D'Ieteren Group SA (DIE) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the D'Ieteren Group 2024 Full Year Results Conference Call. [Operator Instructions] Please note, this call is being recorded. Today, I am pleased to present Francis Deprez, CEO; and Edouard Janssen, CFO. Gentlemen, please go ahead.

Well, good evening, everyone. Welcome to the publication of our results of 2024. I suggest we just go into the key messages right away. We have 3 key messages for you tonight. One is that we've delivered another strong set of results in 2024, both in our adjusted profit before tax group share, where we've increased with 9.6% or even 12.7%, if you take it at constant currency and excluding the additional financial charges Belron Corporate segment that are linked to the transaction of last year, but also in the free cash flow group share where it increased to 22.2%, reaching a number above EUR 740 million. That's message number one. Message number two, is that our guidance for 2025 is that we expect a slight increase in our adjusted profit before tax group share on a comparable financing perimeter in both years. And that is because we do expect the operational performance of most of our businesses to continue to improve throughout the year. And the third message is that we have repaid, or reimbursed actually, EUR 250 million of the EUR 500 million bridge loan at the group level today. And that we will also propose a dividend to the General Assembly in the beginning of June of EUR 1.6 as a normal ordinary dividend. So these are the three key messages. To give you a little bit of more flavor behind those numbers. So the plus 9.6%, or 12.7% in PBT group share, basically leads to a number of EUR 1,065 million, so a bit more than EUR 1 billion basically in PBT. And the free cash flow, the EUR 741 million, is basically driven in particular by D'Ieteren Automotive, but also by the other activities. The operational performance has been across the board. At Belron, for instance, we continued to increase our operating margin with 70 bps points. And so we landed in our adjusted PBT group share 1.4% higher. Of course, there were some additional financial charges as of October, not surprisingly, given the refinancing we had done. D'Ieteren Automotive saw a very nice increase in its adjusted PBT group share, plus 13.4%. There is actually a return on sales margin of 5.1%, a very nice percentage, for them a record number. And that despite the fact that the market of new cars in Belgium was actually decreasing with about 6%. PHE continued on its growth trajectory. Its adjusted PBT group share grew at 8.1%, and is now more than EUR 165 million. It was a combination of market share gains, cost containment, et cetera. We'll give more details in a second. TVH had actually the highest jump in PBT of all, plus 30.5%, almost reaching now EUR 100 million. Compared to 2023, of course, we didn't have the cyberattack effects anymore, but they also did good cost containment and that in softer market environments at TVH. And so we had a 206 basis points uplift in the operating margin at TVH, reaching 15.6%. And then Moleskine had a slightly negative adjusted PBT group share of minus EUR 3 million. It continued to be an environment of a very cautious discretionary spending environment. The whole sector suffered from that actually. And we had a bit of negative operating leverage, therefore, resulting in that negative PBT. And so the gross ordinary dividend proposal of EUR 1.6 million (sic) [ EUR 1.6 ] I already mentioned is, of course, coming after the big transaction of last year, which was, of course, successfully completed in December, where we had done a EUR 74 extraordinary dividend, and where also the family shareholding has been reorganized and where we now basically have long-term stability for the decades to come. And maybe last but not least, we do have a continued attractive prospect for 2025. The slight increase that I mentioned here in our comparative financing perimeter, you, of course, have to take into account that we will have now full year effects of the financial charges linked to the new financing. We anticipate this to be about EUR 140 million at the level of Belron. That's the group share part of that. And also at the corporate central level at the group, we expect about a EUR 40 million financial charge on the loans at our level. So if you take those 2 things into account, you will, of course, see a lower headline number for the adjusted PBT group share, but on a comparative basis, it should be slightly higher than the year before. So to go a little bit of the key slides here at the group level before we delve into the detailed activities. At sales, group share, the plus 3.5%, which brings us above EUR 12 billion overall now, comes to the strongest part actually from PHE, where we did an increase of 8.1%; followed by Belron, plus 6.8%; then followed by TVH, plus 4.3%; Auto, D'Ieteren Auto was relatively flat at minus 0.5% and a decline of 6.1%...

Excuse me, ladies and gentlemen, please continue to stand by. Your conference will resume momentarily. [Technical Difficulty] Excuse me presenters, you may continue.

Okay. Thank you. Sorry for the disruption that we had on the phone line, but I was basically on Page 6, talking about the translation of the additional sales into additional operating results, where we increased it 12%, reaching over EUR 1.3 billion. And here, the strongest grower was the fact of D’Ieteren Automotive with plus 21.2%, followed very closely by TVH, which grew 20.1%. And we had 2 activities growing their respective profit with close to 10.5%, with Belron and 11% at PHE. And we had, as I said, a negative leverage effect -- operating leverage at Moleskine, where we saw a decline of minus 34% in their overall profit. The adjusted profit before tax group share that I mentioned at the very beginning of the talk and that increased close to 10%, is now actually composed more of non-Belron profit than of Belron-related profit. So for the first time, Belron is only "49%" of the EUR 1.065 billion, where we had over 50% or 51% of all the other activities. But you see the different components on the right, EUR 519 million, Belron; EUR 238.9 million D’Ieteren Automotive; and then the PHE clearly above EUR 160 million; TVH close to EUR 100 million; EUR 46 million at the corporate level; and then minus EUR 3 million at Moleskine. The translation to cash flow, I'll probably hand over to Edouard, who can talk a bit more about that.

