OPmobility SE (OPM) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to the presentation of our half year results. I'm here with Félicie Burelle and Adeline Mickeler this morning, and we will present to you how we have been able to perform in this very difficult market environment, but also how we have been able to accelerate the transformation of our company and how we do see the market developing in the coming months and in the coming years as well. Starting with some key messages. I mean, first of all, we are very pleased to show to you today very solid H1 results in a very difficult market environment, mainly impacted by the chip shortage, but also by the raw material increase, as you all know. In this context, we have been able to improve our operational performance, to improve our cash generation as well. And therefore, we are upgrading slightly our guidance for 2021. We have been also able to accelerate our group's transformation, which is key because the acceleration of the transformation of the market is now real. And therefore, we are speeding up as well with a new team in place. About the market now and starting with the numbers of the first semester, you can see on the left part of the slide, the production volumes were at 37.9 million, which is, for sure, much higher than last year in the same period because last year was strongly impacted by the COVID crisis, it is about 29% more than last year first semester. But compared to the second semester of last year, it's much below, 11%; it's much below than in 2019, 13%. And the main reason for that is not the demand because the demand is pretty high, especially in China, especially in North America with very low inventory levels. But the reasons for these low production volumes are mainly the chip shortage. We do estimate the impact in the first semester by 4 million vehicles, and the impact is even higher in the second quarter than in the first quarter. Therefore, strong demand on the market, strong stress on the supply chain and therefore, pretty low production volumes in the first semester. What does it mean for us? It means for us that our turnover in the first semester was at a bit more than EUR 4.1 billion, which is a drop compared to last year in the second semester of 8%. The impact for Plastic Omnium from the chip shortage was about EUR 550 million on our sales in the first semester, meaning that we have lost EUR 550 million sales in the first semester because of the chip shortage, because of the [ stops ] of our customers. In this difficult context, we are very happy to have an operating margin by 6.2%, which is much higher than in the second semester. Therefore, less volumes, better operating margin. The reason for that are, first of all, that we had anticipated market pretty low this year. You may remember that for this year, our forecast or assumption of the market was at 77 million cars for the full year. And therefore, it is more or less in line with what we had expected. We have put in place the maximum flexibility we have, and you know that our cost structure is very flexible. We have still a very high level of temps. We have a very flexible cost structure within Plastic Omnium. Our efficient program, meaning cost reduction, but also Omega are paying off. And that's the reason why we are able to announce this performance for the first semester. And we are also very happy to see that our Greer operations are now breakeven. You know that we are targeting the breakeven for the first year. But already in the first semester, we are breakeven in our operation in Greer. And these are the reasons why we are able to have these very good results in this very difficult market environment. We had a huge attention on the cash as well, which is part of the Plastic Omnium DNA, as you know. And the results is a very high generation of free cash flow because it's about EUR 151 million, meaning 4% of sales in the first semester, with a very strong management of our CapEx, meaning 4% of sales, strong management of the CapEx because we have installed capacity in our factories. We have the capacity to produce more basically. And with the team, we are managing the CapEx pretty intensively. From the other side, we had an increase in inventories by EUR 100 million, which is mainly due to the fact that the supply chain has been strongly impacted by the chip shortage and that we wanted also to protect our customers and not to put them in danger. Therefore, higher stocks, higher inventories, lower CapEx. And at the end of the day, a very good performance in free cash flow, very high liquidity and the net debt-to-EBITDA lower than 1. These are the results you can see on the left side, meaning a strong growth, 32% compared to last year with the outperformance of the market, and operating margin at 6.2% of the sales in the first semester. The free cash flow at 4% of the sales, meaning EUR 151 million. And these great results bring us to upgrade the guidance for the full year. And the guidance for the full year is a strong growth in sales compared to last year. We are targeting operating margin at least at 6%. And previously, we were saying around 6%, and we are targeting generation of free cash flow being significantly above EUR 220 million, and we were saying before above EUR 220 million. Therefore, the market is still very challenging, but we are very confident in our capacity to deliver and very confident in the great performance of our team. I come now to the highlights of the first semester, therefore what we have been able to achieve in the first semester beside the numbers. And you know that our growth strategy in this fast-changing market environment is basically based on 3 pillars: operational excellence, innovation and sustainability. And Félicie and myself will explain you what we have been able to achieve in these 3 pillars in the first semester. Starting with the operational excellence with the 3 main topics we wanted to share with you today. First of all, our successes with our customers, then what we are doing in terms of operation plans and the status of our transformation program, Omega, which is key also for our future agility and performance. Starting with the customers. And on this slide, you can see the number of launches we had in the first semester of 2021. Many key messages on that. First of all, many launches, 88. They are all successful, which is very important for our future profitability. And we like the fact that we have a big part of the launches in Asia because Asia will be the growth engine of Plastic Omnium in the coming years. You see the customers, basically all the customers are involved. We are developing new customers as well. I will come to that later on. And it's a great mix between electrical vehicles and combustion engine vehicle as well. Therefore, a strong momentum within our factories without any issue and many launches in the first semester. Many commercial successes as well. We are very happy with the order intake in the first semester, which was very strong. And the order intake was especially strong in the BEV segment. You know that we are very strongly present in the BEV segment, which is clearly a segment offering a lot of growth opportunities. And some examples you can see here on the screen. We'd like just to highlight the Volkswagen ID-buzz. We are present in all the Volkswagen platform, which are fully electrified, the ID.3, the ID.4, the ID-buzz, again showing that we have the right technology for that, the new Daimler platforms as well, but also the Renault 5 Echo, where we will deliver all the exterior parts. And below in the slide, the 100% EV player of U.S.A., building up a new factory in Texas, and we are supporting them as well. Therefore, you see that we are present in all the regions in all the kinds of segments for BEV and that we are continuing to be intensively investing in the BEV segment as well because we do believe it will be a growth opportunity for the group in the coming years. Besides the BEV segments, we have been also able to convince new customers to work with us, which is important to extend our customer portfolio. The first one is Honda. Honda, where we will deliver bumpers produced in Mexico for their operation in North America. That's the first time that we have exterior business with Honda. Volkswagen Anhui, which is a new brand of Volkswagen, their joint venture with JAC producing BEVs, and we will be also their supplier there. Lotus. Lotus belonging now to Geely and being or becoming a BEV company, where we have been able also to get new orders. And also very happy to be the partner of Mitsubishi. Mitsubishi changing its tank technology from steel to plastic. You know that there is still 12% of the market being in steel and moving to plastic. And Mitsubishi has decided to do that with Plastic Omnium, which is offering us also some nice growth opportunities with this new customer for us. Besides the customers in terms of order intake and new customers, we are also expanding our footprint in China. And China is a key location for PO. We have 32 factories in China. We are building up the 33rd factory in China, showing again the success we have there. We are a market leader in Exterior System, with a 23% market share in China. And that is a new factory for an American OEM, focused only on BEV segment and investing in 1 million exterior parts. I mean we will invest in capacity of 1 million exterior parts a year. The SOP will be next year, 2022, and that will bring us further growth in China. We have also other targets in China to further extend our footprint, and we will announce also new factories in the coming months. It's not only a new factory, it's also a new factory which will be fully sustainable, which is basically pretty new in China, but we are targeting that as being a kind of pilot factory in China for the sustainable production. That was about our customers, about our success with them. The success of the company is also due to the fact that we are very agile and flexible. And that is also the aim of the Omega transformation project we have launched last year. And you know that we had a very high ambition. We wanted to have savings of EUR 200 million a year with the first work package we were working on. And today, we are confirming that we will be at EUR 200 million end of next year, meaning that we would be at EUR 200 million already this year. We have been starting with indirect purchasing and D&D. We have engaged 400 people in the meantime, we have 2,500 initiatives running, being monitored very regularly. And again, it will bring us about EUR 200 million savings this year. At the end, it's about becoming more agile, becoming more digital, simplifying our processes and challenging basically the way we are working. And that is one of the reasons why we are so pleased with the results in the first semester because the contribution of Omega is transforming in numbers basically. I hand over now to Félicie. Félicie will talk about innovation, innovation being the key for our strategy of growth, which is increasing the content by car.

