Forvia SE (FRVIA) Earnings Call Transcript & Summary

Ladies and gentlemen, dear shareholders, I am happy to welcome you to the Annual Combined General Meeting of FORVIA. For those of you who don't know me, I'm Michel de Rosen, Chairman of the Board of Directors of Forvia. I have with me Patrick Koller, CEO and Director; Olivier Durand, Chief Financial Officer; and Jill Greene, our new Chief Legal and Secretary of the Board of Directors. This annual moment is an essential event to inform and discuss with our shareholders about the results, prospects, strategy, governance and social and environmental goals of the group. I would, therefore, like to thank you for coming today. I would also like to thank the many shareholders who have already cast their votes by mail and those who are following the general meeting remotely. As you know, this general meeting is streamed live on our websites and is recorded and will be made available for later viewing. I would also like to thank the members of the Board of Directors, who are present in the room today or who are following us remotely. In 2023, in spite of a particularly complex and unpredictable environment marked by persistent inflation and high interest rates, the group maintained sustainable and value-creating growth. Commercial successes were recorded in all areas, in all business lines, especially those devoted to tomorrow's mobility such as hydrogen and sustainable materials, allowing for high-end selective order intakes for a total of EUR 31 billion for 2023. After the acquisition of the majority stake in HELLA in 2022, FORVIA has become a global connected mobility leader, mobility that is connected, personalized and sustainable. A titan fruitful cooperation with HELLA teams helped already achieved many synergies in 2023, ahead of the road map leading us to raise to over EUR 350 million the cost synergy goals by the end of 2025. This is the outcome of considerable collaborative work between the teams of Faurecia and HELLA. This is also evidence of the strength that these two companies have when they work together to create value for the entire group. As we regularly communicate, the group's deleveraging has become an absolute priority in the current macroeconomic context, marked by higher interest rates than in previous years. In line with this imperative deleveraging, the group has met its commitment by publishing results in line with its Power25 plan. The efforts made in terms of cash generation and the finalization of the first EUR 1 billion asset disposal program, therefore, helped reduce our debt by EUR 1 billion in 2023. A second disposal program of the same magnitude was announced at the end of 2023, and it will be a contribution to further deleveraging of the group. All this is done with professionalism and talent by the excellent team in our financial department. FORVIA is, of course, a forward-looking company. In February 2024, the group announced the launch of the EU-FORWARD program. This project, which is a 5-year project, aims to strengthen the competitiveness and agility of your group's business activities in Europe. With this project, we will achieve higher profitability in Europe, in particular, by accelerating the rollout of artificial intelligence within FORVIA in order to optimize investments and R&D costs and through an improved management of programs and factory utilization. As you very well know, the automotive industry is transforming in general in the world and, in particular, in Europe. We have no choice in the matter. We need to adapt to these changes to remain a competitive leader. The EU-FORWARD project is in line with this imperative. In this project, we are very careful about the social and labor dimension. The various local teams in Europe are actively working on promoting internal mobility as well as local partnerships in order to offer a viable future projects for European team members who will be impacted. Several years ago, the automotive sector was stable with good medium-term visibility. In 2024, such is no longer the case. Our environment has become more volatile, more unpredictable, especially when it comes to geopolitical factors or market changes or inflation. In such a context, the group needs to find the right balance between determination and agility. But be reassured, in this constantly changing environment, the group has major and valuable competitive advantages. Patrick Koller will tell you more about them in his comments. Of course, I hear your questions this morning again about the weak share price of your company. All members of the Board of Directors and the Executive Committee own FORVIA shares. Like you, we are frustrated when we see that the share price does not reflect the progress made by the company or its medium-term outlook. I'm very often asked why initiatives conducted to create value are not found in our share price. Well, yes, yes, I think that the share price does not reflect the true value of your company. Of course, we do not determine FORVIA's share price. This -- the latter is determined by the market. But since the beginning of the year, we have indeed underperformed our French peers. But since our last general meeting, we've done a little bit better than them, in spite of our debt, which is still high because of the recent acquisition of HELLA and which makes us temporarily less attractive for investors, who are reluctant to buy leveraged stocks in a global environment, which invites to caution. It is my belief that as we further continue deleveraging the group according to an accelerated schedule, we will reduce the financial burden related to this debt, and we'll prove our ability to deliver on our Power25 goal. So the group will recognize the value creation potential of our -- of your group, and that will be reflected in the FORVIA share price. But be reassured, dear shareholders, that all leaders of your group are fully mobilized to serve FORVIA's best interests. On my behalf and that of the Board of Directors, I want to express our gratitude to Patrick Koller and the -- his colleagues in the group's management for their commitment. Every day, they fiercely fight with courage, energy, good judgment, professionalism and integrity to grow FORVIA and reach their goals, our collective goals. To close this introduction, I would like to thank you, dear shareholders, for continuing on in this journey with us, in your commitment to sharing our goals in terms of sustainable development and value creation, for believing in our long-term value vision for FORVIA. Thank you for your loyalty and patience. I would like to recognize all employees of the two companies of the group for their engagement, their creativity, their solidarity and agility in the way our companies work in -- according to the challenges of a deeply transforming industry. Finally, I wanted to recognize two exceptional people. Jürgen Behrend left our Board of Directors last July in 2023 after our last general meeting for personal reasons. Before that, he was the CEO of HELLA. He played a key role in the decision of HELLA's family shareholders to sell their stake to what was then Faurecia. We will not forget him. A second tribute, Odile Desforges. She is leaving us after this general meeting as -- after her term as Chair of the Audit Committee. With her wisdom and remarkable elegance, Odile was for 8 years a pillar on our Board. I would like to warm heartedly thank her on our collective behalf. I'll come back to the leadership team here. You know Patrick Koller and Olivier Durand fully. You don't know Jill Greene that well. Jill is succeeding Nolwenn Delaunay, who left our group at the end of October 2023. Jill is a U.S. citizen, and she's very familiar with the group. She joined it in 2016, first of all, as Chief Legal Officer for the North American region and then as Chief Counsel in charge of international legal experts for the group and has been residing in France for 3 years. We also have with us in the room members of the Board of Directors, in particular, Denis Mercier, who is the Chair of the Remuneration Committee; Jean-Bernard Lévy, who is the Chair of the Governance, Nominations and Sustainable Development Committee. They will present the main topics discussed by these committees. And Esther Gaide, who will succeed Odile Desforges as Chair of the Audit Committee after this general meeting. We also have with us Nicolas Peter, member of the Audit Committee, who was coopted in October 2023. You are now asked to vote on ratifying his cooptation. This Combined General Meeting of Shareholders meets on first notice. The -- all convening information was made public in the time frame prescribed by law. The accounts, reports and all legally mandatory documents were made available to shareholders according to the provisions, legal and regulatory applicable provisions. All these documents, which I shall not read the full list of, are on the table at the back of the room, if you want to check. We will now appoint the bureau. We will check the quorum and remind you of the agenda of our meeting. I can see that amongst shareholders present or represented, we have the Peugeot 1810 company, represented by Guillaume Falguière; and the Faur'ESO mutual fund, represented by Daniel [indiscernible]. Both are here in the first row. If you agree, Guillaume Falguière and Daniel [indiscernible] agreed to act as scrutineers of the meeting. If there are no objections, thank you, gentlemen. I would like to inform you that Frederic Ludo, where are you, madame, yes, Bailiff is here to attend this meeting on our request to make sure that it is unfolding correctly. I suggest that Jill Green as -- act as secretary of the meeting. Thank you, Jill. In line with applicable provisions, I will chair this meeting as Chairman of the Board of Directors. I'd like to remind you that for the ordinary part of the meeting, the meeting can only validly decide if 1/5 of shares with voting rights are present or represented. And for the extraordinary part, the meeting can only validly decide if 1/4 of shares with voting rights are present or represented. Regarding the quorum, I'd like to inform you that the -- that FORVIA's share capital is currently made up of 197,089,340 shares. Out of this total number of actions, you need to deduct the number of treasury shares of FORVIA or 790,091 shares, this to obtain the number of reference shares for the calculation of the quorum. I've just given the numbers -- the number of shares owned by shareholders present, represented or who voted by mail or on the Internet who have given proxies is 120,511,230 shares, which is 61.39% of shares with voting rights. This is a much higher percentage than the quorum of 20% and 25%, respectively, discussed for valid decisions by the general -- ordinary and extraordinary parts of the general meeting. Since we have a quorum by a large majority, the meeting can validly decide. When it decides in the ordinary part of the general meeting, resolutions will need to be adopted with a simple majority. And when it decides for the extraordinary part of the general meeting, decisions will need to be made with a 2/3 majority. I'll remind you also that this meeting is asked to vote on the agenda that was communicated in the convening brochure that was made available to you before this meeting. No changes have been made to this agenda, and so I suggest that I do not read it fully. I'm now calling this meeting to order. This is the overview of our meeting covering the following subjects. First, FORVIA is a tech and sustainable group, a presentation of FORVIA leading positions in its business and in terms of ESG, financial performance 2023, a description of a quickly evolving environment in which FORVIA is operating, FORVIA's strategic responses, sustainable development and governance, remuneration of corporate offices, statutory auditors' reports, questions and answers and, finally, a vote on resolutions. Patrick Koller, Olivier Durand, Jean-Bernard Levy, Denis Mercier and the college of statutory auditors and myself will present these various topics. Before resolutions about, which Jill will say a few words, we'll now show you a quick video. And after the video, Patrick Koller will present the first topic, FORVIA, a tech and sustainable group. [Presentation]

