Gentlemen, thank you, and welcome to Pirelli's conference call, in which Pirelli's top management will present company's first half 2023 financial results. A live webcast of the event and presentation slides are available in the Investor Relations section of the Pirelli website. I remind you that the Q&A session will follow after the presentation. I would like to introduce Mr. Marco Tronchetti Provera. Please go ahead, sir. Hi, good evening, ladies and gentlemen. The results of the first half of 2023 confirm the resilience of our business model, with performance improving year-over-year. The scenario we expect for 2023 remains highly volatile and is characterized by a slowdown economic growth, where the main uncertainties concern Europe and China. A high inflation rate, in particular of consumer prices, despite the decrease in energy, transportation, and raw material costs. The growing volatility of exchange rates, fueled by interest rate differentials and economic situation in Emerging Markets. In this context, we prefer to take a more cautious view on the external scenario, both on tire demand, where we confirm the resilience of High Value and on exchange rates. While we confirm our Adjusted EBIT and cash flow targets, thanks to the effectiveness of our internal levers, as we are going to see shortly, our solid price discipline and improving product mix allow us to revise the price mix upwards, offsetting the impact of volumes and forex and upgrading our EBIT margin target. Our result for the first half of 2023 remain among the best in the industry. 7.5% top-line growth year-on-year, supported by the strong improvement in the price mix and the strengthening on High Value, which now accounts for 74% of the group's revenues. Adjusted EBIT amounted to EUR 570 million, with a margin of 15.1%, stable compared to the first half of 2022. Net income of EUR 243 million, up 4% year-on-year. The net cash absorption of EUR 535 million, in line with the usual seasonality of the working capital. Moving on, I would like to give you an update on sustainability. The group is firmly committed to safety as well as Diversity, Equity, and Inclusion of our employees. In addition to the campaign to raise awareness of at group level, the reduction of accident frequency and increase of gender balance in managerial positions become part of the objectives in our Short-Term Incentive program for managers. We expanded our effort portfolio further to include projects in support of parenthood and psychophysical well-being. Regarding product sustainability, in mid-July, we launched the new P Zero E, a top-of-the-range tire for electric vehicles, which received a triple A European label for rolling resistance, wet grip, and noise control, and contains more than 55% of bio-based and recycled materials, verified by third party for maximum transparency. Such results had never been achieved before in the UHP tire market. In term of sustainability materials, we also announced the acquisition of 100% of Hevea-Tec, the largest independent natural rubber processors in Brazil. This transaction is due to be closed by the end of the year and will allow us to launch innovative natural rubber projects to increase the use of non-fossil materials, further improve control over the natural rubber supply chain, as well as expand of FSC certification program. The decarbonization plan progressed more than expected, with all our factories involved in a Climate Change Challenge program. We are also helping our suppliers to reduce emissions in line with our commitment to Net Zero formalized towards the Science Based Targets initiative. I now leave the floor to Mr. Casaluci. Please. Thank you, Mr. Tronchetti, good evening, everybody. Let us analyze the market dynamics and Pirelli's performance. The second quarter of 2023 recorded an improving trend compared with the first quarter, +1% year-over-year versus a -4% in first quarter. Due to the destocking in Europe and North America, together with a slower than expected recovery in China, the market trend in replacement was below our expectation. In the first half of the year, the global car tire demand declined by 1.3%, with very different dynamics between segments and channels. Pirelli kept overperforming the market, thanks to our strong positioning in the more resilient, High Value segment. Positive original equipment market, +8.4%, was supported by strong demand increase in Europe and North America. In 18 inches and above, Pirelli saw roughly 10% volume growth versus a +11% of the market, with increasing focus on higher rim sizes and electric. In 17 inches and below, Pirelli -6.7% versus a market +7.2. We didn't benefit from the market rebound due to our selective approach in all regions. The replacement market remained weak, -4.8% year-over-year, discounting the volatile macro scenario worldwide. In 18 inches and below, Pirelli outperformed the market by 2 percentage