significantly above its 52-week low of €7.89, yet below the high of €19.8, indicating a volatile trading range. InvestingPro analysis reveals strong returns over the last three months, though with notable price volatility. Two analysts have recently revised their earnings expectations downward for the upcoming period, suggesting potential challenges ahead. For comprehensive insights, including detailed valuation metrics and growth projections, investors can access the full Pro Research Report available on InvestingPro.

Outlook & Guidance

Looking forward, Iveco revised its 2025 group adjusted EBIT guidance to a range of €880-980 million, with industrial activities net revenues expected to decline by 3-5%. The company anticipates a progressive recovery in powertrain deliveries in the second half of 2025 and plans an extraordinary dividend distribution following the defense business sale.

Executive Commentary

CEO Olof Persson emphasized the company’s agility and focus, stating, "We are more agile, more focused and more driven than ever." He also highlighted strategic developments, noting, "The combined group would be better positioned to invest in and deliver innovative sustainable mobility solutions."

Risks and Challenges

• European truck market downturn: A forecasted 10-15% decline in the light-duty truck industry.
• South American market challenges: High-interest rates impacting demand.
• Cost management: Ongoing efforts to manage production capacity and costs.
• Competitive pressures: Maintaining market share in a competitive industry.
• Merger uncertainties: Potential risks associated with the Tata Motors merger.

Q&A

During the earnings call, analysts queried the impact of market downturns on Iveco’s strategic initiatives and the timeline for the defense business sale. Executives reassured stakeholders of their commitment to cost management and strategic growth, emphasizing a cautious approach to production adjustments in Europe.

Full transcript - Iveco Group NV (IVG) Q2 2025:

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

Frederico Donato, Head of Investor Relations, Eveco Group: Thank you, Latanya. Good morning, everyone. I would like to welcome you to this webcast and conference call for The Veco Group’s second quarter financial results for the period ending 06/30/2025. This call is being broadcast live on our website and is copyrighted by The Veco Group. I’m sure you appreciate that any other use recording or transmission of any portion of this broadcast without the concept of Eveco Group is not allowed.

Hosting today’s call are Eveco Group CEO, Olof Persson and our CFO, Anna Tanganelli. In their presentation, Olof and Anna will be using the material published on the Ebeco Group website yesterday evening. Additionally, please note that any forward looking statements we 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 Firefight business unit to listed private equity holding company, Mutares, was closed and completed as planned on the third January twenty twenty five, one off effects from the transaction and excluding from all the comparative 2024 adjusted metrics. I will now turn the call over to our CEO, Olof.

Olof Persson, CEO, Eveco Group: Thank you very much, Federico, and let me add my own welcome to everyone joining our call today. And I would like to kick off things by commenting on the major news that was announced yesterday. I’m sure that you all have seen the headlines and carefully read the press release whose key points are summarized on this slide. But let me now bring additional context to these developments and share our perspective. The offer would bring together two businesses with highly complementary product portfolios capabilities and with substantially no overlap in the industrial and geographic footprints, creating a stronger, more diversified entity with a significant global presence.

The combined group would be better positioned to invest in and deliver innovative sustainable mobility solutions by leveraging both supply networks to serve customers globally. It will also unlock superior growth opportunities and create significant value for all stakeholders in a dynamic marketplace. By preserving each group’s industrial footprint and employee communities, this complementarity is also expected to foster a smooth and successful integration process. Tata Motors is committed to respecting and maintaining Eweko Group’s corporate identity, integrity, core values and cultures as well as Eweko’s key brands trademarks and logos. Furthermore, Tata Motors does not envisage any reduction of the workforce of Eveco Group as a direct consequence of the combination.

And our headquarters will remain in Turin, Italy. Ultimately, by joining forces with Tata Motors, we are unlocking new potential to further enhance our industrial capabilities, accelerate innovation in zero emission transport and expand our reach in key global markets. This combination will allow us to better serve our customers with a broader, more advanced product portfolio and deliver long term value to all stakeholders. We also announced yesterday the signing of a definitive agreement to sell defense business IDV and Astra Brands to Leonardo SBI, as you know, a leading European defense and security company for an enterprise value of EUR 1,700,000,000.0. The transaction will create an Italian based European champion in the Land Defense segment with the scale and capabilities to compete globally.

