Iveco Group N.V. (IVG) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Iveco Group Capital Markets Day that we are holding in person at our industrial village in Turin. Welcome also to all our colleagues and stakeholders connecting live from all over the world. We are pleased that you have joined us. My name is Federico Donati, Head of Investor Relations, and it is my pleasure to serve as the moderator of today's event. Some of you joined us for the Iveco Group experience this morning. I hope you enjoyed the test rides and vehicle walk around. Our aim was to give you a first-hand experience of the products and services that are at the core of our company. Now it is time for the main event. We have a great deal to share with you today. Iveco Group has just begun its third year as an independent company, and we plan to illustrate in the next few hours how we are keeping up the momentum that has been driving us since our Investor Day in November 2021. Not only, we are pushing our group even further to identify and take advantage of the unlimited pathways ahead, which is also the theme of our Capital Markets Day, Unlimited Pathways. We chose this theme also because all our unique business units empower their teams to explore and exploit optionalities on their journeys to reach full potential. In the next few hours, you will hear how this translates into our company strategy. But before we start, let me take care of some housekeeping. Our speakers have prepared presentation slides that will be made available in the Investor Relations section of the Iveco Group's website as each speaker session ends. Clicking the banner on the home page will automatically take you to the appropriate section. Also, this event is being broadcast live on our website, and it is copyrighted by Iveco Group. Any other use, recording or transmission of any portion of this broadcast without the express written consent of Iveco Group is strictly forbidden. Allow me to draw your attention to the disclaimer regarding this presentation that you can see here on the screen. I will highlight just one point. Kindly note that financials have been adjusted to reflect the carve-out of our Firefighting business unit. Since yesterday, we signed a definitive agreement for the transfer of its ownership. With the formalities out of the way, I would like to now present today agenda. We have decided to split this event into 3 main parts. First, opening remarks and an overview of our group pathway followed by presentations of our industrial business unit. After the short break, we will return for the presentation of our financial services business unit, a deep dive on our medium- and long-term financial targets and closing remarks; and last, the Q&A session, when we answer your question live. I'm really looking forward to get started as I'm sure you are, so allow me to invite our first speakers. Please welcome our Executive Chair, Suzanne Heywood; and our CEO, Gerrit Marx. Thank you.

Good afternoon to everyone here in Turin and to those of you joining us online from around the world. It's a great personal pleasure to be here today and share with you the achievements and future plans for our Iveco Group, an organization that has a compelling story to tell since it starts only 2 years ago as an independent and publicly listed company. You will have recently read our full year 2023 financial results. As we start the new 2024 reporting cycle, we feel it is the right moment for our second Capital Markets Day. There are 2 reasons for this. First, if we look back at what we promised at our Investor Day in November 2021, we have successfully reached our key objectives 3 years ahead of plan. Hence, the need to put in place a new strategic plan. The second reason is to give you additional clarity and visibility on our individual business activities. Now I would like to ask our Chair, Suzanne Heywood, to summarize what we have achieved over the last 2 years.

Thank you, Gerrit. I'm delighted to join you to share more detail on Iveco Group's first 2 years as an independent company. When we addressed the investment community at our first Investor Day in November 2021, we confirmed our plans to demerge Iveco Group from CNH Industrial and to list on the Italian Stock Exchange in January 2022. We also set ourselves, as an independent company, ambitious targets to 2026. I'd like to invite you now to watch a short video illustrating what we have achieved over the last 2 years. [Presentation]

Behind the strong performance stands our individual business units. Each of these is a key player in its industry. Central to our performance is our Truck business. In the fourth quarter of 2023, Iveco unveiled a completely renewed model range for 2024, positioning itself head to head with the competition. This marked the closing of an investment cycle of EUR 1 billion, the brand's biggest ever. In addition to this, we have added several new products to the Truck portfolio over these last 2 years. These include the battery, electric Daily, hydrogen-powered fuel cell electric buses and the multifuel Cursor 13 engine. We've also introduced a prototype series of our fuel cell electric Daily. This is exploring the opportunities that hydrogen can offer in the upper end of the light commercial vehicle segment. When we last talked to you, we underlined the importance of strong and mutually beneficial partnerships for Iveco Group. This has become a core part of how we operate. It is one of the pillars of the Iveco Group Way. During the last 2 years, we've made a series of announcements about these partnerships. These include the Hyundai Motor Company plus Amazon Web Services and BAE Systems among many others. You will hear more about these and other partnerships from all of today's speakers as the Iveco Group Way is applied across all of our business units. Another pillar for the group is innovation. This is an area where we have made significant progress in the last 2 years. In particular, I would like to highlight the work the team has been doing on multi-energy propulsion systems, which give our customers significant flexibility in their energy choices. Many of our vehicles are powered by internal combustion engines that are multienergy. This means that they can run on everything from diesel to natural gas and even hydrogen. Alongside this, we have also introduced battery electric and hydrogen fuel cell electric propulsion systems as these will play an important part in the next step in our net zero emission journey. Sustainability has not only challenged us to be innovative about our propulsion systems. It has also challenged us to look at how we offer our products to our customers and how we support them through their product life cycle. I would like to highlight 2 examples of this. The first is our life cycle services. These include the ability to monitor our products on the road, so we can help our customers address issues before they impact performance. The second is the launch of our pay-per-use rental solutions through GATE. This allows customers who want to use our green mobility options, like our hydrogen or electric vehicles, a simple or straightforward way to do this. They come bundled with a full set of digital services, including insurance, maintenance and repair and tire management. When we began operating as an independent company, we outlined 4 sustainability priorities: reaching net zero carbon by 2040, reducing workplace injuries and enhancing road safety, applying circular economy thinking to all our products, this starts in the design phase and includes thinking through how each product will be recycled at the end of its life; and fostering an inclusive and engaging work environment. Since publishing our 2022 sustainability report, we have welcomed external scrutiny of our efforts in all these areas. We are delighted that this has resulted in us being included in the Dow Jones Sustainability Indexes for both the world and Europe. We have also been ranked in the top 5% of the S&P's Global Sustainability Yearbook for 2024. Over these last 2 years, Iveco Group has been focused on meeting customer demand while closely monitoring both its supply chain governance and the capacity of body builders. We have consistently increased the completion rate of our unfinished products and the delivery of our order backlog. We have delivered strong financial results; and last year, we raised our financial guidance quarter-over-quarter to reflect the financial health of the group. I am delighted to say that significantly ahead of expectations, Iveco Group has delivered what we promised in November 2021. Thanks to an effective one team approach that stretches throughout our company's 36,000 colleague workforce, by year-end 2023, we were in line with all of our key 2026 targets. In several areas, we have, in fact, already achieved these targets, thus, putting us 3 years ahead of our original plan. Let me share some numbers. We targeted total net revenues of industrial activities at between EUR 16.5 billion and EUR 17.5 billion by 2026, and we achieved EUR 15.9 billion by year-end 2023. Thus, we are fully on track with our target. Our 2026 adjusted EBIT margin of industrial activities was to reach between 5% and 6%, up by more than 240 basis points compared to 2019. By the end of 2023, we had already fully achieved this target. For our free cash flow from industrial activities, we targeted EUR 500 million in 2026. We already reached EUR 400 million in 2023, ahead of our previous target trajectory. I hope you agree that these first 2 years have proven our ability to deliver and indeed over-deliver wherever we can. Over the last 2 years, our business units have built the resilience they need to grow and adapt in what I think we can all agree has been a challenging and rapidly changing business environment. This resilience makes us confident that our group can deliver the new targets that we are sharing with you today. Over to you, Gerrit.

Thank you, Suzanne. Everyone at Iveco Group contributed to executing the plan, embracing challenges as chances to respond faster and more effectively with solutions that positively surprise our customers. Reflecting on the past 2 years, I see a story in 2 acts: the first when we laid down a strong foundation as an independent group and the second when we initiated our transformation to start unlocking our full potential. Allow me to provide color on a few key transformational projects. At the end of 2022, we inaugurated our new ePowertrain plant here in Turin. Besides manufacturing eAxles, we also began producing battery packs that power our eDailys and the electric bus lineup launched in early 2023. At around the same time, we held the opening of our bus plant in Foggia. Later in 2023, we introduced our Cursor 13 multi-fuel engine, a real breakthrough. This combustion engine runs not only on different fuel sources including biogas and natural gas but will also run on hydrogen technology. We are already testing at the prototype stage. This is what powers our newest heavy-duty truck, the model year 2024 that we presented in Barcelona last November. 2023 was also when we acquired the full ownership of the former Nikola Iveco Europe joint venture, renamed EVCO or EVCO, which stands for Electric Vehicle COmpany. This encompasses our e-born heavy truck platform and operations in Ulm, Germany. Along with 100% ownership of the plant, we have full independence on the intellectual property, the software and all technologies. At the base of everything we are presenting to you today across all our 5 business units is a strong commitment to customer centricity. When truck drivers, fleet owners and dealers are trying to deal with external shocks and difficult circumstances, it is especially important that we remain close and respond with smart investments that improve their total cost of ownership. Suzanne?

Indeed, like many industries, the automotive sector has been facing many challenges to how it does business. These have ranged from the long-lasting COVID pandemic to semiconductor shortages, from the energy crises and inflation to conflicts and wars. We believe that challenges in business are inevitable, and our focus should be on turning challenges into opportunities. I would like to share with you how we are doing this in several key areas. The first of these challenges is climate change. We know that climate crisis is increasingly difficult to mitigate, but we're tackling it head on with ever more ambitious sustainability targets. We intend through the strategy to do more than comply with regulations and future targets. Through our work, we aim to inspire others to make sustainable choices such as clean gas, alternative fuels and zero emission vehicles. Next is geopolitics, including ongoing tensions worldwide and multiple critical elections in 2024. Through this geopolitical turbulence, we are staying focused on building an increasingly resilient supply chain that will support our business effectively through periods of change. We are also carefully managing our inventory and production capacity to ensure we can fulfill our order books and deliver our promises to customers. On the macroeconomic front, continued financial uncertainty and volatility are seen in fluctuating interest rates and the threat of credit deterioration. In response, we are being vigilant around maintaining a resilient balance sheet, diversifying our funding sources and curbing the impact of interest rate changes. Finally, we are very conscious of the challenges that come from increasing regulatory requirements. Decision-makers have understandably become ever more concerned about improving safety, reducing emissions and transitioning to zero emissions. We are responding to this by investing in our products, connectivity and new energy solutions. Through doing this, we will not only meet these regulatory requirements, we will also be doing our part to help the transition to a safer and more sustainable society.

Well, turning challenges into opportunities has been our main pathway so far. And Suzanne, thank you for sharing the stage with me and opening our Capital Markets Day, and thank you on behalf of the entire management team for your guidance and dedication as we continue working together to roll out our new strategic plan.

Thank you.

I'm not leaving you. I stay, just change positions. So it's now my privilege to kick off the next part of our Capital Markets Day. You can expect to get our progress since our Investor Day 2021 and updated financial guidance, greater visibility on our business units and the new reporting structure and a detailed view of our financial operations and ambitions. I will share the stage with the presidents of our business units, Sylvain, Domenico, Claudio, Luca and Simone and of course, Anna, our CFO. They're all part of the exceptional team that I'm proud to work with and also share a good laugh when the occasion calls for it. I will start by giving you visibility of our group's unlimited pathway. I must first acknowledge the role of each business unit. They drive their unique segments to success and are accountable for their individual profit and loss. Since beginning operations as an independent company, we have split our reporting into Commercial and Specialty Vehicles, Powertrain, and Financial Services. Starting from the release of our first quarter earnings 2024, we will report our progress and results through 5 business units: Powertrain and Financial Services are not changing, but Commercial and Specialty Vehicles will now be divided into 3 business units: Bus, Defense and Trucks. Firefighting will not be included in our projected financials. As we announced to the market yesterday, we just completed our pursuit from Magirus next chapter of serving heroes. This Firefighting business will gain independence from Iveco Group and unlock its potential as a stand-alone body builder under a new ownership. We expect to close the transaction by the beginning of 2025, and Magirus will take the next step in its long-standing history and compete even more effectively and efficiently in its very unique market. Now let me guide you through a quick overview of our businesses. Ours is the third-ranked powertrain company in the world in its engine category, producing more than 450,000 engines each year. We are among the leading bus manufacturers in Europe, #1 in France and Italy, #3 in Germany and Spain, and we are the undisputed leader in intercity buses. Our defense and civil protection vehicles provide large-scale international programs with the reliability they require. You will understand the magnitude of our defense order backlog in a few minutes. One of the strengths of our Truck business unit is the ability to offer a full product lineup, light, medium and heavy vehicles, by exploiting synergies across the United product development and supply chain. We are one of the most efficient deliverers of financing and service solutions in the market, and we are rolling out a brand-new pay-per-use rental model for green mobility called GATE. The 5 business units benefit from synergies and advancements made across the group. Let me give you just a few examples. Take our shared vehicle platforms. They optimize operations and reduce redundancies leading to cost savings across the group, or think about common technologies. We design, test and develop innovations for our different products. For example, we use artificial intelligence already today for advanced data analytics and predictive maintenance for all our end customers. Another example comes from our engine development. Our trucks, buses and several defense models benefit from the same powertrains designed and built by FPT Industrial. We can also look at our financial services where we optimize funding and support of the whole group. Beyond products and services, fully utilizing our synergies keeps our SG&A structure lean. We have consistently registered less than 6% of SG&A across our business units. And inside gains through R&D for one segment crosses smoothly over into learnings for the other segments. As a newly listed company, it was clear that our pathway would be fast paced and pretty exciting. This enthusiasm needed guidance, so we ran a company-wide survey, an engagement program to shape our purpose and values, listening very, very carefully to all our employees and diverse stakeholders. I'm genuinely inspired by all our 5 values, but I guess the one that resonates most on a personal level is we go beyond the obvious. It embodies the soul of our group and clearly reflects our ambition to always push the limits and courageously set out on new pathways. We are and will always remain humble fighters and fearless creators. Our purpose and values unite our entire organization, starting with the senior leadership team. This morning, you met some of us during the Iveco Group experience. And shortly, I will be joined by Sylvain, Domenico, Claudio, Luca, Simone and Anna presenting their individual parts of today. It's really an honor and a pleasure to work closely with each and every colleague connected, and I think it's the right moment to thank everyone at Iveco Group. I'm not sure whether this was heard online, but it was applause. Sometimes it doesn't transmit. So I promise you, this is just the beginning. Our pathways are truly unlimited. The ambitions we present today will be achieved through our own strength. But we also know that there are inorganic pathways. They can accelerate innovation and synergies within the automotive industry as well as outside of it in places yet to be discovered. So what growth ambitions do we have for this cycle? In Powertrain, we aim to reach double-digit profitability and gained 100 basis points in adjusted EBIT margin year-on-year, like we've done -- like we've been doing since our spin-off in 2022. In Bus, we want to strengthen our position to lead the mobility transition while further expanding our profitability. In Defense, we are innovating to continue our solid growth path building on our current order book of over EUR 4 billion. In Truck, we want to continue leveraging our professional light commercial vehicle leadership while improving the margins of our heavy-duty trucks. Finally, we are looking to maintain our current successes in Financial Services, while pioneering new sustainable mobility solutions. We'll accomplish all of this by advancing technological innovation, maintaining financial discipline, forging strategic partnerships and leading the sustainability journey. I will provide color on each of these strategic pillars starting with innovation. We want to take you on the journey now to some of our sites where innovation plays a key role. Marco Liccardo, our Chief Technology and Digital Officer, visited the colleagues working in these locations. Let's watch it. [Presentation]

