Valeo SE (FR.PA) Earnings Call Transcript & Summary

Good morning, and welcome to Valeo's Capital Market Day. Thank you for being here with us today, either in person or remotely. Today, we're going to share with you Valeo's trajectory till 2028. We're calling this next step of our evolution, Elevate 2028 and will be powered by 3 engines. I will come back to it in a minute. It's a journey that we have already begun. The first engine is about steadily increasing our profit. We have been delivering increases in profit since 2022, and we are committed to continuing on this path steadily. The second engine is about consistently generating higher levels of cash. And for us, 2025 has been a turning point in generating cash. The outturn this year is simply the highest Valeo has ever achieved. And this is not a one-off. This is not the one-off. We know that we have the ability to continue structurally generating higher cash because and I will show it later on, because we have transformed our business model to do so. We're spending less on CapEx. We're spending less on R&D, and we are increasing our profit. The third engine, and this is very much expected, is about returning to growth, and we will return to growth starting in 2027. And we have, as you know, a full order book. This order book is increasingly made up of large orders with longer lead times, but with also longer duration. Many of these orders will kick in shortly with visible impact in 2027. This is why our sales will grow again from 2027, and they will continue to grow in the subsequent years. Delivering superior growth, it will become clear to all that we have become a global leader, very well positioned for success. Valeo is increasingly recognized in the industry as the preferred technology partner in a major transformation currently undergoing in our sector. Our technologies are absolutely suited, perfectly suited to the needs of our customers. Perfectly suited to the car of tomorrow, which, as you know, is increasingly electrified, which is safer and which is defined by software. We're also very well positioned to seize the opportunities in the key producing geographies. This is where the trajectory will take us. In 2028, we're aiming to achieve total sales between EUR 22 billion and EUR 24 billion and operating margin between 6% and 7% and a cash generation of over EUR 500 million after interest in the new definition that Edouard will introduce later. And of course, a leverage ratio that will be lower than 1x our EBITDA. Our ambition is that our financial KPIs will qualify us to be rated investment grade in 2028. Of course, we're basing these targets on some assumptions, and you will see these assumptions here displayed on the screen. These assumptions are, in our mind, reasonable. They are based on the latest S&P Global Mobility forecast. First, for Global modules, we have assumed a 3% decrease as compared to S&P assumptions. So this morning will be 2.5 hours together, including an hour of Q&A session. Before presenting our Elevate 2028 plan in detail, let me first give a first quick recap of our previous move-up plan that remember, we launched in early '22. As you are very much aware of, the environment that we faced turned out totally different from the one that we had envisioned at its launch, a very unfavorable global market and powertrain mix, especially in Europe. A very unfavorable customer mix as well as Chinese OEMs grabbed a much larger market share. And of course, many, many, many headwinds. It has been an unbelievably challenging 4 years for the industry and for Valeo. And for these reasons, it's, I believe, no surprise to anyone in this room that 2025 sales have come at a level below what we had expected at the time. The 3 factors that I've just shared with you, together with foreign exchange variations explain almost 100% of the missing sales. The volume explained for a negative EUR 1.9 billion. The customer mix had a negative impact of EUR 2.1 billion. The powertrain mix had a negative impact of EUR 2.1 billion, mainly due to high voltage, but as well to the 48-volt technology that did not develop as planned. And foreign exchange rate and others represent EUR 900 million of gap, mainly coming from Asian currencies. But in spite of this extremely challenging environment, we have been steadily improving our profit and our cash flow since 2022. Our operating margin has tripled in value since '21, and our free cash flow has more than doubled since 2022. We are also revising up our free cash flow guidance for 2025 to slightly above guidance, so more than EUR 550 million in the current definition. We'll come back to it later on. It took a great deal of proactive management and discipline in the execution. And I would like to thank all the Valeo teams for their achievements. We've managed to reduce the cost across the board while preserving the capacity to innovate. And I would like to run you through the actions that we have taken. First, we have maintained a very strict price discipline at all times. We have systematically obtained good levels of compensation from our customers for the impact of inflation, for the tariffs, for the reduction of volumes in their programs. And at the same time, we have always only accept good orders with good margins. And we have secured improved productivity from our supply base. In total, we have allocated EUR 400 million to fund our so-called self-help measures. We have adapted to the new volumes, and we have reduced our headcount by 10,000 FTEs, and we have cut our industrial footprint by 34 industrial sites over the period, 34 industrial sites. We have as well adapted to the new customer mix by repositioning in China. 65% of our orders in the country in H1 came from Chinese OEMs versus 50% of our revenue in China for the same period. Our order intake ratio in H1 '25 with the Chinese OEMs will be 3x OE sales, 3x OE sales. And finally, we've created power. We've created the power division to be flexible, to be ready to adapt to a diverse energy mix to offer a unique portfolio of products and a very full system. And this is so important to be able to smoothly manage inside power the transition from ICE to [indiscernible]. Let us now turn to the future to elevate 2028. And I will start with the first engine. The first engine that's pouring us on this trajectory, steadily increasing profit. And you saw a moment ago how our profit has improved since 2022. I'm confident that our profit will continue to increase each year step by step, reaching between 6% and 7% in 2028. And we'll achieve this through the same exact levers, right pricing of our technologies, further improving our gross margin and reducing further our breakeven point. First, right pricing our technology. Of course, I'm not very vocal on this topic outside of Valeo, as you can imagine, for obvious competitive reasons. But this is a very important point in our policy. First, we do not go for business that does not meet our margin expectation. We're very disciplined. And it has been a real change of mindset in the company since 2022. There's no good reason to accept a bad business, calling it a strategic win, filling up a plant, counting on a later price adjustment. All these are just bad reasons. Since 2022, we have proven again and again that we can win business that has a higher margin. And by doing so, we have managed step by step to increase the profitability of our order book. Second, we have been rigorous in securing compensation from our customers for tariffs as well as for reduction in program volumes. Our customers understand they've been willing to negotiate with us just because this is a fair business practice. And third, we have secured increases in productivity from our supplier base. And the rule we have is very simple. The rule has been not to concede any price reduction that has not been fully funded either by our own cost improvement or successfully passed on to our supplier base. We ensure that the impact of price pressure is fully shared across the supply chain. Improving gross margin now. We're committed to maintain our gross margin sustainably above 19%, and we will achieve this by further improving the industrial performance of our sites and by the widespread use of our AI technology in our plants. Some factories are starting to turn entire production areas into so-called light of zones, which means no human is needed to support the production process. AI is widely deployed, for instance, for big data approach for predictive maintenance or for quality control. Next, reducing our breakeven point. In 2024, we have announced a series of one-off self-help measures. This plan is almost done. EUR 400 million were allocated to cover its costs, and it will generate EUR 300 million per year of savings as of 2026. Going forward, we plan to allocate EUR 100 million per year for self-help measures. Combined, these self-help measures are expected to add 1.1 points of operating margin improvement. The second engine we are counting on in Elevate '28 is higher level of cash generation. And we see 2025, as I said, as a real turning point for the group in terms of our structural ability to generate cash consistently and structurally. For 2025, according to our current revised guidance, our operations will have generated EUR 700 million to EUR 800 million before one-off restructuring and before interest. After one-off restructuring and before interest, we will have generated slightly more than the EUR 550 million. And we are aligning our definition of cash flow with current market practice, which means that we'll be reporting free cash flow after interest. Under this new definition, we will have generated more than EUR 300 million this year. Let's come back just a minute on the figure of EUR 700 million plus before one-off and before interest. This is the free cash flow generated by our operations. And that figure is nothing short of a record for the group, which we have never achieved previously in our history. This ability to generate historically high levels of cash is now the norm for the group. We expect to generate even higher level of cash over the period '26, '28. And why? Because we're transforming the business to generate more cash structurally. We're delivering higher profit. We talked about that. CapEx spend will be structurally reduced to between 4.5% and 5% and reduction of our gross R&D spend compared with 2024, which I see as being the peak of the R&D cycle. We're managing to reduce permanently our CapEx spend. Firstly, we maintain, of course, the policy of reusing equipment. It means product standardization. It means reusable workstations by design. But secondly, by increasing the intensity of our production facility by 20%. In other words, fuller factories and by making sure that our supply base is best-in-class in terms of pricing and in terms of cost. R&D. Our R&D has been too high. Over the past 10 years, it has gone up twice as fast as our sales. This had to stop. Our gross R&D spend has already been reduced by EUR 200 million in '25 and will not increase anymore. We will do so without impairing our ability to innovate and to win new orders. And how do we do that? Greater use of standard products, further rationalization of our footprint as part of our self-help measures. But by going full speed ahead in applying AI to our R&D, AI is the game changer for R&D. And as part of our partnership with Google Cloud, 100% of our software engineers today are already trained and equipped for AI-assisted coding. Already today, 25% of our certified codes are generated by AI. On top, we have a collaboration with AWS, which allows us to reduce our ECU development times by more than 40% because we have getalized hardware lab. And when you reduce cycle time, you reduce cost. And we are working with partners as well for the next steps for generative designs with Dassault Systèmes on mechanical parts and for generative design on PCBs, on electronic PCB with companies [indiscernible]. Finally, through our AI for -- all program, we have developed already 84 AI agents to boost the R&D efficiency. Thanks to the actions I've just set out, in 2028, we aim to return to investment-grade rating. We expect to be able to reduce our leverage to less than 1x EBITDA. This, while still being able to maintain a progressive increase in dividend per share and our financial trajectory does not assume any acquisitions or disposals. But of course, any potential opportunity would be strictly reviewed on the value creation and balance sheet criteria. Last but not least, the third engine, the one that you expect as well. The third engine in our trajectory, the return of growth from 2027. Having seen a strong order inflow from '22 to '25, we are expecting several of these large contracts to go in production and now convert into sales as of 2027. While we expect '26 to be more or less flat in terms of sales, we are confident of seeing a return to growth in '27 with further growth in the subsequent years. We now expect revenue between EUR 22 billion and EUR 24 billion in 2028. As you know, between '22 and H1 '25, our customers gave us a very large cumulated amount of orders, representing 1.4x our OE sales. This is a very clear demonstration of customer recognition, recognition of our technologies, recognition of our competitiveness. With the strong order books, we will return to growth. And this growth will generate a change in the group because we have 40% of the orders that are with the [indiscernible] divisions, which currently represents 25% of our sales and is as well the most profitable division, Power representing 35% of the order book and light 25% of the order book. Well, I have been thinking about what examples I could give you to justify our confidence about future growth prospects. And I've chosen 4 examples from the largest businesses Valeo has won since 2022 to justify this confidence about our future growth prospects. Of course, I cannot give you the name of the customers. I cannot give you the programs, but these are concrete examples showing how valuable these contracts are. I'm going to show you 4 contracts, and they share the same characteristics. They are large with a value of more than EUR 1 billion each. They are multi-models, and multi-models means longer ramp-up and also longer duration. The first example you have on the screen just went to SOP. It's an order with more than 30 models and 8 million [indiscernible]. The volumes that we have assumed for the purposes of our projections are S&P minus 3%. And this is represented on the green bar on the screen, where the customer volumes are the gray bar. And this shows very clearly the impact in both '27 and '28. The second example now, again, we're talking about more than 40 models and 8 million units. And then you understand why it takes time. Now the third example on the screen. And now the fourth one and the last one, supporting continuous growth in '28 and beyond. This is happening, thanks to the leadership we have on the key technologies and the technological edge that we have. The [indiscernible] tomorrow will be electrified. It will be safer. It will be software-driven. It's the only way to meet the decarbonization of our sector and the improvement of road safety, especially at night. These are the major challenges of our industry, and each of our 3 divisions is perfectly positioned to respond to these challenges. You will be hearing later this morning from each of the 3 division CEOs in more detail. Supporting the 3 divisions is as well, I want to talk about it, our very important service activity, more than just a business dedicated to serving the aftermarket, Value Service has gradually transformed into a true service company. Value Service has launched new services such as Value Tech Academy with a training program, providing maintenance. We have launched as well reman and repair solutions for electrification and ADAS technologies. We're also looking to apply our technology to a broader range of related applications, both in the field of mobility and more widely. Examples include 2-wheelers, 3-wheelers, charging stations, data center cooling systems, agriculture off-road trucks and some defense applications. These applications require only minimal additional R&D as they are easily derived from our existing automotive technology. One of the key drivers I want to talk about of the future growth is as well our growth in key geographies. And I'm thinking particularly of China, India and North America. Of course, there are interesting growth opportunities in many other regions, but these 3 each merit a deep dive. And let me start with China. We've paid particular attention to the Chinese market. As a result, we are regaining momentum. We see a return to growth in that market as of early H2 '26 and return to outperformance from 2027. our positioning, our repositioning efforts with Chinese OEMs are showing results. The Chinese OEMs are, as you know, representing 68% of the market in China, and they account the Chinese OEM for around 50% of our sales in the country in H1 '25. But as you know, 65% of our orders in the same period. We have achieved significant commercial successes in the recent months. And these successes also include key wins in electrification, which is so important as 2/3 of the global electrification volumes are in China. I often say that China is the fitness center of the industry, the highest level of innovation, the highest level of speed, the highest level of competitiveness are there. And our teams over there are doing a fantastic job there in line with the standards there, they are empowered for innovation. They're empowered for speed. They're empowered for competitiveness. Just a few examples. We developed a new headlamp in just 7 months from kickoff to SOP. We know how to do that. And all the best practices that we learn and we develop in China benefit the group across the board. What we learn there enable us to offer, for instance, in OBC and onboard charger that's much better in terms of packaging and cost. So our experience in China makes us stronger globally. If you can succeed in China, you can succeed anywhere, thanks to what you learn in China. A word about India. The Indian automotive market is set to experience significant growth in the coming years, and we are ready to take full advantage of that. We see ourselves tripling by 2028 to approximately EUR 700 million. This market is undergoing a profound change. It's growing by 5% per year. Cars are increasingly technological, increasingly electrified and equipped with ADAS. And a good example is the Mahindra Born EV for which we are the trusted powertrain partner. Regulation is also pushing the Indian market in the direction of more ADAS, and we are ready. [indiscernible] has opened a new production site in Sanan that is ramping up very quickly. Word on North America. It remains one of the largest of the most profitable and the most dynamic market in the world. And it will be for us a more and more important market for our future growth. We expect to grow faster than the group average in North America. It's a market more and more driven by technology, which is our core strength. We are a technology leader in that market, and that market is becoming a high-tech market. We capitalize on a solid position in traditional technologies. We're #1 in torque converters, #1 in 48 volts, #1 in lighting, #1 in wipers. And we're also leading this transformation in ADAS and SDV. We are the clear leader in sensing technology and in high-performing computers over there. Our customers recognize that. We have been and we are the GM ADAS Supplier of the Year for the third year in a row, and we are deeply connected to the U.S. tech ecosystem. Usually, in this kind of meeting, we talk mainly about financial performance. We talk about technology, we talk about geographies and not so much about people, not so much about culture, yet this is probably the most important point to talk about. I would, of course, like to pay tribute to our teams. I'm very fortunate as a CEO to be able to rely on them. But ultimately, the key to success is culture, and we're working very hard to create a strong culture within the Valeo Group, a culture that's suited to the rapidly changing environment that we have. This is what I call the way we are. We're agile. We act with courage and we stand as one. And these are not just words. I believe that living up to those behaviors is what makes us different, what gives us an advantage, especially in this extremely complex environment like the one we're facing. And if you have any doubt about that, just ask our customers what they think. They will confirm. We continue to operate with the same commitment in sustainability. It's very much fundamental to our business model. And you can see it in the way we have integrated the environment into our thinking, the way we relate to our people, the way we contribute to society and the world. At Valeo, we are driving change together. And this is our new signature. Well, thank you for your attention. I will now hand over to the CEOs of our 3 divisions for a deep dive into our business. First up is Xavier DuPont. Xavier is CEO of Valeo Power and Group Executive Vice President.