The transaction is expected to be complete no later than March 31 in 2026, subject to customary regulatory approvals and carve out completion. On completion, Eveco Group intends to distribute the net proceeds of the transactions subject to closing adjustments to shareholders via an extraordinary dividend. This agreement propels Eveco Group’s defense business into its proper dimension as a key contributor alongside Leonardo in the creation of a focused world class player in land defense activities. Our colleagues in the defense business who have done a tremendous job in building this business, responding to the growing need for both land defense vehicles and the technologies we have developed will become a part of a group with the scale and integrated capabilities to compete on all levels and for all platforms. With all the positive potential for innovation and continuous development.

All in all, I believe that this is exciting and positive news, both for our defense business and the wider vehicle group. We believe that these developments will enhance the long term prospects of our business for the ultimate benefit of all stakeholders. Let me now moving into Slide four with the highlights of our second quarter performance. As forecast, this quarter was marked by lower industry demand levels across European truck segments. Market softness was especially pronounced in the light duty trucks where the year over year comparison was further worsened by last year’s PRIVA effect.

In response to those challenging market dynamics, we acted decisively with discipline, execution and unwavering focus on our long term vision in both our Truck and Powertrain business units. In Bus and Defense, meanwhile, we continue to deliver good margins supported by very solid order books. If I break down by business units, in Truck, we saw order intake pick up across regions and segments during the second quarter affirming the momentum of our model year 2024 product lineup, especially for heavy duty. Powertrain continued to navigate the tough market conditions both in on and off road application, strict cost management and the implementation of the group’s efficiency program helped mitigate the negative effects of declining volumes. In addition, throughout the quarter, we booked higher quality costs to secure superior standards as part of our ongoing drive for increased long term customer satisfaction.

Again, in both the Bus and Defense segments, we delivered strong results with continuous margin improvements on a year over year basis backed by solid order books and favorable industry momentum. Our free cash flow performance in the second quarter was positive. We registered EUR145 million in cash generation, partly due to actions we implemented through the acceleration of our efficiency program. And as you may have seen in the press release published yesterday evening, we have prudently revised our full year guidance as a result of the delay of the recovery we had been expecting in the second half of the year in light duty trucks, particularly in the chassis cab fleets and rental fleets, where the tail of last year’s pre buy effect is taking longer than expected to unwind as well as ongoing macroeconomics uncertainties. If we go to Slide five, this year marks actually the fifty years of Evico.

And during 2025, we are celebrating the milestone at our facilities around the world. And in June, we hosted our main anniversary event here in Turin, a four day celebration of VECO’s past, present and future in a truly Italian setting. I’m proud to say that at 50, VECO is full of vitality and getting stronger every quarter. We are more agile, more focused and more driven than ever. And this is not the finish line.

It’s just a launch pad to the exciting future ahead. So talk about looking forward, we made significant investments in product innovation and customer support preparing the group for a new chapter of growth in alternative fuels, digital services and customer centric solutions. Our ambition is to become a more premium company in every respect, engaging customers with both their heads, but also their hearts. We are proud of our Italian heritage, our belief in empowerment and our commitment to sustainability. These values are embodied in our vision for the next fifty years and every product development that unfolds, including our electric models, the SE Way Arctic, the eDaily and the latest addition to our electric lineup, the eJolly and the eSuperJolly.

To reiterate, as we look ahead, our focus is clear. Quality in everything we do and a laser sharp commitment to empowering our customers and drivers. Moving into Slide seven and look at the truck industry volumes and market share on Slide seven. In the 2025, European industry volumes experienced a decline compared to the same period last year. This was both expected and a continuation of what we saw in Q1.

