Ladies and gentlemen, welcome to the preliminary revenues and earnings in the business year 2023 conference call and live webcast. I'm Sasha, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for question at any time by pressing star one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Mr. Stefan Pierer, CEO. Please go ahead. Thank you very much. Good morning to everybody. Warm welcome to our presentation of the preliminary results of 2023. Yeah, who we are. PIERER Mobility is the holding company for the brands KTM, GasGas, Husqvarna, MV Agusta, including also power two-wheeler electric bikes. We are the biggest European power two-wheeler manufacturer. As you are aware, we are listed in Zurich. If we jump to 2023, just as a big picture, 2023 was a challenging year. Fortunately, on the motorcycle in our main markets, it went very well because North America, Europe, also India growing markets, China flat, Latin America flat, but overall, we did a great job on the motorcycling. On the motorcycling, we did almost 325,000 units. On the bicycle, it was a different picture because the bicycle, after releasing all the lockdowns and coming to a normal life, it decreased to the level of 2019. The whole supply chain was fully equipped. Margin-wise, already in the first half of the year, was heavily under pressure. Immediately, we turned around and reshaped our strategy, doing back to power two-wheeler bicycles. We sold the, I would say, mid-class and cheap brand, Raymon. We separated Felt as a bicycle company, and now we are running clearly on power two-wheeler products. In total, we did EUR 2.6 billion, exactly EUR 2.661 billion, including almost 160,000 bicycles. We ended up at 482,000 power two-wheelers. On average, we employed 6,200 people, most of them 5,000 are in Austria, the rest abroad. If we jump to the company structure, we have a clear division, separation. On the motorcycle, we have the brands KTM, Husqvarna, GasGas, MV Agusta. As last year, we deepened our relationship with CFMOTO in China. Later on, we will explain in detail. We take care for the distribution in Europe for CFMOTO. On the bicycle and electro mobility products, as I said, we are sharpening Husqvarna, GasGas, and as a new product, electric scooter, a high performance scooter from our partner, CF. On R&D and design, it's as always, it's KISKA, our design company, our R&D, and our separated R&D in Barcelona. In total, in this division, we are talking about 1,400 people. Innovation is a very important part, innovation rate. The next column, you can see our digital and IT structure. It's Avocodo, our KTM Informatics, digital agency. In total, we are doing most of all, programming for our marketing and websites in-house, and separately our very important marketing instrument is racing, motorsport, where we almost have 400 people, where we are running with the three motorcycle brands, KTM, Husqvarna, and GasGas. Okay. If we jump, then I would like to hand over to Hubert Trunkenpolz. Good morning, everybody. I would like to introduce a program that we have agreed in the board of directors, which is called Pole Position. Given the general economic circumstances, and also especially the situation in the bicycle industry and the bicycle market, we decided that we will resharpen and focus our strategy. We will not have a change in strategy, but we will have a sharpening in our strategy. Pole stands for premium, objectives, leadership, and earnings. What this means, just very briefly, premium, as Stefan PIERER was already mentioning, we have divested the entry brands in the bicycle business called Raymon. We will focus on, in general, also in the bicycle business on high-priced premium mountain bikes and high-priced premium e-bicycles. The same also for our motorcycle brands. In which segment we are active, we always will aim to be in the premium of the market. To command also relevant premium prices and markups. Objectives is also clear. It comes along with refocusing the strategy and also having the mindset again in the foreground, which is coming from racing, performance and winning. This is what we also transfer to all our staff and also our stakeholders in the company. This comes along with leadership. In our case, it doesn't only mean internal leadership. In leadership, we also think about leading the segments and leading the market segments in which we are. Last but not least, I think this is the most important. We have been very much volume driven in the past. We have reached market shares over 10% in all the relevant markets. We now think that it's time to adjust this strategy in terms of keeping that market shares and have more focus on earnings. Means, we do not buy ourselves market shares. We wanna create shareholder value in the future by having focus on earnings rather than growth. This leads me already to the next slide. Here you see this, I would say impressive growth that we have seen over the last years. Definitely, we wanna keep on growing. We want to stay a growing company, but the times where we have double-digit growth rates are over because it's simply not possible anymore if we would not buy market shares, and this is not in line with our premium strategy at all. Last year we had a total sale including the so-called non-e-bicycles of 438,000 vehicles. Out of this, we have sold 482,000 powered two-wheelers. It's a significant growth compared to the 2022 year. When we then go more into detail and take a look on the split between motorcycles and bicycles, then we see that in the motorcycle business, we sold 381,555 units, what equals a growth of 2% compared previous year. The growth was more or less carried out by the brand KTM with a plus of 4%. A very, I would say, big growth in the region of Europe, where we sold 140,000 units, what equals a growth of 15%. In North America, we were considering the high dealer stock