Ladies and gentlemen, good morning. A very big thank you for being here with us today. After this video, I'm going to show you major progress of our company, which, over the years, has become a high technology and sustainable technology group. 2023 was characterized by contrasted environment marked by positive factors. The growth in automotive growth production -- growth in automotive production to 90 million vehicles and gradual improvements in supply chains. But 2023 was also impacted by strong inflation, high interest rates and unfavorable foreign exchange variations. Against this backdrop, the group's performance was robust, and we fully reached all our goals. Three key figures to remember: organic growth, 14%; increased operating margin, plus 100 basis points to 5.3%; and net debt reduced by close to EUR 1 billion. To summarize, all of our 2023 goals were met in line with our financial road map, Power25 and our deleveraging priority. This year, still, we've built on our strategy, which is fully aligned with the most buoyant trends in the mobility sector. This strategy is based around three areas. The first one is electrification, but also all the energy management part, which includes power electronics, as well as battery management. You can see that this is major growth that we have ahead of us between 2023 and 2028, plus 24% per annum. The second major segment is safety, which includes lighting and self-autonomous driving with growth of 11% per annum over the same period. And finally, regarding vehicle interiors, a cockpit, which is more and more digital, but also more and more sustainable with new materials, new architectures, which help significantly reduce the CO2 content. There also growth over 10% per annum. Beyond our strategic positioning, we also have a wide, balanced and diverse portfolio by business activity, by region and by customers. We have six main business lines with leading positions in each of them. We are global #1 in seating structure systems, our legacy business, and we are global #3 for full seats. We are #1 in the world for cockpits, and we are at the forefront in terms of development and production of sustainable materials, thanks to the creation of our MATERI'ACT entity. We are the global #1 for pollution control systems. Moreover, we have the ambition to become the global #1, and we are on the right track for that when it comes to hydrogen systems with major investment and successes in the last few years. We're also the global #3 in the area of lighting, and we are recognized as a technology leader in lighting. And we are positioned between #1 and #3, depending on the various segments when it comes to our electronics business. And finally, we are a leader in the European aftermarket, in distribution. Geographically speaking, we are present in all major regions with an international production network, with R&D centers and commercial offices as well. With that, we are able to be as close as possible to our clients, to understand their expectations in the various regions and to capture potential growth opportunities. Meanwhile, when it comes to our clients, we have a balanced portfolio of over 80 OEMs with an ambition for none of these customers, none of these clients to account for over 15% of our global turnover. In 2023, this wasn't the case. Volkswagen accounted for 17%. But there, too, we are on the right track that we have set ourselves. To conclude, we have a diversified and balanced portfolio, and this is very important because that will enable us to withstand the market turbulences, to better anticipate them and to better manage risk. In our permanently evolving environment, innovation is a key differentiation and success factor, but it also contributes to favorable pricing. This year, still, we have proven our ability to offer state-of-the-art technology, which is high performance and sustainable to meet our customers' needs. The group's footprint, as it is now, is no longer what you knew 10 years ago. From an equipment manufacturer, we've become a recognized technological leader. This year, still, our innovations were recognized by major international bodies, three received awards in the CLEPA Innovation Awards 2023, the European Association of Equipment Manufacturers. Another four were received awards at CES 2024. And more recently, two innovations were -- received awards as part of the PACE Awards of Automotive News. And of course, this made us really happy and proud amongst the team. Our leadership is also connected to the fact that all of our innovations aim to reduce our carbon footprint. 100% of our innovation projects should provide for a significant CO2 reduction. This is the rule that we set ourselves and that we check and control very closely. A few examples to name, but a few. NAFILean R, which helps reduce CO2 emissions by up to 85% compared to traditional materials. Here, these are door panels, developed by MATERI'ACT. This biocomposite, which is a mixture of natural fibers and recycled materials, will be found, for instance, on the new Renault 5 E-Tech. Now let's watch a quick video showing you a significant -- a detailed overview of our technology portfolio. [Presentation]

Nowadays, you can't talk about innovation without talking about sustainable development, and sustainable development is core to our strategy. In 2023, we continued making significant progress on our CO2 reduction roadmap, which was validated by the SBTi, a scientific consortium working under the United Nations. We are indeed the first automobile industry company in the world to have received SBTi certification for our carbon neutrality roadmap. It's an ambitious roadmap. We aim to achieve zero net emissions by 2045 with two midterm goals. In 2025, we will achieve carbon neutrality for Scopes 1 and 2. And in 2030, we aim to reduce our Scope 3 emissions by 45%. Now these are projects, which require us all to pull our weight within the company, and that is why we have launched the Designed for Scope 3 project, which I will present later. But on this slide, what you see is some of our achievements so far. On Scope 1 and 2, we are 1 year ahead of schedule compared to the roadmap as of end of 2023. Compared to 2019, in 2023, we achieved energy savings of 26%. And we've invested in renewable energy production capacity, 700 gigawatt hours in 2024, which is around 70% of our electricity use in Europe. So corporate ESG goals are -- remain at our core to what we achieve -- seek to achieve. And diversity is a subject we are taking it seriously. We've been working on that for a long time, and it's something which can foster innovation and growth. In 2023, we've continued making headway. We have 31% of women who are executives or engineering roles, and 27% are women in our top 300. This is an important result, and it's a result we've achieved 2 years ahead of schedule, as I say, compared to the roadmap. This is the fruit of a proactive approach involving training to promote a better understanding of the benefits of diversity and to encourage an inclusive culture. It's also the fruit of targeted recruitment, mentoring and coaching programs within the company to increase the share of women in senior roles as well as an ambassador's network, enabling us to make progress depending on local context. We've also taken a decision to index the variable share of remuneration of our top 300 based on the increase in women in senior roles in order to change things. Now these are crucial pieces of work, and they're sort of supported by our core beliefs and a set of common values, which are shared throughout FORVIA. Just to close this section, I'd like to pay tribute to our foundation, showcase that. It was created in 2020. One of our beliefs is that we need to support communities in the countries we work in. The FORVIA Foundation focuses on projects with a high social environmental impact proposed by our employees, focusing on three particular areas: mobility, the environment and education. Since 2020, the foundation has supported 75 projects, which have been carried out by 300 volunteers from within the group and benefiting 8,000 people across 19 countries. Just to highlight some of the key achievements from 2023. The foundation worked with two partners, Plastic Odyssey and the Maud Fontenoy Foundation, to raise awareness of the need to protect the oceans, which are the main sources of biodiversity on earth. We support Plastic Odyssey to recover, recycle and reuse plastic from the oceans to give a second life to the plastic and new applications. For example, using MATERI'ACT and their involvement, we've been able to design a full vehicle interior where 20% is composed of plastic waste recovered from the coasts. And as part of the partnership we have with the Maud Fontenoy Foundation, we support the biodiversity and climate trophies, the purpose of which is to support projects of PhD students aiming to protect the oceans. [ Maud ] had conclusion until the 2023 was a year in which we made significant progress across the board and achieved a number of key milestones for our financial roadmap. It's Olivier Durand, who's going to present that.