Good afternoon. As Gary said, I'm going to spotlight some of the technology driving all our business units. I've been working here since the beginning of my career, and I have seen a lot of change in our industry over the years. But right now is one of the biggest transformations ever. To keep pace with this transformation, I invite you on a virtual tour of some of our key sites where we go beyond to design, test and produce exciting innovations. We are working around our 3 innovation pillars: energy transition, artificial intelligence and software-defined vehicles, and autonomous driving. Are you ready? Let's go. At Iveco Group, we want to lead the energy transition, reaching net zero carbon by 2040. We always follow a multi-propulsion approach providing different solutions for different market needs, including green and zero emission. Here in our FPT Industrial testing center, we test the cleaner sources for our engines such as biogas, hydrogen and of course, electricity. Let's take a closer look at our electric powertrain. I am now at our ePowertrain plant, fully dedicated to the production of our electric powertrain range, namely electric axles and battery packs. Since its opening in 2022, we've already produced 10,000 units and grown our internal know-how also in view of the production ramp-up and the next product generations. And the foundation for our zero emission and electrification journey doesn't stop there. I'm here in our recently inaugurated E-BENCH test and validation lab in France. This test bench is unique in Europe. It allows testing of both individual components and complete larger size electric and hydrogen vehicles in real driving conditions. In this way, we can simulate all types of missions and climates and improve process efficiency and time to market. We want to get it right for our customers from the early stages of our design process because customers define each phase of our product development. Speaking of customers, the progress in artificial intelligence, in particular, generative AI, is enabling us to introduce significant customer-centered innovations. For instance, classic AI's based on machine and deep learning is already embedded in our latest product generation. I'm onboard the Model Year 2024 IVECO S-Way, connected to our control room and our IVECO ON portal, just like more than 140,000 other vehicles are today. Our aim is to reach over half a million connected by 2030. The big amount of data generated by these vehicles is the oxygen for our AI algorithms, which are at the core of the advancement of our software-defined vehicles and make up our second pillar. You see, from machines, we are working on software-run devices similar to smartphone [ service ]. The impact will be revolutionary. For example, software-defined vehicles will open the door to pay-per-use business models and new profit pools, just like our GATE program for zero-emission vehicles. Vehicle updates will be done in click, thanks to our over-the-air system. Fully integrated and automated logistic processes will lead to near-0 plant stops and a 50% increase in customer productivity, and customer centricity will be improved as well. Do you know Iveco Driver Pal? Well, already today drivers have access to the new generation of Amazon Alexa, and the next generation will go even farther, thanks to the fast progress of generative AI. Just a minute. Hey, Alexa, play my favorite song. Okay. Here It's Electric by Metallica. But what about generative AI? GenAI refers to algorithms that can create new content from big data based on plain language prompts. Some early applications at Iveco Group are AI analysis of current and historical data to increase our probability of winning a tender, enhance the machine human interaction through Driver Pal, immediate and personalized responses to complex customers' inquiries regardless of the language, generative design of new parts through fill data analysis, and software development based on AI coding and testing that cuts time to market significantly. As you can imagine, a key competitive advantage in this journey will be our ability to develop software internally. That is why, last month, we inaugurated our very own Software & Analytics Lab. We are ramping up and expect to have 500 engineers working full time in the lab in the next few years, the main benefits: cost saving, shorter time to market and higher customization. Our third pillar, an extension of AI in software-defined vehicles, is autonomous driving. I'm in Ulm, Germany onboard our IVECO S-Way equipped with the PlusDrive. With our long-term partner Plus, we are developing and testing highly automated driver assistance systems. We are taking our vehicles from today's Level 2 to Level 2+ and beyond. Level 2+ with the semi-automated driving will result in even safer roads, improve the total cost of ownership and increase the driver satisfaction. And we are already testing those trucks on public roads in Europe. So energy transition, AI and software-defined vehicles and autonomous driving are the 3 key pillars that will drive our innovation journey in the years ahead. We plan to continue accelerating, leveraging on our flexibility, our adaptability and the partnership ecosystem we are building. Thank you for joining me on this tour, and now back to Gerrit.

So Marco is much better live, but we couldn't move all the equipment on stage. But you have him later for Q&A, so we can certainly see some of Marco later. So this is just a sample of what the 3,000 colleagues on our technology and digital team are doing to develop cutting-edge solutions. As you have seen, our focus will be on energy transition, AI and software-defined vehicles and autonomous driving. Investments and advancements require financial discipline. Our group has formulated a very clear plan of operational excellence that ensures viability going forward. You see, 2 years ago, we set the bold goal, EUR 500 million in the 2019 to 2024 time frame and EUR 500 million more from -- by 2026. At the end of last year, we were perfectly in line with our operational goals having set aside EUR 300 million in savings. And in terms of volumes, mix and pricing, we over-delivered at EUR 600 million and successfully delivered on all other fronts, offsetting inflation, improving margins and winning market share. In the upcoming years, we are committing to another EUR 1 billion throughout the plan, split in EUR 600 million by 2026 and another EUR 400 million by 2028. The savings will mostly be driven by operational efficiency. The keys to this step-up will be energy and raw material price recovery plus optimization of every area of our business from procurement to engineering to manufacturing. We are aware of the potential challenges ahead, which is why our plan incorporates current forecasts and leaves room for additional upside if inflation is less severe than expected. Moving to our third pillar, partnerships. We will continue following the Iveco Group Way with like-minded organizations, as Suzanne spoke about earlier. Let's see more about our ecosystem of partners that we formed and reinforced, particularly in the last couple of years. [Presentation]

That was a long list, and all of these collaborations are important to us for many reasons. But let me focus on just 3 of our most transformational partnerships. For more than a decade now, we have collaborated with BAE Systems in Defense. We hit a key milestone when, in 2018, we were selected by the U.S. Marine Corps to provide their new generation of amphibious vehicles, which are on display here in the industrial village. This is clearly an industry benchmark, and we are registering interest in other allied countries where our vehicles are being tested. In March 2022, just 3 months into our first year, we signed an agreement with Hyundai Motor Company to explore several joint opportunities. Since then, we have codeveloped the fuel cell electric Daily, our first hydrogen electric city bus and our brand new full-electric light commercial vehicle, which is just outside these doors. With a gross vehicle weight of 2.5 tonnes to 3.5 tonnes, this opens up a new category for our group and stretches the successful Daily DNA to a lighter segment. And now hot off the press, our most recent announcement, we just entered into an agreement with Ford Otosan in Türkiye to jointly invest in a new cabin structure for heavy-duty trucks. It will be compliant with upcoming regulations on direct vision and mass and dimensions, and we will work together with Ford Otosan to explore the potential for other mutually beneficial co-developments in this area. I have one more key pillar to tell you about, sustainability. It's with great pride that I present a summary of the targets we had set for ourselves at our first Investor Day, and our achievements reached well ahead of our 2026 goals. We surpassed our goal of 60% water recycling across our global facilities, registering 64% at the end of 2023. At the end of last year, 24% of Iveco Group's management positions were held by women. This was the 23% target for 2026, having started from only 18% in 2021. Our Net Promoter Score and customer experience increased by 20 percentage points versus 2021, 3 years ahead of plan also here. And regarding the safety of our people, we are on track to meet our workplace injury reduction targets well ahead of schedule. Reaching some of our sustainability targets during our first 2 years of operations had led us to set new, even more ambitious targets. 100% of our total electricity consumption will come from renewable sources by 2026 instead of by 2030. 75% of industrial water will be recycled at company plants worldwide by 2026. Our new 2028 target for gender parity is to have 30% of our office positions held by women. Therefore, we will widen and raise our scope to include all female employees across every phase of their career. We will also maintain gender pay equity across the organization, and we will have it certified by 2026. And by 2026, we will add 5 percentage points to our already improved Net Promoter Score. These targets are more than just numbers that represent our dedication to an inclusive workplace, life cycle thinking and a net zero carbon society. Our collective commitment to performance can be seen in our new financial targets for 2028. We will grow our industrial net sales up to 5% CAGR, expand profitability from industrial activities up to 3 percentage points, more than double our industrial free cash flow and adjusted diluted earnings per share, and continue to reinforce our liquidity. Anna will talk to you in detail about all our financial targets later today. Let's hear now from the leaders of our business units, starting with Sylvain from our Powertrain FPT business unit.

Good afternoon, everyone. It's a great pleasure and honor to start today's business unit section with Powertrain. But first, let me introduce myself. I joined the group more than 20 years ago, and I have extensive global experience across various segments, such as agriculture and commercial vehicle. And in the role of Vice President of Global Tractor Product Line for Case IH and Brand President of Iveco Group, I worked in numerous locations in Europe and North America. During these years, I approached the powertrain industry from a customer's point of view. And now with FPT Industrial, I serve as a supplier. This means that I can bring and leverage my deep understanding of customer needs and the value powertrain technology bring to our customers. Today, we are 1 of the top 3 independent engine manufacturers in the world, serving over 100 OEMs across the globe and producing over 450,000 engines every year. Our business unit operate under the FPT Industrial brand and is made up of 2 main segments: internal combustion engine, also known as IC; and electric powertrain. IC has historically been our core business. Today, we have a diversified portfolio, both in terms of end markets and geographies. In this segment, more than 40% of sales are outside of Europe. And the business is evenly split across on-road like commercial vehicles; and off-road, such as agricultural and construction equipment, combined with marine and power generation applications. To accelerate our customer journey toward zero-emission vehicles. We cover all alternative fuels from biodiesel to natural gas and biogas as well as hydrogen. We are focused on doing what is right for our customers and for the planet. Building on our strong experience in IC, including classic drivelines and gearbox, we've created our ePowertrain business. Today, we have an installed capacity of over 50,000 electric axle a year and over 1.3 gigawatts per hour in battery systems. Let's now talk about the evolving landscape of our market and what it means for us. We all know that internal combustion engine will remain the dominant technology in commercial and industrial application for the rest of this decade. But we also know that electrification will play an increasing role. Fewer combustion engine will be made, and OEMs may see lower returns on investment. This is where our diversified portfolio becomes a strong advantage, putting us in a unique position. We can capture new business as OEMs move from making engine to buying them. This offers as well opportunities for co-development and partnership. Despite the recent postponement of Euro 7, all our engine families are ready to comply with new regulation whenever they are put into force. Alternative fuels are growing in prominence as they become available. We believe the hydrogen combustion technology, which has recently been recognized by the EU as a zero-emission alternative will play a key role in decarbonizing our industry. In this respect, we are on the right path with our multi-fuel approach as we already have in-house hydrogen IC running on pilot applications. We are well prepared for the shift towards alternative fuels that will occur alongside electrification. This is very relevant in Europe and China, where we expect electrification growth to outpace the 25% global average shift forecasted by the end of this decade. One more point on market trends, the rise of digitalization, which is opening new profit pool. We are proud that 250,000 of our engines are already fully connected. This allows us to provide a full range of connected services, including predictive maintenance, over-the-air updates and remote support. The FPT team has accomplished a lot in the past few years, and let me give you some highlights. Last year, we introduced our XCursor 13 the completely new 13-liter engine that joined our well-known Cursor family. It stands out as the first multi-fuel, single-based engine. It will power the newest Iveco heavy-duty truck, the S-Way Model Year 24. The XCursor 13 cuts fuel consumption by up to 10% and runs on all sustainable fuel sources, including hydrogen. This is another example how we are at the forefront on the multi-energy propulsion. We also reached important milestone in electrification. We developed a comprehensive lineup of eAxle and battery packs, designed not just for commercial vehicles but also for new segments like high-performance sports car. Our supply to Maserati of the complete ePropulsion for the GranTurismo Folgore is a great example of this. The market response has been extremely positive to all this innovation. Customers continue to trust our powertrain solutions, and we have reinforced our long-term partnership and supply agreement, for example, with Daimler Truck and CNH. The loss of the Fiat Ducato engine supply contract back in '19, which started to impact FPT already in '21 has been more than compensated over the 200 new projects won both in off-road and on-road sectors. Thanks to our diversified portfolio, more than 60% of our business is now coming from third-party customers. Building on this achievement, we will focus on 3 areas to elevate our profitability in the upcoming years. With our group's operational excellence program, we will reduce complexity and improve industrial efficiency while driving procurement performance and synergies. This program ultimately will drive the bulk part of the plan's adjusted EBIT improvement, leading to a 3 percentage point increase by '28. Parts and customer service will also play an important role in our strategic plan. In '19, we made an important shift, putting customer service at the heart of our strategy. We grew our team and offering. As I mentioned, we have more a large fleet of connected engine of more than 250,000, and we are digitalizing our dealers to better serve our customer across the 5 million installed running park. In the last 5 years, we increased our parts and customer service sales by 50%. We plan to continue on this pathway, increasing sales by an additional 50% in the next 5 years. We'll capitalize on what we have done so far and further expand into offload services. We will grow our global reach, and we will continue to offer our customers new [ ADAS ] connected features. Last but not least, we want to grow our electric powertrain business to reach more than 10% of our total net sales by '28. This will be a profitable growth as we will already reach breakeven in '24 and planned double-digit gross margin by the end of our plan. Certainly, ePowertrain is gaining traction in the industry. And we have invested early to pioneer this technology. With the dedication of our engineers, smart product strategies and key partnerships, we turn our vision into tangible results, starting with our brand-new carbon neutral ePowertrain plant here in Turin. Whether it's launching new projects, venturing into new countries like China or winning new business like high-performance car, we are moving forward. And let's be clear, our aspiration for ePowertrain extend way beyond '28. We are already planning the next generation of technology and innovation, focusing on performance, efficiency and total cost of ownership alongside, of course, sustainability. What does this mean in concrete figures? In simple terms, we are targeting double-digit profitability, which means growing our adjusted EBIT margin by roughly 100 basis points every year. In terms of revenue, 80% of our plan is already covered by existing contracts based on current volume projection. The remaining growth will be balanced between new business acquisition in [ ICE ], deeper penetration of our parts and customer service and the expansion of our ePowertrain business. To reach our targets of double-digit adjusted EBIT, we are focusing on higher profitability area and staying committed to our operational excellence initiative. Looking ahead, our ambition is backed by a strong investment and innovation plan to protect our technology leadership. We will complete the renewal of our engine portfolio with a new medium engine, further develop hydrogen combustion technology and expand ePowertrain lineup. As you see, we have ambitious goal. Our commitment comes from a robust plan and our ability to deploy laser-sharp execution. This is how we will make our plan -- our strategic plan a reality. And let's not forget that our powertrain industry is going to see many more changes, evolution and shift. All good news for those who are ready to capture valuable inorganic opportunity, and we are. But beyond strategies and plans, it's really our people who are at the heart of our success. We take inspiration from our fully engaged team member who go beyond every day to ensure the success of our powertrain business unit and our customers. Thank you very much.

