Valeo SE (FR) Earnings Call Transcript & Summary

Good evening to all, and thank you for joining the presentation of our ' 25 annual results, which I will do together with Edouard de Pirey, Valeo's CFO. As you will see, our results in '25 are solid. Our guidance for '26 is in line with our plan, and we are confident about the successful execution of our Elevate '28 strategic plan. I would like to highlight 3 important points. Our profitability, it continues to improve. The first engine of our plan is on. We set a historic record for Valeo in terms of free cash flow from our operations before restructuring costs and before interest. This reflects the transformation of our business model to generate more cash structurally. The second engine of our plan is on. And we recorded a solid order intake in '25, and we are preparing in '26 numerous production launches, which will contribute directly to the return to growth in '27. The third engine of our plan will be on in '27. I will naturally start with '25 highlights and '26 guidance, then Edouard will walk you through our '25 performance. This 25 minutes presentation will be followed by a 35 minutes Q&A session that we will handle together, Edouard and I. So let's start. Let's start with '25 highlights. In '25, we delivered on profit and cash, and we did so in a demanding environment. The environment has been marked again by volatility in volumes, by program postponements and by an unfavorable customer and geographic mix and also by many headwinds such as trade tariffs, ForEx variations and shortages of civil components. To overcome this demanding environment, we relied on our operational excellence. We have been proactive in taking the necessary actions to mitigate its effects on Valeo. On top of it, let me highlight a few topics. We continue to apply strict discipline to our pricing. We have further lowered our breakeven point, and we improved the efficiency of our R&D, and we strictly controlled our industrial CapEx, as you will see. Lastly, we continued our work to rebalance our commercial position. Two evidences. One, we are regaining momentum in China with a solid order book, particularly with Chinese OEMs. And the second evidence I picked is Beyond Auto. We won in North America, our first business for battery energy storage systems, $225 million order that will go into production as soon as next August. This proactive management fuels the 3 engines of our trajectory, improved profitability, structurally increased cash generation and a return to growth in '27. Now moving to Slide 5. We have achieved all the financial objectives we set for '25, whether in sales, in EBITDA, in operating margin or in free cash flow. Our total sales reached EUR 20.9 billion. Our operating margin reached 4.7%, an improvement of 0.4 points versus '24. And as mentioned, the group achieved a record level of free cash flow before restructuring and interest of EUR 756 million, a level never before achieved by Valeo. According to our new definition of free cash flow, that is to say after net financial expenses, free cash flow reached EUR 371 million. This is comfortably above the '25 guidance and significantly higher than in '24. Slide 6. You can clearly see the continuous improvement in our profitability since '21 and which has been confirmed again for '25. This continuous improvement is based on 3 levers: first, the right pricing of our technology with high margin orders, rigorous and systematic compensation from our customers for tariffs for reduction in program volumes and productivity from our supplier base. Second, improving our gross margin. It reached 20.2% in '25, up 1.2 points compared to '24 and the cumulative increase since '23 is 2.3 points. As you know, we are committed to keeping our gross margin high through solid operational execution, improved industrial performance and widespread use of AI. Third, reducing our breakeven point. We further reduced our SG&A expenses by 6% in '25 compared to '24. This represents a cumulative decrease of 10% since '23. Slide 7. You can see the improvement in our cash generation, which has been ongoing since '21. Free cash flow according to the new definition, reached EUR 371 million, and we achieved this, thanks to higher profit, our EBITDA reaching 14.7%. Industrial CapEx reduced by 30% at 3.8% of sales, which represents a decrease of EUR 348 million compared to '24. And the target remains as announced between 4.5% and 5% during Elevate, but we are not ruling out the possibility of doing better as soon as '26. And finally, we reduced our gross R&D expenditure by close to EUR 200 million, a decrease of 7% compared to '24. As announced, the peak in R&D spending is now behind us. Slide 8. We recorded solid order intake in '25, reaching EUR 24.6 billion with a slight acceleration in H2. These orders concern all 3 divisions and all regions of the world, particularly China, and I will come back to this in a moment. Over the period '22 to '25, the average annual order intake is approximately EUR 26 billion, a level that makes us confident about the expected growth level in our trajectory. As I mentioned, we are regaining momentum in China. We have won major and strategic contracts there in '25. For example, we won 6 businesses in domain controllers. In electrification, we recorded multiple contracts for our new generation dual inverter, our 5-in-1 deep integration power electronics module and our innovative dual-layer HVAC. These orders are mainly with Chinese OEMs and will be SOP as soon as in '26. Our order intake with Chinese OEMs represented 2.8x our sales and Chinese OEMs represented 63% of our order intake in China. So we are rebalancing our business there, and we do this with a focus on the OEMs experiencing strong growth. In '25, 54% of our sales in the country already come from Chinese OEMs. Of course, and we know it very well, we still have a long way to go, but real progress has been made. And I confirm what we said in November during the CMD, we are targeting a return to growth in China in H2 '26 and a return to outperformance next year. We continue to operate and do business with the utmost care and commitment to ESG. We're perfectly on track with our road map, and we're very proud to have obtained a AA rating from the CDP for both climate and water at the beginning of the year. We continue to be recognized as an ESG leader by rating agencies. Slide 11. You can see our '26 guidance and '26 is the first milestone in our Elevate '28 plan, and we are confident that by the end of the year, we will be firmly on track. We aim for further improvement in profitability and cash generation in an environment that will remain uncertain. Concretely, in '26, we're aiming for sales between EUR 20 billion and EUR 21 billion. Our guidance represents a flat organic growth in OEM sales versus last year, given the EUR 400 million impact of ForEx and perimeter versus last year. Operating margin between 4.7% and 5.3%. And to do so, we will maintain our strict price discipline, benefit from our self-help measures and keep a strong focus on cost reduction. And we target a free cash flow of above EUR 400 million by capping gross R&D below '25 levels, thanks to further R&D efficiency gains and by keeping strict control on our industrial CapEx. And as already mentioned, in '26, we will have numerous starts of production throughout the year for all our activities in all regions of the world. I will now hand over to Edouard, who will detail our performance for '25.

