Good day, and welcome to the Piaggio First quarter of 2021 financial results conference call. All participants will be in listen only mode. At the end of today's presentation, there will be a question and answer session. To ask a question, you may press star then one on your telephone keypad. Mr. Raffaele Lupotto, Executive Vice President, Head of Investor Relations, is going to chair the meeting. Please go ahead. Hello. Thank you very much for taking your time to follow this conference call. Today's conference call will be hosted by Roberto Colaninno, Chairman and Chief Executive Officer, Michele Colaninno, Chief of Strategy and Product, and Alessandra Simonotto, Chief Financial Officer. You can access the slides supporting this call at piaggiogroup.com website. Before starting the presentation, as usual, I need to remind you that during today's conference call, we may use forward-looking statements based on Piaggio's current expectations and projections about future events. By their nature, forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to be materially different. Also, I remind you that the press has been invited to participate in this conference call in a listen-only mode. Now, I would like to turn the conference to Mr. Roberto Colaninno. Hello. Good morning to everybody. The Piaggio Group has achieved on the first quarter of the year results positive at the global level. Sales, EBITDA, net profit have achieved the best results of the whole period. We continue to look and to control through our cost management system all the problems derived from COVID and from the crisis between Russia and Ukraine. First, I want to underline that because we don't have any relation, business relation with Ukraine and Russia, we don't have any negative impact on our balance sheet. The difficulty that we have naturally during this period is the components and material that we have to buy. We try to do our best in the way that we try to bypass all transportation problems and all the sourcing components from the companies that temporarily are in problems for the shortage of material. This is possible because we, as you know, are organized through many countries through our plants, specifically in India, in Vietnam, in China, and in Europe. Plus we have offices in Southeast Asia and in India and in countries overseas and from the main other countries where we buy normally our components. I think that we have done a good job in the first three months of the year because we have achieved our results through our management system. Management system that means for us to follow all production and to follow all customer sales and all customer care in order to be able to balance the problem that we have in production and the problem that we have through the logistics system to be on time on the delivering products. To summarize how the quantity of products that we was not able to deliver it on the first quarter, put together all things is less than 3,000 pieces. That is postponed on April. If you look our network and our organization, I can say that we have very good results in Vietnam, Indonesia, all the other rest of the Southeast Asia. We have very good results in China. We got very good results in North America, and naturally after that, in Europe. Where we don't have the good results is in India, where the problems remain as during the pandemic. We expected that these problems related to India could be finished by the end of the year. We are looking the next year for India specifically, that should be the year where India is able to restart again with the to solve, satisfy the quantity that arrive from the huge market as India is. Regarding our investments, the investments especially in the new products is going as a program, is not changing. All the new products that we present to the market have had very good results, very good impact, especially on the Aprilia, Moto Guzzi, and naturally Vespa. All these products have a very good results on sales on the first three months. We believe to continue for the rest of the year on the same level. We believe to achieve a good results, especially again from Asia market, where the customer is growing up to buy Piaggio products. We have a very good forecast for India, Thailand, and Indonesia. We get a good program of sales even in China. If you speak about Asia, for us, is a market that is very important and where we see our sales rise. Coming to Europe is a very good market. Really speaking, we not expected that the reaction of the market was so good. The performance in France and Germany and in Spain is on the top. Naturally, Italy, there is our natural market, the sales is very strong. As I said before, is strong, especially on bikes. Due also to the good results that they get on the racing, the marque of Aprilia and Moto Guzzi, race and the quality that never been below before this period. Regarding production and regarding material, as you know, we get the problems from electronics products. Some of that is difficult to look in the future how they will move. We are a little bit pessimistic in this way, but because we have done a good policy on material, we can get some products based on the material stock that can help us to optimize production. You know, at the beginning of the year, we decide this policy on by products in order that we get the stock that is divided in three areas. One is for the normal production, yeah, that