Thank you, Laurent. So good morning, everybody. So indeed, our second pillar, which is innovation, key for the growth in the future. And I will elaborate a bit more on our latest development, which are on the 2 key megatrend, which are electrification and connected and intelligence body panel for us linked to autonomous driving and ADAS. So moving on to the next slide. So talking about electrification. Electrification for us means, first of all, hydrogen. As you know, we've presented to you -- back to you some months ago, our strategy in this field. Clearly, our aim is to have a comprehensive offer on the full value chain of the hydrogen from storage to the integration of the system and, for larger part, larger scope of mobility. So we are talking about passenger car, but also about buses, light commercial vehicles, trains and trucks. So on this slide, you have where we stand as far as the storage is concerned. So on top of the 350 to 700 pressured vessels products that we already presented to you, we have made some further developments in the first half of 2021. And in that field, in particular, we have developed, as you can see on this slide, a floor module concept that today is being developed and that we are targeting to certify by next year to propose to our customer. And clearly, the strategy with this floor module is to offer a flexible approach to mobility, electrification as it can transfer to the -- in place of the battery pack space. So the key strengths that we have in this field is clearly that we have certified product. We have capacity in place already at our Belgium production plants of Herentals with already 10,000 units to be produced each year in place. And we have the proprietary software winding technology, Composicad that we bought some years ago, and that is also actually used by many of the players in this field, but it is proprietary to us. So as already announced on this specific application, so storage, we are targeting a market share of 25%, which is in line with the market share that we have today on our traditional business. But obviously, here, the content per car is much more important versus the average EUR 100 of what we have today. Here, we are targeting a bracket of EUR 2,000 to EUR 25,000 per application. So very strong potential in terms of content per vehicle to be increased. That was for the storage. As far as the system is concerned, so you know in March 2021, we have launched our JV with ElringKlinger, our German partner. So JV EKPO focusing on the fuel cell stack development. Again, here, we have capacity in place of 10,000 stack a year, which is one of the largest production capacity in place to that already available in Europe. And with that, we are able to address the passenger car market, but also bus and trucks, and I'll comment on the recent commercial activity we have had in that field. We are quite intense. And here again, we are capable of addressing low power, but also with the target to increase to full power vehicles, so above 200 kilowatts. And finally, we have also around this fuel cell stack, developed a comprehensive ecosystem and expertise around the balance of plant, so the management, the optimization of the system. We did that some years ago with the acquisition already of Swiss Hydrogen. And we reinforced our expertise and our team also with the acquisition of some dedicated teams of ElringKlinger in that field. In terms of activity, so very strong commercial pipeline in H2 already, but also in H1 2021. As far as storage vessels are concerned, we already announced to you 2 contracts last year. And on H1, we already -- we announced to you some significant milestone. The first one was the announcement of our partnership with McPhy. Here, the idea is to extend what we do today in terms of system to full ecosystem, so that we can also optimize the performance of our products with the filling protocol between the station and to have the capacity to propose to our customer a full comprehensive offer. On top of that, we also announced to you a partnership with the French start-up, Hopium, to develop a 7-bar hydrogen storage system to be able to have this vehicle called Machina able to conduct over a range of 1,000 kilometer. We are very happy with this partnership, and we are happy to be able to provide Olivier Lombard with the means to achieve this great challenge, which will be very important for us. And on top of that, we have a lot of commercial activities ongoing. Some of them being already secured. Unfortunately, we cannot already communicate on all of them, but we are very happy with the pace with which we are able to comply with what we initially intended to have in terms of order book. On the fuel cell stack side, so with EKPO also a lot of traction, commercial traction, we've announced with Green Corp Konnection, which is a zero emission motorsport vehicle that intends to again here develop a zero emission fuel system. Here, the intention will be to apply that later to industrial application, but the first target will be to supply with a vehicle that will compete with the 2023 Dakar Rally. So first application motorsport, but with a target to move to industrial application. Also, we will supply stack to AE Driven Solutions, which is a German company that equips vehicle for inner-city transport. Here again, we will -- we have reached a multiyear contract with high volumes, and the first production will come in the first half of 2022. And finally, we have also signed a contract for a German company that is specialized in converting trucks into zero emission hydrogen-powered vehicle. And here in 2023, we will have 100 vehicles in the city of Esslingen in Germany that will be supplied with EKPO fuel cell stack. So as you can see, a lot of activity. And clearly, so based on what we have secured today and that we've been able to show to you what we have secured and maybe we'll be able to communicate a bit later on and the heavy ongoing commercial activity, we are clearly in a position today to confirm the EUR 300 million sales in 2025 and that we are reaching our ambition as far as hydrogen is concerned. So hydrogen is an important part, but not only, electrification is also about full electric vehicles. And for that, thanks to our HBPO business, we are able to address this new segment by thinking about new modules that today do not exist as such because there could be single components or because just they don't exist on traditional ICE vehicles. So there is a great potential in terms of coming up with these new modules for electric vehicle. Here, you have the concept of what we call the LID module. So it's an automatic opening for the charging lid. Today, obviously, it exits. It's a mechanical one. Here, the intention is to make it automatic and intelligent, as you could -- we could increase and provide more functions to this device with lighting, charging status, also have it opening only with a touch. So many features that we intend to provide with this LID module and we have again a lot of activity ongoing with many different OEMs. So LID module, we also have the Frunk module, which is a mix of the trunk in the front of the car because, as you know, now that for electric vehicle, we have this space at the front of the car, which could be used in that specific case as a trunk. And again, here, the idea is to come up with new functionalities, to enhance the customer experience and to be able to provide new functions. So here, again, intelligence modules that could come up with many different features. You have here -- I can't comment on the picture, but you can see for one of a pure EV brand, something that we are already discussing with them. So that was for electrification. As far as ADAS and autonomous driving is concerned, we talked to you a lot about the smart face initiatives that we have. But here, we have a new one, which is a very important project for us, where we have the ambition to really to turn our large surface and transparent body panels of PO into big aperture for automotive radar. So to use all of the surface of the front of the car that we have, thanks to our body panels activity. So this would be quite a disruptive concept that we are designing with a French detect start-up. And -- so how do we increase and how do we integrate ADAS features in terms of resolutions? So we could compete with technology that is already existing on the market. So clearly, innovation in a nutshell plays a big role in the growth perspective that we have, and it's really important that we focus our efforts and our means to develop those new product lines. And I will leave it to Laurent for the sustainability.

