Good morning. This is the Chorus Call conference operator. Welcome, thank you for joining the SOGEFI first half 2026 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. Michele Cavigioli, Head of Finance. Please go ahead, sir. Morning, everybody, welcome to this conference call for the presentation of the first semester results of SOGEFI. I will follow the presentation, then leave space for Q&A at the end. On page three, I will skip the highlights as I will discuss in more detail later. I only mention the sale of the Precision Springs unit, which we announced a few months ago. We have now come close to the closing of the transaction, which is expected to happen at the end of July. As a reminder, Precision Springs is a non-core unit within the suspension division, as it produces small springs that are not for use in locomotives, mainly for other applications, no synergies with the rest of the group. It had EUR 28 million revenues and EUR 3.8 million EBITDA last year, pre-tax. We are going to close for an enterprise value of approximately EUR 21 million. The numbers that we will discuss are all treated under IFRS 5, excluding the Precision Springs unit. The guidance will also be referred to the same period. On page four, we have the performance of sales. In total, the market was down 1% in the first half. SOGEFI had a constant exchange rate performance of 0.4%, a reported change of revenues of -0.5%. At constant exchange rate, performance was very positive in Europe, thanks mainly to our in a market which was slightly down. North America, almost stable, slightly down as per the market. In South America, market was up 6%, although this was not only Argentina and Brazil, but all the countries in South America. You see, we have calculated the constant exchange rate variation of -6%. As mentioned in the previous calls, this is calculated by netting not only the effect of the exchange rate variation, but also of Argentine hyperinflation. Otherwise, devaluation would produce very distorted numbers. As in principle, of course, the currency should devaluate by the percentage which is close in the medium term to the rate of inflation when we are in hyperinflation situation. In this semester, however, inflation accumulated and devaluation was not matching that rate of inflation. This -5.6% is very significant. Also taking into account that the revenues of the local companies are not 100% in local currency. Sorry, the contracts are not indexed to local currency at all, which means that even if there is inflation, not always the prices at which we sell are linked to the local currency. To give you a better feeling what has happened in South America, I can mention that the volumes in South America were flat. Volumes are measured in tons of steel. In suspension, it is quite easy to measure volumes because you just measure the weight of the product, and it is a pretty good indicator. We were flat in South America, a bit higher than zero in Argentina, a bit lower in Brazil. The best way to compare here is a flat performance of SOGEFI versus the market, which is +5.8%. In China, market was down mainly due to domestic demand, although export were strong and growing. There was a weakness in local demand after many years of increase. We were even more penalized by a few programs which had to start this year and were delayed by the customers with short notice. That is why we have -12%. In India, very strong performance, both in terms of the market and SOGEFI. If we go to page five, you can see the sales performance for the divisions. Suspensions was -2% at constant effect, with Europe flat. Decline in China and South America, we just talked about it. India, very positive. While Air & Cooling was positive, +3.5% at constant FX, thanks to a very good performance in Europe. Thanks to the start of production of new project, which brings the comparison to last year to almost +15%. North America, stable and decrease in China to be recognized for suspension. In terms of customers, page six, you can see that there is, as you probably know, a recovery by Stellantis in the market. This is good for us as Stellantis is our main customer. German premium OEMs were suffering this year. We had good performance also from Renault Nissan, weak from Ford. Heavy duty is showing also some recovery, finally, both from a sales point of view and, as we will see, starting to recover also in terms of margin. Page seven, you can see the bridge of EBIT performance, versus first semester last year. EBIT adjusted in 2025 was EUR 34.8 million, 7% of sales. We have positive impact from volumes, positive impact from the change in the margin, gross margin, profit before fixed expenses, flat net fixed costs. Restructuring was not different from one year to the other. A bit more D&A due to the investments that we are making, especially in Air & Cooling, for the development of new projects, and a little bit of exchange difference, which brings the 2026 EBIT adjusted to 7.5% of sales. A nice improvement both in absolute and relative terms. I will discuss the P&L a bit more in detail on the next page, on page eight. You see contribution margin has increased from 19.5% - 30%. We have been effective this semester in managing the squeeze between pricing and the purchasing costs. As you know, pricing normally includes a decrease over the life of the project, which is contractualized. Maintaining stable pricing means achieving some negotiation results, as well as purchasing, which, of course, is influenced by the evolution of the raw materials, but also from the purchasing actions. Overall, we had an almost neutral squeeze, plus some efficiency gain, which brings contribution margin from 19.5% - 30.2%. Also, a little bit of mix in here, in this improvement, especially in heavy duty. Sales cost, almost stable. EBIT adjusted improving from 14.3%- 15%. The non-recurring items this year, we have EUR 4.3 million. The main item is the warranty payments or it is a revision with one large customer, which is mid-single digit millions value of the ICE product, for which we have reached an agreement with the OEM, and we have also made claims with insurance companies for this net value that we expect. This brings EBITDA reported to EUR 69.5 million, improving in terms of percentage. EBIT and EBIT adjusted are also improving versus last year. EBIT, we just saw in the previous page. Financial interest, lower than last year, as we are progressively decreasing debt, and cash interest are now in the range of EUR 2.8 million. Income tax, a little bit higher due to some one-off related to previous period for a value of approximately EUR 1 million. Then