is in the middle. Top of that is when the demand is high, is much more high than the predicted, and we can use that. The first is a sort of stock emergency, where when we get some problems that cannot be solved shortly, we go and we take, we open this gate of the emergency stock. Well, on the first quarter, we was not one time obliged to go and take the emergency stock. We work on the normal and some that is requiring where the sales is much higher than the budget. This, for instance, Aprilia, the sales is very good and is much higher than the budget, and we work to satisfy the delivery to our customer. Financial position is quite good because we don't have any critical position on the credit line because people until today pay on time, even that not only in Europe but also outside Europe. We don't have a particular problem on that area. Suppliers, we get a good condition terms that give us the possibility to manage our finance on the best way in order to be able to reduce our bank debt and to get the money for our investments to minimize the bank solution. We believe that Piaggio is very diversified by products, but on top of this is very diversified by sites of production and the sales and the sales organization. It's worldwide spread, excluding Russian area. It's spread especially where the market of two-wheeler is quite strong such as Asia, Europe. What is very good, beginning to be very important player on the market of the bikes. People coming to buy, want to buy Aprilia, they want to buy Moto Guzzi more than the past, and we are able to compete with our biggest competitors, Honda, Yamaha, or KTM, where that is never happens before. We had to work in production to satisfy these demands. Also in sales, we have a good position, and also in sales, we have a very, very diversified product segment. Scooter, bikes, and the trademark Vespa, Aprilia, Moto Guzzi, and the policy we have done on marketing and in advertising and promotion give us a very good result from that. Until today, we are more naturally work very much, very hard, but we don't see even for the quarter, second quarter, so we see that the first six months should be in line with our expectation. The second six months, we look back more carefully because we don't know what happens exactly in the near future, tomorrow, let's say. What I can say is that because we are out of the hot area, which is Ukraine, East Europe and other country near to the East Europe, we don't work with that, so we don't have any problems in all the other parts of the world. We don't expect to have problems with the next new products that will be present in the market on the second part of the year. All this will be done on time, and as we have put into our budget at the beginning of the year. Don't see problems for the rest of the year. What we have done from electrical new investments, electrical new technical situation, we are on time in all that. We have very good results for the time that we have until now. We have obtained guarantee from our supplier that they are on time to deliver all infrastructure that is necessary to get the electrical products on time with our schedule. Okay, thank you. Alessandra Simonotto will comment on the slides. Thank you. Good afternoon, everybody. Let's start from page 3 that gives you a snapshot of key financial metrics. As you can see, we delivered the record set of results despite the unprecedented supply chain challenges affecting our industry, the cost inflationary pressure and the lingering weakness on the Indian market. Net sales grew significantly, 18.5%, reaching the best absolute result since IPO, driven by volume growth coupled with positive pricing. Similarly, in terms of margin, we posted outstanding results with EBITDA and net profit both reaching an all-time high. Net debt grew versus December 2021. Also being lower than March 2021, driven by the usual seasonal cash absorption affecting every first quarter. If we move to page 4, you can see that these outstanding results stemmed from the synchronized strong growth of our brands. Brands that are clearly our key asset. In this context, motorcycle brands stood out again, as highlighted on page 5 and 6. Notably, Moto Guzzi set a fresh record, high both in volume and revenues. Similarly, Aprilia Motorcycles reached the best revenues since the IPO, mainly benefiting from the strong success of the new models equipped with the 660 CC engine, while we kept on nurturing the racing DNA, setting up the Aprilia racing team, which started the MotoGP 2022 on a positive footing. Clearly, speaking about our brands, we can't forget Vespa. As you can see on page 7, we started the year with a novelty, the successful unveiling with Justin Bieber X Vespa. Now we can move to page 8 to look at 2022 key market demands. In a nutshell, Western countries posted sound demand, ending up double digits versus Q1 2021, despite the full comparison base and logistic bottlenecks that have hampered supply. Asian five countries posted an uneven trend, mainly with China slowing down after years of significant growth. Conversely, Vietnam and Thailand posted sound demand trend, while Indonesia ended slightly below prior year. India kept on posting subdued dynamics with both two-wheelers and LCV unable to go back to the pre-pandemic levels. Namely, LCV ended still 54% below 2019, the lowest level in 14 years. Now, let's move to page 9 to have an