points. Pirelli +2.9 versus market +0.8, driven by a market share gain. In 17 inches and below, Pirelli -10.4 versus market -6. We continue to reduce our exposure to this segment and focus on a mix more oriented towards bigger sizes. Let's now go through the key programs of our Industrial Plan, as well as the results achieved in the first half of 2023. On the Commercial Program, we overperformed in 18 inches and above Car market and reduced our exposure on the Standard segment, which in the first half accounted for 36% of the total Car volumes. On the Innovation Program, 150 new technical homologations focused on ≥19\", approximately 86%, and electric vehicle, approximately 50%. We consolidated our position in the Electric Vehicle segment with a portfolio of approximately 400 homologations and a market share in Premium and Prestige segment 1.5 times that of internal combustion engine. Our focus on sustainability and performance was further improved with the launch of the new P Zero generation, while new products were introduced in the two-wheel business based on our racing experience. On the Competitiveness Program, EUR 30 million gross benefits were achieved, in line with the expectations and project development schedules. On the Operations Program, the level of plant saturation is of approximately 90%, 95% in the High Value. Thanks to the acquisition of Hevea-Tec, the leading independent Brazilian natural rubber processing operator, we shall increase the supply of this raw material from South America. In the first half of the year, we increased our exposure on car 18 inches and above by 3 percentage points, which accounts for 61% of the car volumes. In the Original Equipment, 18 inches and above segment, our performance, +10% versus a market +11%, is featured by a growing selectivity focused on the 19 inches and above, where Electric Vehicle accounted for over 27% of the Original Equipment volume, +11 percentage points versus the first half of 2022. In the Replacement 18 inches and above, volumes 2.6 versus 0.8 in the market, growth was mainly driven by new product lines introduced over the past year, particularly in North America and Asia Pacific. On innovation, Pirelli launched three new products in the P Zero family at the Goodwood Festival of Speed, of which Pirelli is the exclusive tire partner. This new range of tires, developed considering the demand of car makers and consumers, is specifically focused on sustainability and efficiency. These new products were developed in line with our eco and safety design approach, an innovative development methodology based on virtualization, which is the outcome of our experience in motorsport. More in detail, P Zero E is concentrate of technology and sustainability, as I'm going to illustrate in the next slide. P Zero R is the ideal choice for the prestige segment due to its sporty performance and driving pleasure. Finally, P Zero Trofeo RS, a top product in terms of its performance on track. This product is also homologated for road usage and was designed for the Original Equipment of hypercars and supercars. Let's now go into more details about P Zero E. This tire integrates the latest technological innovations developed by Pirelli and was designed for electric and sustainable mobility. It is the first ultra-high performance tire on the market with over 55% of bio-based and recycled materials, and a 24% reduction of the CO₂ emissions compared to the previous generations. Both features are verified by third party for maximum transparency. P Zero E features a low rolling resistance, a lower noise, coupled with a consistent performance when both new and worn. It is the first UHP tire on the market with a triple A on the European level across the entire range. Finally, P Zero E is equipped with the new Pirelli Run Forward technology that guarantees support after puncture and allows to continue driving up to 40 kilometers at a maximum speed of 80 kilometers per hour. This technology is specifically developed for electric vehicle cars, which do not carry a spare tire due to their battery on board. The Competitiveness Program in the first half of the year recorded gross efficiencies of around EUR 30 million, equal to 30% of the annual target, and is in line with the project development schedule. Higher contribution of the efficiencies will be in the second half of the year. More in detail, our main efficiencies come from product cost, where we continued our modular design and design-to-cost approach, aiming at reducing the complexity of the structure and the weight of tires. In the manufacturing area, the results of which will be concentrated in the second half of this year, To improve the production process are being implemented by leveraging on industrial IoT, with particular focus on predictive maintenance and energy consumption. In the SG&A area, logistics and supply chain optimization process continue along their roadmap. Finally, in