Thank you, Francis. So as introduced earlier, indeed, [indiscernible] free cash flow group share at EUR 740.6 million, of course, particularly welcome given the leverage in place, but very solid contribution from most entities of the group, including PHE and TVH. Of course, the strong free cash flow generated by D'Ieteren Auto has to be highlighted, record of EUR 362 million, mainly due to 2 elements, right? First, the strong operational performance that we'll elaborate a bit further in a few minutes. And then the reduction in normalization of the working capital, the order book and the delivery time. And finally, Belron, a very solid free cash flow group share of EUR 232 million, even after higher interest charges in 2024. If we look now at the debt structure and financial position per entities, on that trend, Belron reached senior secured net leverage ratio of 5.15x, down from the estimated 5.5x at the announcement of the transaction. With regards to Moleskine, TVH and PHE, we have a pretty stable situation with regards to their debt. And auto, D'Ieteren Auto, as you can see, they delivered strongly in 2024, thanks to the strong free cash flow generation. They only had a debt very close to 0 at EUR 12 million. Finally, at the group level or the corporate and unallocated, we had more than EUR 100 million of cash at the end of the year, and our net debt was of EUR 652 million. As Francis said, yes, we have repaid 1/2 of the bridge loan effective today, March 10, simply because it is 3 months since we did draw on the D'Ieteren Group debt on December 10, and we have used for that a cash upstream by D'Ieteren Automotive.

All right. So if we go into the activities, and I'll start with Belron, and I'll go immediately to Page 12, where you see a breakdown of the sales evolution. You can see on the table on the right that the 6.8% is decomposed mainly in organic growth of 5.8%, but quite different in the 3 different regions. It's been basically relatively flat in North America with 0.2%, but a very nice double-digit growth in the eurozone, 15.6%, and also a very nice 9.8% growth in the Rest of the World. The acquisitions contributes for 0.9% and the ForEx effect was 0.1% overall. The volume growth was there, but it was, of course, quite modest, with 1.5%, mainly driven through the eurozone and some of the Rest of the World. And we could actually capitalize on that given that we had good capacity and increased level of mobility in those markets. In the U.S., the volumes were affected both by the mild winter in the beginning of the year in H1, but also by the more challenging conditions in the insurance segment. There was some claim avoidance behavior that we've seen in certain sets of customers. And so that is something that has not helped the volume effect in the United States last year. The recalibrations of ADAS continued its growth trajectory. We're now at 42.2%. So that's close to 6% higher than before. And also value-added products and services grew nicely. The attachment rate is now close to 24% at 23.7%. The results on Page 13. As you can see, the 6.8% top line became a 10.5% increase in adjusted operating result. There were still some transformation costs...

Excuse me, ladies and gentlemen, please continue to stand by your conference. We'll resume momentarily. Thank you. [Technical Difficulty] And excuse me, presenters, you may continue.

All right. We seem to have some phone line issues tonight, so sorry for that. I was talking about the operating results at Belron and that there are also some transformation costs at play if you go in translation to PBT. So there were EUR 83.7 million transformation costs, EUR 25.1 million classified as adjusting items. The margin did increase with 70 basis points year-on-year, 77%, if you take constant currency. So we're now at 21.2%, so nicely on track to our 23%. And our net finance costs, of course, have increased. The impact has been about EUR 60 million in the year 2024 due to the new debt issuance in October 2024. And the PBT group share has been impacted by that, of course, as well. If you would not have had the additional financial charges, the increase would have been 7.3% year-on-year on that particular metric. The adjusting items on Page 14 at Belron, you have the usual components of EUR 71 million linked to the long-term incentive programs. Close to EUR 34 million linked to customer contracts and amortization of those, so linked to recent acquisitions. And in the other adjusting items, there were a couple of ones that I could highlight: some legal claims in the order of magnitude of close to EUR 33 million; some system integrator fees, EUR 25 million that are linked to a transformation program; and a couple of other ones that you can read in more detail on the chart. There's also been an adjusting item linked to the net financing, EUR 41.4 million. That relates to the whole refinancing exercise and issuance of new debt that happened in October of last year. So that's the adjusting item. On the free cash flow and net debt for Belron, nice level of EUR 462 million. Of course, lower than the year before, because we have higher cash interest, about EUR 159 million more and now at EUR 355 million linked to the new debt. There's been a bit of more cash outflow linked to some of the adjusting items as well and a bit of working capital outflow versus an inflow that we used to have in 2023. So if you take those 2 elements together and take into account the higher EBITDA, we basically get to the EUR 462 million. CapEx was also there, about 1.7% of sales, so a good and average level, I would say. We have, of course, increased our net debt. We're doing EUR 9 billion more or less in total at Belron. But despite the fact that we started at 5.5x leverage in October, we have already managed to reduce that leverage, 5.15x by the end of December. And so in that sense, the deleveraging that we've talked about before has kicked in already again at Belron. In terms of latest developments, the refinancing, I think, we've talked about sufficiently. You are aware of the new ratings that have been in place since that financing of October. It's BB- at S&P; it's Ba3 at Moody's; and BB at Fitch. Belron did actually 26 bolt-on acquisitions, relatively smaller ones, spending about EUR 93 million in total, both in Europe and in the United States. And as you also may recall, we did have, at the end of October, a small transaction between 2 minority shareholders at Belron of about 1.4%, where the company had been valued, at least equity had been valued at EUR 23.5 billion. The outlook for 2025. A mid-single-digit organic sales growth thanks to, of course, continued price/mix, increased ADAS calibration. Modest volume growth is what we anticipate for 2025. We are very much on track with our 23% adjusted operating margin ambition for the full year '25, linked to both top line drivers, product programs, the transformation benefits that, of course, start kicking in more and more and then the free cash flow is expected to remain at a high level at Belron. I suggest we first go to Auto, and we'll continue like this before we start opening for questions. So D'Ieteren Auto, Edouard?