Thank you, Christoph. Power. Power has been at the forefront of the electrification revolution. And joining our thermal and solutions is a major break in terms of Valeo approach for the market demands. So good morning, everyone. We are continuing to focus on 2 core pillars. First is achieving our structural profitability. Second is executing ambitious market capture. The evolution of the electrification market is not entirely a smooth path. In 2021, 13% of the global car production was NEV, new energy vehicle, meaning that 13% of the cars were plugging range extender equipped or fully electrified. In 2024, we were already at 20%. Of course, this is not the expected speed of penetration, but the momentum is there. And for the Power division, this evolution represent a real opportunity for 2 main reasons. First, as you can see on the graph, the value we can propose with our NEV solution is increasing significantly. Second, the resilience of the combustion engine market. ICE still represent close to 70%, of the production in 2028. Indeed, even plug-in hybrid retain a combustion engine. This allow us to benefit from our very strong market share with a good cash generation. Valeo Power can more or less triple its content per car between combustion engine and NEV ones. Clearly, the current market is a real opportunity for Valeo, namely as a result of the change in our organization. Our new organization is fully aligned with the megatrends of the relevant market since it is fully regional centric to respond to the specific requirements of our clients in each key regions and agile and flexible with a strong reduction of our cost as a result of the merge of the former powertrain and thermal business groups. This has meant reducing our footprint starting in 2023 with 14% reduction of our headcount across our R&D and production centers. Power has now a leaner and more responsive organization. And operational since mid-2024, this new organization has already demonstrated its capacity to win new strategic business, thanks to first, the reduction of our cost. Second, the rationalization of our product portfolio; and third, the increase of our competencies and workforce in China. The positive impacts of the past 2 years of reimagining our organization and approach are being felt today in our operation. We did an amazing job, really amazing job in the reorganization. It was done quickly and without any supply chain disruption. We have now 60% of our headcount in low-cost countries versus only 48% in 2023. Our gross R&D expenses has been reduced by 22%. It is now organized in the regional approach and is increasing the use of the AI. And last but not least, we reduced our SG&A cost by 20%. Our teams are also working with a great enthusiasm, a great energy to adapt our product offer to respond to the specificities of each region and especially for the Chinese market. But before touching specifically on China, let's have a quick look at our extraordinary product offer at Power. Don't forget, only a very few Tier 1s are able to propose both thermal and drive system solution. And as the electrification market evolves, it is becoming more and more obvious that these 2 domains are totally complementary. We focus on delivering integrated, efficient and low carbon solution for the future. This means solutions like the dual layer HVAC for the cabin comfort, our compact and silent electric axle with efficient inverter and motor or our solution for safe and light battery packs. Our integrated system approach supported by our intelligent global heat and energy management with at its core, our smart heat pump truly differentiates Valeo Power. These synergies between [indiscernible] and thermal solution present an incredible advantage to improve the performance of the NEVs while at the same time, permitting a more competitive offer to our clients. And it is exactly what we are able to propose to our clients, and we are hearing their feedback, which is very positive. So [indiscernible] are working to match its product offering to Chinese market -- sorry, to Chinese market constraints. Which constraint are this. First is price. Second is time to market. And these 2 constraints are, of course, linked. Developing a product in 12 months in China means lower development cost in Europe and in the U.S. The OEMs continue to develop over periods of 13 to 14 months. The priorities I gave to our sales and R&D teams are now showing tangible results. Our Chinese customers recognize our effort, 38 Chinese SOP in the last 18 months. order ratio on sales above 3 in China, time to market below 18 months. and projected sales growth in China for Power is above 14% between 2024 and 2028. These successes push Power to be more ambitious. And thanks to a very short time to market, we are ready to move quickly to propose to our U.S. and European customer what we have learned in China with our Chinese OEM. And it is crystal clear that all our OEMs are interested with what we have learned. This will help us to rebalance our sales both in the regions and in relation to IC technology versus e-technology. And as you can see on the slide, Power will advance from 25% to 40% of our sales in e-technology between 2024 and 2028. The [indiscernible] division is more diverse and resilient than ever, adapting perfectly to market demand to meet the specificities of each part of the world. The electrification journey is exciting, but of course, with a lot of twist. In these conditions, it is good time to take to be sure that our strategy we have developed during the last 2 years is the right one. On this slide, you can see our evolution. 2024, a new organization now agile with a reduction of our hierarchical levels. It was a year of the low-hanging fruit benefits. 2025, empowerment is given to the region, strong reduction of our central R&D cost, all litigation customer situation closed, return of the order intake and of the profitability. It is a year of the deep transformation. Next year, 2026 will be a pivotal year towards sales profitability coming from our reorganization and allowing us to have a sustainable baseline for our future. 2027 and beyond, growth is back, and we will fuel our new ambition in terms of sales, EBIT and cash. So I am strongly and personally convinced that my team is doing the necessary job to remain a leader in the dry and thermal businesses for the years to come. Now let's conclude with our power financial path as nothing speaks better than numbers. In terms of growth between 2024 and 2028, you see the controlled chosen growth, bringing a new step of profitability. If we are cautious in terms of sales evolution, we have strong business ambition, but we know from experience that the market is quite unstable. Nevertheless, we have now the right organization to be able to commit today to doubling our operating margin between 2024 and 2028. So thanks for your attention. Now I will hand over to Marc Vrecko for another exciting [indiscernible] journey. Thank you.

