Welcome to the conference call for the results of Q1, 2024 at CIE Automotive. Today we have Lorea Aristizabal, Director for Corporate Development. At the end of the presentation there'll be a Q&A. I'd like to remind you the questions can only be asked in writing via the tool provided in the webcast. Now I'll hand over to Lorea. Go ahead, please. [Foreign language] Good afternoon, everyone. Welcome to the conference call on the results of the first quarter at CIE. We can begin by reviewing the situation of each market and its prospects. Production in Europe, we'll start with Europe, shrunk by 3% in the quarter and suffered a strong deceleration, particularly in the month of March, explained by a very strong comparison base and by the calendar effect of Easter, which this year was in March, and last year was in April. A deceleration which has been also felt in the demand for electric cars, whose market share has dropped in Europe from 22% in 2023 to 19% in this first quarter. In a scenario with a removal of incentives for the purchase of electric vehicles in important markets like Germany and regulatory uncertainty in general. According to IHS, this year 2024, it's expected that Europe will shrink by 2%, in the context of exhausted demand and normalized inventories. Even so, it's important to highlight indicators that point to a solid final demand, such as the aging of the mobile fleet, which has historically high levels over 12 years old, and the level of incentives offered by OEMs to the end consumers, which are below pre-pandemic levels, currently 10% versus 15%-20% in historical figures. Long-term, there are no changes in the structural estimate that production will basically remain flat in Europe, which together with some utilization ratios around 60% back the thesis that Europe is pending a strong wave of supplier consolidation. We move on to China. One of the most relevant pieces of news in the quarter is perhaps the fact that, as we've seen in Europe, and we'll mention it later on, in the U.S., the demand for electric cars has shown certain uncertainties that have been openly recognized by important players in the Chinese electric sector, such as BYD, NIO, or Tesla. But we're also seeing a month of April where the sale of electric cars has been very strong. This has to be monitored. The positive news has been the announcement from the Chinese government of the relaxing of the maximum leverage for the acquisition of vehicles on the one hand, and a scrapping program on the other hand, with a subsidy of up to $1,400 per vehicle replaced, which will be in force until the end of 2024. And the potential impact is relevant since it covers more than 5% of the current vehicle fleet. And in spite of this uncertainty in the demand for electric cars in the first quarter, Chinese production has had a very good evolution, which could point to a communicating vessel effect, from electric to internal combustion engine. We're talking about a growth in production of 4% in the quarter, helped by a less demanding comparison base, since the first quarter 2023 was affected by the shutdowns associated to the Chinese government's zero-COVID policy. In 2024, it's expected that China will grow a total of 2%, and long-term we would also consider with a normalized growth of around 2%, annual on average. We continue with the Asian continent and review India. During this first quarter, production of passenger vehicles in India not only has been one of the few that has grown together with China, but they have also been the one that have grown the most, 7%. When talking about India, we also have to talk about other segments, apart from the passenger vehicle, since it only represents 50% of our sales. We're also talking about the two-wheeler market, the motorbike market, which represents around 25% of our sales in India, which has taken off and grown by 26% in the quarter. On the other hand, we have the truck and tractor market, which represents the other 25% of Indian sales, and which have shrunk by 16% and 15% respectively. It's expected that the passenger vehicle production in India will grow 4% in 2024, a smaller growth than in recent years, due in part to the demanding comparison base and also to the fact that we are in an election period. Although we expect political continuism, according to the polls, election periods are usually periods where discretionary consumption decisions are postponed. On a more longer term, the Indian potential remains intact, with an expected average growth of 5% per year, much higher than the 1%-2% expected for the global market. And to this we have to add the good prospects for the rest of the segments: two-wheeler sales, motorbikes that are expected to grow at a rate at five years of between 8%-10%, and truck and tractor sales between 4%-6%. We move now to Brazil. The Brazilian market has suffered a minimal contraction of 1% in production in this first quarter, a contraction that has been caused to a large extent by a drop of almost 30% in exports to below 80,000 units, while the internal demand in Brazil continues to evolve in a positive way, with vehicle sales growing 10% in the quarter. The production expectations for Brazil for the coming quarters in 2024 are very favorable, with an expected growth of between 2% and 8%, a growth based essentially on the good demand prospects, driven by the positive evolution of inflation and the interest rates that have dropped in recent months, and which are expected to continue to drop, something which is key in a country where 50% of car purchases are financed. 