Félicie, you have seen a lot of things ongoing, more to come again. But clearly, the ambition to accelerate on innovation, to use the transformation of the market as an opportunity for Plastic Omnium. The third pillar of our strategy, as you know, is about sustainability. For that, we have a program in place since many years, which is deployed in all of our factories, basically a program which is based on 3 pillars: responsible entrepreneurship, care for people and sustainable business. And this year, and especially right now, we are putting a special focus on renewable energies, on recycled materials and on carbon neutrality, and that is what we'll show you in the coming slides. First of all, our commitment to sustainability is showing up in the extra financial ratings with an improvement year-over-year, and you see some example here. Like, for example, the EcoVadis, where we are now platinum. Therefore, again, highlighting our commitment to sustainability. We've decided to engage the CDP rating implementation as well, and we will get the results by the end of the year. And we are supporting the TCFD initiative, which is also part of our journey regarding sustainability. Therefore, the ratings are confirming the commitment and the results of Plastic Omnium -- the positioning of Plastic Omnium, sorry, in sustainability. For sure, that's not enough. And therefore, we are speeding up. We will announce our carbon neutrality road map in the second semester, but we are speeding up in the way we are using renewable electricity in our sites. It's more than 30% already. We will have more than 20 sites pretty soon having solar panel or wind turbine, therefore, being able to produce the electricity. And that is a clear path for us to make our production basically sustainable. We are not having a look only on the production, but on the complete life cycle and the complete supply chain. And we are, for example, developing bumpers with more than 50% of recycled material. We have some demonstrator also for exterior parts with some customers. Therefore, assessing not only what we're [ adding ] in the production, but assessing as well the way we are developing, the way we are working with our supply chain and how we can contribute to the carbon neutrality of the complete supply chain. We have announced, as you know, the carbon neutrality of PO by 2050. But this year, we want to provide a clear carbon neutrality road map in the second semester. When we see a clear carbon neutrality road map, it will be a very ambitious one, and we have already committed to the SBTi Business Ambition for 1.5 degree, but it will be very ambitious, but also based on concrete actions. I would say the pure way of doing things basically. We will announce medium targets on scope 1, 2 and 3, approved by the SBTi. And again, it will be announced in the second semester of this year with a clear road map behind. We are auditing all of our factories. We are assessing where we need to invest to speed up the carbon neutrality in the scope 1 and 2, and we want to be carbon neutral in production in scope 1 and 2 in the coming years. And we are also engaging our suppliers more and more but also transporters to decrease the carbon footprint on the scope 3. Again, we will announce everything to you, to the market in the second semester, but it will be a pretty ambitious road map as we are used to do in Plastic Omnium. I now hand over to Adeline Mickeler. Adeline will comment on the financial results with all the details you would like to know.