in-depth analysis of the performance by business. As you can see, the strong growth stemmed from the performance of two-wheelers, which surged by 26% at revenue level. Asia Pacific was the brightest spot, reaching an all-time high, mainly driven by the synchronized growth of all key markets. Indonesia, no doubt, posting revenues two times above prior year. It is worth also mentioning the outstanding performance of Western countries that ended significantly higher than last year, with all major countries positively contributing, despite the supply chain disruption dampening the product offering. Conversely, India posted a hefty volume decline, both in two-wheelers and LCV, mainly on the back of market demand weakness. Lastly, Western countries LCV benefited from the successful launch of the new Porter NT6, which boosted to the positive mix effect and led revenue double digits above prior year. Let's move to page 10 to look at the breakdown of the performance by product. As mentioned before, motorbikes have been the brightest spot with revenues surging by 55%, propelled by the success of the new product launches, coupled with positive price effects. Scooters performed extremely well, too, benefiting from the combined strong growth in APAC and Western countries. In this context, I would like to highlight again the outstanding performance of Vespa, driven by volume growth coupled with positive price effect. Let's move now to page 11 to have a look at the EBITDA bridge. A key message is that EBITDA grew to EUR 60 million, thus reaching an all-time high with the percentage margin on sales at 13.6% if we exclude the currency effect. This is an extraordinary result, in my opinion, if we consider the multitude of negative externalities we had to face this year. The key driver of EBITDA uplift has been the strong revenue growth, more than offsetting the hefty dilutive effect stemming from inefficiency of the supply chain and from higher input costs. Cash OpEx has been kept under control, with ratio of cash OpEx on revenues lower than last year. This testifies our ability to rein in costs without jeopardizing our competitive strength. Moving to slide 12, we can see the remaining P&L figures. First of all, I would like to underscore the strong performance at EBIT level. In fact, EBIT grew by EUR 4 million and more importantly, keeping the same percentage margin on revenue of last year. Net profits grew despite higher financial expenses, reflecting the negative currency effect that has been just partially offset by the lower tax rate versus prior year, 2 percentage points. Let's move to page 13 to have an in-depth analysis of net financial position evolution. As we saw before in Q1, we had the usual net debt increase driven by the seasonality of our business, which mainly affects the dynamic of working capital. In this regard, I would like to underscore that the rising complexities in supply chain management forces us to prioritize inventory buildup. Capital expenditure ended below prior year that are still consistent with the multi-year targets provided in prior conference calls. Lastly, as you can see, leverage has been further reduced consistently with our long-term targets. Thank you. Thank you, Alessandra. Now we are ready to answer the question you may have. Thank you. We will now begin the question- and- answer session. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. The first question is from Monica Bosio with Intesa Sanpaolo. Please go ahead. Good afternoon, everyone, and thanks for taking my questions. I hope you can hear me well. The first one is on the margin trend going forward. The consensus is currently pointing to 14.5% EBITDA margin and an absolute value in the region of EUR 269 million. I was wondering if you feel confident with this level, and if you can quantify the increase in raw mat, in transportation cost and in the energy cost in the first quarter. The second question is on the blocks at the Shanghai port. I'm wondering if you're experiencing some disruptions due to the blocks, and if yes, if these disruptions are related to finished products or components. The very last is on the Piaggio 1. In 2021, the group sold 6,000 Piaggio 1. What is your expectation if you have it for the full year? Thank you very much. Monica, Raffaele speaking. We are working to keep the EBITDA margin that you are mentioning in line with what you are mentioning, so in the range of 14%-14.5%. Okay? Okay. In the range of the consensus. Maybe I can answer to the last one. When you were referring to Piaggio 1, we said 7,000 total sold since the launch. That was the number that we projected in our slide for the full year results. Okay? In any case, the results are quite good. Okay? Okay. Sorry, Raffaele. If I remember well, at the end of the year, the number was 6,000. Well, since launch. We launched the vehicle in October, and we were around 6,000 when we presented that presentation or conference call. Okay. Up to now, there are probably more than 7,000, but that's it. Okay. The trend is positive. Can we replicate this trend for the next months? The trend will be positive also for the ongoing quarters. Okay? Thank you. How we manage our logistic problems, especially in Shanghai, where it's completely locked down. Well, for instance, this is an example of how we try to find all the time new way to solve and to keep on the same level the service rate of supplier for