Thank you very much, Christophe, and good evening, everyone, and thank you for being with us today. Let's now dive deeper into the financial performance for full year '25. As usual, you can refer to the backup slides for H2 and Q4 figures. I will start with the top line on Slide 13. Total sales landed at EUR 20.9 billion, up 0.5% like-for-like, EUR 400 million above our guidance. OEM sales came in at EUR 17.3 billion, down 0.6% like-for-like, reflecting the market headwinds Christophe mentioned in his industry remarks. Aftermarket showed resilience with a like-for-like growth of 0.9%. And miscellaneous sales grew by 15% like-for-like. More specifically, in '25, it includes fair compensation for contract cancellations for which around EUR 300 million impairments were booked as well as R&D and tooling sales, testifying to the good momentum of our order book. Looking at the OEM sales performance by region on Slide 14. Globally, we had a 5 points performance gap, largely driven by negative geo mix of 3 points. In Europe, we outperformed by 2 points with all divisions contributing to the outperformance. In China, which is a key focus area, as you know, we are still in a rebalancing phase. Globally, we underperformed 17 points with an underlying momentum pointing in the right direction, both in terms of sales as well as in terms of order intake. In Asia, excluding China, the performance gap stands at 2 points. Within that space, especially India, which we emphasize as a key region for us at the CMD, continues to grow strongly. The region is well on track with the Elevate trajectory with consolidated sales of around EUR 300 million, up 43% year-on-year. Let's now have a look at our divisions. First, Power on Slide 15. The division is executing successfully on its cost structure transformation. The increase in operating margin of 1.3 points is evidence to this. This is the result of a deep transformation. We rationalized the footprint. We improved R&D efficiency, and we reduced SG&A. In terms of sales, it is worth mentioning the momentum rebounding in China with local OEMs, more than 38 SOPs with Chinese OEMs over the 24, 25 years and good order intake ratio with them. Moving to BRAIN on Slide 16. 2025 was a year of consolidation for BRAIN, marked by the end of several projects in ADAS as well as SOP delays in North America. On the positive side, there was a good momentum in displays and telematics and a solid order book, notably in software-defined vehicles, which reflects the attractiveness of our product portfolio and provides a solid foundation for future growth. In this context, the operating margin was down 40 basis points, but remains above group average at 5.4%. Finally, Light on Slide 17. The division posted flat sales on a like-for-like basis with contrasting trends. H1 was affected by postponements in North America, and this was offset by a good performance in Europe throughout the year, supported by multiple product launches and a solid momentum in China, especially in H2 with numerous SOPs with Chinese OEMs. Notably, our Light division slightly outperformed the Chinese market in Q4. The division posted a 5% operating margin above group average. It is 0.5 point below last year due to the SOP postponements in North America. Moving to Slide 18. Let's now focus on the group operating margin. As highlighted by Christophe earlier, we continued to deliver an improvement in profitability in '25 with an operating margin up 40 basis points to 4.7%. Four key highlights here. First, gross margin progressed by 1.2 percentage points year-on-year, making it the key contributor to the profitability improvement. Gross margin reached its highest level since 2017 at 20.2% in 2025. This level is consistent with our ambition to sustainably above 19%. It is the result of 2 factors: On the one hand, maintaining strong discipline, pricing discipline, as reminded by Christophe earlier. On the other hand, industrial excellence with smooth launches, operational efficiency and automation in all our plants as well as naturally the benefits from a streamlined industrial footprint. So after gross margin, continued tight cost control brought an additional 10 basis points to the operating margin. SG&A were down again in '25 by 6%, bringing the cumulative reduction over the last 2 years to 10%. Third, in contrast to these trends, net R&D expenses went up by 1 percentage point, reflecting the combined effect of 2 opposing forces, the benefits of efficiency gains on the one side, which was largely outweighed by amortization and impairments of capitalized R&D on the other side. Let me provide more details about