Allow me to give you some numbers. As of thirtieth June twenty twenty five, light commercial vehicles were down by 13% and medium and heavy trucks were a decrease of 15% compared to Q2 twenty twenty four. When we talk about LCV’s industry performance, please keep in mind that last year’s performance was inflated by a pre buy effect resulting in a more pronounced year over year decline. And to break that down further, decline in both chassis cab and the upper end of the segment was even more pronounced versus the same period of last year. Reflecting on market share during the 2025, LCV in Europe remained solid at 11.8%.

Our share of the chassis cap segment was comfortably above 30% and the upper end of the segment came in at 69.3%, which is actually up 5.7% versus the same period last year. Figures like these demonstrate our strong brand recognition and historic leadership can build resilience even during challenging phases of the business cycle. If we then turn to medium and heavy drugs, our market share was 8.5 in the 2025. Within this category, our heavy truck market was 7.8%. In maintaining these solid market shares across segments, we pay close attention to our pricing discipline.

If we then look across the ocean, industry volumes in South America were once again strong in LCV and broadly flat for medium and heavy. Moving on to Slide eight. In Q2, order intake was up across segments and regions with our worldwide book to bill ratio at 0.9. For light duty trucks, European order intake increased by seven percent versus Q2 twenty twenty four and remained broadly flat sequentially. The book to bill ratio stood at 0.84, reflecting a 22 basis point improvement over last year.

In South America, order intake was up 79% compared to Q2 twenty twenty four with a book to bill ratio of 1.09. For medium and heavy trucks, European order intake rose 34% compared to Q2 twenty twenty four with a book to bill ratio of 0.8, marking a 26 basis point increase year over year. In South America, order intake was up 20% compared to Q2 twenty twenty four with a book to bill ratio of 105. Order book visibility in Europe is about two months for medium and heavy trucks and slightly shorter in light duty trucks. Let’s move on to Slide number 10 with the bus industry volumes and market shares.

We not only held our leadership position in Europe in the Skipper segment in the second quarter, but managed actually to increase it by two percent two point three percentage points to 53.9% compared to Q2 twenty twenty four. In the European City Bus segment, we maintain a solid 12.4% market share during Q2 twenty twenty five. And as we mentioned in our first quarter earnings call, we expect to accelerate deliveries in the 2025 in line with the seasonality of bus tenders. The electric city bus segment registered a solid 11.8 market share at the end of Q2 twenty twenty five. Throughout the quarter, Evico bus stayed firmly in the number two position in the European market with a 19.7% market share largely due to the strong momentum of our innovative products.

We then move to Slide 11. In the 2025, our bus order intake increased by 10% compared to Q2 twenty twenty four, while deliveries remained substantially flat on a year over year basis. Our book to bill rate here was 1.08 at the end of Q2 twenty twenty five, which is up by 11 basis points year over year. The order book is strong providing long term visibility and it goes all the way through the second half of next year. To step up production of electric city buses, we have introduced a second shift at our N On I plant as of April.

This resulted in some additional cost and negative impact of our production cost for Q2, but it is a temporary situation. On Slide 13, we have the delivery performance for our Powertrain business unit. And looking at our e trucks, powertrain continues to face challenging industry environment, particularly for off road applications where demand is sharply down. Engine volumes reduced by 13.6% in the second quarter compared to Q2 twenty twenty four. But on the positive side, we are expecting progressively recovering deliveries to third party clients in the second half of the year.

And as I said in my opening remarks, we booked higher quality costs during the quarter, expenses that will secure superior standards and help realize our ongoing ambition for increased customer satisfaction. These necessary additional costs impacted profitability in the second quarter. To counterbalance the decline in volumes and strengthen our resilience throughout the industry cycles, we focus heavily on implementing our efficiency program and containing any additional costs. On slide 15, we highlight the strong performance of our defense business unit. In the second quarter, our order intake continued to be healthy and supported the increase in our order books, which is now at €5,000,000,000 Increased sales of high margin vehicles and continuous positive aftermarket contribution gave rise to an all time high adjusted EBIT margin of almost 14.

