Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Piaggio Group first half 2023 financial results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing Star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Raffaele Lupotto, Executive Vice President, Head of Investor Relations. Please go ahead, sir. Thank you very much. Hello, everybody, and welcome to our first half of the 2023 earnings call. Joining me today are Roberto Colaninno, Chairman and Chief Executive Officer, Alessandra Simonotto, Chief Financial Officer. You can access the slides supporting today's call on the Internet at the Piaggio Group website. As you may expect, before starting the presentation, I need to remind you that during today's conference call, we will 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. I remind you that the press has been invited to participate in this conference call in a listen-only mode. I will say that you can. With that, I can turn the call to Roberto Colaninno. Okay. Good morning to everybody. I just finished the board of director, where I describe the results of Piaggio on the first six months of 2023, where, just to be synthetic, Piaggio was able to achieve a record in every sector of the balance sheet. I mean, sales, industrial margin, EBITDA, EBIT, net profit, and debt. We never was able, from the time that I am involved in Piaggio, to achieve such a result. Why we are able to achieve these results? Well, the position of Piaggio, the organization of Piaggio around the world, have achieved the possibility to be a big player in all market. What is more important is able to be in line with different requests of this market. Piaggio was able to be a big player in all market, as EMEA, Italy, United States, and India, where the market is beginning to react in a positive way, especially on three-wheeler, and especially on the request on electric three-wheeler. Regarding Vietnam, Indonesia, generally speaking, the Southeast of Asia, we see that Piaggio was able to maintain and to increase the results, financial results of 23 on 22, and was able to absorb some impact of the some market without increase in a substantial way, the price. In other terms, the results of Piaggio of the first six months is achieved mainly for the productivity activity, where we are able to gain some important point that impact positively on all the results of the company. This is done without the price on each country, where we try to keep as was last year and without decrease the value of the price in a substantial way. This give us the possibility to look the for the next six months, with the possibility to achieve the results as we have in our plan, and we believe in a positive way, the results at the end of the year. This reason is because we was able, finally, to introduce the productivity management system in each area: production, engineering, and sales. To be able to increase productivity is not so easy for Italian company, because productivity means to be able to adapt the company to the customer requirements and customer care. For instance, we have achieved very good results on spare parts and in the other piece of the products. We are able to be very satisfied in the transformation of the company, and to become also be able to be an important actor on electrical market. We was able also, with the investments in the new products, that we maintain, and we will maintain on the last six months at the same level, to be able to satisfy the customer requirements, especially in the motorcycle, and especially in the big scooter size products. I want to remark that, on regarding the motorcycle, Guzzi is explored and coming with very unexpected results in terms of quantity and in terms of sales in the first six months. As we have decided, we proceed in the new restructure of the company, on the factory, let's say, beginning by the end of the year, and to follow the trademark Guzzi as the market requirements. Generally speaking, the results is being achieved based on the validity of the trademark of Piaggio, that is leader in all the market. Aprilia, Vespa, Moto Guzzi, Piaggio, and let's say, not only in the two-wheeler, but also in the three-wheeler, and now in Italy and in Europe, we are working to be ready to develop a four-wheeler commercial vehicle on electrical version. We're working hard with our supplier and our partner to be able to achieve the results on this market that we consider very important. I want to underline that the ability of the company to be... Reduce the cost of production and to control all the general expenses, give up the results that is shown today. We expected, not to be finished on the second six months, to increase our penetration on the cash control, especially to reduce the stock, and especially to reduce the credit exposition, and maintain the leadership in Europe, Italy, Spain, United States, and to follow again, what is the India three-wheeler trend? We consider the results of Asia very satisfied in the terms of the results, because it's much better than the last year, let's say, in term of EBIT, and in top of everything, the EBITDA. EBITDA of the group, we expected to be able to go in the same way of the first six months, and to maintain the same, the same level of EBITDA on the total, on the, on the year of 2023. In our vision, despite all the problems around the world, Piaggio today is in a position that is able, on the strategic point of view, to be able to control all the