Ayvens ($AYV)

Ladies and gentlemen, welcome to the Ayvens Q1 2026 Results Conference Call. Today's speaker will be Philippe de Rovira, CEO; and Patrick Sommelet, Deputy CEO and CFO. I now hand over to Mr. Philippe de Rovira. Sir, please go ahead.

Thank you. Well, good morning, ladies and gentlemen. Welcome to Ayvens Q1 2026 Results Conference Call. I'm hosting this call with Patrick Sommelet. And first, I will present the highlights of Q1, then Patrick will comment on the detail of our financial results, and we will then take your questions. So let's now go directly to Slide 5 on the highlights of the financial performance. Q1 2026 is a good start to the year for Ayvens as the group has once again delivered a strong set of financial results. First, margins stood at 587 bps of earning assets, an increase of 25 bps compared to Q1 2025. This reflects our focus on profitability with an adequate balance between growth, profitability and tight monitoring of asset risk. This increase in margin compensated the normalization of the used car sales results, which has continued in Q1 2026 at a similar pace as in Q4 2025. In Q1 2026, the gross UCS stood at EUR 470 per unit compared to EUR 1,229 in Q1 '25 and EUR 702 in Q4 2025. The decrease was mitigated by lower depreciation adjustments. On a net basis, UCS stood at EUR 403 per unit compared to EUR 703 in Q1 2025. Higher margins and lower costs resulted in strong positive jaws again. Ayvens' underlying cost/income ratio has continued on its decreasing trend at 54%, 4 percentage points below its Q1 2025 level. Bottom line, net income group share stood at EUR 266 million, an increase of 21% compared to first quarter of last year. EPS increased by 29% versus Q1 '25, reaching EUR 0.31 per share and ROTE increased to 13.9% versus 11% in Q1 2025. This financial performance confirms that Ayvens is well positioned to reach its PowerUp 2026 targets. These strong results, coupled with some additional RWA optimization this quarter again have led to a CET1 ratio at 13.9%, which is above our target, same as last year. This is a topic that we will address as we progress into 2026. Finally, we have successfully executed 2 new bond issues in euros since the beginning of the year of EUR 750 million each. These are green bonds that attracted a lot of interest from investors and the strong appetite has translated into historically low spreads for the group, including for the low second issue that was executed in capital markets disrupted by the war in the Middle East. Let's now turn to next slide on the key developments for the quarter. During the period, we continue to deliver on key priorities. First, regarding integration. India and Germany were migrated, respectively, in March and April, and we are on track to deliver our target of EUR 440 million of gross synergies for the full year 2026. Regarding our ESG commitments, the group has reached an important milestone as we obtained the validation of SBTi on our CO2 emissions reduction targets on all scopes. It makes Ayvens the first international leasing company to obtain such a validation for both near and long-term commitments and strengthens the credibility of our actions for a sustainable future. Finally, as you know, Ayvens entered the MSCI Standard Index in Feb, thanks to the increase in the floating market capitalization over 2025. This has reinforced Ayvens' visibility on equity markets and has led to an additional increase in the daily liquidity of the stock. Let's now turn to Slide 7 on fleet and earning assets. Fleet numbers trended lower during the quarter as a result of the continued strategic focus on profitability and asset risk management throughout 2025. Total fleet has decreased by 98,000 units compared to end of 2025, mostly on the back of fleet management contracts. We didn't renew one large contract, which was not in line with the group's expected profitability. Impact on services margin is very marginal. Earning assets stood at EUR 52.5 billion, a 1% decrease versus end of 2025. Deliveries per powertrain for passenger cars and light commercial vehicles showed stability of BEV penetration at 29% compared to 28% 1 year earlier, while PHEVs and hybrid penetrations increased to 12% and 29%, respectively, in Q1 '26 compared to 9% and 26% in Q1 2025. Conversely, ICE penetration was down 8 points at 27% versus 35% 1 year ago. I now hand over to Patrick to present you the details of the Q1 2026 financial results.

