Afternoon. This is the Chorus Call Conference Operator. Welcome. Thank you for joining the Sogefi in-depth of the two business units 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 send the conference over to Mr. Michele Cavigioli, Head of Finance. Please go ahead, sir. Good afternoon, everybody. Thank you for joining this call. As promised, we said on Monday we would organize this one to give the opportunity for everybody to talk to the head, two head of the BUs, the CEOs of the two BUs. We have today Mr. Luigi Lubrano, CEO of the Suspension BU, and Mr. Michael Spag, CEO of the Air and Cooling BU. I propose we start with the suspension, and we go straight to Q&A, as we have already presented results on Monday. Please go ahead with any questions you have on suspensions. When we finish with that, we will turn over to Air and Cooling. Thank you. This is the Chorus Call 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. Please pick up the receiver when asking questions. Anyone who has a question may press Star and one at this time. The first question comes from Monica Bosio of Intesa Sanpaolo. Please go ahead. Hey, good morning, all. Thanks for taking my questions. I have a few. Let's start with the suspension business. I was wondering if you can indicate us the size of the stabilizer bars within the suspension business, and what are the main projects, both within the car industry and potentially outside this arena. That's the first question, and then I will do later, the next one. Good morning. Average, we are speaking about 70% of all total turnover related to stabilizer bar. The rest is related to coil spring. We are targeting a main project, new project is with a German OEM that is changing completely the platform. In this case, the volume will be, we will experience the volume around end of 2027, beginning of 2028. Some part, as I said, is a replacement, but there is, they have to define the strategy, a continuation also of the old business. We consider in our numbers that it will be a full replacement, even though we know that they are thinking about a continuation on one side and a new platform launch on the market. Okay. As for the new platforms, if I can ask, what is the pricing environment? Are you experiencing higher pricing pressure than in the past, or? Yeah. More the same? Oh, sorry. In reality, we are experiencing an high pressure on the cost because, you know, all the European OEM are afraid of the impact coming from the Chinese that are coming in Europe. Due to that, the market is not growing. The risk is that they will be attacked by the Chinese newcomer, and so they are working in order to reduce dramatically their cost. Okay. Thanks. We perceive also this pressure. Thank you. Coming to the Chinese players in the presentation, the total group exposure to Chinese players is something in the region of 12%. This is a mixed question. Can we split the exposure between suspension and the air and cooling? Maybe if you can tell us who are the main the top three Chinese customers in both of the two divisions. Thank you very much. I'll start from the end, the last part of the question. In China, we are a suspension. We are designing, developing, and producing China for China. Our strategy is not to work mainly with the very well-known OEM. I mean, BYD, Geely, and Chery, where, because in their environment, for sure the main target is to have a very, very low price. This kind of fight can impact our marginality. We are strategically looking for the new BYD, the new Geely in the market. I can mention a couple of them, Xiaomi and XPeng. That are promising OEM on the market, and they are performing very well in this space. They are launching the new car line in the market, giving us a very good performance. About the share in China, we can say that 54% is air and cooling and 44% is suspension. looking at the 12. this 12% overall exposure is. Yeah. 49. Yeah, 44. Okay. The sum is not 100 only because inside there is a part of the business, that is not pure, suspension, but is related to the residual screen. Okay. Thank you very much. If I can ask another mixed question regarding Stellantis. The group's exposure grew a lot in 2025. We have seen that the car maker had a lot of cancellation. I was wondering if you can split the group exposures towards Stellantis in the two different divisions and maybe explain how does Sogefi deal with the compensation in the two different divisions? For suspension, okay, we have experience, ongoing project that we have SOP in 2 years ago, mainly is the Cinquecento Elettrica and then there is another part of the business that is related to the LCV Ducato Elettrico. For this, we have negotiated a compensation through an extension of other business. In the specific case, we have been nominated for the hybrid version of new Cinquecento. In this case, we have been compensated with a new project. On Ducato, okay, the volume for the electrical version were not so astonishing, so the compensation was not necessary. It would be managed year-over-year, not releasing LTA or with other form of compensation. For other customer, for sure, an SOP that was supposed to deliver a certain interesting volume, have been substantially canceled and with this we are discussing a cash compensation for the cancellation of the volume. Is it a cash compensation related to the cost that Sogefi had to sustain for the new project? Absolutely. Yeah, absolutely, yes. This is the basis. There are additional... We cover 100% our cost, plus there is a compensation related to the loss of profit on this platform. Okay. How does it work with Stellantis and other players in the air and cooling business? For air and cooling, we have not experienced any cancellation with Stellantis. We are on a battery vehicle production. This was low productions from pretty much start of production last year. We've renegotiated the price with Stellantis based on this lower volume, but there's been no cancellation. The only cancellation we've had is actually not with Stellantis, was with Ford Motor Company. They canceled a platform called BEVQ and BEVK, and we've received a million-dollar compensation for the cancellation. Besides that, there's been no other cancellation on the air and cooling side. Okay. Coming back to your first question, the exposure of Stellantis is more or less 50/50 for both vehicle. 