situation that can cause problem on a different market. We don't expect that to have a problem on the quality of the products. We not expect it to have a delay on the new products that we launch before the end of the year. That we expected to be able to accord, to keep and to bring the opportunity of India market, where we was able to expect and to trust in this market. The terms that we have is a positive evolution on the famous three-wheeler, let's say, traditional and electrical way. Means, the cash flow and means the investments, we have the possibility to control this. We expected that the debt going down, as is down until today, on the same way. Generally speaking, we see positively the results of Piaggio today. Is not just casual results, but is results that is based on the general organization of the group, the capability of the group to control productivity, to control production, to control the fixed cost, generally expensive, and to follow what the market, in term of sales, require to us. We don't expect it to increase price for the first six months in a substantial way. We expected it to reconfirm the positive trend of productivity. We confirm to be able to do better on the cash point of view, and to be able to reduce the financial cost due to interest increase on all over the market. More than this, I don't know what to say more than this. I hope, now we are sure to achieve all the target that we have explained, that we have described in our strategic mark... in the our strategic plan. That means, again, margin, that is EBITDA, that is EBIT, to reduce financial cost and to increase cash flow. Okay, thank you. We are ready now to start the Q&A session. Excuse me, this is the Chorus Call conference operator. We will now begin the question and answer sessions. Anyone who wishes to ask a question may press star one on their touchtone telephone. To remove yourself from the question queue, please press star two. Please pick up the receiver when asking questions. The first question is from Monica Bosio with Intesa. Please go ahead, madam. Good afternoon, and thanks for taking my questions. I have three. The first is on the second part of the year and on the current consensus. In the first half, the group delivered an improvement in the EBITDA in comparison with the first half of 2022 of roughly EUR 39 million. The consensus is expecting, for year end, an improvement in the EBITDA in comparison with the full year 2022 of EUR 31 million. I'm just wondering, how do you feel? Do you feel confident, with the consensus? Or maybe given that nothing seems to deteriorate over the second part of the year, there is room to do something better than what the market is expecting. My second question is on your expectations as for the European two-wheel market in July. What do you see for the APAC market in the second part of the year? The third question is on the new products. Thanks for the introductory notes on the new products. Maybe last part, are you planning to launch some new electric two wheels for Europe by the end of the year? Thank you very much. You have a very long list of questions. Sorry. I hope to be able to satisfy and reply correctly at your question. Starting with the last of your demands, that is, where is very easy to respond. We believe to launch before the end of the year, the new motorcycle version of 400 cc made in India with the name of Aprilia. This, I want to say that, first prototype is already done and satisfy very much all us about the design, about the results, and about the cost of this product. Why India? This type of products is new for us. The size of 400 is a product that is required by all world market, naturally, quality and price is the two win-win condition. I believe that India is able to satisfy these two condition. We beginning to work, as I say, on the new Porter Electric one, where we are ready next year, around the middle of next year. Yeah. I want to underline to you how we are then, how we have done to change the mentality of Piaggio, Italy, in a way that was, as you know, a thermic company, produce diesel and gasoline engine, to a company that produce electrical rides. They started with the four-wheeler, with the new commercial vehicle, where today is very successful, where is the thermic engine, and we believe that this electrical one will be very welcome from the market. In term of what is the scooter, I think that we are working now very hard to reinforce the mark, the trademark of our products around the world, with a very precision strategy in a communication way, where we have a new one idea. Despite the traditional advertising through newspaper and the magazine, we have it, we have an idea in term, how to develop the requirements of the people with our products. In other terms, Vespa will be our products, where we work in order that the market can appreciate more and more the design, the technical performance, and all the style that this type of products is confirmed to be a leader in the market, not only in Italy and Europe, but also in India, in the China, and in United States. Demands regarding how we see these results of the six months. Our idea is that the EBITDA will remain between 15%-16% of that. This then is based specifically with the new procedure of productivity system that give up in Italy, in the company in Italy and in the other company around the world, a very unexpected result for their positive solution. Productivity, new