we have minorities and the income from discontinued operations, which is, of course, Precision Springs that I mentioned before. Group net income is the same as last year. On the next page, free cash flow. We have a similar performance in terms of funds provided by operations. A bit more working capital absorption, but we have used less factoring this year. This explains most of the difference. CapEx, a bit lower than first semester, but it's just due to phasing as the overall capital expenditure for the year is projected to be stable, which brings free cash flow to EUR 13 million versus EUR 11.9 last year. Net debt excluding IFRS 16, down from 19 - 8, without still having cashed in the exposure of Precision Springs, which will further improve this net financial position by EUR 21 million, as we said, which would bring our net debt to actually net cash position. On page 10, we have suspension. We have already largely talked about sales, Argentina. I can only mention that in passenger cars, we are now in start of the recovery in heavy duty. We are in the process of developing not only heavy duty customers, but also defense and railway. New customer acquisition, new project acquisition was quite positive this semester, includes also new projects in those two areas. As we mentioned, based on performance of India and South America, we have what happened. EBITDA in the suspension division was up in terms of margins, came up in basis points, thanks to great contribution of the contribution margin, and to a little bit of mix evolution, especially in heavy duty. Fixed cost is stable, and margin is decreasing, thanks to all the ongoing actions that we are implementing in Europe. As you know, we are in the process of closing the Douai plant in France. This is one of the major plants historically for suspension. It has become a bit inefficient over time because of the local creation, because of old technologies. We decided to close it, move the production to other plants which are now more efficient, could be [audio distortion] plants, but also other European plants. The process of closure is progressing. We are expecting to close all the production by October this year. We have already started moving to aligning to other plants. All the employees will therefore leave by the end of October, and the closing activities will be over by the end of the year. The actual improvement will be in the production fixed cost, will be appreciated in 2027. We expect to have a mid-single digit benefit from this going forward. In Air & Cooling, performance to date, the performance as we've seen, was very positive, especially in Europe, thanks to projects with German OEMs and the recovery of Stellantis, which is a major customer in Europe, which had very good results this semester. EBITDA adjusted was slightly up, but we're talking about a very high margin for many years now. And still some growth in absolute terms. On page 12, that's the comment on the debt maturity. We have plenty of committed facilities. We're not really using a lot of that. We will soon be cash positive, so all our facilities are revolving facilities that we can use only to the extent necessary in order to minimize the interest cost. I would stop here. Actually, let's go to the guidance on page 17. We are updating our guidance versus the one that we communicated in February this year. At that time, we communicated a low mid-single digit revenue decline for 2026. We are now upgrading the guidance to low single digits taking into account the good performance of the first semester, acknowledging that there will be a more challenging second semester, potentially in terms of sales, but also in terms of margins. So far, we have not experienced a lot of squeeze, as I said before, as we have seen the raw material indexes increase, but indexation has a six-month lag, both on the purchase side and on the sales side. Which means that so far, we did not have to incorporate the new value of indexes which are rising into equation. That will start in the second semester. We will have to negotiate with the suppliers and customers to contain increase of raw materials and try to transfer as much as possible to the same price. We have paid prices which are partially indexed, and for the rest, we have to negotiate every time with the customer. In the past, we've been successful to do that. This has not been a very difficult task, so we are a bit more cautious. We would like to confirm the EBIT margin substantially in line with last year, although it was better than last year semester. As we said, we are forecasting a more turbulent second semester, so we'll have to be a bit more prudent. I will stop here and leave it to your questions. 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 is from Martino De Ambroggi, Equita. Good morning. Thank you. The first question is on the warranty costs, because the line was not perfect, I'd say. Just to understand, what was the correct amount? Was it entirely in the second quarter? Was it for suspensions or Air & Cooling? Just to have a clarification on this subject. The second is on the last comment you did, Michele. I understand the challenging environment, is significantly lower the second half implied in your guidance. Could you clarify what are the main reasons, considering that sales are not so weak to justify such a compression in profitability? The last one is on the capital allocation policy, because following the Precision Springs disposal, as you mentioned, ex IFRS 16, you have a net cash position. Is it changing your dividend buyback and any CapEx policy following the financial structure was already enough strong, shouldn't dramatically change. Now you are cash positive, just to have an idea. Okay. In terms of work, because this was a single event recall campaign by one of our major customers, and it was in the Air & Cooling division. That happened over the course of this semester, the negotiation was mainly in second semester, as the full cost from the customer was explicit, the request was made. The amount that we have provisions so far not paid is mid-single digit million. Sorry, low single digit million. This is the net of what we are supposed to pay to the customer at the end of the negotiation and the insurance recovery. This should close the issue with this net payment. In terms of the second half, we are expecting better sales than what we have expected in February. This is the improvement. In terms of margin, we are better than last year, better than the guidance we gave in the first semester. We will try to maintain this over performance versus the previous year, we anticipate