this. The reduction by EUR 193 million in gross R&D expenses demonstrate the R&D efficiency gains achieved during the year. This is in line with the ambition communicated at the Capital Markets Day. It enabled a decrease of 11% of the capitalized R&D to EUR 930 million. On the other hand, the depreciation of R&D was flat year-on-year at EUR 623 million. Finally, we booked EUR 234 million for impairment of capitalized R&D, essentially as a consequence of contract cancellations. So finally, the IFRS impact was plus 0.4 points in '25, 1, 2 points less than in '24. We expect this impact to be around 1.5 points in '26. Fourth and last point regarding operating margin. The net reversal of provisions for unfavorable and loss-making contracts amounted to EUR 50 million for the full year, 0 for the second half, well below the EUR 181 million recorded last year. Turning now to Slide 19 on the net income, 2 main points to highlight here. The charge of EUR 168 million for other income and expenses essentially composed of restructuring costs of EUR 156 million, including EUR 110 million related to the one-off self-help measures launched in '24. The effective tax rate of 43%, it bears the impact of the cash repatriation program initiated in H2 for an amount of EUR 41 million recorded in the P&L, in line with what we had indicated. All in all, the net attributable income stands at EUR 200 million, up 23% year-on-year. On Slide 20, you have an overview of the restructuring program. This is a recap of the P&L and cash implications of the programs underway. In green, we isolated the amounts related to the one-off self-help measures of EUR 400 million announced last year. You see that most of the cost has already been recorded in the P&L with a small amount of around EUR 20 million left to be recorded in '26. From a cash standpoint, after the EUR 167 million cash out in '25, we expect an amount of around EUR 150 million in '26. From this program, we do confirm our expectation of annual savings of EUR 300 million as of '26 after what we've seen in '25, EUR 200 million already. On top of this, in blue, you have the restructuring charges that we foresee for '26 and beyond. We confirm that we foresee an annual charge of EUR 100 million starting '26. Keep in mind that there is a slight delay between the recording in the P&L and the cash impact, which is why you see a EUR 100 million cash out in '27. Turning now to the free cash flow on Slide 21. Under our new definition, which is after net financial expenses, we generated free cash flow of EUR 371 million, a 50% increase year-on-year. We have improved cash generation, not just in absolute terms, but also its quality has improved, which demonstrates our ability to structurally generate more cash. Three main levers behind this improvement. First, naturally, profitability. We have largely commented on this. '25 is the fourth consecutive year of operating margin improvement since '21, a key to cash generation. Second, CapEx intensity with CapEx down 30% in '25. CapEx intensity was reduced to 3.8% of sales compared to 5.3% in '24. We buy better. We reuse, we optimize our footprint, and this is sustainable. As Christophe said earlier, we do confirm what we stated at the Capital Markets Day. CapEx will be kept structurally within a 4.5% to 5.0% range. Third lever, R&D efficiency. I already touched on it earlier by mentioning with capitalized R&D down 11% to EUR 930 million. Note that we achieved the improvement in free cash flow generation despite an unfavorable change in working capital requirements, negative EUR 301 million and the cash impact of withholding taxes for EUR 41 million. A comment now on the financial structure on Slide 22. The same factors as in the first half are at play, namely the adverse currency effect impacting the net debt. Hence, at the end of '25, net financial debt stands at EUR 4.0 billion, higher than at the end of '24, but lower compared to H1. And gross debt is down by EUR 476 million compared to '24. The leverage ratio is stable year-on-year at 1.3x. It is down sequentially from the 1.4x reached at the end of June. Overall, our financial structure remains sound with a balanced debt profile and a solid liquidity situation. Finally, you remember that following the repayment of our bond maturing in March '26 last December, we have no major refinancing needs until '27. To conclude, based on these results, we'll propose a dividend of EUR 0.44 per share at the next shareholder meeting in May. This is a progressive increase, consistent with our Elevate '28 plan. Thank you for your attention. I now hand back over to Christophe for the conclusion.