Thank you. Thank you, Laurent. H1 2021 financial results represent obviously a major improvement to H1 2020 results, which were significantly affected by the plant shutdowns resulting from COVID-19 crisis. They also show, and I will comment in the coming slide, a strong growth for Plastic Omnium, an operational performance, which is back to 2019 levels despite a lower production level. The global automotive market is lower around 10% to 15% compared to 2019 levels. And third, items to be highlighted in H1 2021 result is the acceleration of the free cash flow generation. Starting with the strong growth. Our economic sales, as you see here, amounted to EUR 4.1 billion in H1 2021, which is an increase of 31.9% on a like-for-like basis, which is an outperformance of 2.5 points to an automotive production, which grew over the same period by 29.4%. The outperformance of our consolidated sales is 2.4 points. I remind you that the difference between economic and consolidated sales is a percentage of sales of our JV, our Turkish and Chinese JV in PO industries and our South Korean JV for our PO modules. This outperformance is driven by the PO modules at 10.1 points outperformance to the market, mainly in Germany and in Asia, including China. Over the same period, PO industries, as you see here, grew globally in line with the market. Per region, we experienced a significant outperformance in China and in Asia of 7.2 points. The outperformance in China comes from market share gains in the country and from the growth we have at PO modules, which started its operations in China in 2018. In Asia, we benefited from a strong recovery, particularly in South Korea, Thailand and India. The outperformance of Europe at 1.1 points is mainly driven by Germany, where we outperformed the market by 17 points. The growth of 32% we had in Germany is sustained by a nice positioning and a successful positioning of Plastic Omnium on electric vehicles. To say it differently, and on Europe -- in Europe as a whole, the sales we generated on electric vehicles in H1 2021 represented 9% of our total European sales. It means that in that European market, we are twice as exposed with BEVs as the market itself. In the same time, in Europe, our main customers in France, Spain and the U.K. suffered from the chip shortage and that affected us and that affected our outperformance in the country as a whole. North America. North America, we grew as expected, in line with the market. The ramp-up of 5 new factories we've built over last years is now complete. The evolution of our sales leads to a reinforcement of Europe in our geographical portfolio from 54% to the 55% you see here. We decreased 1 point in North America to 25%. And Asia represents 17% of our sales, with 10% of China. Per country in details, Germany remains our first country with 16% of our total sales, followed by U.S. 13%, Mexico 12% and China 10%. The evolution per customer now shows a significant increase of German customers. Our German customer represented 44% of our total sales 1 year ago. They are now at 47%. We had a very significant growth at Audi, gaining 2 points in our portfolio and at Daimler gaining 1 point. As a result, the penetration of Plastic Omnium on premium vehicles sharply increased from the 35% in H1 2020 to 39% we have today. As you can see also, our customer portfolio is well balanced, and diversification of this portfolio will continue with the new customers Laurent mentioned a few minutes ago. Profitability now and strong improvement of Plastic Omnium operational performance in H1 2021. Again, as stated by Laurent, we've been managing the company and especially the cost structure of the company since the beginning of the year with a 5% discount to the expected production volumes. With the increased impact of chip shortages, we have reinforced the flexibility in our 131 plants. We reinforced our cost-reduction program. We also continued to deploy our Omega transformation program. We closed, as announced, a factory in Germany producing fuel system. And on top of that, we are back to breakeven in our South Carolina operation. All of this leads and drove an operating result to EUR 234 million or 6.2% of our sales, thereof 7.6% for PO industries. I remind you that for the full year 2019, we generated at group level 6% of operating margin and 7.2% for Plastic Omnium industries. Our EBITDA came at EUR 461 million. This is 12.2% of our sales ratio. Plastic Omnium industries contributed EUR 408 million or 14.9% EBITDA margin and the PO modules with EUR 53 million at a 5.1% EBIT margin. Below the operating results, our other operating expenses were limited in H1 2021 to EUR 21 million. I remind you that in H1 2020 due to COVID crisis and the slow recovery we expected for the automotive production, we registered EUR 255 million of asset impairment, which is, of course, the significant portion of the EUR 313 million you see in H1 2020 for other operating expenses. In H1 2021, you saw also our financial expenses significantly reduced by EUR 9 million to EUR 26 million. This decline is a combination of a decrease of gross debt and the decrease as well of the interest rate of the group, which is today at 2.1%. The income tax amounted to EUR 38 million. This is an income rate -- the tax rate, sorry, of 22%, and this is the tax rate you can assume for the full year 2021. Finally, net result group share stood at EUR 142 million, 3.8% of our sales. Further, acceleration in free cash flow generation. Starting with operating cash flow that you see here at EUR 409 million or 10.8% of our total sales increasing. Second, our CapEx are limited or were limited to EUR 149 million, 3.9% of our total sales. You see that the investment over the first semester are quite comparable to what we invested in H2 2020. Again, the footprint of Plastic Omnium is already almost complete, and the capacity we have installed is sufficient to fuel the future growth we have ahead of us. Nevertheless, you can consider that the investment we will have in H2 2021 will be higher. And that for the full year, the investment program will represent around 5% of our total sales. Working capital requirement shows an outflow of EUR 108 million, which is mainly due to EUR 100 million of increase in inventories to secure the supply in an environment where, obviously, there are a lot of pressures on the supply chain. All in all, the free cash flow amounted to EUR 151 million. This is 4% of our sales. In H1 2021, we also paid out the same EUR 71 million dividend to our shareholders as we did the previous year. We invested EUR 115 million in the creation of EKPO with ElringKlinger in the fuel cell and hydrogen business. We acquired a subsidiary of ElringKlinger in Austria, so for a total value of EUR 115 million. All of this leads to net debt of EUR 890 million to be compared to EUR 807 million we had at year-end 2020, over EUR 1.4 billion at end of June 2020. This EUR 890 million debt represents 44% of our net equity or 0.9x our EBITDA. We have no debt repayment before 2023, and we have a very nice liquidity at EUR 2.45 billion, composed of roughly EUR 0.6 billion of cash and EUR 1.9 billion of undrawn credit line without covenant, with an average maturity of 3.6 years. With that very sound financial structure, I hand over to Laurent for the outlook.