Thank you, Xavier. Good morning, everyone, both here in Paris and connected remotely. I am glad to have the opportunity to present the Brand division positioning and prospects. And in a world industry moving rapidly, you will see our role is changing. So our journey is also about reinventing who we are and how we contribute to this industry. To start with a few facts and figures. Brand division is a multi-regional leading player. We are present in all regions with R&D site and test tracks to develop our products next to our customers, with manufacturing site to ship our products within the region or within the country. And because of a crucial position held by the Chinese market and industry, it is important for us to have a strong footprint in China. For over 2 decades now, we have had full coverage, development, testing, manufacturing in an autonomous way. 100% Chinese team, no [indiscernible]. Of which 1,800 R&D engineers are fighting in this highly competitive market day after day. If China is a fitness center of the automotive world, we are really in the gym day after day, ready. Now coming back to the global picture. Over the last 3 decades, we have built what we believe is the broadest products and solutions portfolio in the ADAS and interior experience domains. To do so, we have invested heavily and continuously while making choices and ensured we would bet on the right technologies and the products which will respond to future market needs. As a result, we see order after order talking to our customers and partners, but we have succeeded in positioning BRAIN at the really heart of our customers' interest. Here, you see on this slide the outcome of official yearly polls conducted at each edition of the CES in Las Vegas. In 2025, the result is striking. The 5 most mentioned areas of interest and focus are directly related to our business and connected with what BRAIN is about. This alignment, which, by the way, doesn't come by chance, is key since it drives our relevance in the markets versus our customers and partners. Now in an automotive world with overall volumes tend to be flattish or with marginal growth at best. Our ability to grow is absolutely directly linked to our ability to increase our value contribution per car, the content per car. This is what is happening in the ADAS space and which you see on this slide, where penetration of driving assistance systems in incremental levels from L2 to L2+ and ++ is growing very fast. Each level allows us to increase our content per car in a very significant way. It triples from L1 to L2, tripling again from L2 to L2 plus. And this is not the end. This is further reinforced by the progressive introduction of centralized architectures in our customers' lines, be it domain controller-based architectures or central compute and zonal controller based ones. By 2030, over 43% of global vehicle output will be fitted with one of these central architecture solutions. And in the last 3 years, we have taken key positions in this market for customers across the globe, leveraging our deep understanding of complex and large electronic boards, our expertise in cooling inherited from our thermal solutions expertise within the group and our deep understanding of the electronic components ecosystem as one of the top buyers in the automotive industry. To concretely illustrate the core importance of this evolution for us, SDV-related contracts represent 1/3, I say 1/3 of our global customers' orders backlog. Now contrary to everything you might have heard about OEMs doing much by themselves or SoC players able to act as Tier 1s, the opposite is actually happening to us. Our industry is becoming more and more complex, and our OEMs feel the need to get supported on a one-stop shop basis for a growing part of their lineup. We are actually acting as a simplifier, an aggregator, an integrator, the ultimate trusted partner coordinating for them the entire cycle of development from writing detailed specifications to managing the whole ecosystem of vendors and partners involved in this journey right up to the pre-homologation and certification of cars before SOP. This is called turnkey programs. And only a few Tier 1s are able to offer this kind of service in a credible way. The ultimate ability to orchestrate global multi-models, multi-SOP program is an absolutely key requirement for a flawless execution. We are definitely credible in this new role. And to concretely illustrate this, over half of our global brand orders intake this year is being awarded on a turnkey setup. And here, you could argue and ask me, so what? That's a good question. What does it change for us? Surely, a lot in terms of customer intimacy, as you can guess, ability to better understand from the inside what our customers want and need. Installing ourselves together in a long-term relationship, in other words, into a partnership and probably a lot in helping us to be in position to better present, adapt and introduce our products, our global products to these customers. Credibility here also comes down to our ability to integrate strong ecosystem tech players with whom we have over the years built dense and deep strategic partnerships. Just to name a few, Mobileye, with which through a decade-long partnership, we have brought to life 23 joint customer programs, encompassing hundreds of models. This leads us to become their biggest Tier 1 partner today. Qualcomm, with which our historical partnership in telematics has expanded into ADAS and infotainment, leading us to propose ready-to-use solutions to our customers such as the [indiscernible] Qualcomm pre-integrated ADAS and advanced driving reference platform. And of course, in our Chinese ecosystem, our strategic partnership with Momenta, combining our strengths to serve key automakers in China and abroad with agility. I could go on with many other examples, either from our traditional global ecosystem on the top right or from a Chinese ecosystem on the bottom right, which we are building and developing with determination. To wrap up with sales and profitability outlook. We foresee for 2028, thanks to incremental start of the large programs awarded globally, sales ranging between EUR 6 billion to EUR 7 billion. Profit-wise, thanks to disciplined execution and the better margins of these new programs, we foresee an operating margin ranging between 7% to 8%. By reinventing our role as a Tier 1, we aim to deliver superior value to our shareholders. Thank you for your attention, and I will leave the floor now to Maurizio for LIGHT division. Thank you.

Good morning, everybody. I'm happy to share with you the road map of LIGHT Division. LIGHT division. Light division has a bright future as we have very innovative product, creating perspective to grow. And we have also a solid and attractive business. 2025 has been a quite intense year for us with a lot of launches. And to give you a flavor of what we did, let me share a short video showing some of the latest products we have launched in the market during the year. Video, please. [Presentation] Nice isn't it? This is the visible part of our business. The one you don't see is the know-how to bring to the market this sophisticated product on time, on cost and with the right quality. All this for the success of our customers. And we are a very respected partner by our customers. We are very proud of it. LIGHT, in a few words, [ 2 ] activity, lighting system and wiper systems. In lighting, we design, manufacture front [indiscernible], central panel, rear lamp, stop lamps, illuminated logos and finally, interior lighting and near field projection. In wipers, we design and manufacture wiper motors, arms, blades for front and rear and sensor cleaning system. In 2024, our total sales have been EUR 5.6 billion. And with 31,900 employees, 42 production sites and 20 R&D center, we are a true global player, well established in all the regions worldwide. You can see the detail and the distribution of our site on the screen. We are constantly adapting our production capacity to our customer footprint with a local-for-local approach. We are as well adjusting our R&D footprint with massification of our innovation and development team in Asia. Our business is truly fed by innovation. That's why during 2024, we have registered 404 new patents, 404. At LIGHT, we are looking at a growing market with a projected CAGR of 4% between '24 and 2030. Starting at EUR 28 billion in 2024, reaching EUR 31 billion in 2028, and further to EUR 35 billion by 2030. The growth of the market is the combination of two factors. First, our traditional core business remain very, very solid with a growth of 2.2% in the period with content increase. Second, new technologies with rapid content and take rate increase supported by our growth engine. For instance, sensor cleaning linked to the acceleration of the ADAS is seeing a remarkable 97% CAGR. As well, front central [indiscernible], near-field projection are experiencing strong growth at 23% and 43% of CAGR, respectively. Even smaller segments like logo and interior lighting are contributing significantly with a CAGR of 28% and 13%, respectively. But what does it mean for us? A substantial increase of the average content per [ car ]. We anticipate this to grow from EUR 320 over EUR 400, representing 1.3x increase. This data certainly demonstrates the promising future of the LIGHT market, driven by innovation and evolving consumer demand. LIGHT division is mostly agnostic to the automotive trends such as electrification and autonomous drive. But for sure, they represent additional opportunity for us. Our main drivers are reflected by customer expectation, looking for more style, more performance, more safety and sustainability. Let's see style at first. Style is obviously very important for the carmakers. Our innovation are designed to strengthen car design, brand image and signature. Also, as electrical car tends to look very similar, this creates the need to differentiate and reinforce the brand identity. And lighting is also adding value. It is the new chrome of the car, highlighting the design, highlighting the brand with illuminated logo. On top of the style, thanks to our digital lighting, we are giving the opportunity of personalization to the final user. For instance, it's possible to choose welcome scenarios or other options. Think about the illuminated central area, or near field projection and dynamic ambient lighting. These are not just functional. They are integral to the vehicle's identity and the overall user experience and the car design. Then there is the performance. This is the backbone of our activity. Since [indiscernible], we have improved the performance of lighting and wipers, reaching an unprecedented visibility at night or in bad weather condition. Now it turns to advanced functionality. For instance, our interior experience, communication and interactive system are tailored for smart and connected cars, thanks to our electronic and software know-how. Feature like smart defrost or miniLED displays are not just about advanced technology. They are about providing a seamless, intuitive and high-performing experience that meets the evolving demands of the modern drivers. And let's talk about safety. That's always been in our DNA, C and be seen. Our advanced product like advanced driving beam or high-definition lighting system, combined with sensor cleaning and [ AquabBlade ] technology ensure perfect visibility for both the driver and the ADAS sensor. We are not just illuminating the road. We are actively enhancing the safety of every journey, making the driving safer for everyone on the road. Finally, sustainability. We are dedicated to reduce our environmental impact. Our focus on low consumption and lightweight solution, along with the use of green material, directly contribute to reduce CO2 emission. Innovation like the sustainable thin lead module and the 3D printed wipers arm are showing our commitment to eco-friendly practices, ensuring that our products are not only advanced but also sustainable. In conclusion, our product strategy and our innovation, they are perfectly aligned with the market expectation. LIGHT is a world leader in lighting, wipers and sensor cleaning system, and we are growing fast in China. To give you some figures, we have an order intake sales ratio of 2 with Chinese OEMs, reflecting our future growth with them. We have also a track record of 69 cumulated launches in 2025, 69 cumulated launches, 35% more than previous year. And finally, addressing China means being at the right speed. And we have adapted our development time. Today, we are able to develop projects in 6 to 9 months in China, from business award to start of production. And as you can see in the picture, some recent launches for lighting and wiper system in China. Referring to the financial statement and the perspective of LIGHT division, the figures show our performance and the future potential. On the sales, we target to grow and to outperform the market. On profitability, we have a target to reach a minimum of 6% to 7% operating margin in 2028. This is consistent with our present track record, consistent with our growth trajectory and with our commitment to continue to deliver strong financial results. We are very confident in our ability to deliver the plan. Thank you very much for your attention, and I hand over to Edouard de Pirey.