Good afternoon. I'm really happy to talk about our bus business unit, one of Europe's leading players in the bus and coach segment. But first, I want to tell you about myself and why I'm standing here today. I've taken a diverse route to arrive at my current role as President of this business or maybe I should say, have taken lots of routes. Like many of my colleagues, I'm an engineer, and I've seen our company from deep inside manufacturing, quality, customer service, sales. All of these experiences have built one on top of the other to ultimately equip me with a broader vision of this industry. But they also prepare me for serving in my recent assignment as Chair of the bus and coach division of the European Automobile Manufacturers' Association, ACEA. And together with my team, I'm eager to contribute to Europe's people transport ecosystem. And I'm very proud today to guide you through our bus pathway. But who are we? In 3 words, we love this, we are people moving people. Each day, our 200,000 vehicles on roads around the world move millions of people. We take that responsibility seriously, providing all these people with reliable buses to get them where they need to go safely and sustainably. We do this with a full offering of vehicles across all segments. We like to say we are a full liner. We have the right bus for each specific mission: urban, rural, intercity, long distance, we have all these products. And we take pride in working really closely with our local communities and understanding their needs. With our industrial footprint and our widespread network of dealers and service points, we are right there in the same geographic area as our customers. We know first and what condition they are navigating, so it is easier for us to offer a solution that makes sense. And I can tell you that they really appreciate our buses. Take our Crossway, for instance, it has almost 50% of the European intercity market share. Furthermore, we do what is right to accelerate the decarbonization journey of the people transport industry, offering a complete range of multi-energy technologies. Our buses use diverse energies from biofuel to natural gas, from bioelectric to hydrogen fuel cell, but let me back up this with the facts. Last year, we were the OEM with the highest number of low and zero emission vehicle registrations in Europe. And we already have 1,500 battery electric buses transported people today and over 50% of our incoming city bus orders in Europe are for electric vehicles. For the passenger transport industry, as you know, the future is already here. Zero emission vehicle will make up 90% of newly registered European city buses by 2030, only 6 years from now. A rapid shift like this will be the result of a collective effort. Government bodies, transit operators, OEM and infrastructure provider, we all must work together. This requires a deep understanding of regulation, regional differences and local needs. But the journey is not the same for everybody. Our multi-energy strategy is designed to support each of our unique customers through this change. We also pay careful attention to the new types of support needed by municipalities on their electrification path and this will open up new revenue pools for us as we introduce more electromobility services. Of course, and today, a lot of you ask me about competitors, how we are managing the newcomers. Of course, this shift again and is entering -- is allowing the entrance of new competitors to the market. But despite the fact, some are entering with innovative products and others with cost advantages. We can count on our deep customer relationship and extensive deal, Iveco Group dealer and distribution network. This, combined with our ongoing investments in technology has prepared us to perform well during the change now and in the future. We are now the front runners, but the past few years were complex at the macroeconomic level. The bus and coach market was really under pressure, especially here in Europe. And instead of waiting to see what would have happened, we accelerated and we are still accelerating. We optimized our supply chain and time to market and upgraded our manufacturing footprint so that our customers could count on us even in the challenging times. We also invest in new technology. We renew our product lineup, launching a complete electric range. And we also introduced our first hydrogen fuel cell bus in partnership with Hyundai, you can see here. In France, it's already one of the options available to municipalities and public entities for more sustainable transport. We also brought back bus assembly to Italy, opening our net zero plant in Foggia. These are many outcomes from all these actions. Record production in 2022 that we beat with a new record in 2023, resulting in a significant increase in market share, we grew from 15% just 5 years ago to almost 23% today. And look at our electric bus sales, 300 in '22, 500 in '23 and 1,200 this year. And our 2024 production is already more than backed up with the order portfolio, which exceeds 1,500 electric buses. This gives us over 12 months of visibility of what we need to produce, allowing us a smooth governance of the supply chain. Capitalizing on our achievements, we are ready to invest EUR 600 million in advanced technology to remain at the forefront and keep driving the energy transition forward. You see, we aim to increase our market share in Europe both in volume and in presence, both in volume and in profitability. And especially in the intercity segment where we will consolidate our total cost of ownership edge by innovating within our Crossway range. And we intend to replicate the Crossway winning factors in the city segment. We will launch a zero-emission-born architecture, leveraging commonalities with a new intercity platform that we are developing in parallel. I'm confident that these synergies with our robust product offering and optimize manufacturing will double gross margin in the city segment. Outside of Europe, our goal is to generate at least 15% of our revenues from markets in Africa, in the Middle East, Asia and Latin America. And in this last region where Iveco Group already has a strong footprint, we will also work with local partners to tailor our product portfolio to this region-specific needs. Our strategy is organic, built on a consistent track record of delivery and innovation. However, we are open to partner for or even acquire technologies as needed. And organic opportunities can help us to accelerate our growth. So like I said, we are going to invest in technology to advance the energy transition. It's well known that the electrification is becoming the standard in the city segment. That's why our strategy, put electromobility in the forefront of this segment. Since 2019, we have invested EUR 100 million to launch and industrialize our city buses. Key improvements were made just last year, increasing this vehicle efficiency and competitiveness in the market and offering total cost -- superior total cost of ownership. This strategy has made a positive impact on our local communities, our new plant in Foggia and the upgrade of our Annonay production line in France to include electric vehicles and battery pack assembly are perfect example. All the choices we made have helped us to win many tenders with our electric buses, as I mentioned. And our order portfolio value in 2023 is 4x higher than last year. This trend has continued in recent months as well. We announced winning several tenders for electric buses, [ 100 ] to intercity, 38 city buses in the Netherlands, 200 in [ Marcell ] and another 411 in Rome. We are confident that results like this will keep coming for our electric bus line up. But now the next move is to invest EUR 300 million for the combined development of next-generation city bus and intercity range. And as I said earlier, for our city buses, in particular, we are developing an electric-born architecture. It will integrate the batteries into the vehicle structure, allowing a weight reduction of 20% and a significant improvement in the vehicle layout. We aim to provide our key customers with increased performance benefits, such as 20% more passenger capacity and autonomy. Our operation and supplier performance will improve as well. We expect cost efficiency for 2024-2028 period to be in the range of 20% to 25% when compared to today. So scaling up our business by using new technology, further optimizing our processes and reaching out to more geographies. This is our overarching ambition. But how do we get there? Let me highlight the main contributors. First, we will keep investing in our future. As I mentioned before, we are committing EUR 600 million in the next few years. Half of this will be allocated to innovate our current lineup and ensure full compliance with the new regulatory standards. The other half we have to further develop our new ranges, always with our customers in mind, we are also extending the scope of our aftersales services and solution, which will ultimately double in profitability by the end of the plan. Lastly, our experience in fleet management with more than 75% of our electric vehicles connected to our bus control room [ million ] will enable us to offer our advanced services to our customers. This includes full consumption optimization and battery [indiscernible] monitoring, which will help reduce overall maintenance cost. But now let me translate what I see as the pathway in front of us. First, moving 25% more people around the world. Second, decarbonizing urban transport head of legislation and lastly, doubling our profitability by 2028. That's our story, the story of women and men of Iveco Bus sharing the true passion of people moving people. Thank you for listening.

Good afternoon. I'm pleased to join my colleagues on stage to present the Defence business. Today, we are taking a close look at this business unit together for the first time. I started my career in diesel engine development for passenger cars over 25 years ago. I first joined our ASTRA brand as vehicle testing manager in 2000 and began to work on heavy-duty of highway trucks. ASTRA is our brand of extra heavy trucks for off-road, mining and defense missions. Some of these products are on display today outside of the industrial village. It's working in ASTRA that my passion for custom vehicles really sparked and grew. A passion built around unique customer needs and products designed to operate in the most challenging missions. Over the years, I further expanded my experience in specialty vehicles for many different applications, covering different management roles in direct sales, operations and business development until landing in Iveco Defence in 2011, formerly as the Program Management Director and later as Head of Product Development and Engineering. In 2019, I was excited to accept the responsibility for Iveco Defence, taking this business unit to the next level. ASTRA has since been merged into our Defence business unit, given the proximity and similar business nature of both. Leading and moving this business unit and this people forward is a greatly rewarding and challenging journey. At the simplest level, we have more than 1,800 women and men worldwide, mostly based in Italy in our plants in Bolzano, Piacenza and Vittorio Veneto, all proud to move and protect the human lives in the most challenging places on earth. We do it with passion, essential purpose and great teamwork, also leveraging on the Iveco Group solutions in the field of transport. We complement it with our core competencies in the field of tactical and off-road mobility, our consolidated know-how and survivability and protection and our structured expertise in advanced system integration. Within Iveco Group, we are an independent and self-sufficient business unit. Our points of strength are the ability and flexibility to satisfy customer-specific requirements. At IDV, we specialize in vehicles for defense missions, sensitivity protection, covering a wide range of applications from a 7-ton, 4x4 military utility vehicle to a 70-ton truck platform in compliance with all the applicable NATO standards. At ASTRA, as I mentioned, we developed vocational heavy trucks for heavy haulage and off-road missions. We entered the field when conditions become extreme and standard vehicles are not enough. Since 2021, we have made a great team out of ASTRA and IDV, complementing each other's mission, know-how and offerings. We have proudly developed a center of excellence for special transport, achieving important synergies in engineering, manufacturing and service across different applications, which we face with the same mindset. Now let's have a closer look at some of our flagship products and our most recent developments. In the land armored segment, we have developed the [ Shintaro ] family within the IDV Oto Melara consortium, a long-lasting collaboration with Leonardo. IDV is responsible for the vehicle platform. We offer the highest standards in terms of survivability with our advanced hull design and [ add on ] armor. And in mobility, through our proprietary propulsion and drivetrain systems. Then there's our unique and cutting-edge amphibious range. In particular, our 8x8 is the only platform in full rate production designed for ship-to-shore mission that can operate fully both on land and in open ocean waters. We successfully developed it in partnership with BAE Systems. As you know, it was chosen by the U.S. Marine Corps in 2018. A truly great demonstration of its remarkable performance and our capability to engineer great products exceeding customer requirements. Since then, we have already delivered over 270 units, this range continues to grow with new variants and is under the close attention of other allied countries, which need to modernize their amphibious capability. Moving to another very successful segment, the multi-role range. We have introduced the second generation of our light multi-role vehicle and our medium tactical vehicle. They are setting new standards for light 4x4 armored vehicles. Both ranges are currently adopted in NATO countries and covered by long-term contracts. Our portfolio has been consistently developed paying close attention to customer needs in rapidly evolving scenarios. First, advanced technology is a major driver in the defense sector. Innovative technologies surface with increasing speed, setting new standards for both operational safety and on-field performance. Our uncrewed and autonomous technologies will play a key role together with the survivability solutions and innovative propulsion we are developing. Second, we acknowledge that Defence programs are growing in complexity. Our proven ability to cooperate, contributing technologies, manufacturing capabilities and supply chain governance is a great enabler to our development. We also believe that to navigate ongoing geopolitical challenges, we must respond proactively. Not just to deliver vehicles but to deliver service and repair as well. Our customers need increased availability and capacity sometimes requesting intervention directly on military basis. New technologies such as augmented reality, training and simulation, R&D printing, fleet management, advanced data analysis for diagnostics and predictive maintenance will substantially evolve our service level. In the last years, we proved capable of navigating this rapidly evolving market scenario, achieving positive results. Our order book grew 8x since 2018, well before the recent increase in geopolitical tension. We have expanded our global reach, and we remain focused on continuously improving our operational excellence, strengthening our manufacturing and supply chain operations. Therefore, we confidently target profitable portfolio execution in the coming years. Last but not least, we are committed to providing our customers with the most advanced and mature technology to safely accomplish their missions. With this period, we rolled out a strong investment strategy, doubling the number of our full-time engineers since 2018. We further develop new vehicle protection systems and established a division fully dedicated to innovative military propulsion. We have also shown our ability to grow inorganically. We acquired Italwatt in 2021 to gain full control of military vehicle electronics. And in 2023, we acquired Horiba Mira's Uncrewed division to expand our capabilities in artificial intelligence and software technologies, especially in the most challenging environment, for example, where satellite navigation systems are denied. Now let's take a look at our strategy for the future. As I mentioned, keeping a close look at what's happening on international stages, we will continue to maintain a strong focus on technology. More specifically, we'll continue to invest in material engineering to further improve our capability to protect against modern threats to strengthen our tractor vehicle division and to play a key role in future emerging needs. We will also evolve our propulsion system through hybridization and electrification. And finally, we will bring our uncrewed technologies to the proper level of maturity, reducing infield risk exposure. Then we'll continue to enter new markets through partnerships with leading organizations, cooperating with the local industry to fulfill localization requirements. Lastly, we recognize that strengthening and shortening the supply chain is important to handle disruptive and unexpected events. Specifically, we will continue to vertically integrate key components to assure our customers have strategic autonomy. I would like now to dive deeper into our orders. Our order book has grown substantially over the past 6 years. There is a clear pathway ahead of us with over 60% of the planned sales already contracted. We know how fundamental it is to keep our commitments. For this, we are carefully investing to sustain a rising demand, creating centers of excellence and expanding our plant capacity without reducing manufacturing flexibility. In our business, as you know, quite often, customers award frame contracts and then specific orders are issued within those contracts, depending on their geopolitical priorities and fund availability. What you see in our plan are the already funded orders. In other words, top line is consistently secured and the release of additional funds within current programs can bring significant upside. Our ambitions are grounded and tangible. By 2028, we projected to reach between EUR 1.2 billion and EUR 1.3 billion in net revenues combined across IDV and ASTRA, with an adjusted EBIT margin of 12% to 13%. This is based on the assumption we named before. As our order book progressively enters the production phase, it will ensure steady growth in sales. This growth is based on top line projection on yearly allocated funds within our order book. If spending in member states increases, our revenues could be substantially higher by the end of our plan. In terms of margin growth, we will benefit from a favorable mix in our portfolio and our company-wide operational excellence program will not only ensure the timely delivery of high volumes, but will also lead to further margin improvement. Large-scale international programs provide the foundation for growth, while diversification in products and geographies offer stability to our plan. Brazil, Germany, the Netherlands, Romania, Spain, Switzerland and the U.S.A. are examples of our successful commitment to internationalization. Our entry in the U.K. through the acquisition of Horiba Mira's Uncrewed ground vehicle business, now IDV Robotics, is the basis for our uncrewed expansion and will give us the chance to work with top-end users in this field. The pathway for defence calls for a vertical long-term strategic approach. The efficient delivery of our strong order book demonstrates our capability to develop, manufacture and service on time and with quality. This is at the base of our further international expansion. We'll continue to focus on higher profitability segments and to accelerate the integration of new enabling technologies. On the upside, we see the chance to expand into new geographies and introduce new solutions. Moreover, within our current contract, increasing government needs will drive additional orders. We are setting a course for sustained and continuous growth, believing in our strong commitment to provide our customers and the countries they protect the most appropriate technologies they need to safely accomplish their missions. We contribute to keeping Europe and our allies countries as safe. Thank you.