advertise, new products, and new, to be more close to the quality, to the customer, and to be able to satisfy the quality care system, to be able to have a better condition than our competition, and keep the price as it is, without to increase, in the meantime, to have the advantage on the point that we gain on the productivity level. I believe. I forget to respond to other question. Maybe, yeah, because, Monica, you are very good in asking four, five, six question in two questions. I'm sorry. One was into the demand in Europe in July, if I'm not mistaken. Right? Yes. Yes. Okay. According to our data, demand grow accelerating in July, in term of demand, trending up overall, I will say, high single-digit. Notably, as of yesterday, Italy was growing 18%. At the end of last week, Spain, +17%, Germany, +11%, France, +2%. These are the data that we have now, clearly, are very precise concerning Italy. With that, I think that we answered to all your questions. Maybe on the second part in APAC, because APAC has been analyzed by Vietnam. What do you expect for the second part of the year? As you know, depends, where you look, the results of Vietnam. Financially, results of Vietnam, the first six months of the year is just fantastic. Mm-hmm. This is achieved, even the market, is not so brilliant, let's say, as last year, second part of the. On the second part of the year. This, I think, is normal, because if you are present worldwide in the market, it's difficult to say that the whole worldwide move on the same way, on the same time. In Europe, we have a war. In Vietnam, we have a problem to China, we have a problem to have other problems of the company, of the market, of the, for instance, so that in country as Thailand, the situation is much better. The Indonesia, where it's just opened a factory there, the results is much better than what it was Indonesia before they started with the new plant. You see, Vietnam is just in the middle of Thailand and Indonesia. Why Indonesia? Why Vietnam this year, the market of Vietnam is not so brilliant? I say that we are looking at that, and we want to revamp this situation to our customer. We never forget that the results, as EBITDA, EBIT of Vietnam, is something that is unrealistic, to look what is the results of this year to the last year. The terms and condition on the different market, when you are working internationally, and when you are working more close to be a multinational than just to a national company that export in the other country, you are to be able to move on in order to solve the problem, in order to guarantee the results and to improve the financial results. What is naturally the, at the end of the story, when I looked at the net profit, when the EBITDA, EBIT, and when the margin, or industrial margin, is better than last year, much better than last year. Okay, we are move on in order to be able to bring more customer from our competitor and to us, moving on with the new products, with the new color, with a new proposal to the market. This is a normal dynamics that is all in the country. If you look the banks, they have completely different dynamics, even working in the same market. Everybody move on in different way. Now, I am not afraid about situation in Vietnam. This is normally. India, for instance, nobody believed that India started again with the market of a three-wheeler, with electrical three-wheeler market. In the last three months of the year, India is moving on in this type of market. What will happens if this will confirm and will develop on the same number than before the COVID? India is a huge market, meantime, we are not able to keep the risk from export from India to Africa. This is not because the Africa is a problem, is that we don't want to have risk and export where is the risk is that the customer don't pay, or customer not satisfied our products and so on. I hope to be able to give you a feeling that Piaggio today is not a national company, and that with export in some country. Is an international group, active in the different market, with the products, with the capability to produce, to sell, and to have the possibility to understand the market, how it's moving and in which way it's moving, and what is the problem that we need to solve? Thank you very much. Very clear, I agree. Thank you. The next question is, from Niccolò Storer. Please go ahead. Thank you. Thank you for taking my questions. The first one is, again, on Southeast Asia. If you can maybe elaborate a bit on the Q2 drop, in particular, very sharp on the one hand, on the other, basically, Vietnam probably alone cannot explain such a drop for the overall area, considering the broader market figures, the broader market decline, which probably has been not as bad as yours? If you can detail a little bit more of what drove the performance of Southeast Asia in Q2 specifically, and looking at if you are seeing some problems emerging in Thailand, when we have read about some political turmoil? The second question is on margins, in particular on the improvement in gross margin reported in Q2, which was exceptional. Which were the drivers behind this improvement? Do you think these improvements can be maintained throughout the year? On the other end, OpEx, on cash OpEx, we have seen quite significant increase also in Q2 after the big jump in Q1. What should we expect on cash OpEx going forward? Should we expect some saving because of some expenses brought forward, or