Thank you, Maurizio. Good morning to all of you here in the room and to those who are logged in remotely. Thank you very much for being with us today. Over the next few minutes, I'm going to take you through our Elevate 2028 financial trajectory. This will be the last presentation before Christophe's concluding remarks, after which we'll be opening up for Q&A. I start by giving you an update to our guidance for 2025. As you have already seen from Christophe's presentation earlier, we are confirming our 2025 guidance for sales, EBITDA as well as operating margin. We're also raising our guidance for free cash flow. For sales, we are looking for a level at around EUR 20.5 billion for the full year. As you remember, when we announced our Q3 sales last month, we said that we expect Q4 to be the same order of magnitude of Q3, in other words, around EUR 5 billion. For adjusted EBITDA, we are still expecting to come in, in the range of 13.5% to 14.5% of sales. For operating margin, we are also sticking with our guidance range of 4.5% to 5.5% of sales. We do expect operating margin to be better than H1, and for the record, H1 operating margin stood at 4.5% of sales. Lastly, for free cash flow, we are revising our guidance for free cash flow after one-off restructuring cost to slightly above EUR 550 million, so slightly above the upper range of the guided range. Three factors are mainly at work. On the one hand, strict discipline on both EBITDA and investment spend. Second, a higher-than-expected tax impact. You remember, following our decision to repatriate additional cash from the non-euro regions since H1. So EBITDA and less investments, more tax. And third, lower-than-expected one-off restructuring costs this year, thanks to cash out over time being more spread out than what we initially planned. We are also maintaining our guidance for free cash flow before one-off restructuring costs in the range of EUR 700 million to EUR 800 million. So moving to the next slide and going forward in terms of providing guidance to the market, we will, from now on, focus on 3 main indicators. As in the past, we'll be continuing to guide on sales and operating margin, which I remind to all of us, it corresponds to the operating income before other income and expenses and before net earnings of equity accounted companies, so before JVs. We will also continue to disclose adjusted EBITDA, though we will no longer be guiding on this indicator. Most importantly, with regard to the free cash flow, we'll now be using a more standard definition for guidance purposes, which is free cash flow after interest. You can see here a more detailed breakdown of our full year '24 numbers showing this new definition of free cash flow. As you can see, there is essentially nothing new. The numbers are already fully disclosed in our financial statements. That said, I would nevertheless like to highlight one thing specifically, which is the amount paid for leases at EUR 135 million in 2024. You will note that we record the amount in the investment flows and hence, within the free cash flow, contrary to a number of our peers who record this within the financing flows. Other than that, you will recognize the same figures of EUR 550 million and EUR 481 million for free cash flow before and after restructuring costs that we previously used as a basis for our guidance. Under the new definition, the key figure for guidance purposes becomes EUR 247 million, once we take into account net financial expenses of EUR 234 million. So turning to the next slide. Our divisional reporting is also going to evolve. Starting from full year 2025, we now report the operating margin per segment on top of the adjusted EBITDA. To help you in your modeling, we have provided you in the appendix with the breakdown by division and by half year for '24, as well as for H1 '25. Based on full year 2024 figures, you will note that the difference between operating margin and adjusted EBITDA as a percentage of sales is relatively similar between POWER and LIGHT. That difference is more pronounced for Bahrain, reflecting the higher R&D and CapEx spend and hence, the resulting higher [ D&E ] intensity, which is necessary to support the growth prospects of the division. Moving on now to the [ Elevate ] 2028 financial trajectory. We are naturally setting our objectives for '28 for the 3 main indicators that we will be guiding on in the future, namely sales, operating margin as well as free cash flow under the new definition, meaning after interest. For 2028, we are targeting sales between EUR 22 billion and EUR 24 billion, compared to EUR 21.5 billion in 2024. Operating margin between 6% and 7%, compared to 4.3% in '24. And free cash flow after interest greater than EUR 500 million, effective more than double the level recorded in 2024. I want to take now a deep dive into each of these KPIs, starting with sales. As I said, we are aiming to achieve total sales in '28 between EUR 22 billion and EUR 24 billion. We have shown the assumptions on which this is based at the bottom of the slide, and Christophe commented on it a bit earlier. We believe those assumptions are reasonable. We have taken the assumptions on market growth from the last October '25 S&P Global Mobility Report. For our own planning reports, we have applied a conservative margin of minus 3% to those global production volume forecasts. We have used the following exchange rates as of October this year for all conversions into euros, the U.S. dollar at [ 1.17 ] and the [ Chinese yuan ] at [ 8.42 ]. We are not currently expecting the sales trajectory to be linear. We see growth resuming in '27 after flattish organic sales in '26. More specifically, for '26, we anticipate perimeter impacts of around EUR 150 million negative, following the completion of our EUR 500 million disposal program that we expect to conclude by the end of this year. We do expect growth to resume in '27 as orders we have booked in previous years go into production. Christophe has already shown you how this will work with contracts booked between '22 and '25 that will drive increases in sales from '27 onwards. I'd like now to take a look at our sales objectives broken by division. For POWER, we are aiming for sales of between EUR 10.5 billion and EUR 11.5 billion in '28. As [ Xavier ] explained, electrification will be the main growth driver with increased electrification also leading to increases in our potential value contribution per car. For BRAIN, we are targeting sales of between EUR 6 billion and EUR 7 billion in '28. As Mark explained in his presentation, we are expecting growth to be accelerating from '27 onwards, fueled by large new orders for ADAS, as well as for software-defined vehicles. As you have seen earlier, BRAIN already accounts for 40% of the cumulative order intake over the period spanning from '22 to H1 '25. Finally, for LIGHT, we are forecasting sales between EUR 5.5 billion and EUR 6.5 billion in '28. As Maurizio set out in his presentation, Light intends to continue to build on its leadership position to take advantage of customers' higher expectation, whether in terms of style, more performance or more safety and sustainability. Turning now to the operating margin by division and how each division will contribute to the overall margin improvement. You will note that each business has its own specific profitability drivers. For POWER, it is the in-depth transformation conducted by Xavier and the teams to raise its competitiveness, which is driving the margin improvement. Thanks to those efforts, we are expecting a significant turnaround in operating margin with an objective of 5% to 6% of sales in '28, up from 2.9% in '24. For BRAIN, which is already performing above group average, the main engines are growth and the more profitable orders coming into production. As a result, we are aiming for an operating margin of 7% to 8% of sales in '28. For LIGHT, the story is about building further on existing strong leadership positions and operational excellence. We forecast an operating margin of 6% to 7% of sales in '28. Looking at the operating margin from a consolidated group perspective. Let me now describe the main levers which have been driving the continuous profitability improvement since '24, and which we see continuing to drive improvement through '28. You have heard Christophe talking about the 3 components of these improvements, right pricing of our technologies, gross margin improvement and reduction in our breakeven point. I would like to illustrate this in a slightly different way here. I am showing you the bridge between the 4.3% operating margin we reported for '24, and the target operating margin of 6% to 7% we expect to see in '28. So on the left side of the chart, the impact of both growth and the flow-through of more profitable orders, which essentially reflects the right pricing of our technologies. This level should account for around 0.9 points in the operating margin improvement over the period. 1/3 is attributable to growth and 2/3 to more profitable new orders converting into sales. In the middle, self-help measures. They do represent half of the increase. These measures support the increase in gross margin through the improvement in the industrial sites -- sorry, industrial performance of our sites. They also contribute to the reduction in our breakeven point through the actions taken on fixed costs below the gross margin. Lastly, on the right, R&D efficiency, also contributing to the reduction of our breakeven point. We estimate the net impact over the period at around 0.2 points, reflecting the combined effect of 2 opposite trends. The positive effect of R&D efficiency gains, which is also partially offset by the impact of the amortization of capitalized R&D. Note, however, that by the end of '28, we expect the so-called capitalization impact, meaning the difference between capitalized development costs in percentage of sales and the amortization of the cost in percentage of sales. So this capitalization impact should be close to zero in 2028. Let's now have a look at cash generation and deleveraging. As far as free cash flow is concerned, using the new definition, which is after net interest expenses, our objective is to exceed the EUR 500 million mark in 2028. That is more than doubling the level we achieved in '24. As Christophe pointed out, we have transformed Valeo's business model. We are now in a position to generate more cash structurally, and we are seeing that already in '25. And we expect to further grow the free cash flow generation in the coming years. There are three main levers behind this increase. The first, the fact that we have new orders that we are receiving, and they are more profitable. We have largely commented on this. This is one of the key drivers of the operating margin improvement as well as the increase in cash from operations. Second, CapEx intensity. We are planning for tangible CapEx to be reduced to between 4.5% and 5%, and we expect this lower ratio to be sustained over time. The third lever is greater efficiency in R&D. As Christophe said, we believe that there is room to boost R&D efficiencies while preserving our capacity to innovate. Concretely, this means that the level of gross R&D expenses will not grow anymore. In addition, there are three more things to take into account in terms of deleveraging for the plan. For restructuring cash costs, once the current EUR 400 million exceptional program concludes, we foresee an annual restructuring charge of EUR 100 million compared with the EUR 50 million we used to have in the past. We intend to maintain the policy of progressively increasing the dividend per share. And finally, our plan assumes no major M&A. On this basis, we are confident we can take our leverage ratio down from 1.4x at the end of H1 '25, to below 1.0 in '28. As a consequence, our financial KPIs, should in '28, be aligned with an investment-grade rating. A quick word now about our current financing situation. You can see from this slide that we have a sound financial structure with a balanced debt profile and a solid liquidity situation. We are aiming to strictly manage our gross debt, which is a key indicator for the rating agencies. We recently issued a new EUR 500 million green bond maturing in 2032 with a coupon of [indiscernible] And we will repay our bond maturing in March '26 as soon as next month on the 18th as we announced 2 days ago. If we project forward our debt profile at that date, you can see on the chart that we have cleared '26 almost entirely. Therefore, we have no major refinancing needs until '27. Note that green funding is a key financial tool for us. Over the last few years, we have favored sustainability-linked and green bond issuance as financing instruments. This is consistent with our engagement towards sustainability, an integral part of our strategy. We plan to continue this direction in the future. This is also why it is essential for us to maintain best-in-class ESG ratings. And as you can see here, Valeo is recognized by the main ESG rating agencies as one of the best performing groups in terms of sustainability. In 2025, we maintained our position among the highest rated automotive suppliers. They are all listed on this side. Let me just mention the key ratings. MSCI ESG ratings, where we have a AA rating, CDP, where we are rated at the top of the scale with a single A rating for both climate and water. And [ Sustainalytics ], which assigned us a low-risk rating. In addition to that, Valeo included in the major ESG stock market indices, which are listed on the right hand of the slide that you can see here. Let's now have a look at our CAP 50 plan, which sets out the path towards our goal to achieve net zero by 2050. Our trajectory until 2030 was validated by [ SBTi ], the reference initiative. And as you can see here, we are well on track and even ahead of where we should be based on what we achieved in '24 and our forecast for this year. To achieve our objectives, we'll continue to develop our portfolio of technologies that promote low-carbon mobility. So just to wrap up before I hand over back to Christophe, let me remind you here the [ Elevate 28 ] objectives and reiterate our key messages on the 3 steps to achieve our plan. Step 1, profit. As Christophe mentioned in his industry remark, improvement has been ongoing since 2022. The upward trend will continue step after step until 2028, where we expect the operating margin to reach 6% to 7% of sales. Step 2, cash. Cash is our #1 priority. 2025 will be a year of strong improvement. And I hope we have convinced you that we are successfully transforming our business model to generate more cash structurally. In '28, under our new definition, meaning after interest, we aim to be generating free cash flow in excess of EUR 500 million, or more than double the level we achieved in '24. Step 3, sales. We expect sales to reach EUR 22 billion to EUR 24 billion in '28. We anticipate a return to growth in '27 based on the orders booked over the period '22 to '25 converting into actual sales. Based on this plan, we'll continue our deleveraging, and we will be able to achieve it organically. In '28, our leverage ratio will have come down to less than 1.0x, which will qualify us once again for an investment-grade rating. I now hand over back to Christophe for concluding remarks. Thank you very much.