Yes. D'Ieteren Auto. As I said, record year for D'Ieteren Auto, both in terms of margin [indiscernible] free cash flow generation. Particularly good performance in Belgian new car market, which has contracted by 6% or 6.4% if we take in terms of registrations, net or gross. The market share of D'Ieteren Auto has remained -- has declined slightly to 24% versus 24.2% in full year '23. That means that the total number of vehicles of 119,800 units have been delivered, a bit lower than 2023 by 4.1%. Important to flag is that the order book has now fully normalized at the end of the year to reach a level of 23,500 at the end of 2024 versus 58,000 at the end of '23. This means that the top line has decreased by 0.5%. In any...

And excuse me, ladies and gentlemen, please continue to stand by. Your conference will resume momentarily. Thank you. [Technical Difficulty] Excuse me, presenters, you may continue.

Thank you. So as we were saying, top line, a slight decrease of 0.5% at D'Ieteren Automotive, primarily explained by favorable price/mix effect and sales growth, positive and strong as well in various activities, such as spare parts and accessories and aftersales, both close to 12%. Throughout the year, there has been some tight cost management at D'Ieteren Auto. This has led to a strong 21.2% increase in adjusted operating result to close to EUR 270 million with, as Francis highlighted in introduction, a record adjusted operating margin of 5.1%, plus 92 bps versus last year, right? Adjusted PBT group share also improved strongly by 13%, and we have to flag a negative contribution of equity accounted entities at EUR 17 million. This is mainly due at VDFin Volkswagen D'Ieteren Finance of a decline in residual values and remarketing activity, particularly and mainly in BEVs, so in electric vehicles. As we have seen throughout the market for electric cars, residual values have declined in 2024. And finally, indeed, a very strong free cash flow at D'Ieteren Auto of EUR 362 million. Strong increase of 160% year-on-year, or EUR 223 million, mainly reflected by the strong operational results and a significant working capital inflow. It's mainly the normalization of the order book and the delivery times and as well lower CapEx. Now if we look at the Belgian market for a second on the next Slide 30. We can see that we had 448 gross registrations, a decline of 6%. Since COVID, the high point had been in 2023. And D'Ieteren Auto delivered a slight decline to 24% market share versus 20.2% a year earlier. To flag, nice gain by Skoda and Porsche. Porsche above 1% at 1.04%, which is worth flagging, right, because definitely good margins by Porsche both in retail and import. And slight decline for Volkswagen, Audi and the Cupra brand. Also to highlight for commercial vehicles, D'Ieteren Auto delivered a market share increase up to a new record of 12.6%. If you look at the mix, the fuel mix environment, we had, for the first time, the new energies, which represented the majority of the market, and as well for the first time, electric vehicles, which surpassed hybrid vehicles in Belgium, 29% versus 24%. Important to flag that D'Ieteren Auto remained the market leader in the market in 2024 with 24.1% in EVs. And that if you -- we can see that in 2023, there had been a higher share of business customers also because we have had a change in tax treatment for cars in Belgium around mid-2023. And we can see that at 62% in 2024 for business customers, we are now closer to the multiyear normal. We have talked a bit about the results. But again, we can flag 119,800 new units being delivered, a decline of 4.1%. But strong, very strong results by D'Ieteren Auto and strong margins in this environment. It has been, in a sense, with the reduction of the order book, it is pretty much the end of what we had called the premiumization or the positive results of the chips crisis, which had led to a positive price/mix effect as we'd said. On top of the strong performance of spare parts and accessories at plus 11.7% year-on-year to EUR 366 million and aftersales, also double-digit growth. And as we had said, adjusted operating profit margin standing at a record 5.1% versus the 4.2% in 2023. Finally, with regards to VDFin, we already said about this. In terms of free cash flow and net debt on Slide 22, very strong free cash flow, as we said, mainly the result of the strong operational results with an EBITDA increase of EUR 57 million...

Excuse me, ladies and gentlemen. Please continue to stand by your conference. We'll resume momentarily. Thank you. [Technical Difficulty]

Hello again, everyone and... Are we live?