should we keep expecting growth? Thank you. I repeat again, when you try to introduce the productivity concept in Italian company, is quite difficult. I understand why, because productivity system is not so familiar for Italian company. When you begin to be work hard in this way, you begin to see that the results of this organization is incredible, because they're easy to reduce two or three point on the production cost and on sales, without to increase sales price. This will give you a big jump, a big pump, profit in all the line, because 2% or 3% of cost margin improve is a big number at the end of the day. This means productivity. Means productivity, it not means that the people have to work more, have to work better. The system to work better is just a question of the system of control and the system how you make your project of your products. Means what is your partnership in term of supplier system. Means to control the OpEx. OpEx is quite easy to control, but is also easy to spend much more what is necessary to spend. I want to say that this is a new system for Piaggio, let's say, I don't know the other company, where we see that this year, where we begin to see the final results of this system introduced last year and the year before, beginning to give us the results that was not so easy to thinking before. There's terms is organization. If you are able to organize. the company on the productivity concept, you will see that your results is much better than you expected in this way. The other question, to analyze what happens in Vietnam. I respond to you in other way around. We started to be in Vietnam with new investments on the. 2008. Huh? ... On EUR 200. 2008. Let's say, 10 years ago. No? 15. 15 years. 15 years ago. When you look the number of the Vietnam of 15 years ago, and you see number today, you believe that you speak about another company, that is not the same one. The trend of the grace company during this year was just impossible to thinking the day that we have decided to make this investment in the southeast of Asia. We see that there's a bridge to the other company around Vietnam. ASEAN is not something where is a dream. It's a realistic idea of a new market, where is a market as Thailand, as Indonesia, as Philippines, and that is a huge market than the before was only controlled by Japanese company. Now we are one of the big company in this area. Piaggio is a big company in the area of ASEAN group. This means that if in one year we have something that is not in line with the all increase of sales over every year, well, possibly happens. It's nothing, it's just no disaster around. It's not that this changes something on the dramatic way. It's the market that this year thinking to buy more, some products than other products. We are launched the market with the products that have a price in line with products that is more close to the not say quality, but the first level of the products. We see that the customer is very welcome for that. We don't see that the quite, the question, what happens in the Vietnam? It's a normal cycle of the market, that this year is in Vietnam, last year was in India, the year before was in China, and then Italy, and then France. You know, the market is not working the same way on the all the world. The cycle of the market is different. The position of the customer is different. It depends on many things that sometimes is difficult to understand in time, that for us, is much more interested in the market, at the color of a certain color of the product than the other one. Why the interest is so high, why the product is so good that give more time in the time of. Also, what is the reaction of the competition? You know, we competed with the big company as, let's say, okay. Honda. Honda and Yamaha, and now is some products coming from China, but naturally, we don't want to begin to accept the competition from China products in that country. We keep our products as it is, so we don't see dramatic situation about that. We see it very positive instead, to be able to reduce increased productivity in Spain, in Italy, in Europe, in the United States, where the market and where the competition is much stronger than the market of Southeast of Asia. Let's say this is my vision. Probably is wrong, I don't know. Till now, based on the results that we have achieved, we hope to be able to maintain these results for the rest of the year. Thank you. 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 two questions left. The first one is if you can give us a sense of the current level of stock in Europe, because it seems to me that is somehow lower now. On the U.S., if you can just provide an overview of your performance there, and what do you expect for the coming quarter or the second half? Thank you. Starting with United States. You know, to understand how moving now is the philosophy of the United States market, that is quite different from the philosophy of the European market and the rest of the world. It's necessary to have a real background to be able to manage the business in the United States. The United States is based on the some capacity to improve productivity in order to guarantee the price level, for instance. They want a quality products that is not in discussion. The quality is quality. The legislation in the United States, that there is a legislation that is applicable, that is introduced to the commercial market, is quite different from