50 is related to suspension and the rest on the. The same amount is for air and cooling. Perfect. Very clear. Just to finish it up, we have at this moment, the business is gonna grow on pure battery vehicle, but air and cooling is not very much exposed to battery electric vehicle right now. We are ramping up new programs this year and next year, but past years we have low exposure. Perfect. Very clear. Thank you very much. Thank you to both. Mm-hmm. No problem. As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. The next question comes from Martino De Ambrogi of Equita. Please go ahead. Thank you. Good afternoon. Can you hear me? Yeah. Clearly. Okay. Sorry. Specifically on suspensions. This is a question what we used to ask during the calls, but I take advantage of your presence. What is the maximum profitability that you have in mind for this business when fully on stream? When do you believe to be this could be achieved? Apart from the cost cutting, shutdown of plants and so on, is there any other specific driver facilitating this achievement? This is for suspensions. One general question on the raw mat, because the current environment suggests me that we will have probably spikes, not lasting few days, but there is a risk of longer negative effect. Just if you could remind, what is your ability to pass through this price increase? What is the percentage of automatic adjustment for both divisions, separating the two divisions? In terms of working capital, I suppose a suspension is worse because of raw mat, and this will suffer more. I don't know if there is one. For sure it's too early to talk about potential impact of the current shocks, but what could be the ability to manage a networking capital also in particular? I start from your last topic, the fluctuation of the raw material and energy. You know, our business, I mean, suspension is based on material, direct labor and energy. We have in place contractual compensation for most of our customer. According to the quotation of the reference index, we normally use PS for steel. If we utilize extra steel with extra alloy, typically for heavy duty. Also, in this case, there is an automatic compensation. This is a rule that we apply with most of our suppliers. The pass through is in place and it is working. Only a little part of this is managed through a negotiation with the customer on one side and supplier on the other. For the energy, we have a certain number of customers that have included the compensation also for this, according to the fluctuation of the energy cost, we are able to recover. For sure, there is a delay in the compensation because it's based on the observation of the past quarter versus the actual. At the end of the day, it's only a matter of time. Related to the performance that I expect. We have in mind to grow in the region of 2%, landing point is 2029 in Adjusted EBDA from the actual one. We foresee an increase linked to the optimization of our industrial performance, pushing more on the automation and improving the saturation on our plans. Okay. Raw mat for air and cooling? Raw material for air and cooling. We mostly use the plastic. Most of, and not all, but most of our contract, especially in North America and Europe, we are indexed. What happens is every quarter, the raw material cost is the plastic is adjusted up and down based on the index and the negotiation with the key plastic suppliers that supply our customers. There is some exposure, but very low because we're indexed. Okay. If we had to split the CapEx plan going ahead for the two divisions, how should we split it? Just a second. Air and cooling is taking probably 60% of the, of the CapEx going forward, roughly. Obviously the investments for new products are much more important there. Yeah. I can, I can explain. It's because of the necessity to invest in additional capacity in North America, because North America is going back to producing more ICE vehicle. Also, to invest in battery vehicle cooling plates also for North America, because of a customer of ours, relaunching their. Basically, they've changed completely strategy. Their strategy before was to go into the EV space with big, very expensive truck. It didn't work. They canceled all of their platform, and they're relaunching with low-cost vehicle. We happen to be on this specific vehicle that they will be relaunching next year. That's why we need to invest to support this launch for this specific customer. I mean, if you look in the news, you should be able to find out who that customer is. Okay. Thank you. For networking capital, am I right in assuming that the suspensions, because of the raw mat, weight and so on is higher than networking capital in that division compared to the air cooling? Yes, the working capital in suspension after is higher than air and cooling because primarily suspension. Thank you. The next question is a follow-up from Monica Bosio of Intesa Sanpaolo. Please go ahead. Yes, thank you. If I can ask, what is the saturation rate of Sogefi plants in the two