Thank you, Philippe, and good morning, ladies and gentlemen. So let me start with the evolution on Slide 9 of our gross operating income on the left-hand side of the slide. At EUR 816 million, it is stable compared to Q1 '25, but with a better quality mix as higher margins in euro offset the decrease in the net UCS results. This 7% margin increase from EUR 708 million in Q1 '25 to EUR 757 million this quarter has been achieved despite the decrease in the fleet, thanks to the revamped profitability of our portfolio and contracts. Net UCS results decreased to EUR 59 million this quarter compared to EUR 111 million in Q1 '25, in line with our anticipation of normalization of used car sales results. Let's now move on the next slide on margin. Total margins stood at EUR 757 million, which is up EUR 49 million versus Q1 in'25 on the back of better underlying margins and lower nonrecurring items. These items consisting mostly of hyperinflation in Turkey reduced by EUR 26 million versus Q1 '25. Turning to underlying margin, they stood at 587 basis points versus 562 in Q1 '25, continuing the increased trend seen throughout 2025. This improvement is driven by our focus on profitability, supporting our strategy of value versus volumes. Underlying margins in euro increased by EUR 23 million or 3% versus Q1 '25 despite the decrease in the earning assets. Looking at the margin breakdown, leasing margins continued to be strong, reflecting higher leasing revenues and lower interest charge across all funding sources. On services margin, they decreased compared to Q1 '25, mainly due to a base effect indeed. They were positively impacted in Q1 '25 by accounting harmonization in the context of IT migration. In parallel, interest margin diminished slightly due to higher quantity of claims as a result of adverse weather conditions in the first quarter of this year. Let's move to the next page on UCS. So starting with the total UCS results, whose evolution is represented on the right-hand side, as you can see, the normalization trend of our UCS results continued in Q1 '26. The net UCS results shown at the full line of the graph decreased to EUR 59 million compared to EUR 111 million in Q1 '25. This is the result of a significant decrease in the gross UCS result from EUR 193 million in Q1 down to EUR 69 million. Across all powertrain, January was particularly weak with a gradual improvement seen throughout February and March. This effect was partially offset by lower negative depreciation adjustment, which stood at minus EUR 10 million. This minus EUR 10 million depreciation adjustments include notably minus EUR 21 million prospective depreciation, driven mostly by the evolution of the U.K. BEV market. Other moving parts are detailed on Slide 16 in the appendix. Per vehicle, as shown on the left-hand side on the dotted line, gross UCS results per unit stood at EUR 470 versus EUR 1,229 in Q1 '25. And on a net basis, the decrease is less steep at EUR 403 versus EUR 703 last year. Let's turn to the next page on operating expenses. Total expenses are trending down, showing a decrease of EUR 51 million compared to Q1 '25. Cost to achieve amounted to EUR 4 million compared to EUR 36 million in the same period last year. And as guided at the beginning of the year, full year CTA is estimated to be below EUR 30 million in '26. Underlying costs are down EUR 18 million year-on-year, a decrease of 4.2%, thanks to our continued cost discipline and increased cost synergy. So this combined with higher margins, we have lower operating expense with higher margin, which generates strong positive jaws with an underlying cost-to-income ratio at 54%, down 4 percentage points compared to Q1 '25. Let's now turn to the next page with the rest of these results. So you see that on cost of risk, we have a decrease of EUR 5 million in Q1 '25 at EUR 26 million or 19 basis points of average earning assets. Profit before tax is up 15% versus Q1 '25 at EUR 365 million. So this is a result of increasing margins and lower expense, which more than offset together the decrease in the net UCS results. And net income group share reached EUR 266 million, an increase of 21% versus Q1 '25. So now we can turn to next slide on RWA and capital. So RWA at the end of Q1 '26 stood at EUR 52.6 billion, which is a decrease of EUR 1.2 billion compared to Q4 '25. This decrease mainly comes from our continuous effort to optimize our RWA with 2 actions this quarter. First, a decrease of EUR 1 billion, which was achieved as a result of the netting agreement with Societe Generale. This agreement allowed to net off loan liabilities and cash deposits to Societe Generale and thus exclude this deposits from RWA competition. Second, a further reduction of EUR 700 million, which is linked to the methodology alignment between accounting value and risk exposure value for the computation of earning assets. These 2 actions were partially offset by the increase of EUR 600 million, mostly from off-balance sheet items relating to forward deposits and a slight increase in order book. This reduction in RWA, together with a strong organic capital buildup led to an increase in Ayvens' CET1 ratio at 13.9% versus 13.2% in Q4 '25, a level which is above our target. So this concludes our presentation. Thank you for listening, and we are now ready to take your questions.