Thank you very much. Well, I wanted to come back to you for a few concluding remarks to wrap up words about the 1.5 hours that we spent together, and we've been setting in front of you our ambition. As you have heard, we do not share any of the pessimism that some have about our industry, quite the opposite. Yes, yes, at Valeo, we believe that the car has a great future. We believe that individual mobility is freedom. We believe it's life. Yes, at Valeo, we know that this ongoing transformation of our industry is very demanding. It's very quick, it's very deep. It's even difficult. But it's for the better. It's for an electrified car, a safer car, a more affordable car. And this ongoing transformation is full of opportunities for Valeo as we see our position unique and strong. And yes, we believe, even though the term has already been used, that this transformation is deeply [ Darwinian ]. And by the way, -- by the way, I see you smile. And by the way, we're seeing the first signs of it. The current difficulties of some other players in the industry are opening up opportunities for Valeo to replace them. Our customers are counting on us as partners. This is the message they share with me. We also believe that thanks to [ move up ], our positioning on key technologies has been strengthened, that our geographical positioning has also been strengthened, and that our financial results have improved. We know our strengths, and we know very well what we need to improve. And we had it in mind when preparing Elevate 2028. So what is Elevate 2028? Elevate 2028 is about seizing opportunities. It's about taking the initiative. It's a growth plan. It's a growth plan that's powered by 1 to 3. I guess you get it now, 1 to 3. Growth of our profitability, growth in our cash generation, growth of our sales in key geographies. And thanks to an even stronger positioning, we will achieve this. We will achieve this, thanks to the amazing commitment of the Valeo teams. In Valeo. At Valeo, we will be very much stronger in 2028. Thank you very much for your attention today.

Thank you very much. We will now enter the Q&A session. So I will come back on stage. The sales will be transformed in a few seconds together with Edouard, with [ Xavier ], with Marc, with Maurizio that I thank for their presentation. And altogether, we'll answer your questions.

Okay. Good morning. I see hands raised already. I will say a few words before we start, just a few seconds. So we are now starting the Q&A session. We have set an hour, approximately an hour for that. A few things I would say before we start to ensure we have a smooth process. First, this Q&A is reserved to sell-side analysts. Second, we would like to prioritize those who are in the room and who have made the effort to attend in person. So we'll take the questions from the room first. [Operator Instructions] And with that, I hand over to the hands raised. I can't remember which one was raised first.

[ Mark ] from [ Alkem Asset ] Management. Sorry, I'm not a sell-side analyst, but I own 4% of the company. I bought 10 million this morning. So excuse me in advance, I love the company, of course, but my question will be -- that's my job, will be a bit challenging negative. All the car manufacturers have been projecting forecast in '27, '28 and nobody believe them, including your predecessor [indiscernible] for 10 years. So why should we believe you now if [indiscernible] hasn't delivered for -- and I like [ Jack ], but [ Jack ] hasn't delivered for 10 years. What's now what's the change now? First question. Second question, India. Everybody has been dreaming about India, Renault with [indiscernible], Volkswagen with [indiscernible] I forgot the name of the car. Everybody has been dreaming about India for 10, 15 years, but it has always been a dream. What's the change now? And last one, sorry, after that, I stop. China, the same. Everybody is saying they catch up with Indian and they develop the car in 12, 18 months instead of 36 months. Do you have a specific advantage? Or are you just catching up with the competition?

Okay. Thank you, Mark. Thank you for being here, and thank you for trusting us. When it comes to your first question, sales, you saw the assumptions that we took building Elevate 2028. And you saw specifically the market size that we are working on when building this Elevate 2028 sales plan for 2028. The assumption is 90 plus -- [indiscernible] million cars, which is lower than the market as it will be in 2025, which seems to be according to the very last S&P from November, [ 91.8 million ]. So we're planning only for 90 million cars in '28. We're planning in '28 for a market that will be lower than the one we have in 2025. And why did we do that? Why did we apply a [ haircut ]? And why did we [indiscernible] of 3% on S&P? We want our projection. We want this plan to be extremely realistic. We want to make it happen. We will make it happen. Now when it comes to not the market, but we, Valeo, through the 4 examples that I've picked, I hope I gave you the confidence that it's coming. These orders that I show are real orders with real customers that unfortunately, I could not name. I wish I would have been able to name the customer, the project and all the nice products and technologies that are behind, but I cannot, cannot for confidential reason. But these orders are real. And you saw the green bar, you remember the green bar. This is what we have in our plan. But you saw probably behind the gray bar, which is what our customers are telling us about the expected volumes for the years to come. And you saw that the green bars are very much lower than the gray bar because we have this [ ERCOT ]. So we're not basing this plan on what the customers are telling us. We're basing the plan on what S&P is telling us minus 3%, so taking into account a discount. And we have this growth in the order book coming. India. Well, India was not fully a market for us before. And you see it, India is 6 million cars today, out of 90 million cars. So it's 5%, 6%, 7% of the overall world market, but it's only 1% of our sales. So there's a disconnect. India is 1% of our sales. It represents 6% of the world market. Why so? Well, because it's not yet -- it was not yet a technology market. Now it's becoming very fast a technology market. In terms of electrification, but in terms of ADAS, the front camera, for instance, is going to become mandatory. The parking sensors are becoming mandatory. So we used to have 2 divisions. Now we have 3 divisions. Now we are extending [ Pune ] in the division of [ Xavier ] for electrification. Now we're creating [indiscernible], a plant that we created a few months ago that's almost fully full today. So yes, India is now getting a technological market where our technologies can have a role, and this is what we intend to do. And this is why our sales will triple by 2028. China. Do we have an advantage? Do we have a competitive advantage in China? I would not say so. I would not say so, but a lot of people that believe that we have a competitive disadvantage, and I firmly oppose to that. We don't have any disadvantage in China. We are Chinese in China. Our R&D teams are Chinese in China. Our plants are Chinese in China. Our people are Chinese. Our suppliers are Chinese. We have access to exactly the same cost. So we have the right cost base. We have the right technology. We have everything to succeed in China. And we are absolutely determine. I see China as an opportunity and not as a risk. China is 30% of the market. It's 50% of Valeo sales. I consider that the technologies of Valeo, its cost competitiveness is creating an opportunity for us. And you saw it in all the presentation from the 3 divisions. We're all extremely focused on China because we are absolutely believing that the one that are going to succeed in China will succeed everywhere in the world. You cannot imagine what we are learning over there, how to reduce the cost of our product, how to optimize the cost of our product, how to optimize the design of our product. We know how much we learn over there. Those that are not strong in China will not have the opportunity to learn. And as a consequence, will not be competitive anywhere in the world. Being strong in China is giving us advantage over the everywhere.

Michael Foundoukidis, ODDO BHF. So my question is, could you give us more color regarding the [ Power ] division you highlight. I could have made the same comment for light, but you highlighted in the presentation a favorable [ NAV ] trend, some growing content per [ car]. But in the end, your revenue assumptions suggest very limited growth, if any. And the division is expected to remain structurally less profitable than the other one. So I just wanted to get more color on that. And maybe speaking in a very quick one for [ Edouard ] on free cash flow next year. You raised the guidance for 2025 because our [ tanks to a delay ] in restructuring costs. So what does it mean for 2026? Should we expect free cash flow to continue to grow? And what restructuring cash out should we expect next year?