the organization area, the process of digitization and staff upskilling follow their schedule. Finally, I would like to comment on the Hevea-Tec acquisition, leading independent natural rubber processor in Brazil and our supplier as well. The transaction is expected to be closed by the end of 2023, it is worth approximately EUR 21 million as enterprise value, with no impact on our 2023 cash flow target. Through the Hevea-Tec acquisition, Pirelli will increase its natural rubber supply share in Latin America, ensure continuity of supply in the region, therefore, greater efficiency and benefits in terms of stock management. In addition, the operation will facilitate the launch of innovative natural rubber projects, aimed at increasing the use of non-fossil-based materials in the production of tires, in line with Pirelli's sustainability goals. As just mentioned, always in terms of sustainability, the Hevea-Tec acquisition will also enable the company to further improve its control of the natural rubber supply chain, reduce the CO2 emissions, thanks to a local-for-local supply, launch new FSC certification projects. Thank you. I now leave the floor to Mr. Bocchio. Thank you, Mr. Casaluci. Good evening to all. Let's go through the revenue dynamics in the first half of the year. The volume trend, -2.1% at group level, discounts the weakness of the market demand, especially in the Replacement channel. As Mr. Casaluci already explained, we overperformed the market on car 18 inches and above, while further reduced our exposure on Standard segment, in line with our strategy. Strong improvement in price/mix, +12.5%, expected to be among the best in the industry, was supported by a solid price discipline and a continued product mix improvement. The Forex impact was negative, -2.9% in the first half, equal to -EUR 94 million, with a worsening trend in the second quarter, following the depreciation of the US dollar and other major currencies against EUR. In the first half of 2023, Adjusted EBIT was EUR 517 million, with a 7.4% growth year-on-year, and a stable margin of 15.1% compared to 1H 2022. Internal levels more than offset the weak external scenario. More specifically, the price/mix, +EUR 345 million, and efficiencies, +EUR 30 million, more than covered the drop in volumes, -EUR 29 million, linked to a weak market demand, the increase in raw material costs for EUR 99 million, including the related exchange rate impacts, input cost inflation, -EUR 131 million, related to energy, labor, and transport, the negative exchange rate impact, -EUR 51 million, due to two different dynamics. On one end, the evaluation of the Mexican peso, +13% versus EUR, with a direct impact on costs, given that Mexico is the production hub for North America. On the other hand, the devaluation of renminbi, Latin American currencies, and the devaluation trend in the second quarter of the dollar. The impact of depreciation, amortization, and other costs was negative, -EUR 16 million and -EUR 14 million, respectively. The latter were concentrated in the second quarter and relative to marketing expenses, R&D, and to stock reduction. Profitability improved in the second quarter, reaching a margin of 15.5%, 15.1% in Q2 2022, thanks to the strong contribution of price mix, +EUR 147 million, and the efficiencies, +EUR 21 million. which in total covered 1.4 times the negative impact of raw materials, -EUR 22 million, inflation, -EUR 62 million, and exchange rates, equal to -EUR 36 million. Let's now analyze the net income dynamics. In the first half of the year, a +4% year-on-year growth. This trend reflected the already mentioned improvement in operating performance, which more than offset the increase in net financial charges related to interest rates hikes in the Eurozone, and the higher tax impact linked to the better operating result, with a 28.5% tax rate. The adjusted net income was EUR 298 million, versus EUR 288 million in the same period of 2022. The net cash flow in the first half of 2023 was negative for EUR 535 million, in line with our business seasonality. Excluding the impact of the three-year management incentive plan for 2020, 2022, worth EUR 67 million paid in the second quarter, the net cash flow before dividends was stable year-over-year. The variation of the operating cash flow mainly reflects the improvement of the operating performance, the higher absorption of investment activities, and the working capital and other items trend. Let's discuss the dynamics of the latter. Thanks to a careful stock management, inventories were reduced in the first half of the year, reaching a 20.7% on sales, minus 1 percentage point versus the end of March. The reduction was related mainly to raw material inventories. It should be remembered that in 2022, the high incidence of raw material stocks was due to both rising inflation and actions to contain supply chain risks. Finished product inventories, on