Thank you, Patrick. Good morning, ladies and gentlemen, dear shareholders. I'd like to review with you now the detailed results for 2023 for your company. Starting with this slide showing that FORVIA has improved across its financial indicators in 2023. Turnover is up strongly, up by 11% to reach EUR 27.2 billion. Operating margin is up 1 point from 4.3% to 5.3% of the turnover, representing in 2023 over EUR 1.4 billion in absolute terms. Net cash flow is also up by 34%, reaching EUR 649 million, which is a doubling in 2 years and represents 2.4% of de novo for last year. Net debt reduction of which is the priority goal of Power25 program is down EUR 1 billion over a year and EUR 1.4 billion over 18 months. Hence, the leverage ratio, as -- defined as ratio between net debt and adjusted EBITDA, has fallen from 3.1 to 2.1 over 18 months, which is clearly in line with our goal of achieving a ratio below 1 to 5 by end of 2025. 2023 was also a very good year commercially speaking for FORVIA. Net order intake of EUR 31 billion, which is a ratio of new orders to turnover over 1. And we've been able to be selective about that. We can focus on high-value segments and be selective from a financial point of view because our results are in line with Power25, particular as it concerns reduced -- reducing industrial investment before prelaunch and production starts up. By business line, 25% of order intake was for electronics. Motor and engines, around half the contracts that we won or 46% for electric vehicles. From a regional point of view, Asia represents 36% of the overall total, which is over EUR 11 billion, meaning that we are -- our geographic exposure is more consistent with the global market and brings us also into this area of the world, Asia, which is a strongly growing one. To focus in there on turnover, here, we have organic growth of 14%, which is an outperformance of 4.3 points compared to overall automobile production, which is up 9.7% for 2023. All our businesses across the group have contributed to that performance, led by Seating with 16.2% of organic growth. It's also true for the regions. Asia stands out with organic growth of 17% for 2023. Two other points to bear in mind in the development of our turnover. First is the negative changes in exchange rates, which has a negative impact of 5.2% or minus 5.2%, which is around EUR 1.3 billion. This is due to the drop in the Chinese yuan. It's also to do with hyperinflation and strong devaluation of the Turkish and Argentinian currencies. The second point is a scoping effect, plus 2.1%, representing EUR 550 million, and that essentially represents the 12-month consolidation of HELLA for 2023 compared to 11 in 2022. Because we -- in 2022, we started as of the 1st of February. The second point to bear in mind is the sale of the exhaust utility vehicles, which sold in early October to come in, representing minus EUR 102 million. Coming back now to the operating margin. And so we're saying before, here, we have a 1-point improvement over the period, 4.3%, up to 5.3%. This is a strongly growing market. And so the increase in volumes is the biggest reason for that increase. But the margin has also benefited from two engines of growth, which is a pivot to FORVIA. First of all, a generation of EUR 139 million of additional synergies due to the teaming up with HELLA, and I'll come back to that in a second; and secondly, the drop in losses relating to the seating contract in the U.S., which we exited at the start of the fourth quarter of 2023. This increase has been possible, despite two unfavorable aspects. First of all, the impact of currency, obviously, that is across board impact and, therefore, has an impact of -- on the operating margin of EUR 130 million, plus, the non-COVID inflation of EUR 75 million. If we're able to pass on to our customers most of the additional cost of raw materials and energy, that's one thing, but wage inflation is more difficult in regards negotiation, and we need to make every effort to improve productivity gains in order to offset those additional costs. Coming back now to the synergies we've achieved by teaming up with HELLA. As you can see from this slide, the program is growing better and faster than what we planned. For 2023, we are well ahead of our target with an overall amount for net synergies of EUR 190 million, well above the initial goal of EUR 120 million. The closer we will collaborate, the more we see potential synergies that we can release. So we generated purchasing cost synergies since -- due to the size of the new company. We've also developed shared service centers, which bring on our overheads. We also have efficiency gains in the field of IT, for example, having created a shared company to manage both companies' IT needs. And the last point is logistics, where there are a number of opportunities, the effects of which will be felt in 2024. All of this means that as of the start of the year, we're able to once more revise upwards our target for 2025 from EUR 30 million to EUR 350 million of aggregate profit. Looking now at the profit and loss. The highlight of 2023 is the return to an overall net positive result, EUR 222 million in the black, which is EUR 600 million better than 2022. Part of that improvement is due to the fact that the net result of 2022 was impacted by one-off costs, which were important -- or significant, rather, in particular, due to asset depreciation having of -- relating to exiting Russia as of the start of 2022, plus some exceptional losses relating to the seating contract in the U.S., which I mentioned earlier. In 2023, this improvement was also buoyed by our improved operating margin to the tune of EUR 378 million. Thus, the increase in financial costs due to essentially rising interest rates, in the context of refinancing debt, having acquired HELLA, that was more than offset by around EUR 150 million of capital gains generated by asset disposal, in particular, selling a part of share of Symbio, which is co-owned by ourselves, Michelin and Stellantis in equal part. It also demonstrates the quality of our financial results for that first asset disposal program. As you know, under the Power25 plan, the group has made deleveraging and cash flow generation its priority targets following the acquisition of HELLA. On the left of the slide, you can see the effects of the managed by cash program on the generation of net cash flow, which increased by 34% last year, EUR 649 million, 2.4% of the turnover, and that's doubled over 2 years. EBITDA growth obviously helps that performance, but it's also the fruit of good management of working capital. The net contribution to variation factoring, EUR 182 million greater than in 2022. Plus, we have the increased financial costs due to debt refinancing, plus EUR 167 million last year. And we also have a higher tax burden, EUR 153 million over the period. This tax burden is high for two reasons, which are temporary and specific. First of all, withholding tax due to the high dividend from HELLA and a timing effect due to VAT recovery in certain -- collection in certain jurisdictions. Now these elements will be offset this year and will contribute to cash generation for 2024. On the right of the slide, you can see that net group debt has thus dropped by almost EUR 1.4 billion since last June and is now stable at under EUR 7 billion. The reduction of this debt is thanks in particular to the generation of net cash flow, which I just mentioned, plus the finalization of the first asset disposal program for EUR 1 billion, which we -- which took place under 15 months in 5 transactions, where we had 30% cash in 2022 and the 70% remaining the balance of cash in 2023. Looking now to 2024. Our guidance for this year shows that our financial performance is further improving. We have an automobile production market, which is expected to be stable overall compared to last year. And taking account of our ability to outperform the market, we're aiming for an increase of turnover, which should be somewhere between EUR 27.5 billion and EUR 28.5 billion. We also aim to further increase our operating margin somewhere between 5.6% and 6.4% of turnover. This will be driven by this outperformance and synergies as well as by net cash flow, which will be at least as good as in 2023 in absolute terms. In this context, we are expecting a further decrease in the net debt to EBITDA ratio, which should drop to 1:9 by end of 2024 as opposed to 2:1 at the end of 2023. And the financial performance at the start of the year has two key points I'd like to mention. First of all, our sales in the first quarter are in -- are consistent with our targets for the year. And the market is slightly down, 0.8%. The group has organic growth of 3.1% and, therefore, is overperforming by 3.9 basis points compared to the market. As regard to scope, we have a marginally negative impact to record there. On the one hand, the negative effect of the asset disposal, which is the antipollution systems for the [ 32 ] vehicles that was done last year, start of the fourth quarter. And secondly, since the start of the year, we've been consolidating HPPL, a joint venture with a Chinese lighting manufacturer. And that, of course, increases our exposure to Chinese competitors in the market. Plus, there's a significant negative effect in terms of currency exchange rates, 4.2% like last year. Essentially, this is linked to a depreciation in the UN, but also hyperinflation in Argentina and Turkey. We are assuming that this will switch to a positive impact in the course of the second half of the year. Now this is -- particularly these exchange rate effects, which are -- which lead to the 1.7% drop. We are forecasting for turnover in the first quarter. Since the start of 2024, we've also made progress in terms of deleveraging, in particular, with carrying out the second asset disposal program, which we announced in autumn 2023 for another EUR 1 billion. Just as a reminder, in the context where interest rates remain high, this new program aims to accelerate our deleveraging journey and go beyond the target to achieve a leverage ratio of below 1:5 by end of 2025. To date, we have carried out 25% of that second program in two transactions. Like for the first asset disposal program, those two transactions obviously release liquidity, but they also simplify our asset portfolio without weakening our core businesses. We're working actively to execute the rest of the program, most of which should take place next year 2025. That concludes my detailed presentation of results for 2023 and the first part of 2024 for your company. And I'll pass the floor back now to Patrick.