Slide 17 take us then to the year to date performance of our electric vehicle portfolio. And looking at our e trucks product lineup, all these vehicles not only add to our extensive electric product portfolio, but also bolster our in house expertise. The vehicle was primed to team up with Stellantis Pro one for the supply of two new 100% electric vehicle branded vans, the eJolly and the eSuperJolly with the launch of these vans in Europe in 2026. EVehicle will be the only truck maker to offer complete fully electric LCV products lineup with the LCV vehicles ranging from 2.5 to seven tons. Our e trucks maintain a good level performance despite softening market demand and the plan for our heavy duty electric vehicles is proceeding apace.

We have already introduced our rigid version on the market and we expect to introduce the Arctic version in the later part of this year. The electric bus segment boasts a strong order book, which is now full through the 2026 and we expect deliveries to ramp up in the second half of the year. With that, I have finished my opening remarks, and I will now hand over the call to Anna.

Anna Tanganelli, CFO, Eveco Group: Thank you, Olof, and good morning, everyone. Let’s now take a look at the highlights of our second quarter twenty twenty five financial results on Slide 19. Q2 twenty twenty five closed with consolidated net revenues of EUR3.8 billion and net revenues of industrial activities of EUR3.7 billion, contracting 3.53.1% respectively on a year over year basis, mainly due to lower volumes in Europe for truck and powertrain and the negative FX translation effect primarily in Brazil and Turkey. Group adjusted EBIT closed at €215,000,000 with a 5.7% margin with the adjusted EBIT of industrial activities reaching €187,000,000 with a 5.1% margin, both contracting by around 180 basis points versus Q2 twenty twenty four, but increasing sequentially compared to Q1 twenty twenty five as expected. Net financial expenses amounted to €71,000,000 in this quarter compared to €49,000,000 in Q2 twenty twenty four, which as you might recall has been affected by a positive hyperinflation accounting impact in Argentina.

As already disclosed in our first quarter earnings call starting from January 1, as a consequence of changes in our business model in Argentina, the US dollar became the functional currency also for our local truck legal entity, thereby eliminating hyperinflation accounting fluctuations going forward, and as a result further minimizing the volatility of our results in that country. Reported income tax expenses were €36,000,000 in Q2 twenty twenty five with an adjusted effective tax rate of 26% sequentially flat, resulting in a consolidated adjusted net income of €106,000,000 down €56,000,000 versus last year and with an adjusted diluted EPS of €0.39 The adjusted net income attributable to Eweko Group closed broadly in line with the consolidated figure at €105,000,000 down €67,000,000 versus prior year. Moving to our free cash flow performance in the quarter, Q2 twenty twenty five closed with €145,000,000 cash flow generation, mainly driven by a positive year over year working capital and above all inventory performance, as well as by lower investments, thanks also to the efficiency investment reprioritization program launched beginning of this year. Finally, available liquidity, including undrawn committed credit line, closed solidly at €4,700,000,000 on the June 30, including €1,900,000,000 of undrawn committed facilities.

Let’s now focus on net revenues of industrial activities on slide 20. 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 9% versus q two twenty twenty four, confirming the region’s positive trends started already in q four of last year. Looking at our net revenues evolution by business unit, bus and defense were solidly up versus prior year at plus 23% and plus 19% respectively, while truck and powertrain both contracted versus Q2 twenty twenty four. More in detail, truck net revenues totaled €2,300,000,000 in this quarter, minus 9% versus prior year as a result of the largely expected volume contraction in Europe in this 2025 and an adverse year over year foreign exchange rate trend in Brazil. BAS net revenues were up, as said, 22.5% in q two twenty twenty five, reaching €750,000,000 thanks to higher volume, a better mix resulting from the ramp up of electric vehicles production and delivery and the positive pricing.