the other hand, remained stable. The other elements of the working capital reflect the usual seasonality of our business, with an increase in trade receivables to 13% of sales, plus 3.5 percentage points versus the end of 2022, and a reduction of trade payables versus 2022 year end, due to the investment trend and the normalization of raw material stocks. Trade payables on sales is expected to return to around 30% at the end of 2023, in line with previous year. Finally, we would like to remind you that the non-recurring impact from the incentive payment was related to the 3-year long-term incentive plan, 2020-2022. This roughly EUR 67 million impact was included under the item Other Payables. From 2024, with the transition to the rolling system, incentive payments will be on an annual basis, with a substantial alignment expected between the impact on the income statement and cash outflow. The group gross debt, as of June 30th, amounted to approximately EUR 4.8 billion. Considering the EUR 1.7 billion financial assets, our net financial position stood at EUR 3.1 billion. The EUR 2.8 billion liquidity margin allows us to cover the debt maturities up to 2025 year end. In the first half of the year, two new sources contributed to the liquidity margin. The first is the EUR 600 million 5-year bond issued in January, which marked Pirelli's debut as an investment-grade company, and represented the world's first sustainability-linked benchmark issue in the tire sector. The second is a EUR 300 million bilateral loan, benchmarked to sustainability targets, maturing in February 2026. This loan, as of June, had not yet been drawn, and therefore positively contributed to increasing the liquidity margin as undrawn committed line. The utilization of this new bank line happened in July, and facilitated, partially using the liquidity already available, the voluntary early repayment of EUR 600 million loan maturing in February 2024. Financing with ESG features now accounts for 58% of total debt. The cost of debt stood at 4.46%, up 15 basis points from first quarter 2023, impacted by the restrictive monetary policy, mainly in the Eurozone. I now turn the floor over to Mr. Tronchetti. Thank you, Mr. Bocchio. let us now turn to 2023 outlook. As already mentioned, the macroeconomic picture is still characterized by volatile and mild economic growth. Major uncertainties concern Europe, analyzed by the monetary tightening, and China, discounting its lower-than-expected recovery, impacted by a weak foreign demand and low domestic consumption. The situation led the government to launch new measures to support domestic demand at the end of June. In this context, based on the lower-than-expected market trend in the second quarter, we adjusted our outlook on the car tire market. For 2023, we expect the demand will be down 2%, with High Value and Standard following opposite trends. High Value confirms its resilience, with a growth rate of 3% in car 18 inches and above, whereas Standard is due to fall by -3%. More in detail, regarding 18 inches and above, we expect a mid-single digit growth for the Original Equipment, lower than our previous estimation, due to a lower demand in the China market. The Replacement 18 inches and above, we expect a low single digit growth rate, +2% against the 3% growth in the previous guidance, with a more cautious view on Europe due to the weak trend recorded in the first half of the year in China. Nevertheless, the progressive recovery of Replacement is confirmed in the second half of the year. In this context, we confirm our strategy, which aims at consolidating our leadership in the High Value, especially in the 19 inches and above, which feature a faster growth in specialties and electric vehicle. Based on the results achieved in the first half and the scenario just described, we confirm our Adjusted EBIT and cash flow targets, although with different mix and drivers. More in detail, we expect volume slightly dropping due to the market slowdown, with a low single digit growth of High Value and a reduction in exposure to Standard. Price mix significantly improving, thanks to the better performance in the first half. The forex impact reflects the high volatility of the major currencies against the euro. Revenues are therefore expected to amount between EUR 6.5 billion and EUR 6.7 billion. Adjusted EBIT margin improving compared with the previous guidance, and reaching between approximately 14.5% and less than 15%, due to a greater contribution from the price mix. Adjusted EBIT is confirmed approximately EUR 970 million, is the mid-range of the guidance, where the price mix and efficiencies offset the impact of the external scenario. In line with the previous guidance, we confirm investment of approximately EUR 400 million, devoted to the technological upgrade of our plants, which, mix improvement and increase in High Value. Sorry, increase in High Value capacity in Romania and North America, which is to be completed before the end of 2025. Net Cash Flow before dividends is confirmed between approximately EUR 440 million and EUR 470 million, due to the operating performance and an efficient management of the working capital. This target includes the amount relative to the acquisition of Hevea-Tec, announced on 4th July. The net financial position is expected to be approximately -EUR 2.35 billion, with a leverage between approximately 1.65 and 1.7 times the Adjusted EBITDA, in line with the deleveraging process outlined in the Industrial Plan for the 2010 to 1, 2025 period. This ends our presentation. We may open the Q&A discussion. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. We kindly ask to use the handset when asking questions. Anyone who has a question may press star and one at this time. We will pause for a moment while questioners are joining the queue. The first question is from Martino De Ambroggi from Equita. Please go ahead. Thank you. Good evening, everybody. My first focus is on price mix. It's clear the trend was so strong that you are revising upwards the price mix expectation for the full year. What is exactly going better than expected at the beginning of the year? It's just an adjustment where you have forex devaluation and so on, what else? The second question, still on prices, is can we assume that the Original Equipment is entirely with automatic adjustments indexed to raw mat? When do you expect to start to see reduction in prices? I suppose this is not an event for the second half of this year. The third question is on profitability, focusing on Standard. If you could share with us, what was the profitability in the first half, and what do you expect in the full year, considering that the market is worsening? I understand you are selective, but this business is probably more under pressure compared to High Value. Yes, thank you. Good evening. Concerning the price/mix, the improvement compared to the last guidance is around 2 percentage points, so from 5.5 up to 7.5. I would say half of the improvement is coming from price and half from mix. What is leading the improvement is mainly related to the price discipline. The Pirelli decided. All in all, the price discipline in the High Value is in the market. We don't see a measure movement on price, Pirelli itself decided to keep as a priority of the commercial strategy, the price discipline. This is the measure impact coming from the improvement of price mix and mainly price. As far as Original Equipment, yes, the first negative impact on price will come in the second half of 2023. The price performance on Original Equipment will be slightly negative in the second half, on all the business which is related to the cost matrix, that is more or less 70% of the Original Equipment business for us. The last question, the profitability of Standard, but the profitability of Standard is expected. I have to say, first half was quite positive, around 9%. All in all, we target to have this performance for the full year, so we don't see measured differences between the two halves. You are right, the price volatility in Standard is higher than High Value. High Value is more protected. Nevertheless, the presence of Pirelli in the Standard segment is very limited, and we keep our focus only on the most profitable segments of the Standard. The all-season, the 17 inches, the homologated tires. We don't, we prioritize the price discipline, and in case we lose, as is happening, market share, because it's not our focus. We don't reach within 2023, the double digit profitability that was planned in our Industrial Plan because of the effect of the Russian operations and the desaturation of the plan. The target of reaching the double digit remains, we simply have 1 year of delay. Thank you. Thank you. If I may just, 1 more on price mix. If you could split at it for your full year projection, what% out of the 7-8% is price and what is mix? You can consider more or less 4.5, is price. Okay, thank you. The next question is from Monica Bosio, from Intesa Sanpaolo. Please go ahead. Yes, can you hear me? Yes, we do. Okay, good evening, thank you for taking my questions. The first one is a general question. The replacement market, in, under pressure, there is a destocking process. When do you see the destocking? sorry, one second. Now we are not listening well. there Yes, I'm trying again. Okay. I hope it's better. After the replacement market, when do you expect the destocking process might come to an end? My question is, can we expect a rebound of the replacement market already from the very beginning of 2024? The second question is on EV tires in original equipment. I remind that in the first quarter, the shares of EV tires in tires above 18 inches in the original equipment was at 25%. The target for the full year was 30%, if I remember well. If you can give us an update on this. As