and took out wholesale pressure. We ended up at 101,000 sold motorcycles, which still is by far. We are by far the biggest European manufacturer in the U.S. or North America with that figure. The biggest growth was achieved in India, where our partner Bajaj is in charge of the sales of our products, KTM and Husqvarna. The Indian market was also developing very dynamically, so there we could achieve a growth of 29%. Latin America was under pressure. We all know the circumstances economic-wise, with -26%. Same in Asia. Australia and New Zealand was flat, and Africa, Middle East is a very small region. They had -5%. Jumping now to the bicycle wholesale. In total, we sold 157,000 units, what equals +33% to previous years. Out of these 157,000, 67,000 were bicycles and 90,000 e-bicycles. These figures look from the first look extremely positive in terms of unit sales, what they are, but a big portion of them is also credited to the sold out and de-invest of the brand, Raymon. The volume, so to say, was not in line with profit because most or many of the bikes sold were sold with almost no margin or even negative margin. When you jump to the next one, dealer development or dealer network development, we had to do a massive effort in building up a MV Agusta dealer network. We were quite successful in now implementing 142 MV Agusta dealers, which are real MV Agusta dealers. So we call them ready to invoice. So this means, these dealers have not only the financial resources and proper showrooms for it and are also connected to our IT systems. On the other side, we were increasing the number of KTM dealers, decreased a little bit the number of Husqvarna dealers. Here we had to put more focus on quality of the dealers, and also we had an increase in GasGas dealers. All in all, we have 4,760 motorcycle dealers. We've communicated earlier that the target is 5,000 motorcycle dealers. Given the circumstance that we're still missing 200 MV, at least 200 MV Agusta dealers, which we will bring into business over the year 2024. We are heading towards the target of 5,000 dealers pretty quick. Same with the bicycle dealers. Massive increase, as you can see. Here we will also have a lot of focus on qualifying dealers. We will not sell our products through the big retail chains. We will focus on the specialized, independent bicycle dealers, and much more focus, again, on the second or the exclusive distribution channel via our motorcycle dealers, that we have in our network already committed to sell also, bicycles. To our strategic partnerships, Stefan. We share that because Hubert takes care in China, and I'll take care in India. Our meanwhile strong alliance with Bajaj is lasting almost 17 years, so has built up very nicely. We have agreed for the upcoming year that we separate the distribution organization in Bajaj. We separate as a KTM operation. Shareholding-wise, nothing will change, but we are going to be involved in that. We are sending also an MD for that to bring in more experience, more knowledge, especially on the off-road segment, because Indian market is the fastest-growing one. They are benefiting out of the Russian war through the cheap energy prices. It's The premium market is growing fastest, so that means we have to make a strong involvement. Secondly, we already have the third generation of our joint products. Start of production happened in December, so we expect for this year good figures on that. In India, it's well perceived. In addition, we agreed to develop a new joint platform, a two cylinder, 500 cc, 350 cc. So that part is going very well between Bajaj and the KTM PIERER Mobility. In China, it's almost similar, Hubert? We just Stefan and I returned from China just last week and brought really new insights. The cooperation or strategic partnership, meanwhile, we see CFMOTO is really going well and strong. We enlarged this partnership to a cooperation also in research and development, product strategy, industrialization. We were again deeply impressed about the possibilities which are offered through this partnership in CFMOTO in all these respects. China is definitely ahead in the technology of all electric vehicles, therefore we also decided to move the development or most of our development of electric vehicles to CFMOTO and produce and develop joint products out of this cooperation. Also, we have agreed during the last months that our group will take care for the distribution of CFMOTO products in most or the most relevant regions in Europe, same as CFMOTO is distributing KTM products in China. This is a very strong and fruitful partnership meanwhile, and out of this, we also decided to increase the production capacity in our joint production facility from 50,000 units currently up to 100,000 units during the course of the year. Coming back to Europe, our strategic alliance or strategic partnership with Maxcom in Bulgaria. Maxcom is sampling all our power two-wheelers for the market. Due to the adjustment of the strategic plan, instead of going to big volumes, focusing on quantities on the premium segment, I think it's the first positive outcome in our joint investment. Don't have to do the second step to invest in a second production facility. We can use the existing one because also third parties are going down at Maxcom. In the future, we don't need an additional sampling factory in Bulgaria. We can use the facility from our partner. Secondly, our joint facility for logistics, we are using as a logistics center for incoming and outgoing products. It got finished by September last year. It's working pretty well in cooperation with our logistic partner, Lagermax. That's on a good way. If we go to the next slide, I think you can see our global footprint on production. That leads me a little bit to an explanation what's going on with Europe. Due to the high inflation rate, especially in Central