that's going to be much more challenging than in first semester, because we are going to have all the product cost increases in the second half, energy and materials. We already see the indexes. Indexes have already started to raise. Plastics, aluminum, steel, all of that. Usually, when this happens, we start fighting with suppliers and customers. As you know, in the long run, we are usually able to reestablish the correct value of the marginality. In the meantime, it's not easy to give for granted that margins will stay there. It could be that the reason is alignment for one or two quarters while we negotiate on the two sides. That's why we prefer to be cautious on the EBIT percentage improvement versus last year. In terms of capital allocation, yes, of course, now the capital structure is stronger than ever. The board of directors yesterday did not take any resolution on dividend policy or any other form of distribution. For the time being, this is going to reduce net debt and give further notice, we should consider it such. Okay, thank you. Again, on the warranty, is it a single customer issue or is it something that could also involve any other customer? The warranty that we're talking about was related to one single product. Every product for every customer is completely different from one another. There are no products that move from multiple customers. This one was specific to one customer. Okay. Thank you, Michele. Welcome. The next question is from Monica Bosio in Intesa Sanpaolo. Good morning, Michele and all, thanks for taking my question. The first two are housekeeping questions. On the back of the warranties accounted in the second quarter, can you please just update what could be the overall one-off for the full year 2026? The second housekeeping question is on the capital gain on the Precision Springs disposal that will be accounted in the third quarter, maybe in Easter. If you can highlight what could be the capital gain to be accounted in the third quarter. The third question is more strategic. I was wondering if, following the sale of the Precision Springs, which were not a core business, would you see as reasonable for the group to evaluate the sale of some other small non-core businesses? If I may, I can squeeze another one. It's on the underperformance in China. Can you please give us a flavor on the delay of the start of production that caused this underperformance? I was wondering if this start of production were related to contracts with Western car players or with Chinese players. Any insights could be helpful. Thank you. Start from the last. This was a cancellation of a couple of programs by Chinese OEMs. The local management tells us that these OEMs are very opportunistic and very quick. When they see a weakness in local demand, they react extremely quickly, and maybe they delay by six months, one year, the launch of a new platform, and they stay with the old one. Much more reactive than what we are used here in Europe. This was a couple of Chinese customers. In terms of other non-core units, well, now the only unit which is, I would say, not non-core, but not fully integrated with synergies with the rest of the group is the heavy duty business unit, which is now not in the radar screen for sale. We are rather working on it to restore a profitability which is lost over the years. We are seeing some improvements, but the road is still long until this unit is back to a good performance level. We're not considering the sale of any other non-core unit at this moment in time. Okay. The capital gain of Precision Springs will be in the range of mid-single digit millions. The overall figure for non-recurring in 2026 will be higher than expected due to this event, and will be probably in the range of EUR 6 million. Okay. Thank you very much. Thank you. You're welcome. As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Giada Cabrino in Intesa Sanpaolo. Good morning, everyone. Thank you for taking my questions. I have a couple. The first one is, what were the margins, roughly, of the heavy duty segment? The second one is, what kind of margins do you expect for the suspension business by year-end? Do you see room for improvement also for the next year? If yes, if you can share with us some indications. Last one is about the capacity saturation rates in suspensions right now. Thank you so much. Suspensions, during the course of the year, we expect to continue the improvement of margins. We are working on both fronts. There is the [audio distortion] closure, which will, as I understand, bring most of this back next year. A little bit this year, but as we ramp down the production, there will be also closing costs and efficiency. Not a lot to come from [audio distortion] this year. The big parts will come from heavy duty, where as I said, we expect a turnaround, and we are only in the beginning because the situation was starting from a very low point. In 2026, we have seen a bit of improvement already in terms of margins, but we expect more to come in the rest of the year. We expect to bring up EBIT adjusted, hopefully by half to one point versus 2025. Your last question was about heavy duty in the first semester. The current performance of heavy duty? Yes. Just to have an idea of the profitability for the improvements, also in profitability of heavy duty segment. Okay. The profit before fixed expenses improved. This was related to efficiencies, but also to a change of mix. We have products like the leaf springs, which produce very low gross margins. Historically, this is a market feature. We are trying to diversify out of these low-margin products over time to much better productions, especially when we go out of the truck industry and we go to defense and railway, we have huge gross margins. That's where we're trying to divert the production. This is the first lever that we are enacting, and this brought a few percentage points increase in the gross margin. The EBITDA, the non-recurring, was very low last year, around 4%, and this year we have improved it substantially by a few percentage points. We are happy. We're not at the same level as the rest of the view. There is a long work still to do, but at least the trajectory is now on the ramp up. Thank you. 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. Gentlemen, Mr. Cavigioli, there are no more questions registered at this time. I turn the conference back to you for any closing remarks. I don't have any further observations, so thank you for joining, and have a nice summer break, and we talk together again for the Q3 results. Goodbye. Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.