a third question, as for EV tires in original equipment, what is the share of the local Chinese car players, if you can give that? Thank you. I would not talk about the rebound of the Replacement market, is not expected a rebound so far. Is expected the second half, better than the first half, mainly because of the favorable comparison versus last year on the Replacement, and also because the destocking of the train has been more or less all finalized, both in Europe and North America. I would see a more stable Replacement market all in all. What is clear is that the resilience of the High Value in the Replacement market is confirmed. We maintain a gap between the Standard, 17 inches and below, and the High Value, stable, more or less of 6 times faster and more resilient, the High Value compared to the Standard, which is the most important aspect for our business model. Moving on to the Electric Vehicle, yes, you are fully right, and we do confirm our target on market share in the High Value is confirmed 30%, which means 1.5 times the internal combustion engine in the Premium and Prestige segment. The Electric Vehicle, all in all, is today representing around 27% of the entire Original Equipment volume inside our sales. More detail, specifically on the Chinese carmakers, we will provide you after the call. Okay, thank you. Okay, thank you very much. The next question is from Michael Jacks from Bank of America. Please go ahead. Hi, good evening. I hope you can hear me clearly. I have two questions. The first one on volumes. Your 2 percentage points cut to your OEM channel assumption speaks to a double-digit percentage downgrade for China, if you attribute all of that to the region. Can you just provide a little more color on that, given that, you know, your weighting is more towards the High Value segment and EV tires in that market, and we've seen that the EV car makers in China have been strongly outperforming the domestic market? Secondly, on volumes, would you agree that the comparative base for the overall replacement tire market is quite low from the second half of last year? Would it be crazy to expect some growth year-on-year in that market? Finally, just on cost inflation, could you share with us your updated assumptions for the year and whether or not you've made any changes to some of the individual cost buckets? Thank you. Yes, concerning China, you are right. There is a reduction in the expectation of the market, generally speaking, when we talk about the 18 inches and above market, which is our target market, today, on a full year base, we project a total Chinese market only talking about China of 3.4 percentage point negative, mainly driven by Original Equipment, where we do expect a slowdown of the market in the second half, also because of the less favorable comparison versus last year. I do remember that there was a rebound of the Original Equipment market in the second half, while Pirelli is projecting to gain market share with a +1% on sales in the 18 inches and above. You are right, the expectation of the market is not as brilliant as was in the previous 3 months ago. Nevertheless, remains more resilient than the standard, and we target to gain market share. In terms of inflations and cost, generally speaking, what we can tell you is that raw materials that accounts for roughly 37% of our total on sales, sorry, on the total base cost, we had a headwind of around EUR 100 million in the first half, as negative because of inflation, and we do expect to have more or less the same amount in positive in the second half. All in all, the impact of inflations in raw material is expected to be neutral. If we move on the other cost, logistics, that represents roughly 9% of our total cost, generated a negative inflation around EUR 15 million in the first half, more or less, we do expect similar impact in the second half. Energy cost is around 5%, 4.8% of our sales, and the inflation in first half was EUR 52 million negative. We do expect EUR 38 million roughly in the second half. Still a negative impact, mainly because due to our aging policy, we bought energy at a higher price compared to the actual market price. Labor cost, accounting for around 18% on our sales, on our cost base, has a similar trend of inflation, first half and second half. Around EUR 40 million the first half and EUR 45 million in the second half. We have other inflations for, roughly EUR 60 million, half and half in the two semesters. This is the general picture on cost base. Thank you. Thanks very much. If I may just follow up on the volume question, just to try to understand that, you've reduced your assumption for the High Value segment, or 18 inch and above, by 2 percentage points. Now, given your weighting towards China is less than 20%, a 3.4% reduction in the market isn't quite congruent with the 2 percentage point cut that you've made to the market forecast. Where is the rest of