Net revenues of Defense were once again substantially up versus prior year, posting a plus 19.3% increase to €340,000,000 driven by higher volumes and the positive product mix effect. Finally, powertrain net revenues were down 10.4% year over year to €878,000,000 mainly as a result of the continuously challenging off road industry performance as well as lower volumes in trucks with sales to external customers accounting for 45% in this quarter. Turning to Slide 21, let me 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 €39,000,000 in the period, mainly driven, as said, by lower volumes in Europe for our Truck and Powertrain business units combined with lower deliveries of light duty trucks, which further negatively affected the overall truck profitability. The negative year over year net pricing impact of €29,000,000 is mainly a result of one, last year’s extraordinary positive pricing leverage deriving from a still exceptionally high number of weeks of production already sold and two, a strong pre buy effect in Q2 twenty twenty four, particularly of light duty trucks on the back of the subsequent launch of our new model year 2024 truck range.

And it is worthwhile to be noted that our sequential pricing performance, on the other hand, was substantially stable in light duty trucks and even slightly up in heavy duty trucks, thereby confirming our effectiveness in maintaining a diligent pricing discipline also in this challenging market environment. Finally, the year over year improvement in SG and A cost totaling EUR40 million in this quarter and EUR32 million in the semester is again a result of the efficiency actions announced we launched beginning of this year. Let’s now take a look at each Industrial business unit adjusted EBIT margin performance in the quarter on Slide 22. Truck closed with a 5.5% adjusted EBIT margin as a result, as said, of the largely expected volume contraction in Europe, combined with a negative mix linked to lower light duty truck deliveries, only partially compensated by the cost containment actions implemented in the period. Pricing in Europe remained broadly flat sequentially.

BAS q 02/2025 adjusted EBIT margin closed at 5.6, up 40 basis points versus prior year, thanks to higher volume, a better mix resulted from the continuous ramp up of electric vehicles production and deliveries and the positive pricing. Defense adjusted EBIT margin posted a 400 basis point uplift versus prior year, reaching a historically high 13.8 on the back of increased sales of more profitable vehicles and a continuously positive aftermarket contribution. Finally, Powertrain adjusted EBIT margin closed at 3.9% in the second quarter due to the severe volume drop suffered in the period and as previously mentioned by Olof, due to higher quality costs only partially compensated compensated by continuous cost management actions. Excluding the higher quality costs incurred in the quarter, Powertrain profitability would have landed at around 6%. Let’s now have a look at the performance of our Financial Services business during the quarter on Slide 23.

Q2 twenty twenty five adjusted EBIT closed at EUR28 million with a managed portfolio including unconsolidated joint ventures of €8,000,000,000 at the end of the period, of which retail accounted for 43% and wholesale 57%, up €43,000,000 compared to the 06/30/2024. Stock of receivables past due by more than thirty days as a percentage of the overall on book portfolio was sequentially down 20 basis points to 2% in line with last year. Return on assets remained solid at 2%. Moving to our free cash flow and net industrial cash evolution on Slide 24. As said, Q2 twenty twenty five free cash flow generation closed at EUR145 million with a plus EUR242 million improvement compared to prior year, largely as a result of a positive working capital and above all inventory performance.

In fact, as you might recall, Q2 twenty twenty four working capital had been negatively affected by the extra effort put in finalizing and getting our model year 2024 vehicles ready to ship, thereby resulting in a temporary exceptional increase in our inventory levels, which was then reabsorbed during the remaining part of 2024. Investments totaled €146,000,000 in Q2 twenty twenty five, down €64,000,000 versus the same period of last year, in line with the already disclosed acceleration of our efficiency program and specifically of the reprioritization of some of our less strategic investments. Moving now to my last slide for today, Page 25. Our available liquidity as of 06/30/2025 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, as you know, the majority of our debt will mature from 2027 onwards, and our cash and cash equivalent levels continue to more than cover all the cash maturities foreseen in the coming years.

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

Olof Persson, CEO, Eveco Group: Thank you very much, Anna. And now I’d like to conclude this presentation by looking at both the outlook for the industry and our own financial guidance. I will also, as usual, provide some takeaway messages from what you have heard today. In terms of total industry outlook for the current year, for some regions and segments, we have updated the preliminary industry outlook we provided in May. And I would like to provide a little bit more detail on that.