Thank you. Good afternoon, everyone, and it's really nice to be here, and I'm sure that you want to know our plans for the backbone of our group's revenues, our trucks and vans. And this is my responsibility. And I'm going to share insight on the present and importantly, the future of our truck business unit. If you don't know me, I've been in the truck industry for over 25 years, here and in other companies. Exploring it from many different angles. I've run dealer networks and business developments in different regions. I work hand-in-hand with engineers to develop products and services and I look after customer service and sales and marketing. And together with my team, we have learned what it takes to build a great truck. It is essential to listen to what our customers need and come up with new ideas to help them with their businesses. And that's why we are embracing new technologies and offering increasingly sustainable solutions for and with dealers, distributor, fleet owners and most importantly, truck drivers. In the same way as our other business units, we operate under our brands, this brand is Iveco and this is not by chance that it is also part of our group's name. And we want our trucks and vans to be top of mind when customers are shopping, from big retailers to ambitious small business owners. And to do this, we have developed a full lineup of multi-fuel vehicles. And throughout our extensive and professional dealer network and thousands of system points, we make absolutely sure our customers get the unique support they need. We presented this lineup. You had the chance this morning to walk around last November in Barcelona. It's our Model Year 2024 full range. It took an investment of EUR 1 billion and the effort of the whole team. And we did something pretty much unique in our history because we have done something that had never done before. We renew our [ AIR-PRO ] product lineup all at the same time, and then we provide details on this later in my presentation. For now, let me briefly describe each of our truck segments. I would like commercial vehicle are the backbone of our business units, and the Daily continues to be recognized as the benchmark in the professional division for urban and [ meet my emissions ]. Simply look at our track record. 1 out of 4 chassis-cabs in Europe is Daily. It has become a brand on its own. Then there is the eDaily. The entire lineup is now available as pure electric, and this emission and noise-free range offers increased performance up to 50% savings in maintenance cost and more sustainable solutions. And then our medium-duty truck is the well-known Eurocargo, and I really like to call it our reliable workhorse and after many years of service, he continues providing what customers want exactly in the way they want it. It is a leader in its segment and makes a valuable contribution to hand customer, total cost of ownership and to our margins. For heavy duty, the S-Way Model Year '22 was a big step-up as demonstrated by our sustained pricing policy, and the market simply love it. We had doubled our market share from 2019 to today while steadily working and improving our marginality. But this was just the first step because Model Year '24 is now entering the scene and it offers even more in terms of total cost of ownership, sustainability and performance. And then there is EVCO, IVECO, our electric vehicle company in Germany for the e-borne heavy duty platform and more on that in a minute. As you see, we are not standing still and neither is our market. And today, it's changing more than ever. And there are a few key market trends to watch. The energy transition has already been mentioned today, but it's worth stressing because it is definitely impacting our segment too. And fleet owners are being mandated to move towards low and zero-emission vehicles, and we're responding with the improving demands, efficiency and performance of our multi-fuel internal combustion engines, taking them to the next level. And we are offering a full range of battery electric and fuel cell electric vehicles. Transitioning to zero emission requires a complete transformation of our design and manufacturing approaches, and that's why everyone at Iveco Group is really focusing on adopting the latest technologies in product design and development as well digitalizing our processes such as purchasing and financing and manufacturing and a lot more. And in this period of acceleration, we also see -- we see services and software becoming increasingly integral to transportation. Maybe you remember the software-defined vehicle Marco talked about before. And well, we are investing heavily in our in-house software capabilities, including the very important contribution artificial intelligence will make. As far per autonomous driving, let me head here my personal view. Well, I don't think that we will see a driverless truck soon. People still need to be the hands and brains behind the wheel. We are putting our money into the developments of a level 2+ advanced driver assistance systems to ensure our drivers and fleet owners have a safe, comfortable proposal to support their day-by-day job. And I think level 4 autonomous trucks might have a future in large platoons of multiple vehicles, but stand-alone driverless trucks are not feasible at scale now. I'm already moving forward, talking about our new strategy. But let me remind everyone that we are not starting from 0. In the past 4 years alone, we have outpaced our competitors with a 10% yearly revenue growth and we also managed to increase our margin by around 500 bps. How we did it? Internally, we stay lean. We maintain a very lean SG&A structure while continuing to minimize broad cost and optimize procurement in line with our DRIVE program. And externally for our customers and dealers, we improve the driving experience, boosting productivity, pushing forward with connectivity and starting to offer a wider range of power sources. The Model Year '24 embodies all these enhancements, and let me break it down by segments. In heavy duty, we have the most advanced Iveco has range yet. It comes with smart tech like Alexa-integrated driver pole and plus assisted driving, and our new XCursor 13 multi-fuel engine has up to 10% in fuel savings for diesel and gas as highlighted before. And then there is the S-eWay is the first electric-born-heavy-duty truck fully produced by us. And as Gerrit already explained in summer 2023, we acquired the former Nikola Iveco joint venture in Europe which we renamed EVCO for electric vehicle company. And this includes the entire operational plans in Neum, Germany as well as IP, software and technologies to further develop our heavy-duty battery electric and fuel cell electric vehicles. It also provides us with optionality for additional synergies and partnership, and considering the technology and features that we have developed for these segments, we don't have to be shy. We don't have to be shy about saying that we are planning on the same level as our peers. And this is a great opportunity. It's a great opportunity that we plan to exploit in full. In the medium segment, our new generation Eurocargo stands alone as the only 12 to 19 tonner on the market that is compatible with natural gas, and I continue to see a bright future for this model. And then on the Model Year '24 light commercial vehicle range, we introduced exciting enhancements to the Daily cabs and vans. And let me say it again. The daily remains Europe's preferred choice in the commercial cab segment, one in every 4-chassis cabs in Europe is a Daily. And this motivates us greatly to keep steady on our current pathway for this vehicle. These achievements have increased our awareness of our capabilities, but as you can imagine, this is not enough for us because we want to go beyond. We want to go further. And looking ahead, we will be focusing on delivering the group's operational excellence program. We will continue to optimize our costs through design, strategic sourcing and manufacturing efficiency. And to succeed in our goal, we are tapping into our DNA of collaboration. Our robust partner ecosystem supports us in accelerating innovation, sharing expertise and boosting economy of scale. And through partnership, we can share investments for pro competitiveness and compliance-related requirements that will drive the entire industry for future years. Now let's take a closer look at the other 2 strategies on this slide. As I stated, we are -- as I say, we are staying true to our winning proposition, and we want to confirm our professional leadership in the light commercial vehicles. Through collaboration, we are accelerating our pace of innovation and inorganic growth. And in this way, we can enter new segments. And for example, in partnership with the Hyundai Motor Company, we are developing an IVECO badge whole electric [ 3.5-ton ] chassis cab is the one that you have seen just outside this door this morning. Hyundai will produce it on its new global eLCV platform, and we'll be finishing it and exclusively distributing it throughout Europe, and we're going to be also taking exclusive responsibility of its after sales. This is another concrete results of our strong partnership that started back in March 2022. And this new vehicle will support our already strong electric Daily lineup, and in addition, we are pioneering the development of hydrogen power light commercial vehicle in the 3.5-ton segments and the [indiscernible]. Another step on our multi-energy pathway. What is the goal? Well, is to ensure our customers have a standard range and reduce charging time. And in other words, this translates into more flexibility. Now let's take a look at the potential of our medium and heavy range. As you know, I keep on saying it. We began a new year with the model year '24. And this new range makes a tremendous difference for customers in impactful area, like onboard comfort, total cost of ownership, optimization and reliability. The technology onboard includes, among many other things, our hands-free driver port system. And through predictive and proactive diagnosis, it unlocks 4% in added efficiency and near 0 unplanned stops. We will continue to create better offering for our customers by also scaling up our heavy-duty zero-emission vehicle range, introducing electric articulated trucks starting this year, rigid trucks next year and the next generation by 2027. And through our collaboration with Ford Otosan for the new heavy-duty truck cabins design, we will improve our aerodynamic and made Direct Vision safety standards. And we will also ensure the proper level of competitiveness for our next generation of trucks. I have already talked about our future plan, but now let me highlight some performance ambition. We will keep on improving our profitability while navigating the current markets, one that is a bit slow by volume in the short term, but is as dynamic as ever. And we aim to reach EUR 11 billion in revenue by 2028 and achieve an adjusted EBIT margin of more than 7%. This will include double-digit EBIT from our daily and high single-digit EBIT from our Eurocargo medium truck, and our heavy-duty truck are now positively contributing to our margins, but we will remain comfortably about breakeven, expanding our market reach and using a competitive cost approach to further improve profitability. Across all segments, that's an important point. The growing electric trucks' volumes will be margin dilutive. However, we will compensate true margin improvements in all harder vehicle segments. Maybe this is based on our conservative assumption, but we would be more than happy to be proven wrong here. And we will continue to invest. On top of the EUR 1 billion we invested in our model year '24 range, we will dedicate another EUR 1 billion to alternative propulsion systems. And we are not yet factoring the expected positive financial impact from recently announced partnership like Ford Otosan for heavy-duty truck cabins and Hyundai for the new light electric vehicle and any other potential partnership. As this collaboration mature and deliver tangible results, we will see the impact in our reporting. Coming back to our organization. We must and we will maintain a very lean SG&A while transforming our operating model. We have shifted from manufacturing products to delivering solutions through a design-to-value approach. And a major change like this is aligned with the spirit of our brands. Next year, we are going to celebrate 50 years since Iveco was founded. It has been 50 years full of changes, evolutions, and our pioneering spirits got us to where we are today. Now I believe it's time for a break. But before we go, let me reiterate 3 key points that underline our pathway. We are enhancing the strength of each of our segments, developing technologies and innovative services to step into new areas. We are keeping things efficient and straightforward, streamlining our processes and increasing pro-modularity, and we are continuing to build our partnership network to meet our customers' current and future needs. That's it. So I thank you very much for your attention. Thank you. [Break]

Please take your seats. Just waiting, a few more seconds that everyone is settled. So probably we can start. So welcome back. We have heard from our Chair, our COO and 4 of the business unit presidents. During the second half, we will have the presentation by the President of our Financial Services business unit, our CFO, and our COO, will return for closing remarks. This will be immediately followed by the Q&A session. I think we are ready to start, so I would like to ask Simone Olivati to please come to the stage. Thank you.