our production plant. For instance, talking about Shanghai, we find that from Chongqing is a train connection with Europe. We take products from Shanghai on bus transfer to Chongqing and from Chongqing to Italy, we use train. This is normally something that we don't know before this type of situation. We find that the utilization of this different way, using by train, is much better than to use the normal way of vessel. Naturally, we try to avoid the airfreight transportation because it's a very high cost. This depends all the time on the urgency that we get from the customer in order to be able to deliver our products. It's not easy, and it's difficult to say that this is part of a management system of products and the logistics. In an emergency situation like that, I think I am sure that the strategic position of Piaggio that I remember, just because I want to refresh for the people that know this, we have two plants in India, quite big. We have one plant in Hanoi. This plant that started, as you know, seven years ago, today has the dimension of this plant is already three times more than the beginning and working more than 1,000 people. We're working to set up a new plant in Indonesia, the construction is on the way. We believe to open this plant from October this year. After that, we can say that in this plant, we already believe to use this plant also to develop Aprilia and the Moto Guzzi products on top of Piaggio, can be very serious problem in Italy. This is in many cases that we have altogether there, we can have a solution because we have people, established people for Piaggio, established in Hanoi, in Canton, near Shanghai too, in Beijing, in United States. We get all these people working on the same base, and they, and until today, we find that it's a good exercise to avoid problems coming from the logistic way. Okay. Thank you very much. Very clear. Thank you. The next question is from Anna Santoni with Berenberg. Please go ahead. Hi, good morning, and congratulations on the results. Just the first question is actually confirmation from what you are mentioning on the Indian market. Did I understood correctly that you are seeing two-wheeler volumes down around 50%? Did I get the number right? Anna, Raffaele speaking. Probably we were commenting on the slides, so those are the numbers, I don't see. Yeah, I was referring to the industry volumes. Yeah, the industry volumes. The industry volumes are also shown in the slides. The market went down apparently around 4.5%, but keep in mind that these are selling data. The market was weak in the commercial vehicle and extremely weak in two-wheelers because the market plunged double-digit. Yeah, the Q1 was still negative in terms of market trend. The most important thing, I add a call-out, you see that the light commercial vehicle market was still 50% below 2019 and very negative also two-wheeler. There is now month after month an improving trend, mainly in light commercial vehicle, month after month. But again, the situation is still complicated in terms of market dynamics, I would say. Okay. Yes. Yeah. That was the number I was after. Okay. -volume- Sorry. Post the pandemic. Okay, perfect. Thanks. Thank you. 50% below still. Yeah. Okay. Yeah. Okay. Yes. The second question is related actually to the Vespa project leader. If you can provide a little bit more details. What is the main target for this kind of Vespa in terms of, you know, the typical customer? And also, which are the main geographical markets for this launch? Which are the most important ones? And also, if you can provide some hint on the price point, perhaps. Thank you. The price has not been disclosed yet, but will be very soon. Clearly, the sales will be global sales, so where we operate, and clearly we are aiming to target essentially young people with the Vespa. Okay. Okay? Thank you very much. You're welcome. The next question is from François Robillard with Intermonte. Please go ahead. Hi, everyone. Thank you for taking my question. First one is on guidance again. So you confirm this 14%-14.5% EBITDA margin range. However, given the strength of top-line growth seen in the first quarter, I wondered if you had any indications regarding top-line growth for the year. I guess consensus currently points to +11% or about EUR 1.9 billion for top line. Can you comment on that figure? Do you think it is achievable or conservative? Second question was on cash flow for the first quarter. Quite a significant amount of cash burn from working capital, cash consumption, especially inventories. Can you give us some more color on what kind of inventory increase you witnessed? Were there mainly finished products piling up, or was it more an unfinished goods work in progress as parts were missing? That was my second question. Thank you. Now referring to your first question, you know that normally we don't provide the financial targets this time during the Q1 conference call. Additionally, the combination of the lingering pandemic effect plus these new or the eruption of this new conflict between Russia and Ukraine are limiting even more the visibility. We don't give a specific target in terms of sales. What we are working on, as I said before, is to keep the margin in the range of 14%-14.5%. This is exactly in line with consensus figures. There was a question. Of the cash flow. Cash flow. Well, the cash flow absorption is normal for us in this period