[Operator Instructions] First question is from Jacques-Henri Gaulard, Kepler Cheuvreux.

I had 2 questions. The first one is there was press reports about your agreement with Renault about remarketing, I would say, warehouse and factory that's going to help you obviously increase the leasing life of some of your vehicles. If we could have a little bit more color on that, that would be great. That's the first question. And the second one, obviously, the environment has totally changed with what has happened in the Middle East. And I was wondering if you were seeing a bit of change in demand and if you had any sense about the impact that would have potentially on your used car results going forward?

Well, the agreement of -- with Renault, I would say, is part of our focus to make our remarketing more professional and more efficient. So we've got a lot of work on this activity. And I would say it combines a number of actions that are to make it simple to control much better the pricing, to control much better the channels in which we sell in and to control the cost that we generate when we have to remarket the car. So this agreement is helping us to answer these 3 -- well, not all the 3 on this one, but it's contributing to these actions. It's -- but the action plan that we are remarketing is much broader than this one-shot agreement and it's something that we are deploying in all countries to have an action plan on the 3 dimensions that are mentioned. So it means that to be much more KPI-driven that we were at the level of detail on remarketing that is much higher compared to what we were doing, because I think that we've got opportunities in the remarketing area and that will be important to be able to address the challenges of the coming years. On the Middle East, well, what we can see for the moment related to UCS is we've seen in the second part of March and in April that in the northern countries you've got -- when saying northern countries, I would have mentioned, for example, the Netherlands, but not limited to that, you've got some customers that are asking now for BEVs that were not asking for BEVs before. And it's true that in the last weeks, we've seen in these markets an increase in prices in BEV, which is obviously a positive. And then how long will it last? It's really difficult to say, because is it just a one-shot leak to the war in Middle East or is it a more structural trend because customers will say, well, finally, it makes sense. Frankly, it's difficult to say. But that's what we see. So that's a positive. On the other hand, on the southern Europe countries the global situation tends to be a slowdown in the demand of cars, which are mainly ICE in southern part of Europe. So all in all, when I look at the UCS, what we've seen is Jan that was very low, Feb, which was better than Jan, March that was better than March -- sorry, March that was better than Feb. And we expect April to be more or less at the same level as March with a change in the mix, as I was mentioning.

Next question is from Sharath Kumar, Deutsche Bank.

Firstly, on the CET1 trajectory, I'd say is very encouraging. Again, thank you for the additional color on the moving parts. Is it fair to say that it would continue to grow in the coming quarters given the strong organic capital generation? And would Q2 be still the right time to expect this capital distribution? And similar to 2025, can we expect a broadly even split between dividends and buybacks? So that is the first one. Second is on fleet growth. It was negative at minus 3% in the quarter. If you could elaborate on the drivers? And would you again stick to your full year guidance of flat fleet, which means -- which implies some growth in the remaining quarters? And if you could also give some color on the competitive positioning. And finally, interested in hearing your thoughts in the autonomous vehicle, which has been developing at a rapid pace. How do you see your positioning? Do you see yourself as a net winner, again, given the light of recent developments. Give your updated thoughts.