Thank you, Federico, and good afternoon, everyone. I'm pleased now to begin the second part of our Capital Markets Day with the presentation of our financial services business unit. And like my colleagues, I would like to start by sharing the past that has led me to be here today. I've been part of the group for almost 20 years, holding different leadership positions in finance, risk strategy and operations across both Iveco and CNH Financial Services. And following our spinoff, we created our financial services business unit, shaping every aspect of our operations to best serve our customers. It has been a journey filled with collective effort, introducing new capabilities and pioneering innovative solution. And throughout these years, maintaining a robust connection with the banking sector and cultivating long-stand partnership have been key to bringing our vision to life. So who are we? We are the financial cornerstones of Iveco Group, and we work to power the business and the mission of all our stakeholders, brands, dealers, distributors, suppliers, fleet owners and drivers. And our teams leverage their expertise to ensure end customers have what they need to be successful. We operate through 2 commercial brands, Iveco Capital and GATE. Iveco Capital works in a more traditional way, leveraging many years of operation. We offer tailored financing and service solutions to meet the needs of our stakeholders. We have an Iveco group portfolio of nearly EUR 7 billion, and this is managed through especially design setup, covering more than 160 countries and optimizing our funding and cost. We support Iveco Group sales with wholesale making up 55% of our portfolio. And through Iveco Capital, we handle the full credit cycle of the entire group, including approval, monitoring and collection, no matter where they are booked. And most of these receivables are also financed by us, ensuring operational efficiency, centralized funding and efficient cash management for the entire group. Also, all end customers have access to a wide range of financial and mobility services. Retail accounts for about 45% of our portfolio. And it is managed of book through joint ventures we have with BNP Paribas Leasing Solution and with Santander Consumer Finance as well through long-term partnership we have with other Tier 1 banks. On top, following the spin-off, we continue to manage financial services operations for CNH in the EMEA region under the CNH Capital brand. We service a portfolio of more than EUR 5 billion, which is booked independently and funded by CNH. And this setup is beneficial to both Iveco Group and CNH. It enable us to maintain a lean and effective structure without comingling credit risk on the combined total of EUR 12 billion of managed assets. Our other brand, GATE is our pay-per-use fintech startup that offers total peace of mind. We developed this all-digital platform in 2023 to help customers navigate the complexity of transitioning to cleaner and smarter mobility. All in all, we bring a diverse set of competencies to the group, and we are very committed to the success of our dealers, distributors and fleet owners. Let me highlight the market trends that are most relevant to our specific business. First, the volatile market with ups and downs in interest rates and potential credit deterioration, we must maintain a resilient balance sheet to continue to reinforce our funding. And we are also investing in analytics and digital tools, including generative AI to proactively monitor credit and liquidity risk of our portfolio. Second, servitization continues to gain momentum. And this is why we have added new bundled services through our traditional financing offering and will keep exploring new opportunities. Third, drivers and fleet owners look for solutions that go beyond the pure earning or renting of vehicles, particularly for zero emission vehicles. And the transition calls for a new business model, and our answer to this is GATE. I'd like to highlight now the strong foundation we have built. From a funding perspective, we are fully independent from the industrial businesses of our group. And 80% of our portfolio is funded through committed facilities. Retail is mostly managed of book, minimizing cost and investments, while wholesale is mostly managed and booked through a diversified funding mix. These include European Central Bank credit facilities, securitization as well as committed banking and factoring lines. And this capital structure ensures stability and resilience for the future. On the creditor side, we have improved the quality of our portfolio and decreased the on-book delinquency to around 2%. Lastly, we have leveraged our solid and profitable foundation to innovate with new services. For example, we are expanding our insurance and mobility card offering and developing our digital payment ecosystem. And accelerating our service business is a strategic priority for us. Market trends show that customers are looking for additional mobility services, including insurance, maintenance repair, among many others. And to respond, we'll continue to add new services and grow existing ones, leveraging the use of technology for a seamless customer experience. We expect the insurance and services to contribute almost half of our return on asset on the retail business, and we'll keep collaborating with top partners to explore additional ways to diversify our funding and mitigate risk, all while maintaining best-in-class G&A. I want to take a few minutes now to give you more color on our third priority, the scale-up of GATE. Let's think about what it means, today, for our customer to put a zero emission vehicle on the road. Of course, they need a flexible financing offer, but this is not enough. They also need access to charging station, roadside assistance and battery health monitoring to manage vehicle range and performance. And that is not all, for our customers to fully embrace the energy transition, we need to provide them with peace of mind, ideally a one-stop-shop formula. GATE is 100% born in digital native platform. All the steps of the customer journey are digitalized, the service package configuration, the quotation, the onboarding and the service activation. And we developed a proprietary digital tool to set pricing based on specific customer and vehicle data. Together with our partners, we give our GATE customer a bundled offer that include many different services such as telematic, full insurance package, maintenance and repair, tire service management, charging caps and charging station provisions, and we'll continue to add new services. We launched the pilot version of GATE in Italy, mid of 2023. And our ambition for the next 5 years is to keep scaling up the platform in the entire ecosystem. We want the GATE to evolve into a brand-agnostic platform that can accelerate the energy transition. Naturally, we began with Iveco Group's green vehicles, but our vision is to open our platform to other OEMs vehicles. And the rapid development and prospect for the future was possible, thanks to our GATE team. The unique expertise and dedication of our people will continue to unlock the platform's potential. Now let's dive into some of our numbers. Our financial ambition combined growth, resilience and profitability. By 2028, we aim to grow our average Iveco Group portfolio between EUR 8 billion to EUR 9 billion, including unconsolidated joint ventures and the adjusted EBIT in the range of EUR 130 million to EUR 150 million. And we'll do this by continuing to manage the entire credit value chain of the group and funding the wholesale portfolio for our brands, dealers, importers, while managing the credit risk appetite. We'll also keep purchasing receivable from our industrial legal entities as the most effective method to support the group's operations. In managing credit risk and enhancing liquidity through centralization, we streamlined the cash management. And this approach serves as a crucial strategic tool for the group to navigate market uncertainties. And leveraging on the strength of our partners, we'll better serve our customers. We expect to increase our retail penetration reaching about 30% by the end of our plan. And not only we'll keep supporting our brands and the end customer but we'll also deliver a solid return with a through the cycle return on asset of 2% in line with our peers. We have assumed GATE full consolidation, which will slightly lower our EBIT performance up until 2026 before breaking even in 2027. As we further accelerate the development of the platform, we are open to new strategic equity partners that want to be part of the journey to transform mobility services. And to preserve our marginality, we'll maintain our SG&A at approximately 1%, lower than our peer's average, largely through diligent cost control and digitalization. I have provided insight into the achievements and the strategy of our financial services business unit. To summarize, we'll maintain Iveco Capital solid performances, and partnerships will continue to be a key pillar of the overall strategy. We'll grow our service offering to evolve towards a customer-centric mobility service platform, and we'll keep scaling up GATE to make a difference in the Europe synergy transition. So in the rapidly changing market, we are not just adapting, but we are driving quickly towards a new future. And with that, I hope you enjoy with financial services. Thank you very much, and I leave the stage to Anna.

Thank you, Simone. First of all, good afternoon, everyone, and thank you for your patience. I know it's been a very long day. Before we move into the financials and take a look at how it all comes together from a finance standpoint, let me quickly introduce myself. As you know, I joined Iveco Group on just a few months ago. And I'm really excited to be part of such a passionate, professional and diverse leadership team. But I'm not new to this industry. In fact, all in all, out of the almost 20 years of my professional career in corporate finance, more than 20 have been in automotive. I actually started my career in investment banking at Swiss bank, UBS, working on several M&A and capital market transactions across various sectors. Then in 2009, at a historical time for the auto industry, I was offered the opportunity to join the former FCA Group and to serve one of the largest Tier 1 OEMs across various finance and business development roles in different countries and segments, including FPT. More recently, I was CFO at Iren, a leading multiutility in Italy, frontrunner in the energy transition and in driving the country's shift to sustainability. In this role, I had to ensure increased operational efficiency and a disciplined liquidity management to counter an unprecedentedly volatile external market scenario, while at the same time, enabling the company to fuel an ambitious investment and transformation plan, much like what all the major auto players are going through in these years and months. When I got the call from Gerrit, I was thrilled to have the opportunity to build on all my previous professional experiences, serving a global commercial vehicle OEM with an exciting growth path for this energy transition revolution. So that's me. Now let's take a closer look at the key financials of our 2024-2028 strategic business plan. As I'm sure you've gathered listening to all the various presentations today, our plan revolves around 5 core priorities. First, we are targeting a robust profitability uplift across all our businesses, relentlessly focusing on operational excellence to further optimize our products costs while ensuring a continuously lean SG&A structure. Second, our 2024-2028 investment plan is designed to be, not only ambitious as we are forecasting to invest approximately EUR 5.5 billion over the next 5 years, but also sustainable. Sustainable because we want to remain at the forefront of innovation and of the energy transition. And that's why compared to our 2021 Investor Day plan, we will be significantly accelerating our investments towards decarbonization, safety and new technologies, but also financially sustainable as we are strongly committed to a disciplined and balanced spending strategy, centered around long-term value creation. Third, our overriding priority is to maintain adequate liquidity throughout the plan to be able to react to external changes as well as to capture potentially emerging opportunities that could further optimize our cost of capital and/or accelerate our plan, including [ fruitful acted ] M&As. And I have a very special pen that might precisely fit the purpose. Ensuring a continuously robust capital structure will also enable us to deliver solid and enduring value to our shareholders through a dedicated and consistent dividend policy. Last but not least, our fifth priority. It's going to permeate all our activities and day-to-day operations as we are strongly committed to raising the bar on our cash generation potential, whilst moving seasonality to the maximum extent possible. In fact, we are already taking several actions to improve and stabilize our free cash flow from industrial activities on a structural basis. Now before deep diving into each one of these priorities, please note, with all the financials shown in the next slides have been adjusted to reflect the carve-out of our firefighting business unit. Since yesterday, we signed a definitive agreement for the transfer of its ownership. And now let's take a closer look at the 2024-2028 evolution of our net revenues and adjusted EBIT from -- margin from industrial activities as well as our group adjusted net income. While the short- and medium-term outlook for our top line evolution has not changed compared to what we were already getting a glimpse of back in 2021 at our previous Investor Day, our target for adjusted EBIT margin from industrial activities are now substantially increased, reaching a 7% to 8% profitability by 2028, up 200 to 300 basis points versus 2023 year-end. And that said, all our industrial business units are strongly committed to positively contributing to the significant uplift, with light commercial vehicles, powertrain and defense a double-digit adjusted EBIT margin in 2028 and all other businesses increasing their respective profitability by 2x over the business plan horizon. Working both on our operational efficiencies as well as on different commercial levers and more than offsetting the dilutive impact of the ramp-up in electric vehicles on the profitability of the truck business unit and as a result of our industrial activities. As you've seen, our pathway is ambitious, yet safeguarded as demonstrated by a robust track record. In fact, as you very well know, 2023, our second year as an independently listed group, ended with consistent profitability improvement across all segments, leading to a 5.4% adjusted EBIT margin from industrial activities and thereby achieving, 3 years ahead of schedule, the target initially set for 2026. Similarly, we are also expecting a substantial increase in our group adjusted net income, which is forecasted to more than double by 2028, reaching just slightly under EUR 1 billion by the end of the plan. But what are the key drivers underlying our adjusted EBIT margin improvement? Let's take a closer look. First of all, as you can see, we are not betting on market performance. Instead, we are doubling down on our drive program, capitalizing on the results achieved over the last couple of years and unleashing a step change in our profitability with a balanced impact over the business plan horizon. As Gerrit said, we have already secured EUR 300 million of savings from operational improvements since 2019. And we are committing to an additional EUR 1 billion of cost efficiencies by 2028, net of inflation and of foreign exchange rate impacts. This will be achieved through the execution of a granular set of initiatives aimed at reducing product complexity, optimizing best cost country sourcing, maximizing manufacturing efficiencies and exploiting several commercial and technical levers. Most of these actions are designed to be front loaded with approximately EUR 600 million of efficiencies to be realized already within the first 3 years of the plan. At the same time, we will continue to preserve a very lean overhead structure with our SG&A costs reducing by 50 basis points in percentage of our group net revenues by 2028, including through a continuous focus on upskilling and digitalization to streamline internal processes. As far as the evolution of the main economics underlying our plan, such as foreign exchange rates, interest rates and inflation, our forecast remain prudent, especially for what concerns hyper volatile markets. Let's now take a look at our investment plan. As said, we are committing to invest between CapEx and capitalized R&D a total of EUR 5.5 billion over the next 5 years. This amount represents an almost 35% increase compared to our 2021 Investor Day plan. At the same time, to maximize our competitive edge and to be always at the forefront of innovation, we are targeting to invest more in new and alternative energy solutions, 20% versus 17% of the previous plan, and in software-defined vehicle technologies, 38% versus 32% of the 2021 plan. The remaining 42% of our total spend will be allocated to product maintenance and evolutions, specifically to upgrade existing vehicles and technologies in line with our end customers' demand. It is important to highlight that our investment plan is, not only ambitious, but also flexible, balanced and disciplined. Flexible because more than 50% of our total investment is not tied to compliance or regulation restrictions and can, therefore, rapidly adapt to market dynamics if and when needed. Balanced as the EUR 5.5 billion of cumulated spending is evenly distributed across the business plan horizon, with investments targeted to remain always around 6% to 7% of net revenues of industrial activities and only slightly peaking in 2025, in line with the energy transition acceleration. Finally, our investment profile is also extremely disciplined as we will be prioritizing investments with attractive returns while continuing to scout for cooperation opportunities to optimize our spending. In this regard, please note, with the positive impacts on our earnings and free cash flow from the partnerships signed with Hyundai and Ford Otosan as well as from any other potential future cooperation agreement are not yet reflected in this plan. So how does this all translate from a cash profile standpoint? As said at the beginning of my presentation, we are strongly committed to raising the bar on cash management. In fact, our cash generation is expected to more than double over the business planned period with our free cash flow from industrial activities reaching just short of EUR 1 billion in 2028, thanks to a diligent focus on maximizing cash generation across each and every activity we perform. As a result, we are forecasting to consistently maintain a cash conversion ratio well above 90% throughout the plan. It is also important to highlight here, with our cash from operations, thanks to the robust increase in our adjusted EBITDA from industrial activities and combined with a positive contribution from our optimized working capital management, it's designed to be more than adequate to fully finance all our investments throughout the period. In fact, free cash flow from industrial activities is expected to reach a cumulative amount of EUR 3 billion between 2024 and 2028. Such a sound cash generation profile will also translate into a healthy level of available liquidity across the plan, reaching around 35% of our group net revenues by 2028. This will allow us to preserve a solid and low-risk capital structure, enabling us to secure the plan vis-à-vis external headwinds, we're potentially seizing strategic opportunities, including selected M&As. At the same time, it confirms our commitment to maintain our investment-grade credit rating with Fitch and potentially seeking also second credit rating. Last but not least, we are targeting to deliver solid and enduring value to our shareholders for a consistent dividend distribution throughout the plan in accordance with our dividend policy. Now before moving on, allow me to briefly underline the importance of our financial services business unit for the success of our strategic business plan. As you very well know, financial services handles the full credit cycle for the group. This includes the purchase of all dealer and nondealer receivables from our industrial activities to provide the group with early liquidity while harmonizing collection terms. Consequently, financial services charges back to the industrial activities, the full cost of the related funding and of credit risk. While the compensation associated with the interest-free period offered to dealers on the domestic market is accounted for by each industrial business unit as the reduction of the related net revenues, the costs resulting from the discounting of nondealer receivables referring to direct accounts or export sales is booked as a financial expense of the industrial activities. This approach, not only optimizes our cash management, it also provides a secured, established and cost-competitive liquidity lever to counter and navigate any potential market evolution. The role of financial services is crucial to build and protect the resilience of our group. And as the economic context evolves, we will continue to seek new ways to further optimize it. Finally, I would like to draw your attention to some potential upsides to our plan, not yet reflected in the financials shown in the previous slides. First, as said, in the face of uncertain market conditions and mindful of the polycrisis environment we are currently going through, we have taken a prudent approach in relation to the evolution of certain economics, such as foreign exchange rates, inflation and interest rates. They have been assumed to remain substantially unchanged versus current trends over the business plan horizon, leading to a potential upside should the macroeconomic and geopolitical scenario become more favorable. We also assumed tapping into captive financing in continuity with historical levels. However, as said, we are continuously assessing opportunities to further diversify and optimize our funding sources and the related costs, while at the same time, mitigating our overall financing risk over the plan. As previously explained, the cost paid by our industrial business units to financial services for the sale of nondealer receivables, combined with the impact of foreign exchange rate fluctuations, constitute the majority of our yearly financial charges amount with a roughly even split between the 2 items. This could, therefore, potentially lead to a sizable upside over the coming years. But we are also relentlessly looking to identify optimizations across our entire P&L and balance sheet, including by maximizing our tax certainty and our access to fiscal credits and incentives, while always ensuring compliance with regulation, transparency and a strong focus on our total tax contributions around the globe. Now as we are coming to the end of this section, let's take a look at what, I think, you all have been patiently waiting for. These are our updated financial targets for 2026 and 2028. As said, we plan to grow our net revenues from industrial activities up to a 5% CAGR between 2023 and 2028. With the adjusted EBIT margin moving from 5.4% in 2023 to 6% to 7% in 2026 and then further increasing by another 100 to 200 basis points by 2028. Free cash flow of industrial activities is also expected to grow substantially over the plan, with nearly EUR 1 billion in cash flow generation in 2028. At the same time, our group adjusted net income will more than double over the next 5 years, reaching about EUR 900 million in 2028, with our adjusted diluted EPS exceeding EUR 3 per share at the end of the plan. Let me please remind you that all these targets do not include any impact from a potential upsides shared with you previously. We assume a fully organic, mostly self-driven plan, and all figures have been adjusted to reflect the transfer of ownership of our firefighting business unit. As for the full year 2024, preliminary financial guidance disclosed on February 9 of this year, all targets remain confirmed and need, obviously, to be adjusted to incorporate the impact of the firefighting business unit transfer. 2024 target ranges for adjusted EBIT of industrial activities and as a result, for group adjusted EBIT, will be both increased by approximately EUR 20 million versus the previous preliminary targets to EUR 790 million to EUR 840 million and EUR 920 million to EUR 970 million, respectively, while the forecasted free cash flow of industrial activities remains unchanged at between EUR 350 million to EUR 400 million for the year. In essence, all our 2024-2028 strategic business plan financial targets are expected to be consistently above or in line with our 2021 Investor Day plan and reflect our new ambitions for the next 5 years, where we are continuously accelerating on our pathways. Iveco Group is ready to lead this historical transformation, and I'm so grateful to be part of it. I will now leave the stage to Gerrit for his closing remarks. Thank you.