2024 production will grow by 3%, and on a longer term we expect them to grow at a rate of 6% per year. A good context, a context that attracts announcements from OEMs on major investments in the country. In January we saw GM announcing an investment of over JPY 7 billion. At the beginning of March, we saw both Stellantis and Toyota announcing new rounds of investment in their plants. BMW has recently announced the starting of production of a new hybrid car model for the fourth quarter of this year. It's in the area of hybrid cars where we've seen the focus of several announcements from OEMs over recent months: Volkswagen, Renault, Nissan, General Motors, BYD, Hyundai. This coincides with the recent initiative of the Brazilian government to promote local industry for electric and hybrid vehicles through an increase in import duties for these technologies, and by providing tax credits amounting to EUR 3.5 billion to OEMs that invest in the country and in decarbonization. We now put the focus on North America, a market led by the U.S. economy, which continues to show major resilience. Production in North America has grown 1% in this first quarter, and it is expected that this rate of growth will accelerate in the coming months, reaching a figure of 4% in the final quarter this year. These expectations are mostly based on the strength of the U.S. end demand, something that's reflected in OEM incentives to the end consumer of approximately $3,000 per vehicle, which is 30% below pre-pandemic levels, and the inventory level, which are at 48 days at the closing of the quarter, 25% lower than the normal level. Regarding the U.S. labor market, we can highlight the unionization of Volkswagen Chattanooga, which represents the first unionization of a non-U.S. OEM, and implies a step towards the North-South wage convergence, wages that until now reflected a gap of, around 25%-30%. What is also being discussed is the potential unionization of Hyundai and Mercedes plants. These are additional indicators on the tension of wages in the U.S. One of the collateral effects of this is the trend to continue to move production to Mexico. The Biden administration has tried to give U.S. production a breather by relaxing the deadlines related to stricter eligibility for electric vehicles for subsidies. Up to now, the IRA established that until 2025 electric vehicles that contained critical minerals from China would not be eligible for the subsidy of $7,500, and this date has now been postponed by two years. Of course, this regulatory framework and many other issues that affect our automotive industry could be affected if Trump wins the elections at the end of the year: the IRA, emission regulations, duties, tax cuts, etc. Talking about Mexico, Mexico is saying that they are not going to grant subsidies to Chinese manufacturers to set up their companies then, but it's understood that this movement is the result of the pressure from the U.S. to avoid, as far as possible, Mexico becoming the backdoor that will allow Chinese OEMs to avoid the current U.S. import duties of 27.5%. We have the Mexican elections. The April Bloomberg Barometer points to a clear continuism, although the oficialista candidate seems to be more favorable to the private investment I've just mentioned, and we'll have to monitor this and see what the impact is on the automotive industry. To close the North American chapter, the estimate for 2024 is that production will grow by 2%, and in subsequent years there will be a very slight growth, a growth that is practically flat, let's say, that draws attention to itself because it's similar to that of another mature market, Europe, although there's a big difference between the two. North America is recovering 2019 levels, which Europe is not expected to do. We also have to consider that one of the major liabilities in the North American global forecast is the fact that Canada continues and will continue to shrink. As a consequence of all this, with different realities in the different markets, global productions will shrink by almost 1% in the quarter. It's expected that this will be the worst quarter in 2024, with 21 million vehicles produced in a year that will go from less to more, and where in the fourth quarter it's expected that it will be the strongest in the year, with up to 24 million vehicles produced. An overall 2024 that will be flat compared to the previous year, with 90 million vehicles, and represents the consolidation of these pre-COVID 2019 world production levels. If these 2024 estimates are right, to summarize, we will have a year that will be practically flat in Europe and America, without significant variations, where Asia will take her production from Japan and Korea to China and India. Therefore, they would be the only geographies with significant growth in production in absolute terms in the year 2024. Moving on to the CIE P&L, there are significant improvements in comparative terms compared to the first quarter of 2023, and this is of even more merit considering that this year was in March and last year in April, and therefore the comparison base for this quarter is much more demanding. Regarding sales, in the first quarter we have outperformed the global market by almost five points, a real outperformance that reflects a gain in an actual gain in market share since the pass-through hasn't had an effect on sales this quarter. And this return to outperformance in this first quarter confirms what we have always said, and that is that beyond weaker one-off quarters, our outperformance on the market is structural. If we analyze this by geographic areas, three stand out: one, in Europe, we have been significantly better than the market, improving the performance compared to previous quarters. In India, not only have we beaten the passenger vehicle market, we have beaten our comparable weighted market for the different segments by around 10 points. And thirdly, we reduce our