Europe, Austria, Germany, and the high increase of labor costs. The global companies from Europe, they have to react. What does it mean for the PIERER Mobility? It's clear, we are going to India anyway, we already since a decade, but we are enlarging our activities in China. We're transferring the mid-class segment. That means not just the seven, also the 950. Secondly, I think that's the biggest new change in that we're also transferring a big part of our electric development department to China. That's the ongoing thing. That means, throughout this year, for sure, we are going down by 300 people-400 people due to the fact that we transfer quantities to China and also R&D capability and capacity. That's the big picture. We have, in Hangzhou, a good working factory, which currently is 34,000. We agreed in our last visit that we put in additional products, so that the next two years-three years we're going up to 100,000. India, anyway, it's an, I would say, an endless capacity. In Europe, we are focusing on the premium models and off-road. Yeah. That means 230,000, what we had on our peak, will go down to 160, 150, focused on premium models, small quantities and off-road, high-end. In addition, we have our tax avoiding CKD operations. The biggest one meanwhile is Philippines, where we want to enlarge, because from the Philippines, you can also send completely built up motorcycles above 800 cc to India, which is a real benefit. Then in Latin America, Colombia. In Brazil, we have decided in the future to do it on our own, the assembling in Manaus. Argentina, let's see what's coming out of the new president. I think it sounds optimistic, but currently it's chaos in Argentina. We have a small operation in Spain with GasGas, where we are doing our trial products, already 5,000 units last year. We are always adding small electric kids bikes, so that's working very good. That's our global footprint, but as a main message, Europe comes down and increasing China and India. All right. Maybe last word to our brands. As already mentioned in the earlier presentations, PIERER Mobility and KTM itself also is a house of brands. We decided already more than 10 years ago that European strong brands must be clearly positioned. Not to give us this clear position, we added more brands to the portfolio in order to reach additional customers without cannibalizing the other brands. Everything started with KTM, and KTM is a sports motorcycle brand, a racing brand with purity, performance, adventure, extreme as brand attributes, and therefore very clear positioned and has a fan base, a global one. They call themselves Orange Bleeders. We will stick, maybe even resharp this position. Different is Husqvarna. Even using technology from KTM, especially engine technology with completely different ergonomic design and setups, we have achieved a completely different motorcycle lineup. This works very, very well because we reach other customers which have another focus and understanding of motorcycle riding than the KTM guys. With GasGas, we go a very much different direction in the future. This will be the young brand in our portfolio. Also the product portfolio will go much more towards younger people. Fun and inviting will be one of the brand attributes. Therefore, with GasGas, we are very keen that we also can reach customers which we would not be able to reach with KTM and Husqvarna. Last but not least, MV Agusta. You know that we have bought in 25.1% of the shares of the production company. We have control about 100% of the distribution and the purchase meanwhile. We are in the lead of all the operations. We have announced that we will execute the call option to go into majority the latest in 2025. I think MV Agusta is clear. It's the luxury brand in the portfolio with a lot of potential. We are just in the process of setting up standards and more visibility to the company. All in all, as mentioned earlier, we have agreed to take over the CFMOTO distribution in Europe. CFMOTO products are also using KTM technology. For us, it's an entry brand in the motorcycle distribution, where we will approach, for sure, Suzuki dealers and other dealers which we have not reached so far. Okay. Also good morning from my side. I would like to start with an overview about the development of our employees. I think what you can see, especially what happened in 2023, was the consequence of the switch in the strategic focus. When you see the development starting from 2020 to 2022, we hired in total more than 1,500 people, and from last year to this year, it was only 96 people, employees. And if you consider the circumstance that we also recruit 75 apprentices, then you see what happened in the last year. We also started to decrease our employees numbers in the second half. I think what's worth mentioning is our apprenticeship program. We will continue with this program as the backbone for our skilled workers and employees. We're also a very young company as compared, I think, with other companies in the industry. Our female share with almost 26% is very high. Now coming to the facts and figures of last year. As my colleagues mentioned before, we achieved another record year in regards of revenue with a plus of EUR 224 million in sales. If we come to the margin, you see that we suffered last year. What are the reasons for that? There are several ones. In Europe and especially in Austria, we are facing high salary and wages increases over the last two years, and this had an impact on our EBIT margin of almost 1.6%. It was also necessary to fight against our competitors in the market to gain market shares, as my colleague Hubert mentioned before. This resulted in additional discounts, which were needed in 2023, and which had an impact on our EBIT margin of another 3.2%. In opposite of that, we were able to reduce already costs and increase productivity, but