Thank you, Anna, for giving us a very clear view of the group from a financial perspective. As we approach the conclusion of this Capital Markets Day, I want to cast a vision, a glimpse into the future. Let's imagine a few years from now when the day when we will come together again, not just to share updates but to celebrate the fulfillment of promises made today. We want to be held accountable to reaching the following achievements. Solid delivery of our strategy, picture a unified team operating seamlessly across unlimited pathways consistently playing for the upside and enhancing our value with every step we take. The transformation of our product portfolio. We want to play a key role in the change to low- and zero-emission mobility. This is both a commitment to innovation and our pledge to a sustainable future. Stronger and more diverse partnerships. As a cornerstone of our progress, collaboration will accelerate harnessing collective strengths to make leaps, not steps on our journey. On the frontier of future power technology, with our multifuel and technology-agnostic approach, we will drive the industry towards new horizons of possibility. Setting new benchmarks and life cycle services. We will evolve into a fully integrated mobility service partner, engaging customers and adding life cycle value. And at the heart of all our endeavors will be our deep commitment to sustainability. We will reinforce our journey to net zero by 2040, ensuring that every step is fair and equitable. Sustainability sits next to an overarching focus on customer centricity, offering improved total cost of ownership across all our business units is what drives us. Let's also keep in mind, there could be upsides to our unlimited pathways, upsides that could positively impact our forecast and future results across the plan shown today. The acceleration pace of technological advancements suggests that we may align with new partners to share investments and amplify our efforts, bringing synergies that, today, we can only imagine. The scale-up of our EVCO Iveco electric vehicle company initiative for zero emission heavy-duty trucks could significantly propel the energy transition. We are open to onboarding equity partners who share our vision and are ready to become champions in the electric-born heavy-duty truck segment. And as Luca shared, we have taken a cautious approach to electric truck marginality, but we will welcome all positive upsides that come our way, of course. Consider GATE, the addition of new equity partners could pave the way for a leaner asset profile on our books, growing into an untapped source of profits, and most importantly, a beacon of innovation for the industry. And mergers and acquisitions will remain a viable path towards inorganic growth. In closing, I would like to leave you with this thought. Iveco Group is courageously balancing on the edge of unlimited pathways. We are leaning into possibilities with our group while exploring powerful opportunities outside. Our plans are solid, our targets are ambitious and our potential is boundless. We will always go beyond the obvious. With that, we have come to an end of our presentations today. Please give us just a few seconds as we set ourselves up for the Q&A session here on the stage. Thank you very much.

So -- thanks. While my colleagues are joining me on stage, I will give a few friendly reminder to the audience. kindly be mindful of the brief time we have available for this Q&A session, keeping your questions to a maximum of 2. [Operator Instructions] I see our management team is settled. So I will now open this Q&A session, taking the first question, ladies first, as usual, so Daniela, please? Here, front. Yes.

Daniela Costa from Goldman Sachs. I'll ask 2 things. One, focus on -- you mentioned a lot finding equity partners and partnerships. One area maybe that we didn't talk to explicitly is the EV cells. Specifically, some of your peers have decided to get involved on the cells, which they thought was key for the trucks. Maybe you can comment on that and on your strategy there. And then the second thing, if -- maybe I understood incorrectly, but I think on the FPT presentation, you mentioned a new medium-duty engine. Cummins has been very successful in sort of taking some of the incumbents in trucks in their platform. Has the industry evolved in some of your heavy-duty peers? Focus more on heavy duty, is there an opportunity there? What you see there on, basically, aggregating the medium-duty volumes in the industry, what's on that?

Look, on the EVCO Iveco, you mean the equity partnership of the legal entity that I was talking about?

[indiscernible]

On the view on sales. Well, let me -- look, what we have -- what you've seen outside, and Sylvain will take the medium-duty engine question. What you've seen outside is we have all the combustion versions, including hydrogen, which is considered zero emission by the European Commission. And we have battery electric and fuel cell, and we are going to add the hydrogen combustion as a range extender as a full hybrid, but as well as a straight replacement for a diesel engine to our powertrain lineup at the prototype stage. So we will explore that. I think what we need to see is what is coming together with the new European Commission and the parliament. The elections are coming up, and we need to see what swings we will see in the, let's say, governance in Brussel, when it comes to those achievements of those CO2 regulations. We absolutely committed to the CO2 targets towards carbon neutrality, 100% committed. The role of renewable fuels and the role of hydrogen as a combustion fuel, as well as in fuel cells, still needs to be further detailed. So we will see how the future will play out in heavy-duty trucks. We are prepared for whatever comes. But I think there is probably a big role for combustion engines on renewable fuels, including obviously, hydrogen, to play in the future mixes of commercial vehicles over and beyond 3.5 tonnes, particularly heavy-duty trucks. We are ready. We have it, and we stay put and attuned into what Brussel will decide. On the medium duty?

Yes, medium duty, as I was highlighting during my presentation, this is part of our investment plan to continue the renewal of our complete portfolio of engines. This is the last engine family to be renewed. And I would say this will be one of our last investment in internal combustion as a completely new platform in the horizon of our plan. This is, as well, a segment where we are holding very strong position in the market, both on on-road and off-road, where it's a platform we want to leverage. I was mentioning growth in internal combustion with new business to be acquired, and this is one segment where we are putting a lot of focus.

And it will come -- similar like what you've seen outside, 1 base engine, 3 heads: Gas, hydrogen, diesel.

Next question, Martino?

Martino De Ambroggi, Equita. The first question is on the operating leverage. In the truck business, basically, there is no operating leverage, because from '23 to '26, there is no growth. While I suppose that the new -- the brand-new lineup could have contributed positively on prices, on mix and so on. So just to understand what are the underlying assumptions, if there is conservatism or what else? And this maybe -- I don't know, the heavy trucks which doesn't perform, I don't know, because we know it's the weakest point of the story. On the defense, this is the first time you presented. And just to check if it's not the last one, I wonder if you are thinking it as a core asset going forward or not. And if it is core, if you are planning any partnership also in this business, you already have it with Oto Melara and so on. But just to check, what is your thought on the defense?

I'll take the second one and, Anna, you take the leverage. So look, I mean, Iveco defense, or IDV, it's now rebranded, as a centerpiece of our Iveco Group. It is a self-sufficient stand-alone business. There are no current discussions around anything that goes beyond a partnership. The business has access to sufficient funds, sufficient talent, sufficient resources to grow as it has grown since, as Claudio presented, since 2018. I think when I came, 2019, it was EUR 500 million revenues, EUR 500 million order book. Now it's EUR 1 billion sales and EUR 4.5 billion order book and keeps growing. And there's no reason why it shouldn't continue on this path as part -- as an important part of Iveco Group. If there are interests to partner over and beyond, I mean, in the fiduciary duties of a Board, things will be thoroughly reviewed. But at this stage, there are no current discussions.

So on trucks. No. Well, actually, our DRIVE program or our operational excellence program is benefiting all our business units, including trucks. Actually, trucks on -- because operational excellence is made of different levers on purchasing, manufacturing, on quality. So it's across the board. And given the APV of truck because between truck and powertrain, obviously, they have the largest APV, the savings on trucks are going to be actually the highest. The reason why you don't see them all translated into this plan is, first of all, you need to break this plan down into the first portion of the plan. From now to 2026, we have been -- actually throughout the plan, we have been conservative on the top line -- prudent on the top line. So volume and mix and pricing are not substantially contributing positively. I mean, they are just quite, let's say, conservative. While the operational excellence or reduction in product cost is contributing significantly. As said in the first part of the plan, unfortunately, most of these effects have -- are being offset by inflation and FX impact. Truck is the one most heavily exposed, for example, in Argentina, which as we said also on February 9, we have been remaining prudent for 2024, especially, but I would say also for the immediate first years of the plan. Then beyond 2026, actually then you will see actually the product cost reduction kicking in. And let's not forget what I said also the introduction on the ramp-up in electric vehicle volumes is having a dilutive impact. So that's partially offsetting also this phenomenon. On heavy duty, and then -- Gerrit, I don't know if you want to integrate, but let's say, on light commercial vehicles, we clearly said we will maintain and continue to have a double-digit margin that's already there today. And on heavy, we will double the profitability. So over the plan, it will reach, let's say, a very decent marginality there as well. But as said, I think the first part of the plan is unfortunately adversely impacted also by external FX on which we have for now remain prudent. The mix of the new product -- for 2024, for example, so -- I'm sorry, Gerrit, I don't...

I can -- look, it's the margin dilutive effect of electric trucks pretty much. Obviously, yes, margin mix new products, the one you have seen outside even without the Metallica paint is adding. And we are launching this product into a market 2024, where the heavy-duty truck market is down about 20%. I think this is consistent with also what other market participants are stating. So overall, we are pretty confident and quite consistent in rolling out these vehicles. And it will add positively on the combustion engine side in the price/mix version, offset by the margin dilutive effect of introducing electric trucks, where we take a conservative view. And we try to prove ourselves wrong, but -- I mean, to be fair also to you, electric -- commercial vehicle electric trucks. On the bus side, we are way beyond this point by now already because we are in a very healthy business and electrification in buses is a day-to-day business. Electrification and heavy-duty trucks is an exception. And the introduction will dilute, and we are convinced that it's only fair to reflect this appropriately in the plan.

Thank you, Gerrit. Monica?

I have 2 questions. Monica Bosio from Intesa Sanpaolo, sorry, I forgot. The first question is, if you can discuss the different free cash flow profile between the defense and the rest. I can imagine that the defense is favored by advances. The company is targeting free cash flow accumulated in the region of EUR 3 billion. How much is the defense part and how much is the rest? And the second question is a check on the previous question on the heavy duty. Anna, you are saying that by the end of the plan, the EV duty will double the margins. I remember that the heavy duty could be in the region of 2%, 3% maybe. So this means that it will achieve a 6% margin. Is it correct? And if yes, do you think that there's room to improve further beyond the horizon plan?

Maybe, Luca, you will take the heavy truck question in a bit, but Anna?

Yes. So well, I cannot tell you whether you're right, but I would say heavy duty is definitely reaching, I mean, a decent single-digit profitability. So broadly there, let's say...