We now forecast that the light duty truck industry in Europe will be down between 1015% versus full year 2024, coming in at around six and twenty thousand units. The revision is mainly due to the delay of the recovery we have been expecting in the second half of the year, particularly in the chassis cab fleets and the rental fleets, where the tail of last year’s pre buy effect is taken longer than expected to unwind. That said, the customer fleets are aging and we are expecting a progressively recovery principally in the chassis cab sub segment. We have lowered our expectations slightly for the medium duty trucks in Europe to 26,000 units versus the previous forecast of 30,000 units. Heavy duty trucks are confirmed at between 280,290 units.

In South America, we confirm our expectations for light duty trucks, but we are lowering our forecast for medium and heavy duty trucks to between negative 5% to 10%, mainly driven by Brazil, where the interest rates increases since the beginning of the year have negatively impacted consumer confidence and willingness to invest in trucks. On the other hand, in Argentina, we experienced a more dynamic industry scenario supported by government initiatives and cash injection in the country allowed by the International Monetary Fund. In the rest of the world, both sub segments are forecasted to be either flat or slightly down. Finally, we expect demand for buses to remain flat across all regions. The next slide has our full updated full year 2025 financial guidance, which does not reflect any impacts from the separation of our defense business.

Our full year 2025 financial guidance has been updated. This mainly reflects a slower than forecast recovery in light duty trucks for the remainder of the year, negatively affecting our truck business unit’s full year profitability. Based on the updated industry outlook, our solid order backlog in both parts and defense and our continuous focus on cost management, are updating our guidance as follows. At a consolidated level, group adjusted EBIT at between EUR $880,000,000 and EUR $980,000,000 versus previously EUR $980,000,000 and EUR $1,030,000,000. And for Industrial Activities, net revenues including currency effects to be down between 35% year over year versus the previous flat expectations.

Adjusted EBIT from industrial activities at between $750,000,000 and €850,000,000 versus the previous $850,000,000 and €900,000,000 Industrial free cash flow to be between $350,000,000 and €400,000,000 versus the previous forecast of $40,450,000,000 euros We will continue to manage cost on production capacity for trucks in Europe with caution, especially in the light duty truck segment, where as I just mentioned, we’re expecting a slower than forecasted recovery in the second half of the year. And now on Slide 29, let me provide takeaway messages for today Q2 earnings call. First, as I just mentioned, we revised our full year financial guidance mainly due to a slower than expected recovery in light duty trucks in Europe. As a consequence, we will adjust our production levels in the second half of the year to meet forecasted industrial demand thereby maintaining tight control of our channel inventory. Second, the increase in year over year order intake levels across truck segments confirm our model year twenty twenty four’s momentum and the progressive positive perception of the range despite challenging industrial levels.

Third, for both bus and defense, our order books continue to be solid, providing a good long term visibility and underpinning profitability improvements for both businesses units. In powertrain, we expect deliveries to third party clients to progressively recover in the second half of the year. And fourth, we are proceeding at pace with the acceleration of our efficiency program and the reprioritization of certain investments confirming the expected €150,000,000 in savings in CapEx and OpEx for the current year. We have also identified additional areas of improvement, which could potentially deliver further full year savings. In conclusion, regarding the updates on Tata Motors Software for Vehicle Group and our defense business future, I would like to reiterate that all in all, I believe that this is a exciting and positive news for both our defense business and the wider vehicle group.

We believe that these developments will enhance the long term prospects of our business for the ultimate benefit of all stakeholders. Thank you.

Frederico Donato, Head of Investor Relations, Eveco 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, which you can follow-up directly with me and the Investor Relations team after the call. Operator, please go ahead taking the first question.

Conference Operator: Thank you. And our first question will be coming from Alexander Jones of Bank of America. Please go ahead.

Alexander Jones, Analyst, Bank of America: Great. Thanks. Good morning. Thanks for taking my questions. Two, if I can.

First, on the defense sale. Can you help us bridge the EUR 1,700,000,000.0 enterprise value, which I think is about EUR 6,300,000,000.0, 6.4 a share to the EUR 5,500,000,000.0 to 6,000,000,000 that you mentioned in terms of any net debt in the business, taxation on the disposal? How we should think about possible closing adjustments? And then second question on production levels. You talked about adjusting those in H2 given your sort of revised demand expectations.