Thank you for your question. So first question is for [ power], we let [indiscernible] answer and second question for Edouard.

So regarding power, when we have created power, so just for a reminder, we merged [ power train ] and thermal. And at this point of time, the perimeter was loss making. Of course, we made a lot of change in our organization. I explained that [indiscernible] one level of your [indiscernible] management. And at the same time, we have absorbed [ VSE, Valeo-Siemens]. And we had to face headwinds regarding the program coming from the JV for the voltage. So we see the difficulties in terms of volumes for the program we had, notably with our German customers. We were very cautious in our projection of sales for 2028. So you remember, we are between [ EUR 105 million and EUR 11.5 billion]. At the same time, we are able to doubling our operating margin to go to 5% to 6%. So it's clear that we will still be dilutive regarding the operating margin versus the growth ambition. But we will converge to the margin. And that with a lot of cautions we have taken in our projections. So yes, I don't want to give dreams for today. I just want to be sure that step by step, we will rebuild our profitability. We will [indiscernible] we have started negative some years ago. 2024, it's 2.9%. You have seen that 2025 will be quite better in 2028, between 5% and 6%. It's not a dream. It's just a reality and I am not here to say that we will be at [ 8 ] in 2028, if I don't believe in my numbers. So it is perhaps not totally ambitious, but it is something I can commit today to expect.

And mathematically, there has always been a division below the group average. I'm afraid.

We felt it would be another division, but unfortunately, it might.

But when low, you have an opportunity to go back to the average and be better. Thank you, Mike, for your questions. So as far as next year is concerned for free cash flow -- as [ Christoph ] said, '26 will be better than '25 because we are on the trend towards '28 in both operating margin and cash flow. And there is only one reference to my point of view now, it's free cash flow after interest, so '26 would be better than '25. As far as the restructuring costs are concerned, you have in mind that the order of magnitude last year of restructuring cost was EUR 130 million, EUR 50 million standard and EUR 80 million, this specific part of our additional programs, it will be EUR 220 million, something this year and therefore, EUR 200 million next year. And even despite these restructuring costs, '26 will be better '25.

Yes, I think we have [indiscernible] and behind [indiscernible] and [ Joe ] -- sorry, your [indiscernible] for quite some time.

Thomas Besson, Kepler Cheuvreux. I have a question about the relationship between orders and CapEx. You're showing the accumulated orders over [ 22% ] to the first half of '25 being 1.3x revenues. But it's a reflection of 2 different periods. You had an explosive order intake in '22, '23 and then another intake below revenues over the following 18 months. And that has allowed you to collapse your CapEx and R&D spend over the last 18 months and generate a better free cash flow. If I want to say it a bit bluntly, of course, I understood you don't want to present it this way. Can you help us understanding whether you can effectively increase your orders in '26, '27 to secure future growth while having effectively a CapEx, tangible CapEx, intangible CapEx, that remains under control because this is effectively something that Valeo has struggled to do in the past, apart for a few years, mid-last decade when everything was [indiscernible], and China was growing fast. So that's the first question. The second -- I mean there has been a lot of hiccups as you say, over the last 3 years, it's been a challenge. And I think last time you presented the plan, it was just after the invasion of Ukraine. So you have been quite unlucky. As a consequence of these pickups, you've received a lot of conversations from your consumer customers just compensated you for past events. Could you just give us a magnitude of how much you've received in '24 and year-to-date? And whether this is not something that is going to be missed both in the operating profit and in the free cash flow. Just explain us what are the main types of compensation what you still may have in the future. And effectively, I understand it's a conversation, but I think it has helped maybe a bit '24, '25 figures.

Thank you, Thomas, for your questions. On the first one, well, I don't agree with you. I believe we are actually deeply transforming the business [indiscernible] Valeo. You take 1, 2 or 3 years. I'm going to take a longer view first over the last 10 years. The tangible CapEx of Valeo has been in the range of 5.2%. So it's not 1 or 2, 1 year up, 1 year down. But overall, [indiscernible] is 5.2%. We believe that we are in a position to be below 5%, 4.5% to 5%. And you're going to tell me we are always which kind of assumption when it comes to order intake, because for sure, there's a little bit of relationship between order intake and CapEx. Point number one, if you take the last 3 years, '22, '23, '24, the average is EUR 26 billion of order intake, which is very good order intake. Because remember, it's the OEM, it's the OE order intake. To give the sales of Valeo, you need to add another EUR 3.5 billion to EUR 4 billion, which is [ tooling], R&D, aftermarket, all things that we sell on top of OE sales. So EUR 26 billion -- [ 22, 23, 24 million ] on average is a good number. It's a strong number, this is what we're planning for the future. I think that Valeo having an order intake period of let's say, between [ 25, 26 billion, EUR 27 billion, EUR 28 billion ] should be the right ambition and the right target to ensure the continuous growth of the group, point number one. Now why are we in a position to reduce the tangible CapEx? Because we're buying better. Because we're not buying in Germany anymore.

Sorry, the question was tangible and intangible CapEx so?

I'm just answering on first on the tangible CapEx because we used to buy all these machines, all these production lines in higher cost country because they were the only one to be able to give us assurance that these lines will come with the right quality at the right time, and it's so important to have the line working with no interruption at the right time. Well, the world has changed. The world has changed dramatically in the last 4 years. And now there are ways to buy CapEx in much better conditions and today, more than 50% of the CapEx that we bought in 2025 have been purchased in low cost or very cost competitive. And this is giving -- this is creating a change. This is on top of sterilization. This is on top of reusable workstations because maybe these this deep work that we do will not convince you. But on top of that, what we used to buy 100, we buy much less today. Okay. Now when it comes to intangible, it's pretty much the same. AI is a true game changer. You will find some people telling you that with AI in R&D, they will save 30%, 40% 50%. This is not what I'm telling to you today because I want to be realistic because I want to be rigorous and we don't have this road map yet. We're building it, but we don't have it yet. We don't know yet whether we're going to save 10%, 20% or 30% or more in the years to come. But what we know is that we're going full speed on AI. We're going full speed with the 4 partners that we have. We have already significant results. And R&D, I have to say, has been a significant issue for Valeo in the past. Remember what I said, I said it very frankly, the R&D of Valeo, if you take the last 10 years have increased at a pace which is double, the pace at which we increase our sales, it cannot continue. And it does not continue. We stopped that -- the peak was H1 '24 look at H2 '24, look at '25. We said it. We said that the R&D will be EUR 200 million lower in '25 than '24. And then we've said conservatively that it will not go up again because we don't know yet how much it will decrease. We don't know that yet. And I will not make any commitment in front of you, but just not increasing anymore, we are already changing the business model [indiscernible], we're already increasing the free cash flow duration of the group, and we are already getting into a leverage ratio below 1 in '28. Question on compensation. I have to say I'm not very happy that we got compensation. I would much have preferred to have the sales. And we have much preferred that the programs will have delivered the sales that were promised to us by the customers. Unfortunately, some of these programs collapse. Unfortunately, some of these programs got canceled, and it was our duty to protect value and to go for compensation, there is compensation in '25 and there's going to be probably some other compensation in '26 because there will be maybe some programs that will not meet the initial customer expectations. So it's a running business for Valeo to go for compensation. It is not subnormal. It's just fair. We have invested, we have spent R&D. We have created capacity for a certain volume. If volume is not there, it's absolutely normal to go for compensation. Now how much is it? It's -- as you can imagine -- I have this question usually, I say I'm the CEO of the company, but as well the Chief Sales Officer, I need to make the job of the sales team of Valeo not more difficult but easier. Therefore, this kind of information are protected by, let's say, for competitive reason, I cannot disclose the amount. -- but I don't see that it's going to hurt the profitability of 2026. I don't see that. because there will be other compensation in 2026. And because the progress we do in restructuring the company, lowering the breakeven point and making it more efficient, will continue to pay off in the years to come.

Maybe one point on top is that when we have compensations because [indiscernible] said, it's fair compensation. On the other hand, we have impairment. So on a pure operating margin point of view, at the end of the day, you can have compensation, but you have the impairments on the other side. So the impact is not substantial for the profitability of the group.

[ Stefan Beamo, Bank of America]. I have 2 questions. The first one is regarding your performance per region. So you said that you would like -- your ambition is to outperform the Chinese market by 2027. I was wondering what's your thoughts regarding your performance in Europe and North America. And what's your view about your pricing power because I guess that there is some pressure. For instance, India will be dilutive. I would assume that in China, there's also some pressure on the pricing. So what's your view globally on outperformance and pricing? And my second question is regarding your free cash flow guidance. So you mentioned profitability improvement strict CapEx control. What about working cap? This has been a historical strong driver for you. So what's your view about the working cap?

Thank you for your question. And we'll let -- give the second question to Edouard and I'll take the first one. We're not doing a bad job in Europe. If you take the years 2017 to 2024, the European market has decreased by 20%. The European market has not recovered the volumes that we enjoyed in 2017. Still, when the market has done minus 20% in Europe, our sales have increased by 20%, minus 20, plus 20%. So we're doing a good job in Europe to increase our [ content per car ] to [ drive ] market share to set our technologies and to put our technology in the car. And I think we're doing the same in North America. So we're going to continue. The fact that I picked and I chose to deep dive China, North America and India is obviously not the sign that we're not going to do anything in Korea, in Japan or in North America. By the way, do you know we are the largest French company in Japan? We are the largest French company in Korea, and we be very strong in these geographies. Pricing for -- well, again, I'm a Chief Sales Officer as well. So I would be very careful about the way I phrase it. After COVID after the semiconductor shortage crisis, I think there has been a period of 2 strong pricing power possible. Our customers were a little bit disorganized, let's say, this way. And I think we took advantage of that. If they are the same pricing for today, now that the Chinese prices are becoming a kind of standard in the industry. I will not put it exactly this way. I think there's a margin power we have a margin power because we are adjusting to the price we have to have in order to be successful in the market but reducing our costs in a way that's protecting our margin. And you heard from me price discipline, which you can understand as margin discipline. We're very disciplined on margin. We're not taking any business that does not meet our expectation. And our expectation, as you know, is not lowered at all. So we have a margin power in the sense that we can accompany the price expectations of our customers at the same time that we are lowering our cost and how do we lower our costs. You heard this morning, we have 34 sites less in the company. We have 10,000 people less in the company. We're reducing the CapEx. We're reducing the R&D, but we're reducing the way we purchase components as well. here as well, it was said with some selected words, but we are making sure that we have the right supplier base that we have the right cost base. And at this point of time, we are able to protect our margin even if this pricing power -- this pricing pressure, sorry, coming from China. So I see no situation today where we are not -- despite this pricing pressure, where we are not in a position to keep our margin and to deliver margin in our order book that meets our expectation.