And just on your first question around cash flow. Yes, we are not commenting cash flow by business unit. We don't do that. I think your assumption about advances is not entirely correct. In fact, when it is in general terms and it's a certain program, there is a certain sort of prefunding of research and development work and some developmental support, but other than that, the business goes to the regular cycle. So when we launch products, which you see outside, it goes through the same sourcing inbound materials, production, inventory and sales. So other than certain prefunding on development work, it's pretty much similar.

And if I may, when you look at the free cash flow build up, you see the majority of the EUR 3 billion is coming from EBITDA and you can do the math. I mean defense obviously is a significant business unit, but obviously, relatively speaking, there are bigger ones. You see the working capital is contributing positively, but let's say in -- not that, but definitely, it's triggering the EUR 3 billion. So you're right, the business model, as Gerrit was saying, works on advances, but we are not betting on that to make the EUR 3 billion cash flow over the period.

Luca, anything to add on heavy?

Yes. On heavy-duty truck, you're fairly right because we're targeting mid-single-digit profitability in terms of EBIT. During the course of the latest 2 years, we have been able to be steering from negative into low single-digit profitability over heavy-duty truck. Are there opportunity there? As Anna mentioned earlier, we will have to be working on product cost throughout our operational excellence program. But in parallel, we do have to keep on enhancing our positioning -- product positioning, leveraging on the extra contents and the credibility that we are building up into the marketplace. In our strategic business plan, we did not embed any kind of extra opportunity out of the partnership that we are framing and putting together. I'm referring, for instance, to Ford Otosan for the new generation of cabins, we will see. I mean, better to stay on the safe side and then being consistent.

Thank you. Next question, Andrea. And then...

Andrea Balloni, Mediobanca. I have a couple of questions on the defense business that is the most interesting one to me. The first one is on the top line growth over the next 4 years. You have commented about a backlog that was more than 4x compared to the sales generated in 2023, if I understood correctly. But on the other hand, you have guided for only a 4% CAGR over the next few years, that looks quite cautious to me in light of a strong order backlog, if there is any reason for that? And my second question is again on the defense business. You have mentioned that this is a core part of your business, so no intention to sell so far. But should you change your mind in the future, which would be the main constraint for the disposal of this division. I guess this is something pretty very sensitive since you are operating with many government, you are -- you have many JV in place. So which are the main constraint for a potential disposal?

So Claudio, why don't you comment on the first question that your top line -- what do you say conservative?

Yes. The point is that the speed and the growth in sales that we are projecting are strongly based by the fund allocations of our customers, the contracts we have. So the speed is set from that. And there is a part of our portfolio, which is going beyond 2028. So this is explaining the reason of the differences that you're asking for.

Yes. And it's the -- I think you were quite clear that as funds get allocated to programs over and beyond what is approved today, top line growth accordingly because it's a contract you win and under the contract are orders. The orders are backed by funds made available and approved. And so as the funds made available and approved, that translates into orders, that translates into top line. And we took a top line that is visible at this point in time, and we'll see what the next years will bring in the area of defense and European member states as well as allied countries when it comes to funds allocation. And in terms of IDV, the business, as I said, is self-sufficient and independently run. It has its own plans inside the group with Piacenza, Bolzano and Vittorio Veneto. And it has to be quite segregated inside the group because of classified information and very sensitive, let's say, exposures it has. So by nature, it is a self-sufficient stand-alone business inside Iveco Group.

Yes. Next question, Miguel?

Miguel Borrega from BNP Paribas Exane. So the first question on the guidance, you basically assume flat margins until '26 than 50 basis points each in '27 and '28. So a 2-part question on the first one. you have been historically more prudent than your competitors on pricing. And then those same competitors are saying pricing cannot go up anymore from here, at least in the next 2 years. I just want to make sure that you're not baking in any pricing gains into the margin, is purely from product costs? And then if you can maybe give us some examples on savings in these product costs because I would imagine trucks are becoming more expensive, not less. So if you can give us some anecdotal evidence there. Then the second part of the question is, what are you assuming to be your EV penetration by '26, '28? And if you can maybe quantify the margin dilutive effect through the period. That's my first question.

That was one question?

Two questions.

Okay. So I confirm. I mean the -- over the course of the plan, we are not seeing any further room to increase pricing, okay? As Anna laid out, it's entirely driven by operational efficiency and costs and synergies on platforms that we leverage across the group. And Marco, why don't you comment on that, what we do in...

Yes. We launched recently a design-to-value program. I mean if we consider the synergy that Luca just mentioned between medium and heavy, just to make an example, the utilization I mentioned several times also the journey on the software. The software is going to be or the ownership of the software is going to be also a big enabler for saving, not only an investment, but also simply price because if you own the software, we are just to buy the hardware, and this is opening a panel of possibilities that today are not necessarily available. So there is a streaming of the same to value, pretty important. I would say, 3 digits that we are planning inside the plant. And in addition to that, there are all the commercial savings that were envisioning linked to the energy cost, the raw material costs, where we are pretty confident on that.

Yes, if I can integrate to Marco, so on purchasing and Angela, our Head of Supply Chain is here. So we have gross commercial savings. We have design to value. We have competitive sourcing. We have obviously the benefit of raw materials and energy prices now going down, so really a long list of initiatives on purchasing. And our manufacturing, we have this DOT program, which is our excellence manufacturing program, which is [indiscernible] also here. So we have continuous saving on each and every plant. And obviously, then we have all the digitalization kicking in on some of our processes in manufacturing.

And I think on the EV penetration, I speak for all the segments, we are fully aligned or ahead even with the penetration required to meet the CO2 regulations. Also here, we are taking, let's say, conservative view not suggesting to drive at this stage in the earlier years of the plan, driving margin-dilutive business that in the CO2 achievement curve is already there. So we are having CO2 improvements on combustions, and we are introducing electric vehicles. And all of these CO2 reductions makes us to definitely achieve or even overachieve the CO2 target setting as we speak. And this is very different for the different segments. For example, on city buses, the achievement will be very high.

Yes, we will have 90% of penetration in 2030 basically. And we are following this trajectory. Already today, we are head of competition ahead of the market with the 50% on the urban that is our penetration on the electric vehicles, as I was mentioning to you during our product work around. The intercity is a little bit different because it's not a business subsidized by municipalities. Just keeping the pace, we will arrive until the end of the plan around the 30% of penetration. And it's not dilutive for the business unit.

And then in buses, you mentioned increased competition and at the same time, very ambitious margin and share gains targets. Can you talk about which subsegment are you seeing more competition? And what is the risk to your targets? I'm assuming your competition is becoming more competitive on pricing. So will you eventually have to become more competitive on pricing to achieve your share gains? And then how is that compatible with doubling almost your margins?

Yes. Thank you for the question. We have -- we are playing on the several segments where the competition is more really dense and aggressive on this urban segment, on the city one. I mentioned during our product work around that the price and the cost advantages that the other players, mainly outside of Europe, are entering, are impacting by the 30% on the overall business penetration. There is the other 70% that is mainly linked with the customer proximity, the customer knowledge and the widespread network of dealers and service points as well as a very high level of advanced technology we are introducing there. So in that specific segment, we are tackling the competition that -- we are aware about the competition, but we are tackling the competition with these key ingredients. And as I was mentioning before, we are entering this year with an order intake on specifically city bus electric vehicles that is 1,500 that is more than 1 year of production. And like for the defense, what Claudio was mentioning, we have a frame agreements that arrive beyond 2026. And this is the city bus. If we focalize on our bread and butter segment in terms of profitability that is the intercity, there the level of penetration in terms of electromobility is less radical than in the urban and the level of competition in that specific segment is less aggressive. But regardless, this, we are advancing the market, introducing already the battery electric vehicle. This is the one I showed to you, the low entry electric, and we are going to complete also with the hydrogen fuel cell in the next few years. Thank you.

And to build on that, very often, and it is true for city bus as well, the cheapest choice or the cheapest option is the most expensive buy over life because it's about spare parts, it's about replacement cycles of the battery. It's about customer service in all aspects of a city buses life. And being the cheapest choice at the beginning of a life turns out to be a pretty expensive decision. And that is why we have accelerated. So on our electric city bus platform, that Domenico laid out, will basically push on all lands, including to be a very, very cost-efficient city bus platform, combined with very low total cost of ownership. But what we have seen that some, let's say, outside European competitors are coming with cheap buses, no service network, no parts availability, no spares, batteries that are not really taking the full life. And when the vehicle breaks down, nobody knows how to fix it. In the end, these things all feed into the view that the cheapest option is the most expensive buy. This would change over time. Everybody gets better. Everybody competes more fiercely, no doubt and we will be ready at the time when our new electric city bus born platform will be launched.

Yes, it's what we said when the customer is going to buy a battery electric vehicle is not buying a product, he is buying a solution made of all the stuff, Gerrit was saying. And in order that solution to work properly, you need all the other side elements Gerrit was highlighting before.

Thank you. Next question over there, Nicolai, I think.

Mark Hiley from The Analyst, independent research in London. So I think you get to about EUR 5 billion of net cash in '28 and then we take off the dividends, seasonality in the cash flow maybe the receivable factoring, but you probably end up with net cash higher than the current market cap. So you sort of have a nice capital allocation problem. Can you talk more about dividends, buybacks sort of transformational M&A on the agenda. It sort of looks like you should buy back a lot of stock and really take up the dividend a lot. You also know the CapEx plan for 5 years as well. So just sort of a general question about capital allocation?

We have only EUR 271 million stock outstanding. So we can buy it all back probably then. No, just -- look, we are looking opportunistically in every business unit at accretive M&A. For us, mergers and acquisition is not like a driving force in itself just to do it and to say we do it and we talk about it. It's always an accretive way to either accelerate the development, to capture a team or a technology that would take us too long to develop ourselves. But we also need to be convinced that what we acquire, we can actually keep because knowledge and know-how is coded in people and we need to see whether this is a good team play. So M&A is clearly an area, but we are super selective what we do there. You will probably never hear us investing in an innovation fund and then we participate with 2% and start-ups. We will never do this, okay? We will either like something and then we go double down and all in or we wish them good luck. That's on the M&A side of things. But on the dividend policy?

So on dividends, our dividend policy, you probably have seen it on the slide, it's around 25% of reported net income. But of course, you're right, the amount of liquidity we were going to generate over the plan is substantial. And obviously, we will continue to monitor that. And according to our dividend policy, we will see whether something more can be done. But for sure, I mean, on share buybacks, as what Gerrit was saying, we will renew our program, but please bear in mind that this program is only targeted to cover our LTIs. So we don't intend to do much more than what we have done in the past. And as Gerrit was saying, obviously, this liquidity gives us a lot of flexibility on M&A and potential on dividends, but also -- and you mentioned it on the factoring on the sale of receivables. So we said several times already, this is one lever we will continue to monitor also in the course of the plan and see if there are ways to optimize it or to do something different there as well because definitely, the amount of cash generation is substantial, as you correctly pointed out.

Thank you. Next question, there? Sure, you have the microphone.

Gianluca Bertuzzo from Intermonte. I have a couple of questions. If I were correctly, you're trying to smooth free cash flow generation by quarter. Should we expect a neutral to positive free cash flow from now on and on what time frame you are targeting this improvement? And the second question, I don't want to steer the focus from today's presentation, but I wanted to focus on Magirus. And can you maybe give us more detail about that?

Yes. So on seasonality, so we will be working on that. So don't expect dramatic changes in the next few weeks. I mean it's something we will have to continuously work with the business units, by the way, and with financial services. So it's something we'll have to do over the plan. Obviously, bear in mind, our business model quite well, we cannot completely reverse it. So there are things that are embedded in our business model. What we would like to do is try to smoothen the inventory evolution across the year. But as I said, this is something we'll have to do over the next 12 to 18 months. So it's not something we can do, let's say, overnight but we will -- we are already starting to look at ideas and to at least have a better balance between our cash in and cash out over the years to our investments and our cash in so it becomes a little bit more smooth. But I mean you mentioned a neutral, I don't know neutral to what or in absolute terms. But as I said, don't -- I think the seasonality for this year is very similar to the one of last year. Maybe we'll do some improvements, but I think it requires a bit of time.

It does. And I think for your -- I mean, we will have in the 2024, pretty similar cash flow profile as we had in 2023, okay? So this is it. And we promised on the full year, we delivered and we will deliver again. So the profile is the profile, and it takes time to smoothen it, okay? On Magirus, Magirus is a founding brand. Magirus Deutz was a founding brand back in 1975 of the Iveco Group. And it was a truck OEM, and it was a fire engine business with the ladders and tank pumpers. That's how we call the second product line. The trucks were basically integrated into the overall Trucks business unit. And over the years, the business has saved lots of lives, and it plays a very, very relevant role in the societies where these trucks operate. And over the last couple of, let's say, 5-plus years or so, we have seen that this business being so close to 1 truck OEM is inhibiting its growth, its full potential. Think of Magirus, they are building now only super structures. I mean this is very relevant superstructures, right? I mean like ladders and tank pumpers and specialty applications for firefighters. But they're putting them on Volvo chassis, MAN chassis, Mercedes chassis, Hino chassis, they're putting them on every truck OEM's chassis. And in order to have them be free and to be able to capture the opportunities from sourcing also business with other brand chassis to a greater extent, we believe that this business needs to be set free. It has to be managed in a way with a team, which is in place and with an investor who knows how to handle small lot size, high complexity, superstructure manufacturing with automation to come. And this is a business that inside the overall Iveco Group is not -- we are not the right owner for this. And I think we also need to admit over the last 10 years or so, we couldn't really give it the full potential it deserves simply because of -- the rest of the business is so different and it runs so differently in the mindset that we took a conscious decision to set it free and hand it over to an owner, who knows how to handle and grow this business for the benefits of everyone starting with the customers.

Okay. Next question.

Gabriele Gambarova with Banca Akros. A couple of questions on Iveco Defense. Is it fair to say that you have a very strong expertise in wheeled platforms rather than tacked platforms. I ask you this because I see that your projections are rather cautious considering the world that we are living in. So I was wondering if tacked, let's say, platforms are going to grow much more than wheeled. And so this could explain somehow more smooth, moderate growth for IDV. For instance, I don't know, Italy is going to invest EUR 24 billion on 3 different tracked platform. So this is question number one. And then if you could provide me data on the soft backlog, again, for Iveco Defense. We saw the funded backlog, but I was wondering what is the soft one?