divisions? As for suspension, what is the current saturation rate of the Romanian plant? I know that after the closure in France, the company will move part of the production there. I was also wondering if in the next two, three years, maybe it could be the case for further footprint optimization. If you can share your thoughts with us. Also if you can say us what is the saturation rate for air and cooling plants. Thank you. For suspension, looking at the number of 2025 and 2026, according to the market situation, we are close to 60%-63% of saturation. This is the reason why we have decided to optimize our footprint. We will move the product produced in the plant in north of France, not 100% in the Romanian plant, but according to the validation of our plants coming from our OEM, some products will be moved even in Italy, in Spain, in other French plants, and a part of will be moved in Romania. The Romanian plant have improved dramatically versus 2024, we have completed, let's say, the turnaround of the plant that is working now at a good level. We have space for another 30%, we can move volume there or better to be awarded for further volume in order to optimize the result of the plant. For sure, we are reviewing continuously our footprint because according to the stagnation of the market, we are on one side optimize the footprint and on the other improve the output of the machine through automation and further activity of improvement of the equipment itself. Thank you. Okay. For air cooling, I can answer if you want. It's very simple. For China, we are saturated. As a matter of fact, this year we've planned for a to add a new facility in China, depending on how quick the market grows over there. We are planning for an expansion because of saturation. In North America, as you may know, we have two plants, one in Montreal and one in Mexico. The one in Montreal is completely saturated. As a matter of fact, the cooling plate that I talked to you about earlier was scheduled to be manufactured in Montreal. We were planning a new plant, because of cost concern, we've canceled that new plant and are moving, in agreement with our customer, we are moving that new business in Mexico, because we had spare room in Mexico. In Mexico, we will be having this, and at the end of this year in Mexico, we'll be launching two new key programs, and Mexico will be completely saturated. Now, we are also expanding in India and relaunching India. That will happen, well, it's happening now, but you'll start seeing turnover in 2027. For Europe, we have three plants, one in Romania that is completely saturated as well. They are so saturated that we are moving this year some of their production into one of our French plant. To conclude, we are full capacity pretty much everywhere but in France. Okay. Which we are about, our plant is maybe 60%-65%. All the other plants are full both. That's quite interesting because at the end in air cooling, the company is at full capacity bar France. Mm-hmm. margins of the divisions were a bit down. If I have understood well, they are expected maybe to progress, but not so much in 2026. I was just wondering why. It's because we will see the improvements later from 2027 onward. Am I right or am I missing anything? Are you talking about air and cooling? Yeah. Oh, as on air and cooling. Yeah. It's... Sometimes you have to not only focus on the turnover, but what's behind it. Sometimes you generate more volume, but not necessarily more turnover because the replacing turnover is lower than the outgoing turnover. I'm gonna explain. If I take North America, for instance, we have businesses with a lot of what we call directed buy. Directed buy, it's for instance, your customer telling you you're gonna buy the throttle body from X company for $30. It generates a lot of turnover but no profitability because it's a fixed price. Yeah. Got it. That's the reason why. Okay. Yeah. Very clear. Thank you. Okay. Mm-hmm. Once again, if you wish to ask a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. The next question is a follow-up from Martino De Ambroggi of Equita. Please go ahead. Thank you. Specifically on Stellantis. This year it remains your most important client. This year will likely increase volumes, let's say mid-single or more%. What else is offsetting your guidance? Which are the clients which are going worse this year, offsetting the growth expected for Stellantis? Frankly, I don't know. If you can confirm if Stellantis is growing mid-single-digit or more or not, I don't know. When I start to give an answer related to what I'm observing on suspension. For sure Stellantis is considering this grow, including the globe. Looking at the operation and the market, they are able to attack in, especially North America, where they are making money. We are not on a suspension on the North American market. We are working mainly with them in Europe and in South America. South America, the progression is good, but in Europe not. They have some problems on some car lines. We are forecasting a good performance in 2026 on the light commercial vehicle, not only Ducato, so the so-called platform AX 250, but also the other one produced in Spain and in France. The mid-size LCV and the small LCV. This is not enough to counterbalance all the low performance that they will have on the European car line. You know, that they are under attack by the Chinese. You have experience, especially in Italy, the campaign put in place by BYD in order to try to erode their reach rate in Europe, especially in Italy. We are quite conservative looking at the growth of Stellantis for 2026, just because we are not present on the United States market. Okay. For air cooling, we