Well, thank you very much, Edouard. In '26, as a reminder of our guidance, we aim to further improve our profitability and cash generation despite an uncertain environment. Once again, our '25 results lay a solid foundation for the successful execution of our Elevate '28 plan presented last November, and our expectations for '26 are perfectly in line with our plan. The 3 engines of our road map are on or about to start on for the increased profit and increased cash generation and about to start in '27 when it comes to renewing with growth. With Elevate '28, we aim at making Valeo a stronger company and global leader even fitter for success. Well, thank you very much for your attention. Edouard and I are now available to answer your questions.

[Operator Instructions] The first question is from Jose Asumendi at JPMorgan.

It's Jose from JPMorgan. A couple of questions, please. I would love to understand a bit better the -- when it comes to the guidance and the margin profile for 2026, if you could maybe provide some details with regards to the growth expected for the company in terms of outperformance to the local production, and a little bit the opportunities you have to monetize your strong footprint in China and capture additional growth in China. And also, the second question, if you could comment around the efficiency gains, cost savings expected for '26? And related to that, what you've been doing to reduce your fixed cost base in Europe as production over in Europe is still well below peak level for all suppliers?

Well, thank you very much, Jose. We will take the first question. Edouard, you take the second one. When it comes to growth, we've been very clear already at the CMD in November 20s, there will be no growth expected in '26. The return of growth is planned and has been announced as of '27. I know it's very much expected, but it's coming in '27. So we have a flat organic growth in '26 as per the guidance that we issued today because we're expecting sales between EUR 20 billion and EUR 21 billion. The equivalent of our 2025 sales at same perimeter and at same ForEx is EUR 20.5 billion, which is the midpoint of our guidance for '26. When it comes to China, I'm very happy with the achievement of our Chinese teams in '25, how important it is for Valeo and for me that we regain momentum in China, and we rebalance our customer footprint. I'm very happy with the order intake with Chinese OEMs in '25. The order intake is 2.8x the sales, the OEM sales with the Chinese OEMs, which I think is really a fantastic performance, demonstrating the competitiveness we have in China as well as the technology, the appealing technologies that we have. Having this in mind, we are guiding for returning to growth in China earlier than for the rest of the group and as soon as H2 '26, and this is part of the guidance that we issued. Edouard?

Yes. Thank you, Christophe. Jose, thank you for your question. So as far as the restructuring programs are concerned and all the cost savings program is concerned, you have in mind that during the CMD, we bridged '24 to '28 with 0.9 points coming from growth and new programs coming in, 1.1 points coming from restructuring self-help measures and 0.2 points coming from R&D. Basically, the more we go and the more it will go through growth impacts. And at the beginning of the period, bidding '25 as well as 26, the main impact is thanks to the restructuring. So as I said earlier during the call, the impact of self-help measures is already EUR 200 million in '25, and it represents most of the improvement between '24 and '25. As far as the bridge '25 to '26 is concerned, you can consider that the further improvement of restructuring and self-help measures and cost control will be something that half of the operating margin improvement, the other half being more about pricing activities.

Next question is from Ross MacDonald at Citi.

Yes, it's Ross MacDonald at Citi. Two questions from me. First one on DRAM. Obviously, a lot of discussion in the market around implications from DRAM price inflation, availability of those components in 2026. Just be interested, a, if you have full coverage of those components for this year? And then maybe more in focus on 2027, how should we think about the inflation and how quickly you can pass that through to your customers? So just maybe an overall update on that situation, how confident you are in the DRAM availability for Valeo? Second one, obviously, the first half sounds like it's a down semester. Given that you only report twice per year, it's going to potentially take 12 months until we see the evidence of these self-help measures in the margin. But can you give us some steer on where you see the first half trading in terms of operating margin for Valeo, how close will be to the full year guidance corridor on the margin side and maybe linked to that, the cash generation, how second half loaded we should expect that to be? And then maybe just a final question. I know you asked for 2, but just looking at your free cash flow reconciliation, there is a considerable benefit from the other bucket, EUR 175 million for 2025. Maybe if you could just remind us what's in there and how we should model that for 2026? Any details would be appreciated there.