underperformance in China versus previous quarters. Outside sales, the left of the lines in the P&L have also grown significantly. EBIT has grown 7% to more than EUR 190 million, and EBITDA has grown 9% to EUR 146 million. We're talking about an expansion in operating margins of between 70-80 basis points, which, as indicated for sales, is not affected by the pass-through. We would like to highlight the major headline that for the first time we exceed a 14% EBIT margin, the highest reported margin in our history. A high-quality EBIT margin without a major dispersion between geographic areas, with almost 13% in EBIT margin in the region of less margin, much higher, much higher than the average margin for the sector. What is also especially worthy is the evolution in net profit, which has grown compared to last year in an environment of really demanding financial costs, and bearing in mind that in the first quarter of 2023 there was a net profit of almost EUR 5 million from phased-out activities, which in this first quarter 2024 are no longer part of the perimeter. So, for a comparable perimeter, we could say that the net profit has grown by 9% versus the reported 3%. If we talk about cash flow, an operating cash flow generation of more than EUR 120 million, which on an annualized basis would leave us close to EUR 500 million in annual generation, our strategic objective for 2025. This is a cash generation which is absolutely recurrent, where you can see that both the maintenance CaEx and the taxes paid are in line with our guidance, and an operating cash flow generation that represents 66% of the EBIT, the conversion ratio into operating cash flow. We also highlight the payout of a dividend of EUR 54 million, the first part of the dividend of the year, 7% more than the previous year. As a consequence of this strong cash generation and our EBIT expansion, at the closing of March we find ourselves with a leverage below 1.5x net financial debt EBITDA, a leverage level that is at a historic low, and a very comfortable leverage ratio, which reinforces our capacity to invest in corporate operations in line with our strategic plan. Regarding the future, the future of CIE, if we bear in mind, first of all, the degree of compliance with our strategic objectives at the closing of 2023, secondly, this very good quarter, first quarter in 2024, and thirdly, our good prospects for the coming quarters this year, we reconfirm our commitments for 2025. And meanwhile, more on the short term, talking about 2024, we also confirm that we expect a 2024 in line with the headlines from this first quarter: growth in sales, outperformance compared to the market, expansion of operating margins, growth in profit, growth in cash generation, and therefore additional deleveraging. And with these good news, we close our presentation and open the floor for questions. Thank you very much for your attention. Well, we have a lot of questions. And starting with questions related to the top line, could we explain the reasons for the outperformance in the various geographic areas, whether that's going to continue in the future? And finally, an explanation on the reduction of the underperformance in China. So, present future performance and performance in China. Well, I think that the outperformance this quarter is nothing new, in fact. The five-year strategic plan itself, one of the main guidances, was that during the five years of the strategic plan, we were going to have an outperformance of up to 20 points vis-à-vis the market. And we're meeting this, and although 2023 had a couple of quarters that were a bit weaker, I think that we're going back to this outperformance, an outperformance that I think has two parts to it. One part that is related to each one of the geographies. In other words, we can talk about a European market, for example, where I mentioned the consolidation of the market share, the necessary consolidation of suppliers in an environment where there is only 60% of the capacity is being utilized, or we have other drivers in other markets, such as the Indian market, where players like CIE stand out on a technological level because of all the technology transfer we've done from Europe. A nd therefore the customers assign projects to them compared to the multitude of small local suppliers. So therefore, a supplier factor is related to each of the markets. On the other hand, a concept which I think that can be applied to all geographies, which is the concept of that structural outperformance that I think can be reflected by saying that in the end, CIE is the supplier profile that our customers need more and more. With that, I'm referring to a global supplier, a supplier that has all the technologies and therefore can offer all the kinds of products they need, either for the combustion engine, for the electric car. We talk about that multi-technology as an added value. As additional added value in the present time, it's a supplier that has investment capability with a solid balance sheet that provides not only guarantee of supply regarding quality, price, etc., which today is taken for granted by the market, but also quality and guarantee of supply from the point of view of investments and financial sustainability for the project. Therefore, I think that that's the general context for the outperformance. Going into the margins chapters, there are questions on the present and the future, the short-term future developments, especially in Asia, whether what we've seen in the first quarter is recurrent, and the foreseeable evolution during the rest of the year, whether 18.5% would be reasonable for the year overall. India and China, both a little bit. In the quarter, it's true that we've seen an expansion in the margins in India, nothing