we were not able to participate or to anticipate this for the whole year, but it had a positive impact until now of 1.1%. In total, when you compare the margin development, we've closed the fiscal year 2023 with an EBIT margin of 6% and an EBITA margin of 12.2%. There is an additional impact when we come to earnings before tax. These are the interest rates. Why? Our financial results decreased last year tremendously. Why? Because we were forced to support our dealers via long payment terms to also slow down their increase of their financial impact because of the high interest rates. This was necessary to support the dealers and also to gain the market shares, as my colleague mentioned before. Now, when I come on the next slide to the segment, I think this gives you an overview and also shows you the necessity of this strategic switch, focusing on power two-wheelers and step out of low-margin e-bikes, which ended up with the sale of Raymon. Why? When you see the motorcycle segment, EBIT margin of 8.9% is considering the impact, which I mentioned before, higher personnel costs, higher discounts, I think was satisfying and was within the original guidance we set out last year. The bicycle segment itself was very difficult for us because of the reason you've heard before, and this influenced our earnings by almost EUR 50 million. This is also the reason why we step out of this classic bicycle business, and we focus on power two-wheelers with our brands GasGas and Husqvarna. Having a look on the balance sheet numbers, due to the circumstance that we had to support our dealers with longer payment terms, this had also an impact on the balance sheet total. We also supported our suppliers with shorter payment terms or with financial instruments to support or to stabilize their liquidity situation. This ended up in a lower equity ratio than we had in the previous year, increased our working capital, as you see it here, almost tripled our working capital compared to the last two years, and had also an impact on the gearing number. This action we took by purpose, it was clearly communicated. It was also necessary to stabilize our supply chain on one side and the dealer network on the other side, but it had a negative impact on the free cash flow, as you can see here in the bottom of this chart. I think it's necessary to mention that we stick to our investment program in regards of product development. We also increased in 2023 our activities in that area by almost EUR 30 million. Nevertheless, we believe that this is important and necessary, especially to compete with the other competitors, our competitors in the future. On the last slide, the development of the free cash flow. I don't want to repeat all of it, but you can see here the summary of what I've mentioned before. The increase in working capital for sure influenced our cash flow of operating activity by almost EUR 400 million. We continued with our investment program, as we did in the past, but it had a negative impact on the free cash flow by almost EUR 20 million. The deviation compared to last year is explained by these two concerns, by these two circumstances, and they are absolutely important for our strategic focus in the future. This was it in a nutshell. At the end of our presentation, I would like to hand over to Stefan again to explain the strategic outlook. In wrapping up our summary, refocusing on premium brands, that's clear. KTM, GasGas, Husqvarna, and MV Agusta. On MV Agusta, it could happen that we are coming closer this year. It could happen, so that's clear. On the bicycle, we focus just on PTW. That means power two wheelers, bicycle. Not anymore e-bicycles. On the electromobility, we're deepening our strategic alliance with CFMOTO to a lot of new products, especially under the brand name, GasGas, will show up. In intensifying also our strategic partnership with Bajaj. I think that's basically a must and also very important because on the European side, it will go on. The inflation will stay high. Interest rates, hopefully it will come down, but we have to react immediately. We have to strengthen and coming back to a good profitability. That means between 8%-10%. That's clear. That it's working together with our global partners in India and China. Honestly saying, it's also help to have two from these different regions, because you have a Chinese and an Indian partner, you can balance out your interest. That's basically what we have for this year, and cost reduction in Europe as much as it gets. That's my final wording. Q&A is open. We now begin the question- and - answer session. Anyone who wishes to ask a question may press star one on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star two. Questioners on the phone are requested to use only handsets and eventually turn off the volume from the webcast. Anyone who has a question may press star one at this time. The first question comes from the line of Constantin Hesse with Jefferies. Please go ahead. Hi there. Good morning. Thank you very much for taking my questions. Number one, I'd like to start with the bicycle segment. I think what you mentioned was that most, a lot of the bicycles were sold with basically no margin at all, given the discounts that you had to do. Was that across the portfolio or primarily bicycles only, excluding the e-bikes? If you could potentially give us a bit of an update on how the environment is currently looking like on the e-bike segment, especially around pricing as well. Have you seen any positive developments there? That's my first question. Okay. Yeah, you can pretty easy explain that the cheaper the bicycle is, the less it was under the pressure. The more it's under pressure. This is why we really focus on premium in the future, because what we have seen, everything below EUR 3,000 retail, especially what we was carrying under the brand