Please go ahead.

Thank you. Hello, again, everyone. Apologies for these technological issues. So we were on Slide 22, free cash flow and net debt of D'Ieteren Auto. So very strong free cash flow generation at EUR 362 million compared to EUR 139 million last year, a strong increase, right, of plus 160%, mainly related to the strong increase in operational results, significant working capital inflow of EUR 211 million related to the whole normalization of working capital in the retail and order book. And finally, lower CapEx as well of only EUR 12 million. That has led to a significantly lower debt, which has decreased from EUR 250 million at the end of '23 to only EUR 12 million at the end of '24 related to this very strong free cash flow generation by D'Ieteren Auto. In terms of latest development and outlook for '25, we said indeed that the order book stood at 23,500 vehicles at the end of '24. The company, both the Porsche center in East Flanders as well throughout the year, across the new dealer management system has been implemented. And finally, D'Ieteren Auto obtained the Ecovadis Gold Medal as a reflection of their good efforts in the sustainability field. Finally, in terms of outlook, we expect the Belgian market to be between 420,000 and 450,000 new registrations versus gross registrations of 448,000 in 2024 and indeed, after a new record year in full year 2024 and a normalized order backlog, sales should be impacted by the market evolution and this mix normalization we talked about, right, at the end of the premiumization. Hence, we expect a decline by low to mid-single digits year-on-year, which, of course, is very much related to the Belgian market size we talked about a second ago. Finally, adjusted operating result margin is expected to return to at least 4%, still above historical trends, but driven by this expected decline in sales and mix normalization.

Thank you, Edouard. We'll move to PHE. The highlights of 2024 PHE were a good solid growth of 8.1%. 5.2% was organic and the rest was basically 2.9% coming from acquisitions. I'm on Page 26, immediately giving you a bit of flavor of the sales and the results. In the sales, France, still represents 64% of sales and international, about 36% of sales. International actually grew a little bit faster than the French activities. The adjusted operating profit margin is now 9.3%. And that's given the profitability improvements, both in France and international. There's also been some good cost containment although there were still some cost items that had inflationary pressure, particularly around building rental costs and personnel costs. There were some adjusting items at PHE, EUR 57.5 million, mainly linked to PPA and [ applications ] linked to acquisitions and some cash settled share-based payment expenses as well. The overall contribution to the adjusted PBT group share is above EUR 165 million now, which is a 20.3% increase from the year before and is, by now, about 15% of our overall KPIs. The free cash flow and the net debt at PHE on Page 27. Well, the free cash flow was about EUR 85 million. There was some nonrecourse factoring reserve drawdown happening, which had an impact of EUR 71 million, and then we have the strong operational results. There were also some acquisitions, of course, more than the year before at PHE, EUR 96 million, partially linked to direct stakes in Spain, Belgium and France, but also linked to some of the put liabilities that existed between the different activities, and we had some higher cash interest charges as well at PHE. CapEx was about 1.9% of sales. The net debt declined EUR 77 million, thanks to the good cash flow generation. And it is important to note that when we talk about net debt at the level of -- in our definition, it does not include some of the put options that may exist either at a subsidiary level or at the minority investor level at PHE. The latest development of PHE, while we did do at the beginning of the year or last year, a refinancing worth of EUR 960 million in a Term Loan B with a 7-year maturity, was then repriced in November. We have then received new ratings from Moody's and S&P. We're at B1, stable outlook and BB-, stable outlook. We have, of course, also continued our acquisition strategy this year. We have actually recently announced that we're in exclusive negotiations with an Irish operator, Top Part, that hopefully soon will be able to contribute to PHE as well. Our outlook for 2025 is a mid-single-digit organic sales growth and a stable operating result margin to be expected. So that's PHE basically.