Okay. Okay. So the first question was about the return of excess capital. So as mentioned in my introduction, it's clear that the level of CET1 is significantly higher compared to our target and the cruising level that we feel comfortable. So we will address that as we progress in 2026. You've seen that we've done that in 2025, and we'll address that later on in 2026. We cannot give more details at that stage. But obviously, we are committed to returning excess capital. On the second question, I think it was about the fleet NEA evolution. So what I can say is the evolution of NEA was exactly at the level expected in our internal budget, and our internal budget is consistent with what we told to the market a few months ago in which we were saying that the NEA will increase with a small 1-digit progression and that the fleet we wanted to stabilize it. So for the moment, this is consistent with our planned trajectory. And what we can say is the order intake of Q1 2026 has been around 20% above 2025 -- Q1 2025, which was a low point. And we've done that maintaining the same rigor in terms of focus on the profitability of the orders. But all in all, you remember that our priority is value more than growth. So we consider that Q1 is consistent in terms of NEA and fleet compared to our expectations. But anyway, it's not the top priority. The top priority remains the focus of value creation. You had a third question, but I must admit that I'm not sure I have understood it because the line is really not good. So if you can repeat the third question. I thought it was about autonomous vehicle, no? Can you confirm?

Yes, indeed. Given the rapid pace at which autonomous vehicles have been developing updated. And I'm interested in your updated thoughts as well as your positioning. Do you see yourself as a net winner?

Do you see as a net what? Net winner?

Do you see yourself as a net winner from the ultimate development in which this space could evolve?

Well, okay. On the autonomous vehicle, what we see is the market starts to exist. We see that in China, we see that in the U.S. and we see that it starts in Europe. And for me, it's not a surprise that it works. And it starts by the collective usage, which means the robotaxi, which has good acceptance by the final customer and makes sense from a financial point of view because you just can amortize the cost of autonomous vehicle by the fact that you save the cost of the driver on intensive usage. So I'm convinced that this will pick up and it will -- so first start with collective usage like a robotaxi. It will also will be with shuttles that are driving always the same journey in the day. And later on and probably on this second aspect, it will take significant more time. It will go to individual usage. On individual usage, I think it will take more time because the other cost is much more difficult to absorb. And at the moment, for the customers, at least in Europe, what we -- what the industry -- auto industry is trying to do is already to pass on the cost of electrification to customers. So I don't think that on individual usage, they will be able to pass on both electrification and the -- over cost of autonomy. So for us, Ayvens, I don't see autonomous vehicle as a threat. I don't see -- I see that more as an opportunity because each players in the value chain is specialized -- specializing on part of the value chain. And I think our focus is to continue to lease the car and provide the right services. We are a company that is supposed to make mobility easy and we'll help these companies that develop in the autonomous business to serve the -- maintain the cars. And that's the direction that we are taking.

Next question is from Geoffroy Michalet, ODDO BHF.

Congratulations for those good results. So 2 questions for me. The first one on synergies since I think you reached EUR 110 million, which if you multiply by 4 quarters is equal to your target of run rate synergies. Does it mean that you -- can you go even further on synergies than you initially planned? So that's the first question. The second question is more related to your exiting fleet in '27 and '28. Can you give us your view on the pricing assumptions and the volume assumptions on those BEVs and PHEVs for the next year?

Okay. So on the synergies, as you just rightly said, we are on track to for the full year of EUR 440 million synergies. I think what is important is to say that we're going to maintain focus on cost. 2026 is not the end of the story for the cost-to-income ratio. Of course, this pace of improvement will not be the same as what we've experienced in the last 2 years, because we had the huge level of merging organizations that were similar size and making the same business. But we will continue to work on that. I don't think for the future it makes sense to call it synergies, because by definition, synergies compared to what you would have done if you had not merged. And okay, for the forward plan in 3 years, it makes sense. But one day, you've just to say, well, now we are one company and we just address the cost question. So directionally, my answer is we'll have to continue to work on the cost-to-income ratio and continue to progress on this with some opportunities, in particular, linked to AI that we need to implement, and we are working on that. On your second question, if I understand, it was -- when you say existing fleet, so I suppose it's about the mix of used car sales, if I understood well. So you remember that we had a mix of 10% BEV in our used car sales in 2025. In Q1 2026, the mix was 12%. And this is supposed to grow in 2027, '28 to between 20% and 25%. You can never have a perfect forecast. Of course, you've got the contracts that gives you the forecast. But after that, it depends on the behavior of the customer that want to extend some cars and not others. And you can have distortion on mix on that. It's a decision of the customer. And you can also have other factors like the availability of the different cars of the carmakers that impact that. But as an order of magnitude, for these 2 years, I would give you a range of between 20% and 25% for BEV compared to 10% in 2025 and 12% in Q1 2026.