Thank you, Ross. I will take the first question on the DRAM. Edouard, you take the H1, H2 and the last question on the free cash flow. Well, for sure, the DRAM situation is quite critical. In our view, there's no way to protect the industry through inventory. This is not the way to go. And it's not the way to go because it's a structural problem that will continue way beyond '26. That's going to be a problem for '27 as well. So what are we hearing from our memory suppliers? We are hearing that they're willing to protect the automotive industry. That's what we're hearing. And what is the rationale for them to protect the automotive industry, I see 2 reasons. One is the automotive industry has good forecast and has been able to predict and to forecast its needs for the years to come quite well. And probably the second reason is the ratio between the price and the memory and the impact it will have on cars if the car would be missed. So we're hearing that these suppliers are willing to give some protection to the automotive industry. Nevertheless, the situation is quite complex as the situation has been complex in the past on some other products and commodities, and we are working extremely hard with our customers and with our suppliers to manage this complex situation. Maybe a question on cost because I think you asked a question on the cost impact. We see that our customers are open for discussing the impact of the cost. This is the lessons from the first discussions we had with all our customers. Edouard?

Yes. Ross, and thank you for your questions, actually, 2 and 3. So first, about the trading of the first half. We do confirm today that the market is quite weak globally, especially in China. And this is what we forecasted actually when we met at the Capital Markets Day on November last year. This was already on top of our head. And we are trading actually as we planned. And therefore, there is no big question on our side. As far as the balance between H1 and H2 is concerned, as usual, I would say you can count on an H2, which is stronger than H1. This has been the case in the last 2 and 3 years. You can count on it again for 2026. As far as the free cash flow reconciliation is concerned and the question is specifically on orders that went from minus EUR 218 million to plus EUR 175 million in 2025 from '24 to '25. Actually, the main change behind is about provisions impacts where we reversed quite much more provisions in '24 compared to '25, as I explained earlier, in particular, related to these onerous contracts.

Maybe I can complement your answer #2. We've explained already quite a few times why in the model of automotive suppliers H2 is better than H1. It's not really about the market. It's more than our prices, the prices we have with our customers are kind of flat throughout the year. But every day, every week, our plants are improving every day. We are finding ways to reduce the cost. So the costs are decreasing week after week and months after months when the prices are set and flat since the beginning of the year. And that creates structurally a higher profitability for suppliers in H2 than H1, and that's true for Valeo as well.

Understood. Can I maybe just push you a little harder on that in terms of the, let's say, the percentage of EBIT contribution in the first half, just to help model what kind of margin we're talking about in the first half? How should we think about 1H versus 2H from an EBIT contribution perspective?

Well, I think it's too early to say. We did not guide H2 versus H1, but I think you have a good understanding of what we did in the last years. So I invite you to look at what we did, and I'm convinced that we will deliver, as we said, as a minimum for the full year.

The next question is from Thomas Besson, Kepler Cheuvreux.

Two topics, please, I'd like to cover. First, order intake and revenue growth. If I look at your Slide 8, you remind us that you had more than EUR 25 billion of average order intake over the last 4 years, but you're still guiding for growth to only really pick up in '27 and not reach that level at all in the foreseeable future of EUR 25 billion. So can you first confirm that when you talk about order intake, it's -- it only relates to the OE business and doesn't include aftermarket and others. And second, explain why we never seem to see the color of orders because I was looking at my model for Valeo and I realize that your revenues for OE and aftermarket in 2025 are only 4% and 6% above 2018, while we've had in between orders that have gone up massively. And we have missing in us that are revenues that are 50% higher, but margins 150 bps lower. So can you please address that topic? That's the first question. And the second would be about free cash flow and debt and the cost of the debt. So clearly, I think we all like your new definition of free cash flow a lot better. But this time again, you do a bit better on free cash flow, but your debt is a bit higher than what the market was anticipating. Can you talk about that, explain why the currency effect has not been neutralized? What happened exactly to your gross cash with the cash repatriation you've made? What we should expect in terms of both P&L and cash impact for the net financial expense in '26?