Thank you very much, Adeline. And you have seen a very strong performance in the first semester. Now we would like to share with you how we do see the market developing in the coming years and what it means for us, Plastic Omnium in terms of strategy and in short notice, how we do envisage the second semester. The outlook with basically -- the main message is the transformation of the market, the transformation of the industry. Meaning the CASE is speeding up with the COVID. The cars are getting more electrified. The cars are getting more connected. The ADAS autonomous is getting momentum. Therefore, it's a question of speed as well, not only a question of technology. Only the shared part of the CASE is suffering right now, but it is mainly due to the sanitary situation. And we are pretty convinced that it will come back pretty soon. Therefore, the main message is transformation of the market is basically speeding up. Transformation of the market is also the electrification of the market, which is speeding up. You may remember that we shared this view of how we do see the powertrain mix developing in the coming years already at the beginning of the year. And you see in green, basically the vehicles, the cars being fully electrified, either hydrogen or with battery system, which will represent 30% of the global market in 2030. That was our assumption. That is still our assumption, even if we do see that the electrification of the mobility is basically speeding up. The blue part is the part which means there are still some fuel systems in the cars, and that's a part which is important for us as well for clean energy system. As I did mention in the first semester, the green part, meaning the full electrified vehicle, we're about 5% of the market, it was about 7% of our sales. Therefore, the electrification is a great opportunity for Plastic Omnium to continue to outperform the market. The speed of the electrification will be completely different by region. We do see Europe speeding up, China speeding up. Rest of Asia and North America having a different kind of momentum. And therefore, we believe the market will be more fragmented in the coming years than right now. But the trend is clear, more electrification and faster than expected. What does it mean for us? As mentioned before, it means for us further opportunities to growth. We have shown you before our great exposure to the BEV segment. It is due to the fact that we have the right technical solution in IES, intelligent exterior system, and in modules because we do propose to our customers solutions which are optimized in terms of lightweight, in terms of aerodynamics, in terms of function integration. And these features are key for the customers for the BEV segment because it's about the range of the vehicle. And as you know, the range of the vehicle is a key factor for the consumer, basically. And therefore, great exposure, great technology for the BEV segment and the capacity as well with our technologies to gain new customer. We are a strong partner of Tesla. You know that we have business with Lucid, with Nio. Basically, all the traditional OEMs or new OEMs are working with Plastic Omnium for their BEV strategy. The electrification of the mobility and the acceleration of the electrification of the mobility is also great opportunity for us with our hydrogen business and Félicie did show you before what we are developing in terms of portfolio to be able not only to serve the traditional mobility but also to represent in the new mobility for us, new customers and therefore, new opportunities for growth, meaning truck, buses and trains. And we will pretty soon announce also a great commercial success on all these 3 segments, but also in the passenger car vehicles. That means for us 5% of our sales in 2020 were for fully electrified vehicle, much more than the market share or the market penetration of those technology on the market. It was about 7% in the first semester, 9% in Europe, and it will continue to increase in the coming years, and it will be a growth engine for Plastic Omnium. The electrification has, for sure, also an impact on our traditional business CES, meaning clean energy system, which is about depollution and fuel storage system. First of all, there will be still 85% of the global production having a tank in 2025, around 85%, either hybrid or not hybrid. We do see, as mentioned before, and we have a concrete example with Mitsubishi that there are customers moving from steel to plastic, and steel does represent 12% of the tank market right now. That means opportunity for us to continue to grow, opportunities for us to gain market share. We are targeting 28% market share in 2025 with our traditional business. And for that, we are also opening new factories in countries we are not present in, in countries where the electrification is not coming in the coming years, like, for example, in Indonesia because we will have an operation in Indonesia in 2022. PHEV is also an opportunity for us to continue to grow in this business because, as you know, the tanks are more complex. The technology is more complex. The added value is higher. The content is higher, and we are targeting here a 25% market share in 2025. Important to notice in our CES business, it's -- that our portfolio turnover in terms of geography is very well balanced because we have only 37% of our sales in Europe. And as you know, Europe is the region where the electrification is developing with higher speed basically. But we have more than 60% of our business, which is not in Europe for the CES business, which is very important for the development of this business. All in all, it means for us that we are still targeting to grow in this business in the coming years in the CES business with everything I was mentioning before. But that means as well that besides the growth opportunities we are capturing right now, we are managing the business with a strong focus on cash, with a strong focus on reducing the balance sheet exposure of Plastic Omnium. Coming now to the second semester, we said at the beginning of the year that we had an assumption for the market at 77 million cars produced. The first semester was 38 million cars, and we believe the second semester will be more or less at the same level, meaning 39 million. Therefore, we do confirm the 77 million cars being produced. It is still much lower than what IHS is basically targeting. The reasons why we believe that won't be a strong recovery in the second semester is first of all, because the chip shortage, the issue is not solved, and Q3 will be weak, like Q2 was weak as well because we do see many customers having issues with the chips, and Q4 will be still affected. Therefore, we prefer to remain cautious and conservative and to manage the company with a discount compared to what the customers are announcing. And we are still confirming the 77 million cars being produced for this year. That means, for us to continue to flex our cost. That means for us to continue to accelerate our Omega program, and that means for us to increase our agility. The raw material topic was already present in the first semester. And you know that basically, all the prices did increase in raw material, but also in logistic, container and so on. It will continue and the impact should be even higher in the second semester than in the first semester. And therefore, our market is still struggling in the second semester. Chip shortage issue won't be solved. We are maintaining our flex approach, agility and cost-cutting actions basically. In the second semester, we will have still a very strong momentum in terms of launches. You have seen the number in the first semester, it will be similar in the second semester, which is very important for our future growth, which is confirming that we have a very strong order book. And you see here as well that a big part of the launches will be in Asia. And again, I was saying before that Asia is for us the region we are targeting for the future growth of the company. In this environment of challenging market, but strong performance in the first semester, strong capacity to adapt, to anticipate, to flex, to reduce the cost, great performance from the team. We are upgrading our financial guidance for the year, as I said before. Strong growth in sales for the year, operating margin which will be at least 6% and the free cash flow which will be significantly higher than EUR 220 million. We are very confident in the way our teams are able to deliver and very confident in the way the company will continue to increase its performance in the coming quarters. As a conclusion and before moving to the Q&A session, you have seen that we are confirming basically our leadership position in everything we do. We are #1 position in everything we do. We are developing our portfolio for the hydrogen, which will be a growth engine for the future for Plastic Omnium. We are reinforcing our positioning in terms of electrification, our presence with the customers, investing in purely BEV vehicles. We have a very strong financial structure at the end of the first semester. And therefore, we are able to continue to speed up, to continue to accelerate the transformation of the group. That is due to what we are able to deliver, but that is mainly due to the great performance of the complete PO team. And therefore, we are pretty confident that this transforming, this challenging market will offer a lot of opportunities for our company. That was our presentation. We will be now more than happy to engage the conversation with you. And therefore, we move now to the Q&A session.

[Operator Instructions] We have now a question from Thomas Besson from Kepler Cheuvreux.

It's Thomas Besson. I have 4 questions, if that's okay. And I'd like to ask them one by one. The first one is on the H1 performance. You mentioned EUR 550 million revenue missing due to the chip shortage, mainly this lower production than it could have been. Could you just indicate whether these potential incremental sales would have been more profitable, so the adjusted EBIT contribution mix that you estimate? Or have you not done that exercise?

First of all, Thomas, you can be sure that we have made the exercise because it is impacting us, not only in terms of volumes but also in terms of mix. We were not lucky with the mix. We would have preferred that other customers would have suffered other regions. And therefore, the mix was negative for us. At the same time, we have been able to overperform what we were anticipating in Greer, for example, and therefore, to compensate that. But basically, the mix of the shortage with our customers was not the best for Plastic Omnium.

Out of the EUR 550 million impact, you have EUR 300 million in Europe, EUR 200 million in North America and the EUR 50 million remaining one in Asia.

Very clear. Second question, I'm fairly surprised by your Slide 38 in today's presentation, so that the vision on powertrain mix evolution. So I don't know if it's linked to -- with rounding. But if I compare the one of February, Slide 35, which was a similar picture, maybe just rounding, but it seems that you're becoming more optimistic about the internal combustion engine penetration in '25 and '30 of lately. You had 68% in 2030. Now you have 70% in '30. While since February, we've had quite a lot of announcements from various automakers competing with each other on how many they would sell in 2030. So I know you always want to make, let's say, [ distinguish ] between announcements and what you view as likely, but it seems surprising that 68% share in ICE becomes 70% now, while we clearly see more regulation, more stringent regulation, and we are going to see Euro 7 potentially accelerating further the trend away from PHEVs and ICE.

We are surprised because we didn't change basically between what we said in Feb and what we do see -- what we do say today. Therefore, there is no change. We don't believe more today in combustion engine than in February. We are basically not changing our view on how the market could develop in the coming years. Therefore, we keep the same powertrain mix as discussed some months ago. But we envisage that it could speed up, especially in Europe. And therefore, we are working on scenarios internally, where the electrification could speed up massively in Europe and assessing what it would mean for Plastic Omnium. But we didn't change our view compared to what we have shared with you in February.

Okay. So it's probably the rounding on your slide then. Third question on M&A. I mean there's been obviously lots of noise around your long-term German partner, Hella. I mean Knorr-Bremse approaching them validated the fact that they seem to be sellers of their stake, the various family members. Could you help us understanding what is exactly Burelle SA's flexibility in terms of voting rights and as a consequence, the potential financial power of Plastic Omnium and willingness to eventually participate in a large M&A operation?