are not exposed to Stellantis in North America. Our turnover air cooling with Stellantis is roughly more or less $15 million out of almost $250 million. It's very low exposure. In Europe, I don't know if we are lucky or not, but we are on the not platform, but the engine that actually sees growth at Stellantis. It's the EV engine, and this is why we are moving production from Romania to France because we can't keep up with their demand. It's kind of odd, but that engine actually at Stellantis is doing very well in Europe. One more question on Leapmotor. I assume you are not exposed to Leapmotor today. In the future this could be an opportunity for you or you see the risk of cannibalization, Leapmotor eroding the sale of other Stellantis models, meaning a risk for you if you are not on Leapmotor platform? No. For suspension it's not true. We are on a Leapmotor platform, China for China. It's a potential opportunity for us just in case they improve the volume in Europe to jump in the localized platform. For sure we are working with them in China for Chinese production. I could see an opportunity in the future. They know us, we have developed and designed, developed products for them for the Chinese application. No. For Leapmotor, for air cooling, we have no exposure with them right now, neither in China nor in Europe. Is it an opportunity for you or...? It could be an opportunity, but to be honest with you, on air and cooling, right now we are mostly targeting. Well, of course we have BYD as a customer, but we are targeting the battery supplier, which are CALB, which we are starting production now, and CATL. Those are mostly the people we want to work with for better application rather than the OEM directly. And by the way, they're the biggest suppliers in the world. If I may on the Romanian plant, could you quantify what was the amount of sales and profitability last year in absolute value? I have to look. Last year, you said? Yep. I can give you a percentage, but I don't have. Do you have, Bea, the number? I don't have it with me. I think he was more, he was asking about the suspension, in Romania. Oh, suspension. Okay. Yeah. Give me one moment. No problem. We can have a follow-up through Stefano. No problem. Very last, on the ongoing negotiations for compensation, if I understand correctly, should be in any case small figures, not a big number. I have collected the figures. After a period of the past year that were negative, we forecast to be positive in 2026. We were close to be positive in terms of Adjusted EBITDA this year, 2025, but fully positive next year. 2026. Okay. On cash negotiations that you are currently negotiating with customers canceling new platforms and so on, few millions EUR is a reasonable expectation, if any? Sorry, I have not catch your question. For the ongoing negotiations, to offset, the cancellation of, platforms, of Stellantis, but also. No, no. Yeah. No, clear. For suspension, we have already closed the deal with them. For Stellantis, we were exposed the most on the Fiat 500e, and we have been automatically nominated for the hybrid. We have managed some cash compensation in order to cover the pooling cost that was forecasted, specific one for BEV, forecasted in amortization by cash. Okay. There is no big, like, cash inflow expected as some compensation. From Stellantis, I can confirm, we have to negotiate with Tesla for the cancellation of the volume of the Cybertruck. We were supposed to produce in Europe an interesting number of goods for them. But unfortunately the model has been not successful on the market, and so we are discussing about the cash compensation with them. Okay. Thank you very much. Thank you. The next question is a follow-up from Monica Bosio of Intesa Sanpaolo. Please go ahead. Yes, here I am again. Just a question. Sorry. Basically, the company is working with Leapmotor in China for China, but now Leapmotor will start production, In Poland is already manufacturing and also in Zaragoza. Do you see this as an opportunity or no? In general, when dealing with the Chinese players, how they manage the payment terms? I'm just wondering, maybe they have different payment terms, a different way of doing business maybe. Are the Chinese customers dilutive on the margins? Leapmotor, for sure in Europe we have an opportunity for the future. In the meantime, we are discussing with Stellantis, but at the moment we have no any RFQ for the application they are currently managing. About the payment term, Chinese for Chinese, you know, it's very different customer by customer. I have in mind because I lived in China for four years. Typically, payment term of BYD were 250, 70 days then draft. This can have an impact. Most likely we are not dealing with them in the moment. We are on the newcomer, as I said, the four Xiaomi managing a payment term that are more close to the European one. In this moment, we have no big impact on this, on the cash collection. For sure, the way they are managing the business is the usual way. Like in the past, they are, after the nomination and after the SOP, normally in 6 months, they put again in on the market the volume already awarded to one supplier in order to obtain the better price. This is not the way that normally the European customer are managing the business. Typically, BYD, Geely, for their local production, they are, they were and they are working in this way. Every 6 months, all the supplier around the table and move the volume or part of it to the one that offer the best price. Okay. Got it. Thank you. Thank you very much. You're welcome. As a reminder, or if you wish to register for a question, please press star and 1 on your telephone. For any further