that cut coming from? The total 18 inches and above market at the global level for 2023, is expected, is projected in our estimation, around 310 million tires, growing at 3.2%. That was the number in our presentation. As expected, volume, total and growth at global level, 18 inches and above, total market. In China, the market is counting 43 million tires, it's a bit above the 10% on the... Around 12% waiting on the total market, and is expected to be -3.4%. Thank you. Thank you. Maybe I should take this offline afterwards, but I was referring to the OE channel, which you've cut to 5% versus the previous 7. Thank you. Yeah. Sorry. Yes. Original equipment out of the 310 million global, 125 is the original equipment. If we move to China, out of the 43 million, 31 is original equipment, and is expected to decrease around 6%. The weight of the original equipment in China market is higher than the average of the global market because it is still a young car park. The weight of 18 inches in the original equipment is on average, higher than the global picture. Thank you. The next question is from Akash Kakkar from JP Morgan. Please go ahead. Thank you. Akash from JP Morgan. Two questions from my side, please. The first one on your high plans saturation when it comes to High Value capacity. To what extent does the 95% capacity utilization restrict or contain growth in the segment as we think about growth into 2024, please? Can you also remind us on your current CapEx assumptions for 2024? The second question is more of a medium-term question. In your view, what protects the higher margins of bigger rim sizes in the medium to long term? Is it more down to technological and material know-how, or is it a structural cost advantage versus your competition, or is it just a function of relatively low competition in the space right now? Thank you. In terms of saturation, as we mentioned in the presentation, we have 90% of global saturation, out of which 95% in the High Value. There is all the necessary capacity in our plant to catch all the demand opportunity for the coming years, because I always remind that at least 10% of our capacity in a High Value, that represent 3 million tires, more or less, is used to produce Standard tires. This is the way we keep always a spare capacity to catch in advance the sales growth. 95% of our High Value capacity is saturated, means that we have 5% spare non-used, plus 10% used for Standard. In terms of CapEx, 2024 we don't have already numbers ready to be communicated. Anyhow, we target to maintain a ratio around 6% on sales, which is our ratio of the last years, we do consider this is a well-balanced target, considering that more than 50% of our CapEx are and will remain concentrated in technological upgrade, sorry, mix improvement, digitization of our factories. That remains our main target. 25% is capacity increase, 100% High Value, 20%-25% is base load and business continuity. The answer is to your last question, is always the same, pushing on innovation. Pushing on innovation is the way we rise the barrier, and we protect our mix and our positioning in the most important Premium and Prestige car makers in the world. Thank you. Thank you. The next question is from Ross McDonald, from Morgan Stanley. Please go ahead. Hello, thanks for taking my questions. Ross McDonald, Morgan Stanley. I'm just looking at slide 32 in your presentation pack, you state that raw material costs are now 34% of revenues, which is down from 36% in the first quarter, I believe. Costs, raw material costs obviously coming down quite quickly. What do you see as a normalized level here for raw materials as a percentage of sales, is that 34% number actually quite low now versus history? My second question, I'm just thinking out loud, you know, you have lower raw material costs, you have a cost-cutting program that's accelerating in the second half, it doesn't sound like you're going to cut tire prices. That sounds like a very cash generative period for Pirelli. I'm just curious what factors offset those positives and keep the free cash flow guidance flat? Final quick question, just on FX. Just so I understand it, your FX assumptions for a 6.5% drag on revenues, is that just assuming that the FX rates remain unchanged from their current levels for the rest of the year? Thank you. Okay, thank you for your questions. I will answer on the raw material environment, and then I will ask Mr. Bocchio to answer on the Forex side. Raw material impact, as I said before, is normalized at around 36.5-37% on sales, and this is a normalized impact. We had a negative and headwind of EUR 100 million, roughly, in the first half, and we will have a positive impact of around EUR 100 million in the second half. That's the reason why it's a flat impact on a yearly base. This is 100% related to the raw material markets and the commodity markets, because there is a reduction on the inflation that started