I mean, first of all, maybe you know that we are not Knorr-Bremse. Therefore, we didn't comment anything, and you were mentioning rumors, and we don't like to comment rumors. Nevertheless, we know that with the transformation of the market, with the speed of the transformation of the market we have been talking about today, there will be a need for consolidation, joining forces, to be faster and to be able to take the opportunities of the transformation of the market. And as we said many times, the group will be always willing to consolidate the market because we have the sound financial structure and because it's part of our DNA, basically. That is part of the history of Plastic Omnium. And the main shareholder of PO did always show his willingness to develop the company and to further grow the company. Regarding the Burelle SA policy, I will hand over to Félicie.

Yes. Thanks. I mean, as Laurent just said, we've always been assessing all our options in terms of opportunities and what is going, on on the market, it's part of our job. And obviously, we would be willing to assess all options as long as: one, it makes sense from a strategic standpoint and it creates value for us; second, it really addresses the megatrends and the case; and third, as long as, obviously, the Burelle family can still be a reference shareholders with a long-term perspective. So we are open. We will be assessing options, but it has to fit those 3 criterias.

Very clear. I have last question on hydrogen please. I understand you're happy with the development of orders you had over the last 12 months. But I think you are aiming for EUR 300 million revenues in '25. But I'd just like to know if plan at one point to give us absolute numbers in terms of accumulated orders of what you have and understand how much -- how many orders in hundreds of millions you need to reach by year-end or year-end '22 or year-end '23 in order to able to have EUR 300 million revenues that are hydrogen related in '25?

I mean, first of all, you know that we don't like to communicate on order intake, but we are never doing that as far as I know or maybe in the past, but order intake for the group and for general also not. Nevertheless, for hydrogen, it's a specific business. And therefore, it's normal that you want to understand a bit better how we can achieve the EUR 300 million. As Félicie mentioned today, we are confident by achieving EUR 300 million in 2025. As of today, we have booked a very important part of that, I would say, even if we cannot communicate on that. We have booked that on the commercial vehicle. It can be truck, buses, captive fleet, but also passenger cars, but also other kind of mobility. And we plan to have an open discussion, maybe not sharing all the numbers, but with you probably in September, October, then we will be able to disclose more information. We are not allowed to do right now. But we do confirm today the EUR 300 million, and it's based on already a very strong order book in the last months.

The only reason I ask is that there is more skepticism to bear on potential for hydrogen than there was 12 months ago. So I think if you give -- not the name of the customers...

No, but we will give names. It's not only depending on us, we are booking, but sometimes we cannot communicate, which we need to accept, but we will give names somewhere in September and October. I don't believe there is a change in hydrogen. We do see that it is basically speeding up for everything which is related to commercial mobility, commercial vehicles, more and more fleets, more and more bus, truck customers being interesting in hydrogen. And these are the first targets we have, but also the train, the railway mobility, moving to hydrogen with lower volumes, but very high content by train. And therefore, in terms of value, it is completely different that what we are -- that we know in the passenger car mobilities. And even for passenger cars, you know that Korean and Japanese OEMs are still investing in new platforms, and we are part of this journey. That is what we will be sharing with you in September and October.

We have now a question from Akshat Kacker from JPMorgan.

Akshat from JPMorgan. Three from my side, please. The first one on innovation and from expanding their product offering. So you have shown some good examples here. I want to touch on floor modules. Can we understand better where you are in the development process and in your discussions with OEMs? Are you already in the RFQ process? Or is this still in predevelopment phase? That's the first one. I'll follow up with the other 2 later.

Today, we are in development, and we are targeting a certification of this floor module by next year, moment in which we'll be able to answer to clear RFQ from customers.

Understood. The second one maybe for Adeline on the earnings performance in the first half. Is it possible to quantify the P&L benefits that you had already seen from the cost-savings bucket across Omega, the restructuring plan as well as Greer? Can you give us a number in terms of what was the total cost save in the first half on the P&L, please?

The cost saving and the improvement in operating margin comes first from Omega program. I remind you that it's EUR 200 million saving program. Half of it is confirmed to impact positively our performance in 2021. And obviously, part of it was booked in H1 2021. The second part of the cost saving is what we call the rationalization program. This is EUR 40 million in savings. Again, half of it, EUR 20 million to be achieved in 2021. And again, you have a portion of it in H1. And for Greer, I remind you also that Greer, that was an operational loss of EUR 90 million 2 years ago, reduced by half in 2020, and we are at breakeven already, I would say, in H1 2021. So all of the 3 items contributed in H1 to the improvement of the operating margin, and we'll continue to do so in H2.

The last one on working capital. I can understand the buildup of inventories and the working capital drag in the first half. Can I just check with you on your assumption for the full year? Do you still expect a working capital inflow in total for the full year?

I mean, as we mentioned before, the working capital was negative, EUR 100 million working capital effect in the first semester. As you noticed, it's mainly due to the chip shortage because you know that when we are informed by our customers, it's already on short notice, basically, and therefore, we need to be able to react, to adapt the supply chain when it starts again. And therefore, we have increased our working capital. It's also partially for tooling. Tooling, we have not been able to invoice because the customers did stop their operation. Therefore, a part of this working capital will revert in the second semester. There will be still issues on the inventory side because the supply chain will still be impacted by the chip shortage. But on the tooling side, it should normalize.

We have now a question from Michael Foundoukidis from ODDO BHF.

A couple of questions also on my side. I will ask them one by one. First one, I know you don't disclose quarterly results, but could you give us some color about margins evolution between Q1 and Q2? Was Q2 below Q1 or not necessarily?

We said Q2 was below Q1 in terms of volumes because of the market, because of the chips. And you may remember that we said it was 2.5 million or 2.6 million cars being impacted by the chips, 1.4 million in the first semester -- in the first quarter, sorry. And the less volumes means that the margin is as well impacted.

Okay. And then regarding H2, I mean you had a 6.2% margin in H1. You're guiding for at least 6% in H -- for the fully year, sorry. So what would make in your scenario that is already a bit conservative as always? What would make margins lower in H2 than what they were in H1? I know there's raw materials, these kind of things. But even in your scenario, I mean the level of activity should be a bit higher, you would be probably a bit more lucky in terms of mix. You will still have Greer, Omega, et cetera. So why margins could be lower in H2 versus H1?

I think you already answered the question. That means basically, we are cautious with the market. We believe that Q3 will be pretty weak, basically, because it's a combination of chips and vacation time. And additionally, as you noticed, the raw material increases are impacting more H2 than H1. And therefore, we prefer to remain conservative even if we know that, as you mentioned before, Omega and Greer and so on are contributing positively to the results. Therefore, we prefer to remain cautious.

Okay. Another one on CES. Would you agree that CES margins and cash generations as a percentage of sales should increase in coming years in the environment that you described during your presentation?

