Release Date: July 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Solid earnings growth in H1 2024 compared to both H1 and H2 2023.
- US has become the largest revenue-generating country for OPmobility (PASTF, Financial), reflecting successful geographic diversification.
- Strong commercial momentum with a robust order intake, particularly in hydrogen and lighting sectors.
- Significant outperformance in North America with 11% growth, now representing 30% of total revenues.
- Improved financial metrics including operating margin, free cash flow, and net result compared to previous periods.
Negative Points
- Underperformance in the Chinese market, particularly in the C-Power and module segments.
- Lighting business continues to suffer from a decrease in sales due to a weak order book prior to acquisition.
- Challenges in the BEV segment with volumes 45% below expectations, impacting investment and operational efficiency.
- H2 and e-Power segments are still in the investment phase, resulting in negative operating margins.
- Market volatility and declining vehicle production forecasts for 2024, posing challenges for future growth.
Q & A Highlights
Q: Last year, your second half was weaker in terms of profitability despite higher volumes. Is it something we should expect again this year?
A: Last year, our sales were lower in H2 compared to H1 due to traditional market trends in Europe and North America. We expect a similar pattern this year, with H2 sales slightly lower than H1, but we are confident in posting growth compared to last year.
Q: Can you provide more granularity on the improvement in margins for your new divisions, particularly in the exterior and lighting segments?
A: The margin improvement in the exterior segment is driven by the traditional bumpers and tailgates business. Lighting has managed to compensate for a 25% drop in sales by improving operational performance and reducing structural costs.
Q: Can you comment on the level of losses in hydrogen and e-Power? Are they higher or similar to last year?
A: The operating margin for hydrogen and e-Power is slightly lower than last year due to ongoing investments and the start of production with a still weak turnover. These are considered investments for future growth rather than losses.
Q: Could you give us some indications on the evolution of your business with Chinese automakers in terms of revenues and orders?
A: In the first semester of 2024, Chinese OEMs represented more than 45% of our turnover for YFPO, with about 50% in the order intake. We have secured orders with BYD for plastic tailgates and are developing relationships with other Chinese BEV automakers like Huawei.
Q: Has the first half result been helped by recovery from OEMs based on volume shortfalls?
A: We have had some commercial successes in recovering from volume shortfalls, but the discussions with OEMs are ongoing. We are focusing on being more agile and cautious in our investments and quoting for new programs.
Q: Could you give us an update on your targets for the lighting segment for 2024 and 2025?
A: We still target a similar negative operating margin in 2024 despite a 25% drop in sales. For 2025, we aim to be as close as possible to breakeven, with growth expected to start in 2026.
Q: Could you provide rough revenue expectations for the hydrogen segment for the second half of this year and your target for 2025?
A: We expect hydrogen revenues to be around EUR40 million to EUR50 million this year, with higher revenues next year. The target for 2025 is around EUR250 million, slightly lower than the initial EUR300 million due to customer delays.
Q: Are the hydrogen orders, particularly the large one linked to North America, fully secured given the political landscape?
A: We are confident in our hydrogen orders, including the large one in North America. States like Texas are heavily investing in hydrogen, and we are adapting our investment pace to match customer developments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