Very good. If we move to TVH. Definitely, we had a rebound following the cyberattack in 2023 at TVH in an environment of cost containment in the company, but in context of relatively softer end markets. We always talk about the mixed picture, right, across markets and regions with definitely some softness across these different markets for TVH in 2024. This allowed to have sales growth in Slide 31 of 4.3% year-on-year, out of which 3.4% organic, largely driven by the recovery from the cyberattack; 1.1% due to M&A, mainly Sincanli in Turkey. As a reminder, I think Sincanli was an agri spare parts distributor, both local and international based in Turkey with a good hub of Turkish manufacturers. And finally, minus 0.3% due to negative currency translation effects. The adjusted operating result has increased by slightly more than 20% to EUR 262 million, representing a margin of 15.6%. This is an uplift of 206 bps, mainly driven by this revenue growth, strict cost containment and an amount of EUR 6.6 million of cyber-related insurance income in 2024. To be highlighted, the transformation program continues and has led to operating costs of EUR 32.1 million, out of which around EUR 9 million in adjusting items. Various adjusting items as well at the operating profit level for an amount of EUR 105 million, mainly the PPA -- mainly related to PPA and provisions for LTIP program. Finally, adjusted profit before tax group share amounted to EUR 97.6 million, plus 30% year-on-year, partially supported by lower interest charges largely FX related. If we look at the free cash flow and the net debt of TVH, we had a stable free cash flow year-on-year of EUR 84 million. Of course, thanks to the strong adjusted EBITDA growth of close to 20%, but a good control of CapEx, slightly below 5%, and a negative delta of working capital year-on-year and a bit more acquisitions than in 2023, as we said, around Sincanli in Turkey. This led us to a net debt of slightly above EUR 770 million, but with a net leverage of only 2.5x, which went down from 3.1x at the end of 2023. And TVH has distributed a EUR 73 million dividend in 2024 aligned with its dividend policies. In terms of latest developments and full year 2025 outlook, after 6 years, by solid work by Mark Oosterlinck, the current CFO, we have a new CFO coming in with 30 years of international experience to lead TVH to the next levels. Also to flag Innovatis, the digital transformation program continues to make progress among other things with operational solutions expected early 2025 in North America and continued improvements around various e-commerce platforms, which are important for the customers. And finally, on top of the Sincanli acquisition, TVH also did 2 smaller deals, one in the U.S. and one in Colombia, which is, of course, important for the global footprint. Thanks to all of that, the outlook for 2025 is an organic top line, which is expected to grow by a mid-single-digit percentage, reflecting market share gains, but in a still soft market environment, among other things, in the United States. We expect a slightly declining adjusted operating result margin for 2 main reasons: dilutive sales mix, higher growth expected in construction than in NPA and, of course, an absence of that cyber-related insurance income, which we received in 2024. And finally, free cash flow generation expected stable compared to 2024.

And then we come to Moleskine, where the sales declined with 6.1% in 2024, mainly organic. We did, however -- because the whole sector suffered overall, were able to reinforce and grow our market position in the core papers product at the wholesale customers and at our direct channels. We saw a year of cautious discretionary spending around the globe. So the category did see a decline. There has been a negative operating leverage. So our operating result did decline with 34.2%. However, and that's particularly the strength of the Moleskine economic model, the cash conversion even in the situation remains very good, and so we're at 81%. And so they were able to also pay the interest on the shareholder loan we have with them of EUR 18.8 million in total. The net debt ended at a level of EUR 266.5 million in particular. And so there were also some financing costs of EUR 18.1 million. The PBT group share ended at minus at EUR 3 million. On Page 37, the free cash flow. I talked about the EUR 18.8 million interest payment and the cash conversion of 81%. And you can see the details of where the net debt landed in more detail in the table. The latest development is, of course, we have a new CEO since the 1st of January at Moleskine as Daniela Riccardi retired after 5 years at the company. And Christophe Archaimbault, who was the Chief Commercial Officer, has taken on the role of CEO now. Second, we have continued to pursue a cautious store footprint increase where we have relatively small stores actually that were adding surgically to our footprint. We've added 6 of those in 2024, and we'll continue to look at key cities around the world where that could make sense. We've also continued to develop the product lineup. We had a very successful Van Gogh edition that has actually received an international award. There's a couple of other very nice, limited editions that Moleskine was able to develop. Our outlook for 2025 is a mid-single-digit sales increase and an adjusted operating margin that should increase above 100 basis points versus 2024. So with that, we have the corporate and unallocated and the wrap-up, I would say, for questions.

Absolutely, yes. I think the corporate and unallocated is pretty self-explanatory.

Exactly.

So we might want to [indiscernible] and ask more questions.

So let me just open it up to questions. I think that will be the best thing as we've already spent about 40 minutes in this call. Any questions?

[Operator Instructions] And your first question comes from the line of David Vagman with ING.

Yes, David Vagman from ING. Can you hear me well?

Yes, we can.

Okay. Perfect. Just a first question to clarify the guidance. So you're saying that the guidance is at comparable financing perimeter in both years and is expecting to slight -- expected to slightly increase. Just to be sure I understand correctly, the comparison base then is EUR 1,090 million. That is the right way to understand the comparable financing perimeter? And then we need to adjust for the financial charge at Belron and the holding level. So the EUR 140 million and the EUR 40 million.

I'm happy to take that one, David. So indeed, to clarify, in 2024, our PBT group share at December '24 FX, so foreign exchange and excluding the negative EUR 24.8 million net impact from the additional financing both at Belron and at corporate is at EUR 1.1 billion. And that is expected to grow slightly. You then have to take the full effect in 2025 of the additional financial charges, which is EUR 140 million at Belron, our share, right, the Belron group share and EUR 40 million at the corporate level for our size of the debt. So that is what we mean by slightly increasing on a comparable perimeter. Okay?

Okay. And we don't need to, let's say, adjust for the charge you had at Belron level and make a complex calculation on the EUR 60 million you had already in 2024. So group share at 30 and then something else. Now it's really the EUR 1.100 billion, as you said, for FX at the end of the year.

But indeed, how do we get to the EUR 1.1 billion, it is by taking care of the EUR 24.8 million, right, both at Belron and corporate. Like you said.