We agree that it is our target, but the cash generation of CES will increase in the coming year.

Okay. And maybe one last one, coming back to M&A. I mean Félicie, you've said before that Burelle SA wanted to remain the return shareholder. If I remember correctly, before the minimum was 50% of voting right. Is there a difference between the 2 wordings, return shareholders and 50%? Or returns could be lower than that?

I didn't get the question, is there...

Is there a difference between your wording about Burelle SA remaining, in any case, a return shareholder or your previous wording, which was that Burelle SA minimum stake would represent 50% of voting rights?

I mean, anyhow we want to remain the anchor shareholder of Plastic Omnium, so...

Maybe to it even more clearly, sorry, Félicie, I think it's important for us to have the control of the company.

Yes.

Yes. And I think it's even more important in this kind of market transformation, stability means to have the control of the company.

And long-term perspective, which is key to the stability of any developing business.

We have now a question from Antoine Bregeaut from Exane BNP Paribas.

I have a few as well. The first one would be on Greer. You've given an update. Could you maybe give us some indication now on the potential longer-term margins at these plants or particularly compared to group margin?

I mean first of all, what we say today that because of the great performance of the team, again, in this difficult environment, we have been able to breakeven already in the first semester, which is fantastic when we know where we are coming from. And that is due to everything what was done in terms of performance, quality performance, logistic, productivity. And that's really something which is due to the fantastic job our team has been able to do. That's important for me to mention that today. No, for sure, it's not finished, and we want to continue to increase basically the profitability in Greer because our target is not to have a big facility on breakeven for the longer period of time. And therefore, we are working on additional opportunities in terms of productivity. But also in terms of booking new business, we have been able to book new business to have a positive contribution margin because the great performance in Greer is creating right now free capacity, free industrial capacity to produce more. And therefore, it's not finished, and we are continuing to be willing to increase the margin in Greer, both based on productivity, but also more sales and more contribution margin.

Okay. On your cash, you usually have also a seasonality that has H1 lower than H2. With that very strong print, should we expect or is it fair to say that basically full year could easily grow higher than EUR 300 million?

I will hand over to Adeline. She likes to talk about cash.

You saw again the great performance of PO in H1 with limited investment and working capital outflow. As Laurent already stated, probably we will have a reverse effect in H2 with a significant increase in CapEx to reach the 5% of sales, I've already mentioned. And in the same time, probably an inflow regarding working capital that will compensate.

Okay. Very helpful. And last question from me. On your slide with customers, new customers, you have GM, new EV. Is it -- am I understanding well that this is on top of every contract? And if yes, is there still potential for further contract with GM in North America?

Our new customers, if I am right, and you -- I assume you're talking about the page where we have new customer gains, it's a combined platform from GM and Honda. Therefore, it's a GM platform. It's in the GM factory, but it's for Honda car. And we were already the supplier of GM for this platform, and we have been able to convince Honda as well to go with us. And therefore, it's written down GM. But the new customer is Honda here, but they are sharing the same platform. Are we able to further develop the business with the GM? That is our target. You know that we have been able to book business with GM some months ago, which will help us well our operation in North America, and we are targeting to continue to develop the business with them.

Sorry, if I wasn't clear. I meant the slide just before Slide 11, where you have General Motors New EV SUV. And I know in the past, you mentioned the [indiscernible] and potential for again for a new contract with them, is that basically in the contracts?

Yes, and which is great for us is that General Motors is willing to outsource the production of exterior parts in the -- in some of their factories in North America, which is creating a lot of opportunities for us. And the question -- the answer to your question is, yes, we hope it's not finished, and we will have further development with GM.

We have now a question from Peter Testa from One Investments.

I have 3 questions, please. Just on -- first one, just on the launch impact that you're seeing in H1 and then in H2 with the products to come. I was wondering if you could give some sort of context for how the launch impact compares maybe year-over-year or versus 2019 for more normal market in H1 versus what you expect in H2 in terms of revenue profit?

If I understand right, you would like to understand the number of launches we had, for example, in 2019 as a reference?

Well, just trying to understand the impact of launches because last year, you had a hiatus in launches because of the problem. A lot of things were delayed, shifted around inside the year. This year, things are running more at full steam and just trying to understand that as it comes on. And I know initially when you launch, it's not exactly the most profitable moment, but you build steam as you build volume and so on. I'm just trying to understand how that's phasing and high level of launch activity. So in H1 and coming in H2, how we should think about it financially?

I mean I like to have many launches because it shows that we are successful with the customers. And if the launches are smooth like they are right now, there is no negative impact to be expected on the margin.

And again, we are an industry of projects. Our business model is to launch projects in our existing factories, and that's what's part of our profitability to have successful launches as we did in H1. To say it differently, if I don't talk about the launches, but the number of projects, we have on a recurrent basis, we are developing 400 to 500 different projects a year. And after that, we have a dedicated process in place to launch successfully those projects into our 131 plants, and that's really the core model of Plastic Omnium.

Okay. And related to that, do you have a sense as to whether your market share performance or your performance versus market will evolve more positively in H2 as a result of launches or a result of the mix expected out of chip shortages?

Yes, the outperformance, I mean, it's -- today, it's very difficult for us to predict the outperformance because it's mainly -- the market is mainly impacted by the chip shortages right now. Therefore, it's not something we can anticipate what will happen in the second semester, which customer is going to be the most impacted in which region, how are they going to decide to develop their product mix because you know that our customers, they are also choosing which cars they prefer to develop or to produce and which car they prefer to stop. And therefore, it's really difficult to anticipate how could be our outperformance for the full year. We will outperform the market for the full year, but it will depend too much right now on the product mix, which is a geographic mix, which is again impacted by the chip shortage and also by the strategies of our customers. In the first semester -- to give you a bit more color, in the first semester, we have seen customers, for example, in Greer, we had no negative impact on production because their customer has decided to use all the chips they had to produce the cars they have in Greer because the margin is high in what they are producing there. They are the big SUVs. At the same time, they did impact their factories somewhere else in the world. Therefore, they are also taking some decisions which are impacting our turnover, but also our outperformance on the respective market, which we cannot anticipate basically.

Okay. And then the other question was on the hydrogen business. If you look at your order book discussions, can you give some sort of sense as the degree to which they are heading towards full powertrain discussions versus components or fuel tank discussions and maybe the extent to which you're seeing traction in Europe relative to what you've seen earlier?

Today, to make it simple, if we have a look on our order book, it's half storage and half is either system on fuel cell about. That means it's pretty balanced, sorry.

And mainly Europe.

And it's mainly in Europe today, what we have been able to book. Even if we have a business also in Asia, we have not announced right now, but it's mainly in Europe for the fuel cell business.