Thank you, Olivier. Now I'm going to talk to you about the rapidly transforming evolving environment in which we find ourselves and the way we intend to manage that. Many of the drivers of this change involve technology. I'll start with that. First, the technological shift concerns drives change. This is due to climate change, which requires us to decarbonize mobility. Decarbonizing involves a significant transition towards electric mobility driven, in particular, by changing regulations, notably in Europe. And things are moving very fast in 2019. So before the COVID pandemic, over 90% of cars manufactured had an internal combustion engine. For 2030, the forecast is that, that will be a mere 30%. Electric cars are booming, and that's supported by a second technological shift, which is a fundamental one, which is changing architecture and increase in the electronics and software components of cars that's facilitated by electrification, but it's not the only criterion, unless it's a fundamental shift. And the third technological shift relates to the need to develop and use materials with a low CO2 content. We'll need to make vehicles lighter, less energy-intensive and ensure they emit less CO2 for the same cost. All of these changes will be accelerated by developments in artificial intelligence, which is developing at speed, not just in our industry, but in others also, the impact of which is already visible in the automobile sector. What will make a difference in this context is the -- both the quantity and the quality of data, but also the organization and our ability to start -- to train our staff in new fields, new professions. So to conclude on this point, the -- what is at stake is economic affordability for the end consumer. We'll need to act quickly in Europe, in particular, in order to provide a sustainable, safe and, in particular, affordable technologies. Second shift concerns our geographies and business models. Growth is no longer to be found in Europe or indeed in North America, both of which are mature markets. Growth has to be found henceforth in Asia. Asia was the only region in the world continuing to grow, and Asia has become the home, the epicenter of the car industry. That is the reason for which we introduced the West to East program. Asia will be -- represents 60% of global car production or automobile production by 2030. It's also the biggest exporting region in the world. So this rebalancing is not just a question of volume, it's also a question of technology and technological leadership, in particular, in certain segments, including electronics. Business models are also evolving. In Asia, the business model is becoming more and more similar to that for consumer goods. What that means is you have more and more brands trying to obtain market share that, in turn, fragments volume per vehicle and reduces life cycles. For us, this means we need to reduce development time scales, reduce costs, reduce investment. It also involves working across the board to reduce spending and to manage our vehicle projects and by cash. It's probable that our business model will arrive in Europe as well, with the Chinese brands soon to arrive. And we need to prepare by improving competitiveness and not get behind. We also see that manufacturers are opting for more and more differentiated strategies. So some of them may have a vertical integration strategies. Some of them will go for different technologies, have differentiated regional strategies and distribution models, which are different. The only thing we can be really certain of is that not all these strategies will pay off. That means that for us, we will need to be more selective, that we need to plan ahead, understand those markets better and to understand that complexity in commercial terms. And finally, the geopolitical and environment part, these are macroeconomic factors like geopolitics. It's also about possible decoupling issues, decoupling between technologies between East and West, with specifications that can differ widely, that can force different developments on us, for instance, in the area of electronics because of components, but also in terms of software and algorithms that we use. There, too, there are costs and structural cost issues, which are very different, such as the cost of energy in Asia, in North America, and also the cost and accessibility of raw materials. And finally, an important aspect, crisis management and potentially climate-related events management, which have a direct impact on us via our supply chains that forces to respond and also forces to manage our risks in terms of supplies in a more elaborate way than in the past. And of course, all these risks can be political or climatic or even industrial related, as was the case on semiconductors, with a gap in supply and demand management. Now let's look at our strategic response to this constantly shifting and fast shifting environment. In this context, it is our role to be agile and adopt the necessary measures to get the most out of these market changes and seize the opportunities that can result from it. In this framework, we've defined four priorities: West to East, EU-FORWARD, Engage, and all that should fuel overall group performance that we've summarized in Power25. The West to East project should help us leverage growth in Asia, whilst rebalancing the contribution from our main regions to our operational profit. This rebalancing is also at the heart of the EU-FORWARD project. Both go hand in hand. The aim of EU-FORWARD is to strengthen our competitiveness in Europe, a mature market, where volumes dropped by 21 million -- from 21 million cars in 2019, including Russia, to less than 17 million cars in 2023, excluding Russia. This new production level is now structural. So we need to adapt, and we need to adjust our capacities to this new reality. With Engage, we are going to optimize our R&D throughout the life cycle of our programs. We need to reduce our CO2 emissions via Designed for Scope 3, and all that whilst building on artificial intelligence tools and generative artificial intelligence tools. All three initiatives contribute, of course, to Power25, our financial roadmap by 2025, which supports our ambition and strengthens our transformation into a technological leader in sustainable mobility. Let's look at that in more detail. First of all, West to East. In 2028, our goal is for Asia to account for over 35% of our global turnover with an operating margin, which should be higher than 10%. How can we reach those figures? First, by building on our strong positions in China and with Chinese carmakers. We've been in China for 30 years. And amongst the 20 biggest carmakers present in China, 19 are customers of ours. In 2030, Chinese carmakers will account for over 34% of global volumes. And they will thus also become -- they are already now, but this will only get stronger. They will become the biggest global exporters. Well, it's not Chinese carmakers, but rather carmakers in China that will account for 34% of global production. We also need to become closer to Japanese carmakers. Their current production levels are around 25 million vehicles per annum, of which 20% -- 70% stay in Asia. We'll also need to benefit from a growth driver in India, supported and fed by the growth of the middle class and by significant investments to improve road infrastructure as well as political stability. The aim in 2030 is to reach 7 million vehicles produced in India as opposed to slightly over 3.5 million in 2023. EU-FORWARD, as Michel said in his introduction, is the European equivalent of West to East. In Europe, we want to consolidate our strong positions with a robust 40% of our global sales and with a significant improvement in our operating margin higher than 7%. We will achieve that by adapting our production capacity, by also adapting our R&D capacity and by significantly reducing our overheads. The third element is Engage. This is about engineering and the way we design our products with a reduction goal of our CO2 emissions by 45% by 2030 for our Scope 3. Artificial intelligence, especially generative artificial intelligence, will considerably help us reduce our development times and, consequently, our costs. Our aim is to deliver 50% in efficiency gains by 2028. These three major projects, these three main priorities, as I've explained, welcome and support, as I've already said, the priorities of our Power25 plan that I will give you more details about in a minute. But a few examples simply to illustrate our change in Asia. In Thailand, last year, we started the construction of a new seating assembly factory with our partner, BYD, proving how close we are to this major Chinese carmaker and also how able we are to follow them beyond their domestic market. This is the next decision that will have ahead of us will be about the next location in Hungary. Last month, we signed a joint venture agreement with Chery, strengthening our strategic cooperation in the area of smart and sustainable cockpits. In this framework, we are going to open an R&D center and start two production sites this year. And our ambition is to reach EUR 1 billion in turnover by 