questions, please press star and 1 on your telephone. Gentlemen, there are no more questions registered at this time. Excuse me, Mr. Martino De Ambroggi from Equita just registered for a question. Please go ahead. Yeah. Very, very last follow-up on product innovation. I remember some years ago, we talked about a new spring, with, which much lighter and so on. Is there any innovation you are working on, which could be, which could have a significant, contribution in the, in the future? Let's say it's a minor, there are minor improvements, for the, for the products. Related to the spring, you remind, you remember well. We have launched on the market for a niche application, the coil spring in composite. Now there is a trend to reintroduce the composite on the leaf spring, especially in heavy duty. We are working on hybrid leaf spring, so in order to reduce the weight. In this moment, again, is scouting some OEM are introducing two volume of this of this innovative leaf spring. Scania is has in production one of these. Today there are no, let's say it's, as I said, scouting in order to understand the advantages and the benefit. For sure, the weight reduction is in relative an interesting reduction, but in absolute considering the weight of the factor in a heavy duty is not so big. We are working on new material in order to reduce the cost. We are trying to propose to the car maker in order to reduce the cost of the product and not reduce our margin to reintroduce the solid bar instead of the tube bar. The performance are with this new material we are co-developing with other supplier at the same level of the tube, I mean, with the stamp bars. The cost saving for the customer is not negligible. We are working on, for example, in R&D, the application of artificial intelligence in order to manage some activity. Taking into account our experience in the past, we are starting the learning phase for the artificial intelligence agent. We expect to have some results in the third quarter of this year in managing, for example, very quickly the RFQ. To obtain the preliminary design for the offer in a short, instead to have a couple of week, we can reduce, our forecast is to reduce in 2 days. To be able to be more aggressive on the market and compete on several people with several customers, not in increasing the R&D staff. We are evaluating also the automation through humanoid in our in our plant. Thank you. Very last on competition for the two businesses. What are the most aggressive competitors that you have? I remember Thyssenkrupp was making in Europe. I don't know if the environment is improving also for Thyssenkrupp, frankly. Just to understand if there is more aggressive competition in the two different businesses. As for suspension, yes, but it's more coming from the newcomer from China. They are offering very competitive price because their cost structure, in some ways, supported by the government in some case. They are paying less the energy, and they have some advantages on the raw material. For sure the tariff, and all the protection, the protective action that have been put in place in Europe are in some way mitigating this effect. You know, Thyssenkrupp is dealing less on the market. They have announced the closure of the plant in Germany. On the other end, this could be an opportunity for us because there is a volume on the market to be awarded. Well, for air and cooling, it's more or less the same story. As you know, we half of our turnover from North America. In North America, we have a dominant position, and there's a lot less players with no competition from China. That really helps us. In China, while we have competition from the local Chinese, but so far we've been able to maintain our margin. The highest competition that we see is in Europe, and it's not with our Euro competitor from Europe, but it's also like suspension competition mostly from Chinese suppliers where our traditional customer, especially the French one, asks quotes from Chinese players, including our own plant in China. As a matter of fact, recently we took a business away from one of our competitor in Europe that was manufacturing in Spain and will be manufacturing for that OEM out of China. Yeah, competition from China is a big deal right now. In Europe only. Okay. May I ask you, what is the amount of volumes that you mentioned for Thyssenkrupp after shutting down the German plant? Very, very roughly, just to have an idea. Sorry, I haven't catch the first part of your question, sorry. I was wondering what is the amount of volumes that you mentioned Thyssenkrupp is shutting down a plant in Germany, and these volumes are available. I don't know if Thyssenkrupp is able to move them to other plants or if these become a potential business for you. I was wondering what is the size of this business. Okay. The size, honestly, I cannot give to you the precise figure. We know that we have been inquired by a German customer that I exposed with them on important platform for the coil springs specifically. We have been awarded for application in BMW. Is not a very big volume. It's for the M Motorsport application. Today we are speaking about 120,000 springs for the M5 that have been moved by Thyssen. Several other have been requested by other German customer that after the business with them. With the start of production forecasted in no more than 18 months. Thank you very much. You're welcome. Gentlemen, this was the last question. Back to you for any closing remarks you may have. Thank you very much, everybody. We'll be at the STAR Conference for those of you who are there. Otherwise, we'll talk then for the Q1 result. Thank you. Bye. Thank you. Bye. Thank you. Bye-bye.