Yes. And if you look at the discussions that you're having, going on, is there a shift in direction or tone of those discussions between the storage versus fuel system?

No, what we -- I mean, we wanted to have a complete offering, and that is what Félicie did show you before. What we do see is for the passenger cars, they will probably continue to produce their fuel cell and to produce their complete system for a long period of time. That is the case of Toyota, Hyundai and so on and so on, the well-known players, I would say. From the other side, for the storage, they will go to the Tier 1 suppliers. And I'm pretty sure that the Tier 1 suppliers, the one being already in the industry -- in the automotive industry will be the winners of that. Therefore, for passenger cars, the storage system will be available, I would say. It will be a bit different for the fuel cell and for the complete system. If we talk about buses, if we talk about trucks, then it's different because we are talking to different kind of customers, sometimes customers operating fleet and not producing their vehicles. And here, they are willing to have a complete system supplier or provider. And therefore, for those, it will be the complete system. Our aim is to be able to offer everything to the customer because we believe there is an added value, first of all, to understand the system, and that is the way we want to position ourselves. But if we talk concretely about the coming years, again, storage is an open business for all kind of mobility system. It's much more today for the bus, the trucks and so on. For the passenger cars, at least not in the coming years.

We have now a question from Christoph Laskawi from Deutsche Bank.

Christoph Laskawi, Deutsche Bank. One would be a pretty long-term one and a bit of a follow-up to Thomas' question. Could you give us your take on the European Commission proposal to essentially -- which reads like a brand for combustion engines in 2035. Do you expect that to be altered? I mean it's still not ratified yet and not yet a law? Could you see PHEVs be included? And in case they would really go for an end of the combustion engine, which OEMs are partially targeting anyways? Would you consider running the fuel tank business as essentially rest of world ex Europe? Or would you reconsider owning that kind of business? That's the first question.

Which is already a very complex question for the first one, but I will try to do my best. No, but first of all, as you said, it's not decided, but it's a proposition, 2035. Is it going to be 2035, 2040? It doesn't change a lot basically because the trend is the same. And therefore, we need to anticipate that. Is it going to happen in 2035? I don't know. I just know that it is not the position our country, France was having because they wanted to keep as well the PHEV possibility in 2035. Is it the right decision to take to ban the combustion engine? I'm always struggling with the idea that we want to promote something positive, which is carbon-neutral mobility, by banning some technologies instead of encouraging and creating the condition for those new technologies to develop. Therefore, I think we all know the issue will be the infrastructure. The issue will be as well the cost of the vehicle because they are not affordable for most of the people. And therefore, the biggest risk I see or we see is that the market in Europe could suffer and that the volumes in Europe could be impacted by that because the decision of the politicians won't fit to the needs of the consumers and the infrastructure. Having said that, what does it mean for CES. For us, it means capturing all the growth opportunities we can capture right now, especially in Asia, in North America, but also in Europe because they are still. We are happy to be well balanced in terms of geography. You have seen that Europe is about 1/3 of this business. Therefore, 2/3 is outside of Europe with a different kind of approach of the clean mobility. And therefore, we will keep our operation in Europe and everywhere. We will adapt to the market situation. Adeline was mentioning before that we have closed the factory in Germany for fuel system. And if they are less to produce and there will be less capacity in place for PO, but again, we will be still present in Asia, like in Indonesia, where we are building up capacities right now. Our transferring capacities from current operation to new countries, where the electrification will take more time. And the focus will be for sure on cash generation and balance sheet exposure because we want to be ready in each kind of scenarios, even if it would further speed up.

Very clear. The second question will be more short-term one. You have highlighted that you expect essentially the same volumes in H2 as in H1. Would you expect the volatility in the volumes to decrease, which would allow for you to essentially run your production facilities more efficiently. And aside from that, when considering the second half, are there any costs which you currently are essentially pausing, which would reoccur in the second half moving towards a more normalized operation?

I mean to your first question, is it quick to be more smooth in the third and fourth quarter? We don't believe [indiscernible] because it's not what we are experiencing right now. Therefore, it's -- we are informed very -- always on a very short notice by our customers, and we have to adapt as fast as possible to their production schedule and when they stop their production, basically. Therefore, I don't believe it will be completely different in the second semester than in the first semester. We hope that Q4 should be a bit better than Q3, but basically the logistic, the supply chain will be still strongly impacted and the possibility to anticipate will be difficult as well in the second semester. To your second question, I'm not sure that I did get it. Maybe Adeline, you can help me.

On the cost side, no, there is no big difference between H2 and H1 in terms of cost reduction. Perhaps one quick comment in terms of comparison between H2 and H1. Usually, H2 is lower in terms of operating margin generation compared to H2 because again, we generate 55% of our sales in Europe, 25% in North America, and we have the impact of the summer shutdowns in those 2 regions, plus the month of December were some plants are also closed. So again, the comparison is not, in that extent, so favorable to H2, higher operating margin generation compared to H1.

We have now a question from Antoine Bregeaut from Exane BNP Paribas.

I just have 1 question on Slide 40 regarding your Clean Energy Systems. I'm not sure I understand well, you have a market share target of 28%, that's 2025, if I'm not wrong. And why would PHEV market share target be slightly lower to 25%? What's the reason for the difference?

First of all, yes, I confirm that the target is 28% market share coming from '22. Why the PHEV is a bit lower is because -- it's because of our customer mix, basically. As you may know, we are not very pleasant with Volkswagen in the CES business. And the share of the PHEV is pretty high. And therefore, the market share we have in PHEV is basically lower than the market share we have in the other -- in the traditional, I would say, technology. We will increase our market share in PHEV, but nevertheless, it will be a bit lower than the market share we have globally.

And the accessible market in PHEV is lower because as stated, the steel share is 12% for a conventional fuel system, and it's more than 30% for PHEV, the share of steel, I mean.

Okay. And a follow-up on that, does that mean that there's also a higher maybe growth opportunities still is a higher share?

In PHEV, that's the target, yes. But we are targeting 25% and trying to do our best. Apparently, there is no more question, which is good because it's the time we were scheduling to finish today. I really want to thank you again for your attention, for the number of questions we have been talking about today. Again, we are in a very difficult market environment, very challenging market environment, very difficult to predict to anticipate what will happen in the coming months in the transforming as well. But in this transforming market, we are very pleased about the performance. The team of Plastic Omnium have been able to deliver in the first semester. And we remain cautious as we are always. We remain conservative with the outlook on the second semester because it's not over with the market issues we were talking about today, but we remain very confident for the future of the company because we have everything in place to overperform the market in the coming years. Thank you again for your attention. Thank you, Félicie and Adeline and have a nice day.