of the year because as you know, the period in which we buy components between the end of October and the end of March to sustain the production of all our factories in the world. As normally, the sales curve is different between the last part of the year and the first four. It begins again from March to August. If you take a look to our figures of the last 10 years, in any first quarter, we absorb liquidity while we are able to produce a positive cash flow from the second quarter onwards. This is the same that happens in the first quarter 2022. The situation is different because are different the product that we are producing now. We are not producing only scooters, but we are producing motorbikes, and motorbikes is more expensive than some scooters. This is why also the inventory is higher than last or the precedent years. Okay, you confirm it's not just products waiting at the end of the production line for some missing parts. Those are mainly- No, it's normal for us, and you can take a look to all the other first quarter closure in the previous years. Yeah, that's true. Okay? Sure. Just a quick follow-up still on cash flow. CapEx was quite low in the first quarter. Can we still expect the range for the year to be around EUR 150 million? Yes, we do. We confirm the same amount of last year more or less. We don't expect nothing less than 2021. It's only a different splitting during the months. Thank you very much. The next question is from Gabriele Gambarova with Banca Akros. Please go ahead. Yes, good afternoon, everybody. Just a couple of questions from my side. The first one is on April. We are the beginning of May, and clearly for seasonal reasons, Q2 is very important. So any clarification on the trend you saw in the month of April would be very interesting, especially for Europe and possibly India. I think that the trend in Far East Asia is more robust. Anyway, any indication on the trend in April would be very useful. Even a very short one on tax rate, 200 basis points below Q1 2021. So I was wondering if- I mean, what we could assume for the rest of the year, for 2022. Thank you. Your first question. We have data concerning the Italian market in terms of sell-out. As of last Thursday, the market was up 5%. This evening will be released the official data of the month. Keep in mind that April 2022 has two less working days compared to 2021. That have a weight on the trend in the region of 10%. As of last Thursday, the market was positive. This is the only market for which we have reliable data so far. In terms of the trend in Asia Pac, the trend is positive, and we remain up a bit on Asia sales going forward. I repeat. We remain upbeat on Asia sales going forward. About the tax rate, as you know, we assume during the first closure the same tax rate that we have used for the budget. Our budget for 2022 sees a tax rate of 38%, and this is what you can expect for all the next closure for the first half and so on. Okay, thank you. Thank you very much. The next question is from Emanuele Gallazzi with Equita. Please, go ahead. Yes. Good afternoon, everybody. Thank you for taking my question. I just have one question, and is on Europe and in particular on dealers, inventories. Can you just give us an update on the current level of stock in Europe? Yes. Raffaele speaking. Can you hear me? Yeah. Yeah, yeah. Okay. Yeah. As you know, the key metric you have to consider is the ratio between dealer stock and the market size and market demand. I can confirm that the ratio is exactly the same as 2019, pre-pandemic. This is what I can tell you. Okay. Thank you very much. You're welcome. Okay, I don't see other questions. Operator, can you confirm that there are? Okay. Okay, no. There are other two questions. Okay. Okay. The next question is from Niccolò Guido Storer with Kepler Cheuvreux. Please go ahead. Yes, good afternoon. A quick one also for me. Can you comment on expectations for gross margin evolution going forward? We have seen a big drop in Q1. What should we expect going forward? Thank you. No, we prefer to stick to our comment on EBITDA margin. We can confirm what we said before. Okay. Thank you. You're welcome. The next question is a follow-up from Monica Bosio with Intesa SanPaolo. Please go ahead. Yeah. Thank you very much. Just a follow-up on the question made by Monica earlier. I don't think I got the answer, so if you answered it already, I'm sorry. Just looking at the Q1 figures, can you give us some more detail on the impact of raw material price inflation, freight cost inflation impact as well? As well as the mix of motorbikes that I believe have a lower gross margin compared to scooters. If you can just give us a bit more color on how the evolution of the gross margin went in the first quarter. Hello? Okay. More or less, you can consider EUR 10 million in the first quarter. That will be for- For the total effect of raw material and logistics transportation, impact of energy, you can consider a major cost of more or less EUR 10 million. Okay, thank you. Okay. There is no question at the moment. Okay, the last answer draws the call to an end. Thank you very much for attending the conference call. If you need further clarification, you can call me later as usual. Thank you very much. Bye. This concludes the Piaggio financial session. The conference call has now concluded. Thank you for attending today's presentation. You may now disconnect.