Thank you, [ Stefan], thank you very much for questions, Bank of America. As far as free cash flow guidance and working capital is concerned, I would answer in 2 steps, [ 125 ] and then the [ ELEVATE 28 ] plant. As far as '25 is concerned, you have in mind that in H1, we had a negative impact on working capital, and I still do not see a positive impact of [indiscernible] a negative impact of working capital for these current 25 years. As far as the plan is concerned, we do not count on working capital improvement to achieve the plan. It does not mean that we will not continue to work on the working capital because it is same to work on the working capital to get paid earlier part for customers to pay later used to place is just part of the game, but we do not count on it to achieve the plan that we presented.

José Asumendi from JPMorgan. I want to come back to Mark's question and maybe just compare a little bit the previous plans versus the existing plan. and there's an opportunity for the [ brain ] division to grow as proportional revenues within the group in the coming years. So can you talk a bit about the margin potential of this division in the future? And when do you expect CapEx to come down for this very rapidly growing products? And second, it's not rate for me in power, what is driving the margin? Is it cost cutting? Is it volume? Is it a bit of both? Can you maybe just go back again and address what are the levers to improve the market in power? And then finally, when I look at the margins of other competitors, they do disclose margins by region. I know you obviously don't want to go there. But the question is, have you done enough cost cut in Europe? What is the opportunity cost cutting wise to drive the profitability in Europe because with the current margins, clearly, Europe must not be contributing to a lot, and there must be a big opportunity to improve margins in -- specifically in Europe.

Well, thank you, Jose, for your question. I think your first question was specifically on [ brain ] so we'll let [ Mark ] take it. The second was in power, we'll let [ Javier ] take it, and I will take the third question on we have enough cost cutting in Europe.

Thank you, Jose, for giving the chance to elaborate on your question. I think definitely, [ 28 ] is a midterm, is not long term. When I mentioned in my presentation that, for instance, we have 1/3 of our order book in SDV type of programs. So it means that down the road when we look in of 2030, it will be 1/3 of our sales. And for that, there is a potential. And as Christophe said, we are very, very much obsessed by the margin discipline and raising the profitability of our businesses and both business come with very significant better profitability. And we do the job to adjust. It means that for us, we are pivoting as well the organization. If I take one specific example, you have gone to our German plant vending, which is our [indiscernible] of the [ ADAS ] in Europe. Within 2 years, we have been kind of adjusting by 1/3 of our total headcount, and that plant will almost double in sales with the next 3 years, thanks to this kind of pivoting our product portfolio. So yes, very small. I'm not going to tell you which percentage and so on, but definitely 8% is certainly not the end of the world far from it. So we have the potential to do more.

So regarding power -- of course, there is cost costing. I cannot say that we didn't do it in 2024. But we do -- we did it, sorry, with the reorganization. So meaning decided to merge 2 former business group and to reduce a lot the level of organization by region, by product line by product group. So now my organization is quite all -- so it's the first point. But it was, I will say, the beginning of the recovery. To be more structural, the second key point for the reduction of our of our cost is a job we made in terms of bill of material. A bit of material of my business is quite high. And at the same time, we're in China now for 30 [indiscernible] and we have a strong team working in terms of purchase component in China, and I have now more and more component even for my business in Europe coming from China. So we were able to reduce a lot of bit of material. To serve point, it is -- so personnel costs bill of material. And the third point, which is surely the most interesting for us in order to prepare and to secure our future is what we have -- what we have done, sorry, in terms of R&D expenses. I will not give the -- in value where we were in 2024 but we have the decrease of development effort by more than 20% and for 2 reasons. The first one is now we are totally focused on the client demand region by region when we are developing a product in 12 months in China. And when we are developing a product in 13 months in U.S. or in Europe, it's not the same cost, but by using AI and by adapting perfectly our R&D team to the specific land demand, we were able to make a huge effort. And now we see the reduction of our R&D effort, we're able to take more business, more profitable, and we can see the start of the first business in China with a good EBIT. And meaning that now it is a part a big part of our recovery plan.

The third question is, have we done enough cascading in Europe. Well, it's -- it's a difficult question. Please accept the idea that we've done a significant part of the job. Look at the numbers that I showed earlier in my presentation. the EUR 400 million that we spent mostly power and mostly Europe. So we've really concentrated our efforts on Europe. Is it over it's never over because there's a need to make the car affordable, there you need to reduce the cost of the product and the price of the product. So it's not over. Have we done the job? Yes, we've done a significant part of the job. By the way, we've done it efficiently, silently, quietly. You have not heard about it too much, but it was done. It was very serious. It was [indiscernible]. Is it over? No, it's not over. And this is the reason why we have put in the forecast EUR 100 million restructuring costs down the road per year. We used to be able to live with EUR 50 million. Now we say it's more likely to be EUR 100 million. Now that's the middle term. That's '26, '27, '28. If your question is more even longer term, let's say, in 10 years from today, it depends on what the European Commission and the politicians will decide on the European content per car. If they would not decide for a European content per car minimum, then there will be significant massive delocalization of the automotive industry in Europe, from Europe to the rest of the world. Let's say, from Valeo Europe to Valeo, for instance. This is not for '26, '27, '28. We know the loads in the plant. We know the sales. So it's a subject that we have consequences today, but that's for sure a subject that we have a consequence later on. So long term, it depends what the positions will decide to protect or not the European industry and short term or midterm, while we're putting EUR 100 million per year in order to make sure that we're continuing working on our costs and making sure that we keep the margins of value that we expect to have.

[ Stephen, then Christoph ] and back again to [indiscernible] afterwards, please.

Steve Reitman from Bernstein. I have 2 questions. First of all, on power and then on brain. On power, I know you don't like to talk too much in detail about your customers, but it certainly came up on the news wires [indiscernible] decision to drop value of supply on the [ 7(a)], the data that you're going to be supplying. And then you're saying they would maybe go to China instead that in -- you already said that your costs in China now are at a good level and comparable to those of your Chinese competitors. So I just wondered if you could talk a little bit about the competitiveness of your European operations where maybe this contract was originally meant to be originating and how much well has to be done in Europe in order to see competitiveness with that without necessarily talking too much about the contract with [indiscernible] general, it just as an indication. My second question is on the brain and specifically on [ LiDAR]. Arguably, your biggest competitor, Hi, is now talking a lot about the usage of their technology also in humanoid robots. So I thought that would be something that would be a very nice story for Valeo to be we're talking about as well considering the interest in AI and this whole process and whether the undervaluation of other companies. So I'd be interested in what you can say about that. And also while we're on the [ semi LiDAR], if you could maybe talk as well about where you think we are in terms of the process because obviously, more and more companies, more of our OEMs seem to be looking at the [indiscernible] approach of sort of camera-only end-to-end neural networks. Obviously, make a case about the [ edge ] cases, LiDAR is necessary and the like. But they argue it's not. So I'd just like to say heavy your take really on where we are in the process from a regulatory standpoint and where you think practically we are.

Thank you. So the first question is the [indiscernible] rare matter. I was sure I will have the -- and so thank you for the question. So just to explain the situation with what happened with [ Renault]. It was not a new business. It was a common predevelopment on [indiscernible]. And the plan was to have a [ site ] technology in a new car in some years, but to be able to redevelop these technologies -- for the motor, I will say, the rotor for the [ Renault ] side and the [ state ] for the Valeo side. We had a good development with Renault with a good relation between our 2 teams. They gave us the target price for the state, and we were aligned with their target price. I want to remind that it was a French for [indiscernible]. So state of built in a Valeo plant in France and the rotor in [ Renault ] plant. We gave our proposal for the target price. Going 5 months, nothing happened. And after they decided, and it is their decision, and I don't have to say that I am happy or not happy, but it is their decision, and I respect their decision. They decided to launch the discussion with a Chinese supplier. It's a fact. At the same time, and Renault requested us to develop with a bullish segments with inside [indiscernible] to make the contact. So it's something creating some particles and so on. We were not totally happy with the decision of [ Renault ] we discussed with [indiscernible] to have more or less the same techno with more power, but without any in order to be [indiscernible] that there will be no particles emission with this echo. Now -- well, no, I read the newspapers like you yesterday that Renault is again contemplating the solution from [indiscernible]. I will have a discussion with [ Philippe Bone], who is the new [ CEO ] of Renault. But at this point of time, we didn't put all our effort on with Renault. Now we are developing with [ Malu]. And we have the technology to be able to propose 3 [ wares ] motors for clients.

So we are continuing working on the technology very hard. We believe in this technology for the long term. Now we're not commenting too much on this or that or the RFP because there are so many RFPs going on at the same time. On China versus Europe. Well, your question is about the competitiveness of China versus the competitive of Europe. And this is a true question, and this is the reason why we are working so much to hold our position in China and even to consider China as an opportunity and not a risk. We are considering China for us as an opportunity and not a risk. Because we can increase further ourselves because we are in a position to learn so much about what we what we do in China and to export it -- I'm not saying exported products. I'm saying exports the ideas, export the design, export the cost base. So I mean, being in China, and I think I convince you already -- I already answered the question on that. I think the being in China is making us absolutely stronger for the rest of the world, given what we are learning. Now at the point of time, will they more -- will there be more Chinese content in the European car possibly, but that does not depend on us. It would take a political decision to decide how much they can be of a non-European content in a European car. It doesn't change [ LV28]. But obviously, it might change the more longer term, but we are fully prepared for any scenario because, as I said, we are getting stronger in China, and we're getting stronger in Europe at the same time.