Raymon, we had to heavily discount because it's a kind of commodity and therefore the outcome is the resharpened strategy. What you will see in the future, in terms of e-bicycles from our group, under the two brands, GasGas and Husqvarna, will also benefit technology-wise from that what we have learned in the motorcycle, especially the off-road motorcycle over the last year when it comes to suspension, braking systems, et cetera, et cetera. We really clearly want to separate ourselves from the volume and mass makers, and therefore, it was necessary to get rid of the cheaper products. In general, this is also in line when we take a look on how is the pipeline filled. There also we see that more premium the bicycles are, the less is in the pipeline. We already see demand on bicycles model year 2024 and 2025 with a higher price tag, because obviously Are not overstocked with this kind of bicycles. The lower you get, the more stock the dealers are still carrying and the fuller the pipeline is. Therefore it will for sure take another almost a year to clean out the pipelines with the low price bicycles. With the high price, we are much more optimistic. We see this already between three months and six months that there will be I would say the market is coming back more to normal. Understood. Just to understand, what's the typical holding time of bicycles in inventory usually? The rolling time? Holding. Holding time? Yes. It's at the moment, the cheaper they are, the longer they stand, yeah. Sure. Yeah. It's two a year at the moment, yeah. At the moment, a year, I would say. Yeah, yeah. for the premium ones. Half a year. Yeah. Maybe not even because if you buy a top premium, you have waiting time already again, yeah. Yeah. Sorry, I meant what's the usual holding time? Sorry, not what's currently. Usually, I would say, yeah, four or five months at least. Yeah. It depends a little bit on the seasonality, yeah. Yeah. I would say in springtime and summertime, it's shorter. Autumn, winter it's a little bit longer because of the weather conditions. Understood. Okay. Thanks. Quickly onto the balance sheet. I mean, free cash flow was pretty under pressure in 2023. If you could comment maybe on your debt covenants, and if you could provide us with any commentary around free cash flow for 2024, that could be great. Thanks. I think with our numbers, we are all within our covenants we have in place. There is no additional need for example, for equity increase or something like that. We are within our guidance, within our covenants. The cash flow position or the free cash flow position for this year should come back to, I would say, normality. We will see how successful we are to reduce especially inventory on the dealer side, how big the demand from those is to support them in addition. We expect to come close to, I would say, close to zero. Maybe positive. Okay. Understood. Thanks. Just quickly on this strategy to go further to China, how are you assessing the potential geopolitical risk here? I mean, with Europe already investigating the import of EVs on the automotive segment, is there, like, any risk that you potentially see here in the future when it comes to electric motorcycles and the import of such to the U.S. or even to Europe? We do not see more risk than with anybody else, because if you are in China, then this Taiwan topic is of course seen from a different point of view. In China, everybody is 100% aware that the conflict with Taiwan or a serious conflict with Taiwan would heavily affect the Chinese economy as well as the U.S. economy, as well the global economy. We do not really see this escalation in the near future. Of course, we cannot predict what's going to happen. Talking with people there over there and as well in Taiwan as well as in Asia. Honestly saying, I'm not in charge for the European Union, but as a global European company, you must team up in China, otherwise you are disappearing. Secondly, due to the fact that we have assembling and production facilities basically everywhere, I can find a way around because just for example, the 790 engine is produced in China, is delivered to Austria, and now we are doing an Austrian Husqvarna 790. I think if you are acting quickly, immediately with some smart moves, yeah, you're on the forefront. Just to give you an example, 90% of the parts for all Apple products are coming from China. I would be surprised how this should go to block that, because then one of the most valuable companies in America is dead. Yes. Yeah. Understood. Just for clarity then, the smaller sizes are gonna be manufactured in India with Bajaj- Yes. Made in China and the premium in Europe. In Europe. That's the strategy what we are running on a motorcycle. As long as it gets, we keep Europe. Yeah, it's clear, but stupid politicians and all that surrounding is not helping. Yeah. Okay. Thank you. The next question comes from the line of Christian Braun with Finanz und Wirtschaft. Please go ahead. Hello, and good morning, everybody. I have two questions concerning the dealer problems. First, it has been many years since we have seen an interest rate increase like this one. I therefore was wondering whether this weakness of dealers is a usual phenomenon in times of increasing interest rates, or that they just have become weak and careless because of these years of low interest rates. The second question is, you mentioned financial support for dealers, extended payment terms and high discounts. Have there also been loans to support them? No. The one goes along with the other. High interest rates are affecting the business on two ends. First of all, retail financing is more expensive, and this is especially a problem in the United States, where most of the products are retail financed. High interest rates, of course, is not helpful. Therefore, we have to bring promotions into place to