Europe. If you don't understand these type of things, you will be very difficult to have a successful in the United States, even your product is fantastic or whatever you want. Let's say, to manage the United States, you need to be in line with the system of United States, and to know how this system is moving for satisfy the customer and to have the customer that follow your products. This regarding United States. Regarding the other of reduction of the stock, we see that, for instance, we have a lot of things to do in order to have a better performance on our cash flow situation. We are able to achieve that, and we are lucky to have the possibility to work and to achieve same results that have consequently, a cost reduction on interest, and the cost reduction on capital invested regarding the stock, regarding the credits, and regarding all the investments done, where to keep our credit line free and not depending so much from the situation of the market, that today is quite high as an interest. Let's say that we have a lot of things to do in the next six months in order to have a better situation on cash flow and to have a very positive results on our cost. Okay. Thank you. The next question is from Gabriele Gambarova, with Banca Akros. Please go ahead, sir. Yes, thank you for taking my questions. One is a couple of questions on India, because... I saw that in Q2, your sales grew by just 5%. They were up 36% in Q1, I was wondering what's happening, what could we expect for the rest of the year? I think the market is up nicely. Same question for two-wheelers. They are down 30% year to date. I understand that there is, let's say, I mean, it's just a decision from Piaggio to reposition the brand, probably. I was wondering what's the strategy there, and what's your what are your expectations? This is for India. On Europe, I guess that the consensus is still expecting a -5% on volumes. I was wondering if you agree with this view or maybe we could expect, I don't know, a flattish market for the whole year or even a positive performance. I was interested in understanding what's your view. The last one is just a check. Mr. Colaninno, in your prepared remarks at the beginning of the call, you said that you are targeting to replicate the EBITDA performance of the first half across the all 2023 years. We should expect 16% EBITDA margin for the whole year, if I understood well. Raffaele speaking. Starting from your last question, the closest to not 16.3%, so the aim is to go close to 16; 15, okay. Concerning Europe, no, the goal is to have pretty much now volumes aligned with prior year. You are right, consensus figures, some analysts are still expecting negative demand or volumes for Piaggio. As I was saying before, after a positive Q1 in term of demand, we had also very positive on the first data that we have, July. Clearly, the picture is brighter than if compared with the beginning of the year. Concerning India and light commercial vehicle, we were waiting for the homologation of particular engine. Yeah, now it's ready. That was hampering a little bit our sales in Q2. This is the explanation for light commercial vehicle. For two-wheeler, as you said, it's written also in our slides, we are changing the mix, that is shifting towards Vespa. That's the reason behind these declining volumes. Clearly, when we look at the performance and gross margin of India, this year is improving strongly compared to last year, both in two-wheeler and light commercial vehicles. Okay? Okay. If I can add a little bit of color, we have a gross margin that you will see when we publish, the results by geographic, by CGU, Cash-Generating Unit, that is on the rise in all geographic areas. Right? Okay, just to follow up. It's okay? If I may. Y es, thank you, Raffaele. Just follow up on India. Do you think that the export perspectives from India can improve? I mean, once upon a time, export was a major, let's say, revenue sales driver for India. Now it's almost non- I will respond. I will respond this way: I believe that if the market confirm, if the Indian market, not export, just confirm the trend of the last three months, I will say that we have all production dedicated to this improve for the market, because it's big number. In India, if we are able to control better our dealer and our customer, it's very easy to do that, instead, to try to develop some African market, because of the export from India is the export internal us, that is considered not export, but is in intra sales. The export to Africa is very dangerous, it's high risky, I'm not so in favor to improve export for India, dedicated is going to Africa. The export for India, instead, on South America, is quite good. There's a lot of products that is imported from South American country, from India. We see that this is a market that we can look. I want to say something that is very important. We have received the, finally, the approval of three-wheeler diesel engine, that before was not done for us. This is very welcome from the market, and this is the reason why the three-wheeler jumping up on the last three months. Piaggio was able to receive the qualifies certificate on diesel engine on the three-wheeler for India market. The demands are beginning to be strong also in the three-wheeler electrical version, and we looked at as the future of the market in India. As you say, I told you that we are producing the motorcycle 400 in India with Aprilia trade name. This