So I think -- by the way, we have a tacked platform, the Ariete. So we know how to build tracked platforms. So that's not new to us, but Claudio ?

Yes, you have to consider that, first of all, in the last 2 decades, the majority of the procurement of vehicles has been in the land. So clearly, we focus quite a lot our engineering and our operation in wheeled because -- this was the majority of the vehicle that has been purchased in the last 20 years. You have to consider that the current tacked platforms that the Italian Army is using. And by the way, we are modernizing, especially the Ariete, are coming from the consortium Iveco Oto Melara. And we are taking care of all the part related to mobility, traction, so track suspensions, engine, transmissions. And we have localized since then, so about in the '90s. We have localized all the core components of the tracked vehicle. So clearly, we -- in the consortium, it's the -- it's under Oto Melara so the Leonardo brand that is the responsibility of the overall platform like we have on the wheeled, but core components of the tracked vehicle are depending on us. Then looking forward, we expect that tracked vehicles will definitely develop much more in the past, but the fact that we have this plan of sales is not -- absolutely not related to the fact that we don't think to play a major role in this business. We think that on the other side, that there is not yet enough clarity on the path, the road map of the next years. Some platforms will be most probably procured from available platforms, but will be localized or will be leveraged on the Italian industry as well. There are other platforms that also based on customer requirements, we'll have to be designed completely from scratch. And in that, we think that we have absolutely the technologies and the capabilities to give our contribution. But when it's difficult to plan, then we clearly manage properly our forecast for the next years. I didn't understand the question you did about...

The question was about the soft backlog, which is probably when you compare contract size versus made orders. But look, we are not commenting on that number because it is significant. On the other side, the actual spending allocated to these programs could be significantly above that number as well. So contracts were awarded a long time ago in a different era, in a different world. And nowadays, there is a number in the contract, but apparently, funds allocated to these programs can be significantly alter these contract sizes. So we wouldn't see any value in providing that number.

Next question, Nicolai?

Nicolai Kempf from Deutsche Bank. My question is a bit more long term also on the electrification ramp-up because the bottleneck does not seem to be the product because you have the product, but also your PSF have the product. Debottleneck seems they charge infrastructure for battery, electrics and fuel cell. How do you try to softer? And how are you allocating CapEx that problem?

Your point is about the charging infrastructure and the refueling infrastructure probably. And you're right, every truck OEM right now has their versions of an electric vehicle. Ours is electric born. The others have currently retrofits on the offer and they are catching up. When it comes to the charging infrastructure, the refueling infrastructure, we are having very good partnerships in those member states in Europe, when you look at Europe across. And we are looking at charging partners when it's about electric vehicles, and we are looking into refueling partners when it comes to hydrogen. This network is obviously very spotty these days. And I think I heard of some of you asked me the same question is when you think of a truck stop somewhere in the middle of Germany and you want to put their 20 -- 350-kilowatt chargers for 20 heavy-duty trucks. And by the way, I'm not even talking megawatt chargers so stop dreaming. So 350-kilowatt chargers, and you put them there, I mean the 7 megawatts that you need to put -- need to be available from the grid. Well, I don't know we need to ask Leo Birnbaum from E.ON how he gets additional 7 megawatts to that truck stop in the middle of nowhere, somewhere in Southern Germany. It's not going to happen. So we have a very long investment cycle ahead of us when it comes to charging infrastructure as well as refueling infrastructure. But it is going to happen. And the way it's going to happen is along the very same lines as we were pioneering the LNG story, the liquefied natural gas story. So these technologies will start in places where you set up meaningful refueling infrastructure and then you do hub-to-hub traffic, you do back-to-base traffic, you do milk run traffics, right? These are the 3 types. And with those, you grow the recharging and refueling infrastructure. And over time, you can actually cover Europe. I mean, an example, we opened last year together with Air Liquide and Total in the port of Marseille, a first 700 high-performance truck refueling station for hydrogen. And the purpose of the trucks that are going in and out of that place is to haul containers. They will have a range of 800 kilometers like the one that is outside, and they're going to hold containers in and out of the harbor. And that's a typical back-to-base mission, right? You pick up a container and then you haul it out like 200 kilometers you return. And so that is a mission where basically the truck deployment follows the charging and refueling infrastructure availability. And so building this with partners together is a way forward, as our bus division does this already today with charging infrastructure and electric city buses. We are not allocating CapEx to become a charging infrastructure provider. We'll not do that. And at times, I was asked the question, why don't you join this consortium of the others and put money there to put the charges, why should I do that? I mean the charging infrastructure that they invest is open to everybody under European competition law. Why should I put their money in order to own something that is in any way subscale? So in the end, we are working with partners country by country, deploying the vehicles together with charging and refueling infrastructure as the things come together. So it is -- it's a longer run. And as per my prior comment about the new European Parliament and Commission, let's see how they think about all of this because the alternative fuel infrastructure directive, the AFID and then the AFIR, the regulation that followed it, is insignificant. It is way too small to force member -- European member states to invest in recharging and refueling infrastructure to truly turn every second truck into an electric one. There's a big mismatch between targets on truck OEMs we delivered and targets on member states and electric and other molecule companies to roll out the network. There's a big discrepancy here. We are ready and the way to roll is with partners step by step, application by application. And the history of the LNG story will certainly repeat with battery electric and hydrogen again.

Thank you. Any additional question? Virginia?

Virginia Montorsi from Bank of America. One question on Magirus. Considering it's roughly EUR 300 million of sales, would it be fair to assume that you would get probably half of it when the transfer is complete? Or could you get us any color on how much you would get?

Yes. So no -- but please -- she said EUR 300 million of sales. I think she was trying to understand the purchase price, I think, of the sale of Magirus.

Sorry, sorry, Maqirus, okay. We're not commenting on the details of this particular transfer of assets related to Maqirus. It does not impact 2024 financials. In fact, there is a positive -- slightly positive revision of our guidance that we presented earlier. We continue to support the business in its transition and it's transferred to the new owners. And we are assuring that it's well set up for a start opening this new chapter.

Thank you. Shaqeal?

Shaqeal Kirunda, Morgan Stanley. So we see a lot of efficiency plans across the group in manufacturing, procurement, product costs. Are you able to tell us what's so inefficient about those processes today? And exactly which actions are going to have the most impact across the group?

I think, Marco, you gave a part of an answer. Why don't you answer for products?

Well, I can tell you on the product standpoint. It's not just a necessarily matter of efficiency, it's also a matter of historical moment or some of the technologies that you have seen before we can say that probably we are in the first generation with a very fast acceleration. So in one of the streams, we are envisioning an imaging that moving to the next generation to the second generation look, for instance, just an example, how much was the cost per kilowatt hour 5 years ago and compared to what is expected in the next 3 years. So this is one of the stream. The second, we are envisioning also to streamline a little bit some of the choices in terms of product also in terms of some of the technologies that we are investing today looking ahead into the future. And when we come to the efficiency, all the possibilities that the software and the artificial intelligence are opening us. That doesn't imply that we were this efficient yesterday. It's just meaning that thanks to the technology progress, we are finding a better way to doing things in several areas because when we think about artificial intelligence, there are the 2 souls, the automation, the augmentation. If we think the automation side, there are already several things that you are putting in place in manufacturing, in our plans, in our internal processes to get rid of some bureaucracy, in computer vision inside the manufacturing plants. So coming back to your point, were this efficiency yesterday, no. But we are going to leverage the possibility that the new technologies will give us in order to be even more efficient.

And I think I'll give you some very concrete examples. Screens in vehicles. We used to have a different tacho graph, a different meter, meter cluster for the light for the medium, for the heavy. Now they're all based on the same modular platform for 1 supplier, and we are leveraging scale across. Just to give you an example. This is most visible. When you look through the -- you didn't put for you the old ones, and not the old ones, the current great ones, but they are replaced by the model year '24. And with the model year '24, you see these things coming together. Another big, big area is battery sourcing for electric vehicles. We have launched our model year '22 with a certain battery technology with the supplier. Now there is the model year '24. And already in '26, '27, the next iteration will come. Innovation cycles in batteries is basically 2 years -- 2 to 3 years. And we have engineered -- Marco and his team has engineered the products in a way that the envelope of the outer diameters of the battery allows us to keep changing chemistry and packaging in these envelopes in order to capture better cost, better priced battery technology. And this is not small money that is coming together. Of course, some of this will be need to be forwarded in price because price curves also in the electric are coming down, but we aim at improving on the cost side. You can go through high-voltage cables, you can go through all the different components. Even things like, for example, take the electric trucks, I mean, brake resistors, they used to cost on a prototype stage almost as much as the daily. Now they need to come to a single digit. And then it comes down significantly in cost, just brake resistors for electric trucks. There are massive cost reductions in procured components, particularly when it comes to the newer technologies that are feeding into the plan on the operations. On the plant side, we are rolling out artificial intelligence, more and more for not only machine maintenance, but also for simply how the plant is organized when we look at certain ways of how do we run the plant, how do we track the plant, how do we split the different work steps, the different workers perform. And there are so many ways how we can learn from data and big data that our former world-class manufacturing efficiencies is now transformed into DOT, which means driving operations together. It's a similar program but the big difference between the 2 is before -- and you want to know before, we were basically an audit-based plant performance assessment. So there was an audit done at some point in time, but that means you're training for an audit, and then you think I'm good on that day when the audit takes place. That's not us. So we have changed this to a continuous performance measurement to make sure that every vehicle we produce is in the end a performance measurement on whether the plant is on track. So we have also changed very much the way how we look at things. Another example, and I could go on, but I'll let me annoy you a bit with my life. So for example, vehicle delivery, we were having, and we still have room to improve when we ship our products, our vehicles from the plant to the dealer because these products are annoyingly get damaged. Some things happen. The way they've been transported, the way they've been treated, the way how we stage and sequence the delivery into body builders. And now with having all these products connected with telematics box to the cloud, the data room, this is the room with the big screens at the end of the industrial village, we can track and trace them. We can much better sequence the delivery. And we can also be very, very specific about vehicle damages that we usually had to pay for because -- who was guilty. Now we have high-resolution, high-speed cameras at the end of every line where every single vehicle gets photographed with high-speed, high-resolution pictures. And if something happens, we have pictures how it left the plant, and so on and so on. But these are things that help 100,000 here, 200,000 over there, 1 million over there. So there are many different things we do.

An important -- and this is very relevant for our sector is all the part linked to the predictive maintenance and DI connected to all this. I mean these are massive internal savings because very often, there are a warranty portion that is in charge of the OEM. And thanks to all this progress, there is a very relevant saving that we are experiencing already today, but we are envisioning to be even higher in next years and the years arise.

And if I can add a finance perspective, less engineering.

Also finance improvement.

No. Of course. Of course, always, we have to be, obviously, the pioneers, but I mean, you've seen -- anyway, this program was launched already in 2021 and till to date, year-to-date, we already achieved EUR 300 million of savings. So this is a rolling program. So there is a portion which is rolling. And then as Gerrit and Marco were saying what we did is to do a step change in that and to add new levers and new ideas and new areas to further optimize -- more than being efficient, I think, to optimize our product costs. So -- but I think there is -- not I think, there is a base who's actually been rolling out over the past couple of years already, so it's not a change versus the past.

Thank you. We have just the time for one really final question.

Sorry, just to double check, if I understood correctly on factoring, I don't know if you mentioned it, but should we take the rule of thumb but 12% of rolling sales for the Industrial business as a rule for the whole business plan? And you are eventually thinking about reducing it during the period. And what was the cost, if you can remind us, in '23? And what should we expect in '24?

Should I take it? So myself and Simone for sure. So just to clarify, maybe terminology, but let's say, as I said, we -- industrial activities sales to financial services or its receivables, dealer and non-dealer. I think what you're referring to is the nondealer portion. And yes, you're right, the assumption is correct, around 12% of last 12 months' revenues. And this is what has been assumed throughout the plan. Then as I said, I still believe to be honestly, frankly, that this is an optimized way to manage our funding. But having said that, because obviously, every one of you -- some of you are pointing out of the fact, but obviously, then there is a financial charges amount which, as I said, is definitely impacted. But last year in 2023, this was severely impacted also by devaluation of the Argentine peso and all the FX and hedging we had to do in the country. So the big amount in 2023 was a one-off. And we have to be prudent still in 2024, but let's say, over in the long run, this number should go down, but we will continuously to assess opportunities to potentially revise this mechanism, although I do believe it's still cost competitive and gives us enough flexibility. So we'll see, obviously, if it makes sense to change that, but it's an option for sure we're looking at. I don't know, Simone, if you want to...

No, you're perfectly right. But as we have seen in my presentation, maybe on one side, financial services that is responsible for the full credit cycle. There are several different aspects that we need to have a look when we talk about the famous discount of non-dealer receivable to financial services because like Anna was mentioning, we need to distinguish domestic markets where there are dealers and nondomestic markets where there is financial services. Since we talk about nondomestic markets, there are several advantages, including the effect to move receivable from different countries to one single countries in order to centralize funding and optimize the overall cost on top of the centralization of the credit management. So we streamlined the overall process in order to optimize the earnings per share of the group, not our financial services stand-alone.

So thank you. That is all the time we have today. And so thank you very much, everyone, for your participation. So Gerrit, do you have any final remarks?

Yes, some final remarks and still a highlight to come. So thank you, Federico. And thank you, again, everyone here in Turin and connected online from all over the world. I think we covered all the subjects and priorities as far as we can share them at this point in time. So now we want to invite those of you who are here with us in Turin to have some refreshments just outside these doors. And as you walk out, we have a small surprise for you to take home, especially if you like, music and are as excited as we are about our partnership with Metallica, okay? I have had no clue how many metal heads among bankers so I got so many e-mails about this. So anyway, this collaboration focuses on our joint sustainability and social engagement efforts during the band M72 tour in Europe this year. The tour dates are on the back of the T-shirt. And at the front, you can see it's our truck. So there's waiting something for you outside. Enjoy the rest of the day. Thank you very much.

Thank you.