new. Especially those that have had the opportunity of listening to the results presentations from CIE India, you'll have heard from our CEO in CIE India, Ander Arenaza. He talks about the enormous ambition in the margin expansion in CIE India, and I think what we're seeing is the delivery of that. Regarding China, where there has been a significant expansion in a margin in the quarter, this has to do with a concrete aspect related to operating improvements. As you know, we're not a product company, we're a process company. This means that operating excellence and the excellence of the operating processes is the main focus in the everyday work of the plants. And this is what's reflected in the improvement in margins in China. There's been specific processes that were subcontracted, which has to do with encapsulating, which is part of the production process. And it's been felt that it's more efficient from the economic point of view to do it in-house. And we're improving, as a general concept, the operations, and this is reflected in the margins, strong margins that we believe are basically sustainable. Moving on to working capital in the first quarter. To what extent is that related to the calendar? Should we expect a turnaround in the second quarter? There's not much to say about the working capital. It's usually a quarter that consumes working capital, this first quarter. We've made enormous efforts to minimize that working capital consumption with a factoring, and I'll step ahead and say, because we had some questions about it before the conference call, it's true that it's increased in absolute value, but not in relative value. If we talk about the factoring over sales, or the amount of factoring over sales, we're even lower than in previous quarters. In previous quarters, we were closer to 9% over sales. We've gone down to 8.something%, 8.5% over sales. So, I would say that there's nothing special to be added. Continuing with cash flow and balance sheet, how should we expect for the net financial debt EBIT ratio to develop towards the end of the year? With the current perimeter, without corporate operations, we're going to see an additional deleveraging. We've seen the deleveraging this first quarter, and that can be extrapolated to the rest of the quarters. As you know, again, with a normal perimeter without corporate operations, the capacity for deleveraging at CIE is very important, and it's usually around 0.4x net financial debt EBITDA, as you've seen in the past years. So therefore, nothing stands out apart from what's already reflected in figures from previous years at this quarter. Talking about the perimeter, we're asked for an update on the M&A pipeline, whether we expect anything in the coming months, anything relevant in what geographies, products, an update of the pipeline. Well, this question came up today at the shareholders' meeting. Our CEO was asked about this, and I think he was very transparent, saying that we have the human and financial capacity to tackle M&A operations, but the supplier market is complicated. The supplier market is complicated. There are a lot of suppliers in a not very good situation, and this means that we have to be very careful. And we're analyzing everything that is on our desk very carefully. I think we're fairly cautious. We always talk about the figures from CLEPA, the European Association of Suppliers, and an additional aspect we haven't mentioned other times. In the latest quarterly survey, it said that only 25% of European suppliers do not expect to carry out restructuring in the coming quarters. 75% of the suppliers do expect to carry out some kind of major restructuring or readaptation, adaptation, downsizing, or whatever you want to call it of their production capacity. So, this gives us a clear idea of what the sector is like. And in this context, as I was saying, a lot of M&As are being analyzed, but with prudence and a very careful analysis of potential purchases. A completely different question. Can you give us an update on the advance of Chinese OEMs in the various geographies? Is there any relevant news? Chinese in the world. Well, we can give a brief summary of what we currently have. In Europe, we have BYD with a new plant in Hungary. They plan to start to produce next year, with an ambitious goal of obtaining a market share of 5% of electric car sales in the European Union. They're talking about a plant of 150,000 vehicles that could double its capacity. Now, although it's not official, they're starting to talk about Great Wall, also in Hungary. It seems that there could be an intention to build a plant there. While here in Spain, we have Chery that has announced that they will produce their cars at the former Nissan plant in Barcelona under a semi-assembly regime, which is planned for the end of this year. That regarding plants in Europe, in Brazil, you know that BYD is there with the Salvador de Bahia plant and Great Wall in the plant they bought from Mercedes in São Paulo, and which is expected to start to produce in 2024 too. What other geographies are there? North America. It's true that both BYD and MG and Chery have made various announcements that they're exploring the Mexican market. But as I said during the presentation, we have the government sending out messages under the pressure of the U.S., and it's been put somewhat on standby. What can we expect from the Chinese in the world? Well, what's on the table here are the keys to Chinese competitiveness. In China, they're very cheap producing. They control raw materials and the electric vehicle added value chain with the vertical approach at BYD. They have cheaper energy, cheaper land, and in many cases, subsidies. What else do Chinese OEMs have? I would say that they're