Yes. Okay. Okay. Okay. Then another question on Belron. So you said you're on track to reach the 23% and so, we have been picking the past and still today. So the objective in 2022 was at least 23%. So here, in recent press release, you've been saying 23% and not the at least. In the past, you've also been saying you were comfortably on track. So can you just give us a bit more color about the 23%. Actually it's a big step up and I'm not downplaying the achievement for sure. So that's my first question to clarify. And on, let's say, the building blocks of this 23%, so you go from 21%, I think a little bit more than 21% at the end of -- for the full year, sorry, 2024, so 21% EBIT margin and you go to 23% or you've been thinking and modeling 2025 in terms of margin, et cetera?

So the guidance is exactly the same as we've been saying in the last 3 years, and so it doesn't change at all. So we are on track to reach what we said we were going to reach. And so the 21.2% from which we now start because that's the number that we landed in 2024, we see, of course, different contributions. Part will come from the translation of the top line development into bottom line. Part will come from the continued benefits from the transformation program, which progresses nicely. Part of it will come from the fact that there's, of course, recalibration and [ VATs ] and so on that will continue to develop and some overall, let's say, good cost containment that -- or continuous improvement overall, I would say, that happens across the company. So it's all of these elements. And then there will be some volume, as I said, some volume effect in there, more a modest volume increase and the normal pricing effects that you can anticipate in the normal environment that we have. So it's a combination of all the typical levers that we've seen at Belron, but added by some of the facts that, well, the transformation program is getting in fuller scene, and we have, let's say, the way the budget has been made and that makes us comfortably on track to reach the targets that we set before.

Okay. Very clear. And last question, and then I'll give back, let's say, the mic, on TVH. So you still -- you're saying you expect to grow by mid-single-digit percentage in a still softer environment and reflecting market share gain. Can you also give us more color on that? So do you expect the market to be down and to grow, the market to slightly recover? What is basically behind the guidance for the top line?

Yes. The guidance actually assumes that there will be a continued mix of markets where we're not fully in full swing in the market environment and so that we can actually develop our market position as we normally do, but in still a mixed market environment. So that's why we have a mid-single-digit top line growth.

Indeed, very much across geographies and markets, right, like Francis said.

Okay. The mix means some are positive, some are negative. Can you...

Yes. Given the market position that we have...

Some have stronger growth, some have lower growth indeed, so leading to a mid-single digit top line overall.

And your next question comes from the line of Michiel Declercq with KBC Securities.

Two questions on Belron, if I may. Just referring a bit to the top line out to mid-single-digit organic sales growth. I have the feeling that this is a bit softer than what you had in the previous years, the mid- to high single digits. So I would suggest that -- I know that 2024 was a bit of a difficult year in terms of demand and the insurance premiums. Based on your outlook, I would assume that also 2025 might be a bit more difficult or at least it shows that maybe the impact of the increased insurance premiums and the claims avoidance continues. Can you maybe give a bit of color there on that mid-single-digit organic outlook? How we should see that between the U.S. and the EU? And maybe also, I was assuming that there were some price negotiations ongoing as well. So I would have expected some positive tailwinds from that also. And then the second question on Belron is on the strategy here between the insurance and the cash market. Last year or starting at the end of 2023, you focus more on the technician retention. What is the strategy here now? I assume that, yes, maybe this could be a bit of a tailwind if you decide to change the strategy here from a margin front given that, that was a bit of a drag in the first half of 2024 and the end of 2023. So if you could maybe comment on that as well?

Okay. So the top line, yes, we anticipate the normal developments at Belron. And so we don't have, of course, a very long visibility looking forward and how things may change, but you still have some of the same effects of last year continuing this year. Most likely, that's at least the way we've made to the budget, I would say. And so we'll see what that will translate to in the different regions of the world. And so as you know, Q1 is typically also impacted by a couple of other things as well. And then there, things are maybe a bit different from last year. But in terms of the insurance dynamics, the budget has been made in the kind of a, well, this is slowly going to start to normalize again, but it may still take, and we don't have that much visibility, how long that will last. And that neatly links to your second question. We, of course, are looking at all the segments in the market, but our position is the biggest in the insurance market. And so even if we do good efforts in developing some other parts of the market like the cash market, that doesn't play in each of the states necessarily. It doesn't necessarily play at the same size either. So we, of course, are pursuing these things. And so all of these things together lead us to this mid-single-digit top line evolution of Belron in the way we've made the budget.

Okay. That's clear. Maybe as a quick follow-up, we have seen quite some storms in the U.S. on the East Coast in the first half or some difficult or cold weather conditions. Shouldn't that be also a tailwind for this year?

Well, maybe we'll see. Yes, a bit early days. As usual, we'll have a better view on that once we're in the month of May and we have a good view on the Q1 top line. So I think that we'll have a better visibility on that. But it's true that there has been some decent winter vortex elements in some of the weeks in the U.S. -- in some parts of the U.S.

And your next question comes from the line of Alexander Craeymeersch with Kepler Cheuvreux.

Alexander from Kepler Cheuvreux. Two questions from my side. So one, I'll probably pick on David a bit here. So for the 2025 outlook, I'm trying to figure out the implied profit before tax group share here. You mentioned a mid-single-digit growth and a rather large margin increase in most segments, except for the auto. And starting from that EUR 1.1 billion in profit before tax in 2024. And then assuming the EUR 180 million that we need to deduct, would you allow me to pinpoint that your implied profit before tax group share is between EUR 960 million and EUR 980 million? And then I'll immediately go to the second question. So on TVH, the sales post the cyberattack, the cyberattack in TVH still hasn't really fully recovered. So is there still an impact of that cyberattack? And how do you plan to get TVH fully back on track with its growth ambitions?