we expected a big result on the new products for us and for India. The first prototype, I want to guarantee you that this is a product that from the design, from the quality, and from the cost, is exceptional one. Let's say India is a huge market. We have able to not to make a mistake, to follow dangerous situation, but to be concentrating how the market move on the products and price and quality and distribution. We see that this new three-wheeler diesel engine, approved by the government, have a big demand, big results immediately. This, I think, is a product that can develop in the future, in the interesting number, let's say this. Okay, thank you very much. Very clear. The next question is from Sébastien Lemonnier with INOCAP. Please go ahead, sir. Hi, good afternoon and congratulations for the result, especially on the margin. Two question. One very quickly, which may be a bit of paradox with your previous comment. Isn't it the time to sell the commercial business in India, given the focus on mostly like scooter and bike and to try to make the group more simple? That's the first question. The second one, if I look at the free cash flow, and if I try to normalize basically on what you described, given the quite strong EBITDA margin, which is today the reflect also of all the productivity improvements since like the last years, I see that the free cash flow is quite attractive. When I look at the valuation of the Piaggio Group, I know you pay today a good dividend, the dividend is virtually attractive. Shall you consider at one time to implementing share buyback? Net debt to EBITDA should deleverage quite rapidly in the coming three years. Current situation is already quite healthy, basically. I'm not sure you need so much CapEx going forward. Could it be something that you may consider at one time, given the valuation of the Piaggio share? Thanks a lot. You know, totally in agreement with you, that our cash flow can be improved in easy and a big number before the end of the year. We work on that, we see that that is an area where is very important, and I am totally agree with you, because this can reduce the cost of the money, can give us the possibility to utilize the cash for different investments and products or credit line, but to, for instance, invest for new products and then to invest for in new technology without money cost that is now in the market, is quite difficult. I am totally in agreement with you. We work, and I want to stress, people of Piaggio Group to improve the cash flow, to reduce the stock, to reduce the credit line, and to have a cash for investments in new products, cash for technology and cash to be able to develop other market. Other investments in advertising, and, how we can improve the value of the trade name or the mark, how to improve Aprilia name, Vespa name, how to improve Moto Guzzi name, how to improve all this trademark. You mentioned what we are thinking about commercial vehicle in India. We have a concept in India, where the three-wheeler today is not on the way to be finished in a short time. Have to be adapted to the market that use three-wheeler today, as in the past, as a commercial vehicle. We working, and we beginning to think what we do, how to improve this market. That is very important and will be very important also for the future. Let's say, you and ourself have the same concept: cash flow improvement, reduce financial cost, to look the possible, the, the opportunity for India market, and to improve the new products strategy, with the new idea of advertising and to follow and to increase better that customer care. We have to develop our customer care to our customer. This is a real big value that, let's say, we have to express the value again in Piaggio. And, and just- In other terms, we have a lot of reserve to working on and to have results, and to have a good results back from this investment. Just to get back to one of my questions, does that mean that at one point you may consider to do share buyback? This is our job. No. The free cash flow yield is quite attractive, especially if you consider the upside on the free cash flow that you mentioned. Today, given the valuation of the share, I think that could be a way to show the fact that the group is fairly overlooked compared to its quality. That's why I'm asking if it could be part of the option. Well, number one, it's very easy for me to respond. With the financial regulation in Italy is quite severe about the buyback of the share in the market, we are not able to do what we want. We are obliged to follow the law and to follow all the, let's say, regulation that is quite restricted and quite severe to the company that want to have a buyback. Naturally, at the price of today, this can be very important to buy because its price is low. I consider this price can be better in this way. Naturally, we are limited in our action because we are part of the interest, let's say, interest. People. Huh? Interest people. With this market, we have to have, we don't want to have any risk from legislation point of view to not satisfy and not to respect what the law give us. They say to us what we have to do. This, I want to say, is a good price to buy. All right. Thank you very much. All the best. Okay, there are no more questions. I think that the last answer draws the call to an end. If you need more info, you can call me this afternoon. Thank you, everybody, for attending this conference call. Bye.