ease this cost of financing and give the consumers more appetite for buying motorcycles. On the other side, high interest is also, of course, causing a problem in dealer financing and the floorplan financing facilities that we have in place. You must imagine a dealer has a margin of 15%. Out of this margin, he has to give some discount away to the consumer. Maybe let's talk about the remaining margin of 10%. It makes a big difference if the dealer has to pay 1% interest or 5% interest for financing his stock. This is also something where we have to help. In addition, Viktor, coming to your question, loans to the dealer, short-term loans, yes, if they are needed to prolongate the payment term, but no long-term loans. Okay. Thank you. After a decade of low interest rates or without an interest rate, the whole economy got used to that, honestly saying, yeah. That extremely fast increase 10 times within eight months from the European Central Bank is hurting European industry or European economy heavily, I can tell you. That's the reason sooner or later they must come down with on a certain extent with the interest rate, otherwise it gets damaged, the European economy. Okay. Thank you. The next question comes from the line of Christian Arnold with Stifel. Please go ahead. This is, yes. Good morning, gentlemen. Good morning. Question on the end markets. We have seen a very solid performance in Europe, clear growth here, kind of stagnating market in North America, declines in Latin America and Asia for your motorcycle business. What do you expect for 2024 in terms of these markets? In Latin America, it's difficult to predict how Argentina will develop at the moment. Argentina is an important market for us. Always was and still is. For the other markets, we are very optimistic. For example, in Colombia, we changed distributor and also our setup. In Brazil, we just decided to reopen our sales subsidiary in São Paulo because we also see potential there. We are pretty optimistic that we can offset in these regions what we eventually will lose in Argentina. Nobody knows at the moment. Maybe Argentina also turns out to be a positive surprise. It's an economic experiment, what you see at the moment there with an unpredictable outcome. The rest of the region should be better than in 2023. In Asia, the number that you see in decline of wholesalers is misleading because what is in line with our premium strategy, we pulled out of some businesses where we only sold cheaper motorcycles with lower margins and focus also here in Asia, especially on the premium products and also more expensive motorcycles. What we will see is maybe a stagnating number in wholesales or units, but a decrease in turnover and profit in Asia. This is the strategy for Asia. In North America, we expect a flat market because America's economy looks like a soft landing. So far, they are doing very well. In Europe, we are also expecting a flat market because that increase what we had last year, we don't see as that is repeating. What's very really curious is that the premium or the motorcycle is still a product. is in the focus of the customer, yeah. That's the opposite to the bicycle. The bicycle is not really that thing what you need. That means vacation on a premium end, motorcycles are still in very good demand. Well, there are still the megatrends that we also have seen before COVID was playing into the business. The megatrend was always that the powered two-wheeler is replacing step-by-step the car. It's a commuting tool. It's a, yeah, it's a tool that avoids traffic jams, the parking space problems. It gives you more flexibility. Also, weather conditions are changing, so the megatrend towards the powered two-wheeler is unbroken, is ongoing. Thank you. On wage inflation. Your personnel expenses had a negative impact of 1.6% on EBIT margin, you told us before. I believe this pressure will remain in 2024, right? Wage inflation is also a big topic for 2024. Could you quantify what you expect? I think we will face the same impact in total numbers on our earnings than we faced last year. But as we published in our last press release, we started a sharp cost restructuring program to compensate these additional costs. These high wage increases also had an impact on our strategic focus to transfer activities to our strategic partner in India and in China. Honestly saying such a tough situation is squeezing us and focusing very much on that new strategy. You can imagine what I have to explain to the Austrian politicians and to the community that we said we go to China and India, although we still have good profit. Yeah. That's the problem of Europe. Yeah. Austria is on the leading edge of the inflation rate. The net income for the employees is still higher than a year before, but it doesn't help. It's just, it's not the solution for Europe. If you're doing it in all Europe like that, the industry is disappearing. Anyway, the energy-intensive industry is on the way. Thank you. Maybe a last question on your margin guidance. In your press release, you were talking about this 5%-7%, which you expect for 2024. Is it fair to assume that the motorcycle business, you aim still for your 8%-10% target margin? Yes. That implies the bicycle business will still do the loss making, right? It is. As in the press release. Restructuring and focusing. This is on the way. That means it's not finished by the end of January. Yeah. Yep. Okay. Thank you very much. You're welcome. Next question is from Michael Kois with Bellevue. Please go ahead. Yes. Hello, gentlemen. Just a quick question actually coming back to the bicycle business. I was just wondering if you could maybe quantify the turnover in the e-bicycle business in 2023. I think it was EUR 146 million in 2022. This year, I mean, you've indicated the units breakdown between e-bikes and non-e-bikes, but not the