Well, thank you, Thomas. Two excellent questions. I'll take the first one, Edouard, you take the second one. Well, we know how sensitive, we know how important returning to growth is for our investors. We know this very well. And they are right. They are right because the operating leverage that we will get from additional sales is going to be a tremendous boost, both for our profitability and for our cash generation. So we know that it's extremely important to return to growth. And I think we've been extremely clear during the CMD when and why this is going to come in '27. So first, some clarifications that you requested. The order intake that we book is since '22, purely based on OEM business. There is no consideration for aftermarket. Aftermarket comes on top. It's based on the S&P volumes forecasted at the time of the booking of the order. It might change later on, but it's done at the time of the booking of the order. Point number two, and that's a pretty important one. And point number three, if there are some cancellation of orders on a given year, this is deducted from the awards that we receive on the given year. So what we publish as an order intake for the year is a net order intake between the wins and potentially some cancellations that happened. Now I have explained as clearly as possible during the CMD that the nature of a significant part of the order intake awarded since '22 has dramatically changed. I explained that these are multi-model platform-based orders, extremely large orders where typically, the way it's SOP-ed is much more gradual than before. Took the example of, I think, 4, I picked 4 examples during the CMD. These 4 had the characteristics of being multi-models. It means that when these orders are concerning up to 50 different cars. And the 50 different cars are not SOP-ed on the same day. You first have one model and then the second one and then the third one. And then 2 or 3 years later, you have the last car of the same platform that's typically SOP. And that creates a profile of growth that's very different from the one that we had before. Now the good news is, and we looked at it in many details to prepare for the CMD because we know how important it is for the investors, and we know how important it is to give a boost to our profitability and cash generation. The return to growth is back in '27. I think it was actually totally missed during the CMD. The CMD, this is what I said. And most people understood, well, there's no growth in '26, which is true. There's no growth in '26. And by the way, pretty much everybody since explained that there will not be any growth in '26. But the important and the interesting part of what I said was the return to growth in '27. And the return to growth of Valeo in '27, I think, is something big in the sense that it will not be the common behavior of all the suppliers I think that a lot of suppliers will continue to show flat sales in '27. And some, by the way, have already shared it. We will have a different behavior, thanks to this order book. So I know you can trust or not trust, but I'm telling you from the data we have, there's a return to growth of Valeo in '27. This is going to happen, and this is going to help us, thanks to operating leverage to boost both the profit and the free cash flow generation. Edouard, you take the second question.

Yes. Thank you, Christophe. Thomas, thank you for your question. Even more, thank you for your comments on the new definition of free cash flow. As far as the debt is concerned, what are the main moving parts? It is exactly the same than at the end of H1 because the exchange rate changes were violent in H1. You remember these big changes. And actually, in H2, the impact is limited. You remember, we said in H1, the impact of the net debt -- or sorry, of the ForEx on the net debt was EUR 260 million. And now we say EUR 263 million. So exactly the same at the end of June compared to at the end of the year. Basically, we have our gross debt leveled in euro and our cash mostly in China and in North America, so in RMB and in dollars. We have repatriated already a big part of it, let's say, 1/3 of what we had, in particular in China. This has cost us, as we said, the withholding taxes of EUR 41 million, but we still have some more to repatriate. That's the first point. But the second point is that even you repatriate, even it becomes euros, it's still euros at the exchange rate of H2. Therefore, the impact on the net debt is still the same at the end of H2, as it was at the end of H1. As far as the cost of debt is concerned, so we decreased the gross debt, as I said, of around EUR 500 million, EUR 466 million to be precise. And we do consider that this year, the P&L and cash impact of the cost of debt would be in the range of EUR 250 million to EUR 260 million.

Can I just follow up asking how long do you think it's going to take to repatriate the rest if you plan to repatriate the rest? Or are you done with your cash repatriation?

Yes, Thomas. We plan to repatriate somehow everything. The bad news is that our Chinese teams are so good that every year, they generate even more. So it will be repatriation step by step. I said we repatriate something more than 1/3, but they increased back the cash generation in RMB. And we have to balance also depending on local context, in particular, to secure that we remain a high-tech status company in China. This is a specific tax impact there. And we need to keep some cash in the country for a few more months and years, and the repatriation program will continue in the future.

The next question is from Vanessa Jeffriess from Jefferies.

[indiscernible] on the results. Just wondering if you could talk more about your expectations for Power in North America, in particular, in 2026 and how you expect the electrification backdrop there to impact sales and profitability when you net off the mix impacts on both? And then just on the cash customer compensation for canceled programs, are we expecting any more of that?