2029. The scope of this JV is the whole interior of the car. In April, still, we signed a letter of intent with GREE Electric, which is the Asian leader in air conditioning systems, so that by the end of 2024, the goal is October, we create a joint venture for China in order to develop high recycled content plastics. And this is a first significant step for MATERI'ACT in China, and this is only the first step. Now regarding West to East. And if you look also at EU Forward, this pair that I was mentioning earlier, you can see that Europe now accounts for 46% in 2023, 46% of our sales, but only contributes to our operating income by 22%. The region, as I said earlier, is characterized by structural overcapacity, both for carmakers and suppliers. The European market is also facing accelerated electrification because of regulations that will ban internal combustion engines by 2035, which forces the whole industry to adapt its structure and its cost. And this is because at the same time, Asian players are going to strengthen their presence in Europe. In this situation, status quo is not an option. It is our responsibility to anticipate and adapt our production capacity and R&D capacity to stay competitive in Europe. This is the ambition and the mission of EU Forward. This is a 5-year project that I've mentioned earlier, the aim of which is to deliver sustainable profitability in the area. Some industrial and labor redeployments have already been announced locally. We are doing our utmost to find socially responsible solutions. The partnership with LTTS, which is an Indian engineering company, is a good example because that way we could secure jobs by repositioning some of our employees to new projects on new industrial segments. To conclude, this project will contribute to rebalancing the regional contributions to the group's results, and this is what you can see on the right-hand side of the slide for 2028, where we wish for Asia to grow to over 35% in global revenues, Europe to maintain a robust position at around 40%. And when it comes to operating profit, 35% of Asia will grow -- will make a 40% contribution to operating profit, and Europe will contribute to operating profit to the tune of 35%. We need this balance so that our profitable growth becomes sustainable in Asia. Of course, we care strongly about France. And the evidence of that is threefold. First of all, Allenjoie. Allenjoie is the first factory in Europe that mass produces hydrogen tanks. Our ambition is to produce 100,000 tanks by 2030. The second example is MATERI'ACT, our company specializing in the development of innovative and sustainable materials. Our aim is to produce these materials so that by 2030, we can reduce our CO2 emissions by up to 85% so that we can also generate sales of EUR 1.5 billion. MATERI'ACT is based in Lyon. And finally, we also opened Symphon'hy, the Symbio gigafactory, which is a joint venture with Michelin and Stellantis, which is the largest integrated fuel cell production site in Europe with an aim to produce 50,000 systems per annum as early as 2026. Now I'd like to talk about Engage to transform our R&D. That should allow us to address issues of speed, competitiveness and sustainability in industry. We need to become more flexible when faced with increased diversity in programs with adjustments in our clients' footprints and new regulations in terms of sustainable development. We also need to drastically reduce our development costs and times, we are aiming for development times of less than 20 months. And in China, we're already somewhere between 15 and 20 months. Artificial intelligence will be an accelerator, but also a competitiveness lever. We are already building on the many opportunities for time savings and efficiency that it offers for engineering or design. For instance, for every step in the life cycle of a product, we are checking how we can save time, improve quality and reduce costs. And so we are taking our entire development program. We slice it up in thin slices that we have full control of where we know costs exactly, but also we know deliverables fully. And for each of these slices, we are checking where we can use new technologies. Of course, for that, we are taking into account our ability to feed that technology with the right level of data. And I think that this AI part, this artificial intelligence part will make a difference in terms of quality and the speed at which we'll be able to develop our future products. We have a large amount of data that will differentiate us. This is one of the things that will be taken into account in the future and that will make life more difficult for smaller firms or structures that won't have access to the same level of data. All that, of course, as I said, should help us deliver significant efficiency gains of up to 50% in 2028. Right now, as we speak, in many cases, in electronics, like radars that we've talked about earlier, we are limited in our ability to bid in RFPs from clients simply because we do not have the resources. So these projects should also help us make savings on one hand, but also to increase our profitable growth on the other hand, for some technologies. The other major aspect is, of course, our Scope 3 emissions as part of our 0 net emissions road map, we are committed to reducing our Scope 3 emissions by 45% by 2030. Scope 3 emissions account for most of our emissions, 98%. There are twofold, 1/3 of these emissions are fully within our control. 2/3 are related to the use of products and the way our clients and the customers of our clients use them. To give you but one example. When we deliver a seat to a carmaker, if they see the exact same seat is fitted into an electric car, a 0 emission car, the amount of CO2 that we will record will not be the same as if it's fitted into an ICE car. And so here, we are dependent on what others are doing, and so that will be related to the development of 0 emissions mobility by 2030. For this 45% reduction on our Scope 3, there are 3 generations of cars ahead of us, not more. So we need to be able already now to offer attractive solutions. And these are solutions that cannot be associated to cost inflation. It's up to us to find a way to offset increased costs for recycled or bio-sourced materials with lower costs related to lighter design with fewer materials and processing that uses less energy. This is really what MATERI'ACT is doing, to formulate new materials and understand the materials variability so that we can then process the materials in the best possible conditions. We already have a design for Scope 3 product offering, which is state-of-the-art in terms of technology and sustainable development. This designed for Scope 3 approach is going to become the bedrock of our process and offering. And this means that we need to be present on a wide spectrum of subjects. We need to get our supply chain on board. It's obvious that we won't do it alone to develop our sales of products dedicated to electric vehicles, we'll need to develop the -- increase the recycled and biosourced content in our products and improve their recyclability and also develop the circular economy as much as we can. Power25, I can confirm the financial objectives of our plan as presented during our Capital Markets Day in November 2023. Turnover of around EUR 30 billion, which may change marginally depending on market volumes and foreign exchange rates, operating margin higher than 7% of turnover, an improvement compared to our guidance for 2024. Net cash flow of 4% of sales, which confirms the effectiveness of our managed by cash program to better convert EBITDA into net cash flow. A net debt over EBITDA adjusted ratio of less than 1.5x at December 31, 2025. This performance does not include the positive impact of the second asset disposal program, which is being executed as we speak. To summarize our 3 -- our 4 priority projects: West to East, EU Forward, Engage and Power25. These 4 programs plus -- well, these are 3 programs plus Power25, which is a summary of the company's performance. All that is fueling sustainable growth. Our overperforming growth, EBITDA improvement, increased cash flow generation and also, in addition, the contribution of asset disposals, all of that is there to address our #1 priority for 2025, your group's accelerated deleveraging. We have competitive advantages. Where are they? Well, we have, in our hands, a portfolio of key technologies, a wide international balanced client portfolio. We have the necessary critical size to face current and future challenges. We have a strategic positioning on future geographical markets. We have leadership in all our areas of activity, constant focus on what we can control, our operational excellence, a robust road map. We have a lead over others because we've solved our strategic equation in terms of powertrains. All of us at Forvia are united in a mission because of values and strong beliefs, and we are confident in our ability to materialize our ambition for safer, more sustainable and particularly more affordable mobility for all. Thank you so much. And I think that I will now -- we have now our last video to show you. [Presentation]