turnover. Just to have an indication on that. The total turnover was EUR 214 million for the bicycle business as a whole. Mm-hmm. Two thirds were e-bicycles and one third was non-e. Okay. The non-e was influenced by the sale of Raymon. Most of the bicycles we sold were Raymons in that segment. This was also the reason for this focusing on the two other brands. Yeah. Okay. I see. The other question I had on the working capital, I mean, as you said, obviously we should see a decrease of the working capital. Just looking at, you know, ballpark figures, in 2023 you had roughly EUR 0.5 Billion in working capital. In 2024 with your assumptions of a flattish turnover, where do you think, roughly speaking, we could end up in terms of tied up working capital, basically from those EUR 500 million? I think the big question on that will be the stock situation on the dealer floor, because this has a huge influence on our receivables. Mm-hmm. I expect a reduction. It will be not on the level what we had in 2022 and 2021, but I assume that maybe it's, it should be something in the middle. This is not our target. Maybe the same question on the CapEx side. I mean, you've reached a peak of, I mean, close to EUR 300 million in 2023 total envelope, let's say. Is this going to decrease slightly in 2024 or are you still on those high levels? It should decrease. Why was there a peak in 2023? You remember we opened in April last year, our headquarters in the U.S., which was the largest investment outside Austria ever in our company's history. We opened the logistics hub or the joint venture in Bulgaria, which was also an investment of about EUR 40 million in total. EUR 20 million were within this year. We had to invest in our new dealer software called Dealer.Net, which will have an impact of EUR 15 million. We enlarged our R&D activities. These were peak situations in 2023, and here we should find a normal level in 2024, which should end up in a reduction of the CapEx level. In addition, what's supporting that is the strategic decision to move also R&D activities to China. It's also helping. Are we going back to a level of, I don't know, EUR 250 million, EUR 260 million, something like this, or as an indication? 2024, 2025, yeah. In 2025, yes. In 2024, you cannot stop an R&D project immediately, yeah. You have to finalize these projects, if it's from an economic perspective wise to do this. There should be a slight reduction in 2024 and the bigger reduction in 2025. It goes down. Okay. Maybe just a point of detail. On the minority line, it seems that in Europe it seemed you had a positive impact this year of close to EUR 4 million. What was that related to? The minority impact. These are several. China. It's China, but we have also our joint venture in Bulgaria. Yeah, we have minority interests. We have on the Philippines, minority interests. So there are some smaller participations where we have minority interests. But mainly it's coming from the Chinese. Yes. CFMOTO. Yeah. Okay. Okay, very clear. Many thanks. Thanks. Yeah. The next question comes from the line of Marc Dittel with Vontobel. Please go ahead. Thank you. Good morning, everyone. I just have three questions. Good morning. The first one is you just talked about CapEx. I'm just wondering when you said it will come down, does that mean in absolute and relative terms? So even if we expect 2025 to grow again, CapEx would then come down both on absolute and relative terms. Then the second one is on the margin guidance again for 2024. Can you tell us what is the charges you think for the reallocation and the production shift and how much that affects the motorcycle margins? And the third one is when you say free cash flow development should normalize, so does that mean back to the 3%-5% of sales levels already 2024? Thank you. Your last question, free cash flow, 5%-7%. I don't see at the moment. I think this is too early to predict now. As I said before, the biggest impact on that number is the demand from our dealer network to support them. We expect a positive influence on that, but estimating the real impact, it's too early now. It should be in absolute numbers and in a decrease, and in relative numbers an increase. No, also a decrease, sorry. As I said before, we had over the last two years, several impacts on that figure in our product lineup. When I go back two years ago, it was EUR 44 million, for example, less than this year. We had to invest in our IT infrastructure. I mentioned the Dealer.Net, which is our communication tool to our dealer, but we've also invested a lot of money in our security systems. There are a lot of extraordinary items which had an impact in 2022 and also in 2023. I think. Does this cover all your questions or? Yeah. No, thanks. No, the third one was on the margin guidance for 2024. Okay. 5%-7%. What is kind of the extraordinary charges of this restructuring and reallocation? Is that kind of how big is the charges? You're talking about EUR 40 million-EUR 50 million, we have to assume, which would fall away in 2025. Look, I think our target in motorcycle business is to stay within the original guidance. The actual guidance is 5%-7%. I think there is room for restructuring the bicycle business, and there is room to cover the costs, which comes along with the strategic shift towards our strategic partners in India and in China. How this develop, I would say this we will see in the upcoming months. Okay, thanks. We have a follow-up question from Constantin Hesse with Jefferies. Please go ahead. Thanks. Just very quickly on the bicycle segment, are you making any margin at all? Obviously I would assume that most of the loss is driven by the traditional bicycles, but on the e-bike segment, excluding that low end, are you already profitable at all or is that still loss-making? I think it depends what you mean with making a margin. Yeah, if we come