That's very helpful. And any, let's say, differentiation of pricing in your estimates versus current pricing?

You mean for the U.S. over the coming years?

Yes.

Well, I would say -- compared to what we said 3 months ago, I would say there is no significant change. We continue to have a price scenario that is similar. And as you remember, our price scenario is in the coming years a slight increase of the ICE prices and a significant decrease of BEV prices. So that's what we've entailed in -- included in our scenarios. And we have not changed them so far. We consider that the last months were consistent. It's obvious that what happened in the last, I would say, 4, 6 weeks in the Middle East doesn't make the exercise of forecasting easier. If it's -- I don't know if that's ever been easy. But for the moment, we consider that our price scenario remains valid with the direction that I've indicated. And anyway, as I've already stated in our call 3 months ago, the normal UCS, when you've got the perfect crystal ball, is a UCS that is close to 0 because you project perfectly each RV on each and every car. So the message remains the same message as 3 months ago, to make it simple.

Next question is from Nicolas O Sullivan, UBS.

The first one will be on margins. We saw previously that margins can be volatile on a quarter-on-quarter basis. So do you think the margins right now are sufficiently strong that you can afford more rebates and be a bit more commercial in the second half and 2027? And then finally, the other point is, is that kind of a sustainable run rate of margins going forward and no one-offs in this Q1 print? That will be on margins. That will be the first question. And then the second question will be on costs. You reported underlying cost income of 54%. Expenses, yes, are down, but flat quarter-on-quarter. So are we actually seeing the benefits of the synergies yet? Or are you investing more in customer satisfaction and IT perhaps? That would be my question.

Okay. Well, on margins, what we can say is it's not our intention to modify our margin policy in order to gain market share of volumes. What we want is to stabilize the fleet this year and with an order intake that remains at a good level of margins, because that's the basis of our policy and we don't want to change the strategy on that. So which means, for example, that in Q1, when we've seen '26, when we've seen the interest rate increasing due to the Middle East events, we've passed on the increase without waiting to our countries for them to include in their pricing. And I think it's something important to have in mind. On the cost-income ratio, so we're at 54%. It's a 4-point improvement versus Q1 2025. And 4 points is exactly what we need to do on a full year basis as we -- our target is to move from 56% to 52%. So what we've done in Q1 is perfectly consistent with what we need to do on the full year. And that on a quarterly basis, you can have some volatility between quarters as we've seen last year. But I would say that we are perfectly on track, consistent with our target. And as answered a bit to your question of -- I think it was Geoffroy before, it will not be the end of the story.

[Operator Instructions] Next question is a follow-up from Sharath Kumar, Deutsche Bank.

I have a follow-up on used car sales results. In light of the comments that you made regarding higher BEV mix in '27, '28, I appreciate this is a bit distant in the future, but do you think there is downside risk to consensus, which currently has gross UCS per car between EUR 300 to EUR 400? So is this consistent with your central scenario?

Well, I think we've repeatedly said that normalization of UCS will take place. And what we see is that is happening in 2026. Now that's -- generally speaking, our policy is not to comment on the consensus on top of that. That's a bit volatile if we do that. What we have said and that we repeat is UCS is normally 0 or 0 positive, let's say. That's the normal thing that should happen. And that's the way we want to manage the company. It's fair to say that with the increase in volumes of BEV, that puts more pressure on the UCS. But that's the reason why we say that UCS will not be as high as it is, as it was in 2025, in the future. So no change of message on the used car sales.

We have no more questions registered at this time. Mr. de Rovira, the floor is back to you for any closing remarks.

Well, I just wanted to thank you for these questions and comments. I think you understood that this quarter is a quarter in which we consider that we are on track versus what we've announced to the market previously with no significant event or change compared to the messages given in -- a few months ago with the full year 2025 call. So thanks a lot for your attention, and we'll be happy to meet you in the -- if necessary in the coming days or weeks. Thanks a lot. Goodbye.

Ladies and gentlemen, this concludes today's Ayvens conference call. Thank you for your participation. You may now disconnect.