months ago, and now we have the impact on our costs starting from the second half. Mr. Bocchio, thank you. Yeah, I will take the one on the FX. As we said, our renewed guidance is taking into consideration an impact of Forex between -6% and -7%, and we are considering a devaluation of the United States dollar, meaning that in second half, we are expecting the US dollar to remain in the range of 110 to 112. A devaluation compared to the second half of previous year of about 9%. Same 9% devaluation, we are expecting from the Chinese renminbi to stay in the second half in the range between 7.70 to 7.90. This give another 9% devaluation. We are assuming a higher volatility on the Latin America currencies, which will represent a significant part of the impact of the FX, and then some uncertainty on the Russian ruble, but reasonably stable compared to the devaluation that we have had on the market in these last few weeks. Maybe I could just rephrase my second question. You know, a lot of investors are expecting price cuts, just to be clear, it seems like that's not your intention. With these lower raw material costs, would it be fair to say that this is a very cash generative period for the tire sector? Thank you. Okay. Thank you. No, we don't plan any price reduction. We keep the actual price positioning. We don't have any more opportunity to increase price in this environment, both because of raw material and also because of the reduction on the demand, and the lower expectation on the market. We don't plan to increase price any more in the second half, but we don't have any plan to reduce price. We keep the price discipline, as far as replacement channel is concerned. As far as original equipment, as I said before, because of the cost matrix mechanism, we do expect a price reduction, which is already included in our numbers and in the contracts we have with car makers, that will be in the range of 1-2 percentage points in the second half. Thank you. Thank you. The next question is from Philipp Koenig from Goldman Sachs. Please, go ahead. Yeah. Hey, good evening, guys. I've just got a question on the new margin guidance. I know that you obviously lifted it, you did over a 15% margin in the first half, inflation is improving, pricing is remaining stable, and seems like the volumes in the replacement market, especially on the High Value end, also recovering. I'm just wondering why even the mid or the high point of your guidance would still imply the second half margins to be lower. I know there's a bit of an FX headwind here, there seem to be quite a bit of offsets from deflation and higher efficiencies. Is it just the FX or is there anything else? Thank you. Okay, I'll take this question. Related to the second half profitability that is implicit in our guidance, we have to say that it is discounting some cautiousness on the external scenario, as we said, related to demand and to the Forex. The volumes are expected to decline year-on-year in second half, and even for the Forex, especially, it is expected to deteriorate and have a higher devaluation of the dollar, as we said, the renminbi, the volatility of the currencies of the Emerging Markets, jointly with the revaluation of the Mexican pesos, as we said, at the beginning. All of these impacts, jointly with the inflation headwind, will be offset by the price mix and the price discipline that we just mentioned, whose contribution at the end will be lower compared to the first half, given the base obviously is getting higher and higher, and efficiencies and the raw material tailwind. Overall, at the end, this is the input that we are including in our second half implicit guidance. Could I maybe ask then, what type of drop-through are you assuming on the FX? What? On the FX... You're asking about the FX on the second half, right? Yeah, the drop-through into the operating profit. Okay. Drop-through? Yeah, the drop-through that we are expecting for the second half is pretty similar with what we experienced in second quarter, so it will be about 40%. The currency movement, as what we said on US dollar, we are expecting to stay between 1.10-1.12 in second half, so with the devaluation of 9% compared to second half previous year. A weakening of the Chinese renminbi, that is to stay in the range of 7.70-7.90. Again, roughly 9% of devaluation second half of 2023 compared to second half of 2022. Volatility of the Latin America currencies, especially of the Argentinian pesos, and then some uncertainty on the Russian ruble, but we are considering ruble to stay more or less at the level that we are experiencing in these last few weeks. Very clear. Thank you very much. Gentlemen, there are no more questions registered at this time. Floor back to you for closing remarks. Well, thank you, everybody. This conclude today's program. Thank you for your attendance, and have a good evening. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.