This video is a perfect transition towards the next topic, and I will now give the floor to Jean-Bernard Levy, Chairman of the Governance, Nominations and Sustainable Development Committee.

Thank you. Thank you, Patrick. Good morning, ladies and gentlemen. I will now comment on the committee's work, the company's work in the area of sustainable development as well as the usual subject related to the makeup of the Board of Directors in 2023 and proposed changes in this makeup for 2024 that you will have to vote on later. As regards, first of all, the activity of the Governance, Remunerations and Sustainable Development Committee. As was already said, in particular by Patrick Koller a few minutes ago, Forvia is still a leader on its market segment when it comes to achieving its carbon dioxide emissions goals. The fight against climate change as well as looking for a more inclusive work world are more and more at the heart of our societal concerns and Forvia is a pioneer amongst the automotive sector. The Governance, Remunerations and Sustainable Development Committee were strongly invested in the year 2023 on these topics, supporting general management and making sure that it's monitored the progress achieved within the group. Our committee met 6 times in 2023. Several topics related to sustainable development were addressed. I'll name a few. The committee reviewed and commented on Chapter 4 devoted to CSR subjects in the Forvia URD for the fiscal year 2022. The committee was involved in approving Forvia's road map in terms of carbon neutrality on the carbon neutrality pathway. It is noteworthy that 2023 was a year of concrete achievements. The Scopes 1 and 2, the committee is glad that the ambition and speed of Forvia are above the sector's average. On Scope 3, which is complex, as Patrick has just shown us with many examples, Scope 3 that encompasses the entire value chain upstream and downstream, Forvia is making remarkable progress, especially thanks to investment in sustainable materials. We've presented MATERI'ACT. The Scope 3 goals were widely presented and shared with stakeholders during our specific day devoted to sustainability in March 2024. The committee also monitored progress in the group's diversity policy. We now have 27% of women amongst the top 300 leaders. The group also reviewed the nonfinancial road map, which expects 30% of women amongst managers and professionals by 2027. The current figure is 28.6%. The committee also studied initiatives deployed by the Forvia foundation with 6 environmental projects that came to fruition in France South Africa, Portugal and India. And finally, the committee analyzed the impacts and challenges with European regulations on -- in terms of environmental and social performance, in particular, the CSRD. Now you have a presentation, a summary presentation of what this European directive is. You often hear that it's a complex issue. It's about company corporate nonfinancial reporting. The structure of the directive shown here, it's followed by our road map, The directive strengthened expectations that already exist in terms of CSR reporting since 2014. France is one of the most demanding European countries in this area by mandating nonfinancial reporting every year. We've now harmonized our CSR reporting with this European requirement with a focus on transparency about the potential impact of our business on the environment. Then the timeline for implementation of the directive within Forvia. It applies as of 2024 financial year, and our sustainable development director is overseeing that project to collaborating with external consultants and a number of specialist directors effective within Forvia. So HR purchasing, et cetera. The directive is broken into 3 levels of information. So first of all, as the double materiality criteria identifying key challenges before the ecosystem. And there's qualitative in reporting, covering 70% of the directive's requirements. The rest, the 30% remaining is quantitative information. The project was launched in July 2023 across those 3 levels. Forvia validated the reporting grid in January 2024, and now working on developing those qualitative and quantitative information items required under the directive. As you can see from the bottom of the slide, in terms of our agenda, the Board of Directors and our committee are invited to review and provide comments on this project, which is an important one for the group. On governance now, having talked about sustainable development. On this slide, you can see the makeup of the Board of Directors and some key indicators for 2023. It's a diverse Board. It's an international Board, and it's interdisciplinary. It has 14 Board members, 2 of whom representing our employees. Of those 14, we have 5 women, a share of 42%. If you carry out the calculation, excluding the Board members who represent employees. There are also 5 nationalities on the board. 83% of our Board members, and again, excluding those representing the staff, are considered independent. During 2023 financial year, the Board met 24 times. The main topics dealt with were the asset disposals, in particular, under the Power25 plan, synergies resulting from the acquisition of a controlling stake in HELLA. The group strategy and CSR results, group's results overall and approval of the budget plan for the medium term. In terms of the terms of office, which are going to expire as of today's meeting, we have 5 resolutions, which we presented to you today. I'll come back to this later. But they aim to renew the terms of office of Michel de Rosen, Judy Curran and myself, to appoint a new Board member in the shape of Christel Bories and to replace Odile Desforges, whose term of office is arriving at expiration after today's meeting and who doesn't wish to be renewed in her position. And lastly, to ratify the co-optation of Nicolas Peter, who was coopted on the 19th of October 2023 due to replace Jurgen Behrendt, who resigned his post. First of all, Michel de Rosen's term will expire at the end of today's meeting, and you are invited to renew him for a further period of 4 years. He is -- has been a Board member since 2016. He's Chairman of the Board and indeed chairing today's meeting. He's also a member of the Governance Nomination Sustainable Development Committee. He has a lot of valuable experience as I manage within the international multinationals, both in terms of the work of the Board and as a member of the Governance and Nominations and Sustainable Development Committee. And we'd like to thank Michel de Rosen for agreeing to put himself forward for a further term of office. Proposal to renew Judy Curran. Again, her term is due to expire, putting herself forward for another 4 years. She was elected as a Board member in 2022. As a member of the audit committee, she has a long experience in the automobile industry as well as new technologies and energy markets, all of which is extremely valuable in the context of the Audit Committee and the Board Directors' work. We thank Judy in advance for agreeing to put herself forward for a further 4 years. I pass the floor back to Michel de Rosen.

I wanted to interrupt Jean-Bernard to talk about Jean-Bernard because his term of office, Jean-Bernard Levy. It's his first time of office, but it's due to expire at the end of today's meeting, and it is proposed that you renew it for a further period of 4 years. Jean-Bernard is a Board member, has been since 2021. He chairs the Governance Nominations and Sustainable Development Committee. He has robust experience as a manager in a number of multinationals. He's an attentive, a good listener, all of which has been valuable in the work of the Board of Directors and in his capacity as Chairman of the Governance Committee. I would like to thank Jean-Bernard Levy for agreeing to serve a further term of office if the shareholders meeting today votes in favor. Jean-Bernard, back to you.

Thank you. Now we will move on to the next proposal, to ratify the cooptation of Nicolas Peter as independent Board member. As we said, Jurgen Behrendt resigned on 13th of July 2023. The Board of Directors proposal of the Governance, Nominations and Sustainable Development Committee decided at its 19th October meeting to co-optate Nicolas Peter, who is a candidate put forward by the family -- the Hueck and Roepke Family pool as a Board member to replace Jurgen Behrendt with immediate effect. This co-optation covers the remaining term office of his predecessor. He's to say until the end of the annual meeting, which will [ commit ] in 2026 and which will validate the accounts of the financial year just expired. And we are proposing to you to ratify his co-optation today as a Board member. I'd like to thank this opportunity, Jurgen Behrendt, for his valuable contribution to the Board of Directors over the previous years. And Nicolas Peter is with us, and I'll give him the floor for him to say a few words of introduction.

Thank you, Jean-Bernard. Ladies and gentlemen, dear shareholders, I'm very pleased to meet you at this 2024 Annual Shareholders Meeting. As you are aware, as Jean-Bernard has just said, I took up this post following Jurgen Behrendt's resignation on the 13th of July 2023. I was very honored to be asked to do this by the Board of Directors of Forvia at its meeting on the 19th of October 2023. As was said, are the proposal of the Hueck and Roepke Family pool and on the recommendation of the Governance Nominations and Sustainable Development Committee. Since then, I have become a Board member within your company, replacing Jurgen Behrendt with immediate effect. It's proposed today that you ratify my co-optation for the remaining period of Jurgen Behrendt's term of office. He's to say until the end of the general meeting, which will deliberate on the -- in 2026 on the accounts for the year expired. I'm a Franco German citizen. I attended the University of Mannheim. I have a doctorate in law. I joined BMW Group in 1991 and spent 32 years of my career working within BMW, where I had a number of roles, one of which was Chief Financial Officer and member of the Management Board from January 2017 to May 2023. I'm currently a Board member and of the BMW Herbert Quandt Foundation. I'm President of the Board -- I'm Chairman of the Board of that since 2020, excuse me. I'm also a member of the German Governmental Commission for the German Corporate Governance Code. And so I would be very pleased to bring my experience to bear of the automobile industry on the Board of Directors of Forvia as well as my knowledge and understanding of financial matters. I'm well aware of the duties and responsibilities of a Board member of a listed company. I look forward to the opportunity to pursue this term of office on the Board of Directors of your company. Thank you very much for listening, and thank you very much in advance for your trust.

Thank you, Nicolas. And the proposal to appoint Christel Bories as an independent Board member. If you decide as much, she will succeed Odile Desforges, whose term will expire at the end of today's general meeting. It is proposed by the governance committee that you'd be asked to -- that you approve her as a new Board member. I'd like to take this opportunity to thank Odile Desforges for her contribution to the work of the Board and the Audit Committee, which she chaired since 2016. Christel Bories is CEO of Eramet. She's been the CEO since 2017. She can bring to the Board her experience as a manager and her knowledge of this industry in international context, which are complex and varied. She will be an independent Board member and her term would expire at the Annual General Meeting 2028. And she was not able to be with us this morning because Eramet's AGM is also taking place today. Nonetheless, she has recorded a message and to introduce herself, which we'll watch now. [Presentation]

Thank you, Christel, for those words of introduction. Now the work of the Board in 2023. It's supported by its 3 specialized committees, which have an important role in preparing the work and the recommendations of the Board. First of all, as I said, there are 3 permanent committees. You here have the makeup shown on the slide. First of all, the Audit Committee, which is -- has been chaired by Odile Desforges to date and she oversees financial matters as well as risk and accountant matters. Esther Gaide, who has been members of this committee since last year, will take over the chairship as of the end of today's meeting. And there's the Compensation Committee chaired by Denis Mercier, who will be taking the floor in just a second, which looks at the issues of management and corporate officers remuneration. Then there's the Governance, Nominations and Sustainable Development Committee, which I'll continue to chair, overseas all issues relating to governance succession of corporate officers and sustainable development. On this slide, you have the makeup post general meeting of the Board, assuming that you vote in favor of the resolutions put to you. Following today's meeting, there will be 14 members of the Board to represent employees. And it will remain 83% independent Board members and 42% women, both of which are, I think, good figures. Following today's meeting, the 3 standing committees would, assuming you vote in favor of the resolutions, will be composed as follows. The Audit Committee would be chaired by Esther Gaide as new Chair, with members Valerie Landon, Emmanuel Pioche, Judy Curran and Nicolas Peter. The Compensation Committee, chaired by Denis Mercier, with the members Daniel Bernardino, Michael Bolle and Christel Bories, who will be new. And the Governance, Nominations and Sustainable Development Committee still chaired by myself with the following members, Michel de Rosen, Penelope Herscher, and Robert Peugeot, acting as the standing representative of Peugeot 1810. That brings my presentation to an end. Thank you very much for listening. I'll pass the floor back to Michel.