to EBIT level at the moment, not clearly say, but this is the reason for the strategic shift on the gross margin. In the e-bicycle business, we have a slight margin, but we have a margin. Okay. The slight margin at 100,000, it's a slight margin. No, it's a little bit more for sure. You know, you must see that result. For sure there is a margin. Also the higher price the e-bicycles were, the higher the margin was. In the top range, we had a margin. Yeah, we have a margin, but you have to cover the structure, and you have to cover development costs. This is, as I said, yeah, if you count margin on the EBIT level, no. If you count margin on the product level, yes. Okay. To get EBIT positive, what kind of scale do you need to have here? I think this is what we are doing now. We sold Raymon. We stepped out completely of the, let's call it e-bicycles, meaning we also will sell Felt, which is for sure a profitable brand, but nevertheless, it's out of our strategic focus, and we focus on our two brands, GasGas and Husqvarna, sharpening the product lineup and come and increase the profitability in these two brands. Maybe to explain, when we started with the bicycle strategy, where we had huge quantities in mind, we have structured a separate independent division with I would say 150, almost 200 people to cover Europe and the global market. Due to the strategic decision to integrate and then reduce to powered two-wheelers, that means we are reducing people at least 120. Yeah. Integrating in the existing organization in all sales hubs. That's our restructuring costs. If you reduce 120 people, you have to pay something. Fortunately, we are in Austria, not in Germany. Anyway, you have to pay for that. That's what Viktor meant or explained in his... Also on the product side, what we have in mind is that, even if we talk about e-bikes, but we will talk about real Power Two Wheels. It's not this coming into urban mobility with the products which are separating from what is on the market so far. With GasGas, we go into high-end mountain biking. As I already said, we are the market leader in off-road motorcycles, so you can trust us that we know how to make a proper suspension and braking system for such products. This is where we see us in the future in the e-bike business and leave the mass market to the others. Maybe to explain in addition, we are setting up or we set up also close relationships with main suppliers. With SRAM, we have a close relationship with GasGas, so we are using exclusively SRAM, doing joint developments even on the powertrain. On Husqvarna, which is a urban and a city bike and a very European-focused brand, we have on the powertrain a relationship with Bosch. That's it. Nothing else. We don't have any more Japanese manufacturers, and that is also part of the resharpened strategy. Maybe just ask one final one in terms of a potential timeline here. When do you expect this business to potentially become profitable at EBIT level? Is there any timeline or? It must happen by the end of this year, otherwise it's not a restructuring. That's what I learned. 2025. 12 months-15 months. That's. Yeah, it's part of the game. You must pay for that. No, fine. Because my question was, in normal operations, is the e-bikes business profitable? Normally, it's based on the quantity, it's profitable. Yeah. It's still on a margin level, what we explained between 4% and 6%, yeah. You are heading towards the motorcycle. The loss comes out of the restructuring cost. Yeah. Okay. Thank you. The next question comes from the line of Miro Zuzak with JMS. Please go ahead. Hello, good morning, gentlemen. Good morning. I have a question regarding the capitalized R&D. You have between EUR 400 million and EUR 500 million of capitalized R&D on the balance sheet at the end of last year. Is there any chance or any risk basically that you have to write off some of it now with all the changes that you're applying on your business structure? No, because we do not capitalize R&D costs for the bicycle segment. We didn't do that. It's on other motorcycle, it's checked every year based on the lifetime and the quantities. That's on the motorcycle, nothing has changed. The bicycle, as a beginner, we didn't do something. It was always written down. Okay. A second one is a follow-up regarding the net working capital, related to the question Michael Kois asked before. If you talk about the normalization now in 2024, do you mean like that the change in net working capital will be, you know, come close to zero? Or do you believe that the level of net working capital will normalize and hence the change in net working capital, the level will be negative, so it will come from EUR 500 million down to EUR 300 million or so again, or EUR 200 million, and the cash flow effect will be positive? When I talk about normalization, I mean, this is the level of net working capital. In 2023, we had extraordinary high level because of the reasons I mentioned before, dealer network, support and so on. For 2024, we expect here a reduction of the level of net working capital because we expect that the payment terms towards the dealers will go down. The DSO should be reduced during the year, meaning we can also fully utilize our ABS programs we have in place, which should have a positive impact on the net working capital. Okay. The order of magnitude, I mean, will be then like EUR 300 million or so in your cash flow statement. Last year we had EUR 200 million, last year, meaning in 2022. In 2023, we had EUR 500 million. I would say something in the middle. Okay, cool. Thank you. There are no more questions at this time. Okay, everybody. Thank you for the good communication and the Q&As. One or the other, we see each other today and tomorrow. Thank you very much. Thank you very much. Bye. Thank you very much. Bye. Ladies and gentlemen, the conference is now over.