The last question is about [indiscernible].

Yes. So thank you for your question on LiDAR. So we'll start by the question on nonauto, what we call the beyond auto Yes, we do. we do look at those markets. It's talk about human it, but it's not only a human are. It can be any kind of things linked to the transportation logistics and to 1 where in all kind of main AGVs you have [indiscernible] a bit everywhere. Now what we need to do is that we have been already for 15 years investing in this business. And want to make sure that not every line are fit any kind of use case. So you can be in a situation where you have to develop specifically module for that -- and we need to make sure that we do the right balance of what we want going to spend versus what can come. Now to say very clearly, we are now preparing to launch the Generation 3. We are preparing the Generation 4. So we're moving on that side and definitely they are today. very tangible opportunities on the non-auto space. Now regarding [indiscernible], is a very respectable competitor. This is probably one of the businesses in which we the victory between China and non-China is the strongest. It's really you have 2 worlds. You have the Chinese world and the non-Chinese world. Now in both worlds, I would say, to be very simple, you have not a single car driving Level 3 in the world without [ LiDAR], not a single one, not a single one, not even by the carmaker that you need. It doesn't exist. You don't have -- not a single application, which is the robotic application without multiple LiDARs on it. So 15 years ago, our technologies have been kind of assessing that you would need in this highly safety environment to have very strong redundancy of sensors and that at the peak of a pyramid of the sensor, you will have [indiscernible]. We haven't changed our mind. And we are still there, and we will be still there. And we -- as you have some of these [ type ] -- we got some nice start-ups, which are burning ashes now, we are there, and we will continue to be there. Now I would say as well, coming back on China, you have a very strong drive and this is more in the level advanced assistant driving the [indiscernible] that you have, you have a [indiscernible] with multiple [ LiDAR ] solutions, which are -- which is what [indiscernible] is focused on which are extremely competitive and lower performance level of [ LIDARs ] because they don't address the Level 3 needs that address the level 2. Now we are fully in China. We are learning a lot. We are driving a lot. We understand that one of the key drivers in this adoption of [indiscernible] will be the affordability, and we are working very hard on that. But I can tell you having all OEMs talking to us about [ Lidar ] coming to us as a one reference point on that. There are a lot of projects booming there, and this is going to accelerate in the coming years. I hope I answered your question.

Christoph Laskawi from Deutsche Bank. The first one would be just coming back to the bridge on the margin side. Obviously, it starts in 2024. Could you remind us how much of the self-help measures that you show there have actually already materialized in '25? And how much is still to come? And is that basically spread across the rest of the time frame? Or was it mostly '26? And then second question would be, we have headlines over the recent weeks that some U.S. OEMs are looking to get their supply chain free of any Chinese parts for U.S. sales. Now obviously, you highlighted the opportunities from sourcing from China being stronger in China. Could you give us an indication how much of the systems that we are selling in the U.S. is sourced from China? And how difficult would it be for you to get that China free? And also if the current targets that you've presented would have any impact if that really were to come by '27 and if more OEMs will follow.

Thank you for your question. The first 1 is obviously for you, Edouard.

Thank you, Christophe, and thank you, Christoph, by the way. Both Christophes. In the bridge, I presented 1.1 points of improvement, thanks to self-help measures between '24 and '28. You have in mind that when we presented our specific programs of EUR 400 million allocated to this program, we said based on '23 would have a EUR 50 million impact synergies in '24, EUR 150 million in '25 and EUR 300 million as of '26. I do confirm these synergies. I do confirm, I do see that today in '25, and I do see this amount in our plan for '26. Nevertheless, you have to keep in mind that some of these synergies are seen in the capitalized R&D but not necessarily everything these [ 300 ] I'm talking about directly into the P&L as of '26. So it's coming in step by step while we amortize what we have not capitalized thanks to these self-help measures. I hope I'm clear.

Okay. Related to the second question, I will obviously not comment what one or the other customers might give us as guidelines, this is part of their policy and unless their policy is public, I cannot comment on that. Nevertheless, what I can tell you is if a customer would request that all components would come from a region, not from another, from a country, not for -- we can adjust and we can adapt these cost consequences. So they are priced consequences. And should this situation happen, then we'll be very transparent as we are always in the relationship we have with our customers and tell them this is the price in one condition. This is not a price in another condition and will be extremely transparent with our customers in the way we approach the question that you raised.

It's 5 to 1. So I guess that the last question will be with you [indiscernible].

Vanessa Jeffriess from Jefferies --

Sorry, when I didn't -- so okay, let's go for your question and your question.

I'll be very quick. Just 2026 specifically and the lack of growth that you're forecasting, just wondering if you could talk a bit more about divisional dynamics because, I guess, as we entered this year, the messaging was that 2025 was a transition year for [ brain ] and that it would ramp up in 2026. And it seems like what you're saying is that no growth will be broad-based across the divisions. And then just on China as well, if you're not outperforming in 2026, then it means you're declining by at least low single digits from everything you're saying about your strong book-to-bills and your mix of Chinese OEMs, I feel like you should be at least flat. So maybe if you could just go into more detail there.

We're going to go in many details about '26 at the end of February '26, when we released our results for '25 and we give guidance for '26. But you heard a few things today, you heard that the sales would be more or less flat in '26 versus '25. You heard that we're going to continue improving our profitability, and you heard as well that we're going to continue increasing our free cash flow. You heard all this during the presentation of today. And obviously, the numbers will be given as a guidance at the end of February 2026. And it will come as well with the divisional dynamic that you're asking me to comment and that I will be happy to comment at the end of February. When it comes to China and 2026, we've been quite specific and precise in our communication today, seeing that we expect the growth in 2016 coming back in China per in H2, it means it doesn't come in H1. And what is coming at H1 because all the all the SOP or the start of production or the launches that [ Mark Xavier that Mauricio ] has talked about are just at the beginning, and it takes some time for ramp-up to be accomplished and for the sales to be much more visible. So we have, unfortunately, to wait until the second semester of '26 to see the effect of the Chinese offensive that we have in our company that I think you felt very well because, again, of the point that we believe that being successful over there is the way to be successful elsewhere or say differently for those companies that will decide not to skip this battle to skip this [indiscernible] because it's too difficult then they will lose much more than their Chinese sales. They will lose their world sales in my opinion. And that's absolutely the opposite of the value policy or plan.

So sorry, we're going to take the last question from [indiscernible].

Thank you very much for giving me the question again. Two, please, one for Edouard and one for Christophe. Could you come back on the exercise you've done about cash repatriation in H1, you had a hit that wasn't expected from ForEx because you had part of your cash in the U.S., in China and other subsidiaries. Could you update us on what has been done or what will be achieved in the second half of the year? The reduction in gross cash, which I think makes for a more efficient balance sheet and reduces the risk of further headwinds potentially and talk about whether it has an impact on the free cash flow '25 or not. [indiscernible] that your question. And Christophe, I have a more difficult question for you, apologies. You're presenting 3 divisions, which are very different. One offers growth prospects that require more investments. [indiscernible] the time over that. I get that. And then 2 more difficult businesses. Does it make sense to have these 3 businesses together? Is there no -- obviously, right now, a lot of suppliers are trying to sell assets. So maybe it's not the best time to sell assets, but [indiscernible] was EUR 4.4 billion, I think at the end of H1. Will it not make sense to simplify our business and sell a decent size assets in some areas of little growth any immediate prospects for margin improvement, for instance?

Thank you for giving me the easy question and giving you the difficult one to Christophe, very nice of you. As far as the cash flow [indiscernible] is concerned. So yes, in H1, you remember we had the increase of net debt, not on gross debt, which decreased by but an increase on the net debt, especially because of the ForEx impact. I remind to all of us, the impact was EUR 260 million in H1 on the net debt. So I do confirm the plan it's a multiyear plan that we are working on. But the first part of the plan, which is '25 is well on track. Actually, it is coming in. It will not decrease the amount of cash at value globally, but decrease the cash currently in foreign currencies that will be in euros at the end of the day, at the mother company basically. There is definitely an impact on free cash flow for the year because there is a tax impact, which is multi-tens of millions of euros. I think you get the order of magnitude, thanks to my point here.

Well, actually, your question is not, in my opinion, a difficult one. It's a pretty easy one and straightforward. We're very happy with the 3 divisions we have. The car is becoming electrified. The car is becoming safe, the carbon software and the 3 divisions we have are just as a center of what's going on. I also upsell, you know what's going on outside of Valeo. I see some splits of companies being decided. I'm not really seeing any value creation as part of these pits and when it comes to selling, for instance, because that might be your question, I thought self that the values and the multiples currently in the industry are extremely low. So as long as we are in a position to be able to develop the 3 divisions because that's the point, are we the best shareholder group cooperation, you are the shareholder. But are we the best to be in the patient to develop these 3 divisions? Are we in a position to continue to make sure that they have the teams, the scale the money to be developed? As long as it's possible I think that it's okay to have the 3 divisions. And given the plan that we have on the screen, I see that we are able to develop the 3 divisions, and we're going to continue to observe obviously, the M&A activity around us. And we are in any way deeply thinking about all this permanently. I think that's the end, Marisa. So I would like to ...

If you allow me a few seconds because there are questions on the webcast that we will not be able to answer. I want -- just want to make sure and say to those people who are connected and send their questions that we will follow up with them directly afterwards. And that's it Christophe.

Sorry for the ones that have asked questions, and these questions could not be asked. Sorry for the one that did not get questions, [ Mauricio]. But probably, you didn't get questions because you have a bright future. And because everything that you said was bright and clear. So sorry for that. We are now at the very end of the Capital Market Day. I think you understand very clearly today from the presentation and from your Q&A you understand our trajectory. Please be sure absolutely assured that the teams of Valeo, the management team of Valeo, the executive committee of the group, our Chairman today here and the Board of Directors, we are absolutely committed and engaged to make this [ Elevate 28 ] success. So I thank you very much for your attention. And I think we have a little bit of show. It's not a show, but we have a few products in the room upstairs. We have a light lunch and we'll be happy to continue the discussion. Thank you very much for your attendance.