Thank you, Jean-Bernard, for that very comprehensive report. I'll ask now Denis Mercier to present the news from his committee.

Ladies and gentlemen, to shareholders, good morning. On compensation. We are 7 resolutions put to you today. The first concerns the compensation to be approved for Board members. For 2023, Board members received EUR 703,571 out of a maximum amount of EUR 900,000. This is lower than last year since the Board has resumed its regular pace of meetings, having had to manage the refund financing following [indiscernible] 2022. The recommendation of our committee, the Board member at its meeting of 14th December of 2023 consider that it was necessary and desirable to change the structure and level of remuneration of its Board members in order to continue attracting talent, noting in particular that the mean fixed remuneration of Forvia Board members is lower than the average operated by the main listed companies. We are, therefore, asking you to increase that overall maximum envelope for remuneration of your Board members from EUR 900,000 to EUR 1.2 million. So that's the second -- 12th resolution, and to approve the remuneration policy for Board members, which next antivote, whereby a number of modifications were made to the rules for the distribution of that overall envelope. That's Resolution 16, and all that's described on Page 26 of brochure. Then we have 2 resolutions concerning compensation to be paid to the Chairman of the Board of Directors. First of all, the next post resolution concerning remuneration paid to Michel de Rosen for 2023. This is EUR 311,189, and it's stable compared to previous years. Then there's ex anti resolution on the remuneration policy for the Chairman of the Board of Directors for 2024. As stated, his fixed annual compensation is the only part of the Board of Directors remuneration, and that's remained unchanged since 2017. The Chairman receives no other remuneration, whether one-off or variable. He also receives no remuneration in his capacity as a Board member. Our proposal of the Compensation Committee, the Board of Directors has decided to propose to you an increase in the fixed annual remuneration of the Chairman to -- from EUR 300,000 to EUR 400,000 to take effect as of the 1st of January 2024, in order to maintain the competitiveness of this remuneration for the Board -- for the Chairman of the Board compared to practice on the market. Moving now to the CEO, I have 2 resolutions concerning his compensation package. First of all, an ex post resolution concerning the remuneration paid to Patrick Koller as CEO for the financial year 2023. And ex anti-resolution concerning the remuneration policy for the CEO in 2024. In 2023, Patrick Koller's remuneration can be broken down as follows and shown on the slide, fixed remuneration of EUR 1.1 million, which is unchanged compared to the previous year, and then a variable annual remuneration of EUR 1,782,921, slightly down compared to the previous year. 2023 was characterized by continuation of the group's transformation as has been presented this morning in the context, which remains a challenging one for the automobile industry. The company has continued taking the necessary action in order to deleverage, to improve its operating results, to maintain cash flow and to render more flexible its overheads. The quantifiable individual criteria for the variable part of the CEO's annual remuneration as determined by the Board of Directors and approved at the previous Annual General Meeting of 2023 have been met in very large part, and that's in line with the group's priorities. Amongst the quantifiable priorities, you have the debt-to-EBITDA ratio, synergies relating to on-boarding HELLA and carbon neutrality. With regard to individual criteria, these concern order intakes association with the operating margin and reducing overheads. These 2 last individual criteria are measurable in the same way as the quantifiable criteria. And long-term variable remuneration in the shape of performance shares. The CEO's remuneration is thus strongly correlated with group performance, as can be shown by its development over time. The information is variable annual remuneration for 2021 and 2022 was, respectively, EUR 300,000 and EUR 1,180,000. We ask you to approve the remuneration policy for the CEO in 2024, which will be stable compared to last year. The only change proposed compared to last year, concerns the assessment of performance conditions for the variable -- long-term variable remuneration plan. This change would involve replacing the reference to the strategic plan by reference to an overall achievement over 3 years of the budget targets for internal financial conditions, for example, operational results or net cash flow. The other conditions, whether internal or external, would remain unchanged. We propose that this change be applied as of plan '16 to be enforced in 2024. That closes my part on remuneration. Thank you very much, and I'll give the floor back to the Chair, Mr. de Rosen.

Thank you, Denis, for that very clear report. I'm going to ask Guillaume Brunet-Moret from Ernst and young on behalf of the College of [indiscernible] to present their reports in advance of today's meeting.

Ladies and gentlemen, shareholders, good morning. On behalf of the statutory auditors, Ernst and Young, [indiscernible] and Mazars, I'd like to present the reports we've prepared for 2023. We prepared 8 reports. The first concerns the consolidated accounts for Forvia group. The second concerns the annual accounts for Forvia SE. We have 8, and as well as 5 on Resolutions 2029, which you'll be asked to vote on during the extraordinary part of today's assembly. Now all these reports are available for you, if you wish to consult them. I'm going to wrap up the key findings. I'll start with the annual accounts for Forvia. This report was prepared in line with the [indiscernible] filed per the French regulations, and we included the share in that, and we -- they have no -- we approved the accounts without any qualification or reservations. With regard to the consolidated accounts, these were carried out in line with the IFRS standards as adopted by the EU. Here again, we have a -- we have certified the accounts without reservation or observation. And we consider them a key point in the audit value of asset, recoverable assets. The development of costs and the cost of recovering deferred taxes into HELLA. For those reports, we've also checked whether the presentation was -- from that was complied with in terms of filing them in electronic format in line with regulation 2019 815 of 2018. Concerning the special report on regulated conventions, that's -- we have 2 new such agreements are signed with HELLA, a licensing contract as well as the agreement on -- signed in 2022, approved our 2023 assembly on the coordination agreement with HELLA. That brings us on then to the extraordinary part of today's assembly, where you'll be asked to vote on Resolutions 20 to 29. Here, we have written reports on these. Our first concerns, Resolutions 20 to 24 on proposals for delegation to the Board of Directors of various share issuers or securities maintaining or -- with or without, rather, the preferential subscription rights. Then this is Resolution 26, concerning offering free shares, whether existing or new shares. Resolution 27 on issuing of ordinary shares and various stocks in the society for those with a company share saving plan. Resolution 28 on the issuing of shares and various securities without any preferential subscription rights for a specific category of beneficiaries. And lastly, Resolution 29, which concerns capital reduction. We have no observations to make about these operations that follow the conditions provided for in the commerce code. Thank you for your attention.

Thank you, Mr. Auditor. I think that shareholders are aware that the reason why the auditor's report is so favorable is that the financial team did such a sterling job this year as in previous years. Olivier, this is a compliment to you and your team members, and thank you for that. Now we will move on to the Q&A sequence. Let me point out that we haven't received any written questions from our shareholders. In order to be able to manage time constraints as best we can for the Q&A, we will take your questions in blocks of 3. So ask your questions. If you have questions to ask, ask them, maybe if possible, if you're in the room by standing up and by mentioning your name. And then once we've taken 3 questions, we will answer them and so on until midnight, if there are enough questions, to justify this schedule. So there are microphones. Sir, you are the first.

Yes, I'm [ Lu Dvalin ], an individual shareholder. I had a question about the currency issue. You have sales for EUR 24 billion. You have negative impact from ForEx of EUR 1.2 billion for FY 2023, that's minus 5%. And already for Q1 '24, you already have a currency loss of EUR 280 million, minus 4.2%. Are you maybe considering putting a hedge system in place as they do in other firms? This is costly, but it's also quite convenient. And secondly, interest rates are on the rise. I don't know whether your debt is covered by swaps or such like because then you're selling assets to cover debt in 2023. You're selling more assets to cover some of debt in 2024. But at some point, once you've sold off a number of assets, what are you going to do? This is your question.