very techy. In other words, all the functionalities, software, infotainment, etc., and the young generation likes that very much, and they're very quick in the time to market. They have development times for new products that are shorter than traditional OEMs, and we've read in some reports that it's almost half. They do a lot of virtual testing instead of mechanical testing. That reduces the deadlines a great deal. They launch products on the market sometimes with software that's safe, but not absolutely complete, and they do subsequent updates. Even permits to build plants are much more agile in China. So, we find a context that without a doubt gives them a competitive edge, but we'll have to monitor everything I've said, and which of those competitive advantages will still stay in place when they're manufacturing in the world. And there's little else to add, that's what comes to mind. And we're asked more about the Chinese market itself. We're asked again about how our performance has evolved there compared to the market, but especially an update of the Chinese market itself. How do we sync it with the recent incentives and some more details if possible? Okay, the recent incentives, to start with something. They've launched a new scrapping policy that was announced in April and has come immediately into force. These subsidies will be available until December 31st this year. They can opt for a subsidy if they scrap fossil fuel passenger vehicles with a China III or less, those registered before April 2018. This is an important part of the Chinese fleet. It's a subsidy that's applied $1,400 to purchase an electric vehicle and $1,000 in the case of internal combustion engine with engines of 2 liters or less. It's expected that the electric vehicle demand will continue to be strong thanks to this new scrapping program and also thanks to new models that are being launched. It's said, we've read it in some reports, that this could drive additional car sales up to 1 million additional units, 1 million more than in the current estimates. We'll see whether that's the case or not. What else do we see? We see a brutal price war. The competition with OEM discounts is becoming more intense month after month, day after day. We have an average discount rate that in some cases is more than 15%. With a redistribution of market share, that means that there are important players like BYD that already have a market share of almost 15% and a third of the electric market. A BYD that is one of the few Chinese OEMs that are making money in a context that seems could provide them with more leverage. We're changing markets completely. Now we go from the to the lower electric demand in Europe and how this is affecting supply decisions. Can you give us a bit of color on this? Well, yes, we've seen that deceleration. I gave you a figure that I think is significant. After several years where the market share of the electrified vehicle I'm correcting myself, I think I said electric vehicle earlier. I mean electrified vehicle because I include the plug-in hybrids. The share in 2023 reached its peak with 22%, and yet in this first quarter it's gone down to 19%. With some countries like the German market, where we've seen that the electric vehicle market share has dropped by 14% in the first quarter, or Portugal that had an electric vehicle market share at over 30%, and in this first quarter we've seen figures of 20%. So we are seeing this drop. We know that the cooling down in the demand of the electric vehicle is becoming a reality. Many countries are taking away incentives, such as the case of Germany. We know that these are premium vehicles, or at least high-priced vehicles. It seems, or you get the feeling, that the early adopters' niche is full and that the mass market isn't willing to pay these prices. At least that's the feeling. We'll have to monitor that. We'll see whether with these new figures there will be a new subsidy initiative from the governments. It's clear that the electric vehicle requires aid, or at least that's what it looks like, so we'll have to keep monitoring. And changing geographies again. What do you think the change of government or possible change of government in the U.S., how could that impact our evolution in North America? Well, I think I said it proactively. This context that we're talking about, both in the United States and Mexico, is the current context. And with the possible or probable coming to power of Trump at the end of the year, we feel that this could bring about revisions in the IRA, the Biden program, or in emissions, or potential tariffs, or tax cuts, etc., etc. Regardless of all that, what the previous Trump mandate left us with, apart from media noise, there was a great deal of that, but the real impacts, one of them was the NAFTA treaty and the new NAFTA treaty, the real impacts were more limited above and beyond all the noise. But what's absolutely unquestionable is the economic efficiency that all the players are looking for in our market. And this means going through Mexico. The example I gave of the unionization of the OEM plants, not just American plants, but also foreign plants in the U.S., the only thing they're going to bring about are additional wage increases and therefore a loss of competitiveness for the country. This is one of the reasons that reinforces Mexico as the great production and export hub in the North American market. It's a trend that if I extrapolate it to CIE, and of course I'm going to finish on a positive note, this is very favorable to us. So, it's a great context. Perfect. Well, there are no more questions. Well, great. Thank you all very much for your attention, and we're at your disposal if there's anything that has been unasked. Thank you.