I'll maybe start with the second one first. So of course, the effects of the cyberattack are really behind us, and it's really been more the softness of the markets that has actually led to less growth on the top line of TVH in 2024. So with the percentage of growth that we've had at TVH, we have "a note" the cyber effect of 23%, but we have not had additional growth beyond that very much in 2024. And so when we're now in 2025 say that we want to do a mid-single-digit growth, that means, of course, we will continue to grow our market shares and our positions in the markets in an environment where some of the markets will have some growth and some of the markets will have less growth. And so that's more behind it. What we are continuing to do is a very surgical fine-tuning, looking at the share of wallet of all of our different customers and making sure that we continue to have a good representation, a good share of wallet in each of them. But not all the customers have the same utilization rates. Not all of them have the same growth rates in their equipment and, therefore, the demand for spare parts, et cetera, and so that is actually behind the somewhat softer top line that we have seen and that we have used to come up with our mid-single-digit top line growth for TVH.

On the first question on the guidance, absolutely. So we are not providing a range, but I can repeat what we have said, right? We did provide the figures. So what we expect is a slight increase from the level of EUR 1.1 billion and the EUR 140 million plus EUR 40 million, which is EUR 180 million of full year financial charging, both at the Belron level group share and at the corporate level in 2025, right. So normally, that should make it pretty straightforward.

Okay. That's very straightforward. That's why I dared to put out those numbers. So just maybe I'm going to ask it in this way. EUR 980 million, do you feel comfortable with that number?

We're not going to guide on a specific number.

[indiscernible] are at the base that we just mentioned.

And your next question comes from the line of Kris Kippers with Degroof Petercam.

Can you hear me?

Yes, we can.

Okay. Perfect. Just one question still on Belron. Looking at the winter effects. Could you share with us a bit more detail on indeed keeping those blue collars on the P&L, what that altered in this winter? And the second question, just a financial detail perhaps, but looking at dividends. The EUR 1.6, how should we look at this going forward? Will this be -- should we be using a payout or just something that goes roughly up with PBT or something like that?

Well, on the blue collars, so last November, December, we reverted a bit back to our former approach, I would say, is to -- from a couple of years ago, where we said, well, we're going to -- we're not going to keep everybody just hoping that we will meet them. We just basically live through this -- the low season with a lower level of capacity, but have differentiated between the level of expertise and the level of experience of our technicians to then, of course, mainly hold on to the ones with most of the experience to -- as the volumes then come up as the winter now unfolds to not have to recruit too many people. So we have kind of reverted back to our older approach rather than the one that we had done between end of 2023 and the beginning of 2024. On the dividend policy. Edouard, do you want to say something?

Sure. Yes, the dividend balance of EUR 1.60 per share, so it is a decision of our Board of Directors. But indeed, our policy stays the same, to have a stable or increasing dividend going forward when business allows. And given the large dividend, of course, we have paid last year and given that we start 2025 with some leverage also at the different group level, which we have already lowered, right, by EUR 250 million today, for all these reasons, that's why what will be proposed to the shareholder meeting is the dividend of EUR 1.60 per share, also to be a bit cautious on the cash side and at the group level.

Yes. And I think it's too early to speculate on what KPI would we use if you were to think of increasing, will we increase following a ratio or this or that. We'll take that next year when there is a decision to be able to draw dividend in February or March of 2026.

Absolutely. The whole idea of the rebasing definitely is to start from there at stable or increasing going forward. A bit as we had done in the past as well, when, if you look at the -- we had a nice CAGR in the last 5 to 7 years, and we are not committing to anything, but we rebase at that level.

Okay. And then just a small follow-up. Just looking at the cash upstreaming you already did from auto in start of 2025. So already 1/4 actually, the EUR 1 billion you raised at group level's already repaid. What is the leverage we should look at going forward at auto? Where are you comfortable with going forward.

So yes, it's 1/2 of the bridge, right? So it's EUR 250 million, right, which has been repaid. And so what -- so we are not stating anything in particular at this stage. It's just strong cash generation in 2024 at auto, as we said, right, more than EUR 360 million. And so following this, it was very simple to do some -- to upstream some of that cash early 2025 to reduce by EUR 260 million of debt. We'll provide more information on all of this at the Investor Day in May.

And your next question comes from the line of Jeremy Kincaid with Van Lanschot Kempen.

I've got two questions on PHE and then two questions on Belron. Starting with PHE. If I look at the organic growth rate in the second half, I get to a number around 6.2%, which looks very strong compared to the previous half and also compared to peers in the market. So I was just hoping if you could talk to some of the dynamics there as to why that number is so strong. And maybe if you could break out the price and the volume components of that, that would be very helpful. And then the second question on PHE. You've obviously expanded into Ireland now, which is a new strategic step for that business. And I was just wondering if you could talk to whether or not there'd be changes to the CapEx envelope that would be required to grow that business?