Yes, the third question, sir?

Yes, [ Daniel Valle ], I'm an individual shareholder. Well, I would like to make a comment before I ask my question. I consider that the company is a great high technology company that is well managed, but I really enjoyed what the manager said regarding all the goals and the scenarios that were presented. This is a lot of work, and that's quite appreciable given that we're working in a constantly evolving world. Now coming on to my point. A month ago, the European Commission said that the automotive industry, the EV industry was at an impasse. Well, this is for the electric part. Now when it comes to hydrogen, it's even much worse. On a global scale, there were 360 gigawatts of expected installed capacity. By 2030, we're at 16%, so 4% completion rates compared to what's expected for 2030. A few days ago, the Science Academy said that policymakers needed to revise their hydrogen policy because it wasn't a good solution. A couple of days ago, [ Jean-Covishi ] was heard at the Senate, the French Senate, And he said that the use of hydrogen for mobility was nonsense. The other day, I was at the [indiscernible] General Meeting.

I'd like to interrupt only. I would like to be courteous to the others. What's your question?

My question is very simple. How are you considering these various dark scenarios regarding -- how do you include these issues that we're seeing when it comes to electricity and the fact that hydrogen seems to be a total no go?

Thank you, sir. We'll take another question there.

Three quick questions. I am leasing a Peugeot i-Cockpit. I rented it in Marseille, and I needed to go to [ Kamark ]. And I had a smartphone and helped me reach Kamark. So I wanted to know about the development and fine-tuning of intelligence in this i-Cockpit. Second question about hydrogen. I noted with great interest you have a partnership with Stellantis. And Stellantis is partnering with your competitor, OP Mobility for Citroen light commercial vehicles. Did you bid for this project yourselves? Third question about the integration of headlights coming from your merger with HELLA.

Thank you. I think that, Olivier, you maybe address the first 2 financial questions, and then Patrick will answer the other ones.

Well, regarding the questions from the first speaker, there was a question about currency. Well, there is an impact from ForEx. We have a ForEx hedging policy which is mostly based on purchases in a -- made in a different currency from the currency in which we sell. But this is minor. We buy locally to sell locally. So in China, we buy in yuan to sell in yuan. And so the impact that you're seeing is mostly a translation impact. And in terms of profitability in percentages, we -- the impact is fairly small. But we are monitoring all this closely. And on our supply policy, if there are long-term changes on currencies, we are taking that into account. Over the recent period, there's a specific element about Argentina and Turkey, where there was a strong devaluation and there's an accounting room, which is that of hyperinflation. You need to translate your accounts at the latest exchange rates and not the average over the period. So that inflates our accounts. You can see that the Argentinian currency is still devaluating but not at the same pace as what happened recently. Ditto for Turkey. So this effect is really specific, and that will be reduced majorly in H2. We've also reduced our activities in Argentina, especially as part of our divestments because one of the factories that we sold as part of SAS was in Argentina, so we are reducing our exposure to this currency. Now regarding your second question about debt. Firstly, most of our debt is at fixed rates, 3 quarters are at fixed rates, which is a very good thing because most of our debt is at pre-Ukraine war rates, if I may say so. And secondly, as part of the rollover of the bridge loan for the acquisition of HELLA, we took on structured debt at fairly high rates. So what we are currently doing is as part of the rollover that we are doing now, we're able to do that at rates between 5% and 5.5%. And so we are replacing debt, which sometimes had 7.5% interest. Our average rate is at 5% now. And with current operations, we can stay around 5%. However, our goal is to reduce the absolute value of our debt and reducing our debt in absolute terms is not just achieved through divestments. We generate twice as much cash flow as 2 years ago in 2023. Our goal is to go from 2.4% in 2023 to 4%. So the goal is to have most of proceeds coming from operational generation, and we will complement that with asset disposals when it makes sense. And the divestments that we've carried out, one of the indicators which help gauge whether that was positive or not is whether that impacted the core business, whether that impacted central technologies and whether we did so at a loss. Of all 3 points, the first program is positive. We divested noncore business activities. We divested assets, which are sometimes related to our exposure to ICE technologies such as the latest disposal on pollution control activities, on LCVs to [ comings ]. So we are part of our -- we're involved in our transition. For that, we generated about EUR 150 million for a total of EUR 1 billion in the disposal in total. And so for the first wave, as you could see, there has been a capital gain on 1 of the 2 operations carried out as part of the second divestment plan, the sale of our shares in BHPC and a capital gain, which is 3 figure, a 3-figure capital gain. So of course, the aim is to reduce the absolute value of our debt. We've reduced our debt by EUR 1 billion so far in net or gross terms last year, and this is what is important because that explains the structured debt burden. In addition to that is that when interest rates start declining, there will be an additional favorable impact and we haven't waited for that decline to manage the company correctly.

Thank you, Olivier. Patrick?

Regarding questions on BEV or hydrogen cars. What is clear is that we are moving towards 0 emissions mobility. The way we get there and the time frame according to which we'll get there may lead to questions and discussions but I think the trend is very clear. You've talked specifically about Europe. I think that in Europe, considerable investments being made and remains to be made and it's important to support such electrification and that we do not call it into question because we need scale effects so that we can be competitive with newcomers, especially those coming from Asia. I also think that technology is changing. We are witnessing very steady progress when it comes to the electric -- battery electric parts and the hydrogen electric parts where we are at the beginning of the journey. Now speaking of the battery, electric and hydrogen electric parts, these are technologies that are not competing with one another. They are complementary. It's obvious that for all urban [ and Perry ], urban users, battery vehicles have an advantage and they will probably be the main technology. And when it comes to heavier mobility, commercial mobility, then there will be other alternatives such as the use, the injection of hydrogen in combustion engines, the use of e-fuels as well. So there, too, there will be intermediate technologies for larger cars over 4 meters in length. To put it simply, we'll probably find hybrid solutions, but with a battery and electric range component in excess of 200 kilometers, probably between 200 and 300 kilometers in the future. So we're not at an impasse. So there is no -- the system is not being called into question significantly. You're talking about policymakers, but in industry, our road maps are clear. Investments have been made. And we've invested a lot of money. I wanted to discuss our collaboration with Stellantis. Stellantis has communicated very clearly their intention to equip SUVs and pickup trucks in the U.S. with hydrogen. And we are with them working on the RAM brand to do so as early as 2025, 2026. Therefore, hydrogen in mobility is running a little late. I think it's about 2 years late, and that forces us to adjust our investment consequently, but we still believe in this technology. There is no other solution for heavy mobility, and we also think that. Although now, development is not linear. The development of electric vehicles will continue. And finally, I wanted to tell you that in 2027, European regulations will change again and cars that will not be electric or 0 emissions, will need to have at least 200 kilometers electric range on batteries so that they can work with only a reasonable financial penalty estimated around EUR 3,000 now. I can see that you look despondent, but this is what we are experiencing in collaboration with our clients.

Thank you, Patrick. Dear shareholders, are there any further questions?

And maybe the third question from the gentleman. Regarding vehicle belonging to Stellantis, you'll understand that, of course, we cannot answer your question. No. Well, first of all, I don't know what car you are talking about. But on IVI, this -- we are probably not the supplier. On headlights, if you're talking about modules, we sold that. That was a JV between Plastic Omnium and HELLA. And HELLA's stake was sold to Plastic Omnium, that was called HBPO. Now the front ends on electric cars, you've got front ends that include lighting, but not only with also some animations on the front end. We have a presence in these products, we are even the European leader there, and we intend to keep growing in this area.

Thank you, Patrick. Ladies and gentlemen, are there any further questions? Sir, please wait for a microphone to be brought to you. When it comes to -- please, who are you?

I'm Mr. [ Pradel ], a very small minority shareholder. So regarding electronic chips. There were delays in previous years. I wanted to know what the situation was like and especially when you compare it to 2019.

Regarding semiconductors. Last year, we didn't have any constraints in our supply chain. We could work normally with a volume of 90 million cars roughly. This volume will be the same this year. Although electrification is rising because it is still rising, maybe not at the pace that we initially expected. There shouldn't be any difficulties. However, it all depends also on how inventory is managed by the various users of these components.

Maybe with the microphone, sir, so that everybody can hear you.

Well, you had a 1.5 year delay last year.