You give us a little more color and split that between LCV and any changes you’re making on the medium and heavy side? Thank you.

Olof Persson, CEO, Eveco Group: Should I perhaps, Yes, I’ll start on the production level. So basically, given what I just said there, it’s during the presentation, the main adoptions will be in the light commercial vehicle on the LCD side. We will, of course, making sure that we don’t overproduce on the heavy duty as well. But what we see right now, it’s we have a good production pace going into the second half of the year. We keep some flexibility to make sure that we can react quickly to the end market demands.

But it’s mainly within the LCVs that we’re adjusting the production rates. And that is because we really want to make sure that we don’t use other cash flow to create vehicles that stands on the yard. So we again, having full focus on making sure we have a very good breathing machine when it comes to the number of production, the sales and our inventory levels in that respect.

Anna Tanganelli, CFO, Eveco Group: Hey. On your first question, yeah. So you correctly said the 1,700,000,000.0 is the enterprise value, which then will translate into a 5.5 to €6 per share extraordinary dividend. As you correctly pointed out, the difference between the two figures are on the closing adjustments that need to occur. And as we said and as it stated in the press release, closing is expected to to occur in q one twenty twenty six.

So, obviously, the the part of the closing adjustments will also be the full year 2025 reported defense financial statements as well as other factors, I mean, which should, in any case, be be benign or so that’s let’s I mean, broadly speaking, the difference between the two values.

Alexander Jones, Analyst, Bank of America: Okay. So there’s no material net debt or or tax cash tax you’re expecting to pay, when that closes?

Anna Tanganelli, CFO, Eveco Group: No. No. No. It’s in relation to material cash tax impact. But I said, yes.

Definitely, need to look at December 2025 balance sheet of defense, including the financial position at that time.

Nikolai Kim, Analyst, Deutsche Bank: Thank you.

Anna Tanganelli, CFO, Eveco Group: No problem.

Conference Operator: And our second question will be coming from Nikolai Kim of Deutsche Bank. Please go ahead.

Nikolai Kim, Analyst, Deutsche Bank: Hi, good morning. It’s Nikolay from Deutsche Bank. A couple of questions from my side. Can you just highlight on the remaining business of truck, powertrain and buses, how many bidders were there for this asset? And I will start here.

Olof Persson, CEO, Eveco Group: I think the I mean, we had the basically had a position to take where we are looking at the bid that we have. And there was only one firm bid in to take consideration of, and that was from Lutato and Remeco. And the Board believes that this is the best interest of the company, promotes the sustainable success of the company. And of course, provide, as I’ve said before, also in terms of strategic and complementary, clear benefits to all Eveco’s stakeholder, including its shareholders.

Nikolai Kim, Analyst, Deutsche Bank: Okay. Got it. And my second one would be on the new guidance, which is actually quite large looking at the earnings range, actually bigger than the one before. So should we look at the midpoint of this new guidance range for the upper end and lower end? Any color on that?

Thank you.

Olof Persson, CEO, Eveco Group: I think the reason is, as I mentioned, I mean, have a visibility now of about two months on the heavy duty medium, and we are basically slightly shorter on the light. So it is a and we also have the uncertainty going into the second. So I think that is the reason why we contemplated to have a little bit of a wider range, seeing where this market will come and see how it will.

Nikolai Kim, Analyst, Deutsche Bank: It’s a

Olof Persson, CEO, Eveco Group: visibility I would say, a visibility issue right

Alexander Jones, Analyst, Bank of America: now. And

Conference Operator: our next question will be coming from Martino D’Ambroshi Your line is open.

Martino D’Ambroshi, Analyst: Thank you. Good morning, everybody. The first is a general question on what are the main synergies that you see from the deal with Tata. And specifically, from a technical standpoint, the engines provided by Cummins could be replaced by yours or maybe with just technical adjustments. I don’t know.