Okay. So on PHE H2, well, actually, H2 was, in that sense, a bit similar to H1. So we have very limited price and pricing effects overall. And so that means that the majority really came from volume effects also in H2. And that's both a continued growth in the market and the continued growth in the market share, and that's been both case in France and in the international environment. So in that sense, it's been relatively across the board, but mainly volume-driven elements at PHE and a lot less on the price effect. Because that's really kind of petered out and the umbrella under which we kind of operate didn't allow for many price increases. On Ireland, yes, of course, we want to close that deal in the coming time. But once it's there, it's not going to change or have a big impact on the CapEx profile of PHE. There's not anything we need to particularly invest in that activity that would change the CapEx profile of the company, as we usually do when that's the first synergies that will be looked after will be, of course, procurement synergies and we'll work from there. And then the other things will follow more the development of that Irish operation. They are not covering the entire country at this stage. And so at some point in time, it may be useful to look at whether they would want to keep playing exactly the same role as they do today or whether they would have a broader role, but that's really something to be decided at a later point in time.

Just to reinforce that point, it's very much continuation of the ink spot strategy at PHE and they can easily ship from France, from close to Logisteo to Ireland. So it's good as well like what we said on the purchase in 2019.

Sure. And then just two questions on Belron. Organic growth in North America has been flat for 3 halves now and implicitly, you're guiding on 2 more flat halves largely due to this claim avoidance trend, which we're seeing. I still personally struggle to understand the claims avoidance issues. So just wondering if you could provide some context to how long you think this behavior might last and whether or not there's any catalysts that could see claims avoidance behavior abate? And then the second question for Belron is you talked to some legal claims that came through in the one-offs. I was just wondering what those were.

Okay. Well, on the organic growth claims avoidance in the U.S. is of course, triggered by the relatively drastic insurance premium increases that several insurers have done and when then consumers decide when they have a crack in the window to not use the insurance and just repair via cash involvement. And our position in cash has, of course, been a bit more opportunistic and less developed than in insurance. And so that means even if the volume was in the market, it may not necessarily have come to us because we are stronger in the insurance market than in the cash market. What may change that, what could be a catalyst to start thinking, well, what's the behavior of the insurance players that we're going to see? I think you have some insurance players who still talk about a little bit of premium increases here and there. But you have other insurers who start saying, well, I want to increase my footprint to go over my market share and these are in that state and who are talking about potentially decreasing their insurance premiums or not. So if that happens, then there's less reason for people not to use the insurance anymore, and so then this claim avoidance would start reducing like we've seen that in the past. And so it's basically, what we're monitoring is the competitive behavior of the insurance players in the different states in the United States because that will ultimately trigger to what -- when it gives people a good reason to continue to practice claims avoidance or not. And so that will trigger that. On the legal claims?

Yes. On the legal claims, what we are talking about is what has been called the [ quitam ] of a case. So it dates back a few years back during the COVID-19 pandemic. And Safelite has reached a final agreement to resolve its litigation, which was relating to insurance billing of aftermarket windshield molding and the care and cleaning program. So to be clear, Safelite has denied all allegations made in this case. But after careful consideration, the decision was taken to settle because this seems like the best solution for our stakeholders and to allow Safelite to continue going forward.

And then there have also been a couple of other, let's say, legal claims that you typically have every year that may be linked to an accident that happened or things like that so that from time to time, you have these type of things.

[Operator Instructions] And your next question comes from the line of Victoria Adesina with Barclays.

Just a quick one on tariffs. Obviously, a very popular topic at the minute. How should we be thinking about how the tariff situation affects D'Ieteren?

The tariff situation. Well, so you have a couple of our activities that are not affected, I would say, especially for our product throughout the U.S. So PHE also will be not affected at all. In Moleskine, we shipped the notebooks around the world, but we had anticipated because we've listed that a couple of years ago, we also do not anticipate this was an effect either. TVH and Belron, which are the activities that have big U.S. activities, while sourcing for TVH happens around the world from all kinds of regions, again, they have looked through that 5, 6 years ago as well. And so of course, what we are trying to do is to -- yes to make sure we have as flexibility as possible to source your different spare parts around the world, so then you want to get them into the U.S. if that will be the issue where you would want to sell them from, and then try and deal with any tariff impacts you may have at that level. At the level of Belron, we know that in the U.S., we are already reliant for a large degree on domestic glass production. So we are importing a little bit, but not that much. And also that is something that we have dealt with in the past. So again, if, of course, tariffs would start to lead to a real inflationary environment again, we're going to, of course, have to apply what we applied to the previous inflation wave, which is to try and price it through, which is ultimately what we will be doing then.

And I'm showing no further questions at this time. I would like to turn it back to Francis Deprez closing remarks.

All right. Well, thank you very much all for joining the call. Apologies again for the technical issues we had, but I'm sure we'll be able to talk to several of you in the coming days and weeks more about these results or any other issues. So thank you very much, and have a great evening.

Thank you. Goodbye.

Thank you, presenters. This now concludes our presentation. Thank you all for attending. You may now disconnect.