And the second question is on IDV. If you could split the €5,000,000,000 backlog among the different products, armored, multi role and trucks and off road, And the margin was the historical peak. Should we take it as a starting point or there were nonrecurring elements in this high profitability for IDV? And what is the current capacity utilization for IDV?

Olof Persson, CEO, Eveco Group: So let me start with synergies and I touch upon it in my commentary. I think there are a number of synergies that we look. One is of course, definitely geographical. You start to see if you map out the geographic complementary, it’s really not much overlap at all. The second one is on the product customer segment side, which is also very complementary in terms of supporting between the Tata products and the products that the vehicle makes.

The third one is technology, right? There are technology development that is not always the same technology development and trends as in Europe. So we basically could align to and be also been taking advantage of that as the synergies. So there are a number of those synergies because of the complementary situation of the two companies, which makes it very exciting and really looking forward to that. Now when it comes to the details, as you mentioned around the different situation, that is something that has to be worked out over time.

But it’s I just want to highlight once again the strategic match in terms of complementary is quite very high. On the IDV, I can already say from the beginning that we don’t give any details on on the order backlog. And then Anna, if you want to perhaps, give a little bit other color on on on the second part of the question.

Anna Tanganelli, CFO, Eveco Group: Sure. So on the margin, the profitability performance of IGV, there are no nonrecurring elements. So it’s all ordinary. And I think the performance I mean, we had a good, very good two quarters in a row of defense that I think it’s a proof of the solid the liquidity and the good marginality of the business itself. Then I wish we all wish that we’ll continue in the future, but that remains to be seen.

So definitely, they had a very strong performance in these two quarters. That’s how it continues. But let’s say they have their own business plan, which we released last year, so that that still stands. So I think that’s the the what what I can say for now. In terms of capacity utilization, IDV has flexibility, first of all, to fulfill their back full backlog without significantly increasing their related investment.

So I cannot provide you with the percentage because we don’t disclose that. But what can I say is that, as I said, they can fulfill the backlog and the the revenue performance, the revenue expectations they have in the plan without incurring into additional significant investments as of from today?

Olof Persson, CEO, Eveco Group: Thank you.

Conference Operator: Our next question will be coming from Akshat Kacker of JPM. Your line is open.

Akshat Kacker, Analyst, JPMorgan: Good morning, Polo. Panana. Akshat from JPMorgan. I have two questions for you, both on the proceeds from the defense payment post special dividend. I just wanna make sure I understood this correctly.

So firstly, could you just explain what is the book value of the defense business, please? And what do you estimate as the corporate tax liability on the capital gain expected from this transaction? And the second question is if you have received any guidance from tax authorities on the withholding tax rate that will apply to this extraordinary dividend for different shareholders and if there could be any exemptions or reductions that we should be aware of. Thank you so much.

Anna Tanganelli, CFO, Eveco Group: So thank you for the question. So yeah. Well, we we don’t disclose the book value of IVD. So what I can say is the the receipt of the side of of the sale itself are estimated that we’ve seen that between €5.5 and €6 per share. So I think that’s that’s what I can say.

And and I’ve tried the we don’t we don’t disclose the book value of of IDDs of today. Anyways, in terms of impact tax impact from distribution So as you very well know, Ezeco Group is the resident physical resident in Italy. Therefore, given the distribution will be subject to the Italian tax rules as any other past dividend distribution Ezepel Group did. So very nonfactual.

And the result in tax obviously may vary according to the legal form of the shareholder receiving the dividends itself and its country of of residence. So as I said, it really depends from from the jurisdiction and the form of the shareholder receiving the extraordinary dividend, but the distribution itself will be subject to the same tax rate and withholding tax rate as any other distribution of dividends we made in the past. I hope I answered your question.

Akshat Kacker, Analyst, JPMorgan: Yeah. Thank you so much.

Anna Tanganelli, CFO, Eveco Group: No problem.

Conference Operator: And that will conclude the question and answer session. I would now like to turn the call back to Frederico Donati for additional closing remarks.

Frederico Donato, Head of Investor Relations, Eveco Group: Thank you all and for your participation, and, have a nice day.

Conference Operator: That will conclude today’s conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.

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