Dear ladies and gentlemen, welcome to the conference call of TRATON SE. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star zero on your telephone for operator assistance. One final request. Please note the disclaimer that you will find at the beginning of the presentation. If you are connected by phone, please access the online tool to display the disclaimer. May I now hand you over to Lars Korinth of TRATON, who will start the meeting today. Thank you. Dear investors and analysts, welcome to the TRATON Second Quarter 2022 Conference Call. Thank you for joining us today. Together with me, as usual, are Christian Levin, our CEO, and Annette Danielski, our CFO. Before Annette provides some insights into the drivers of the group's financial results in the second quarter, Christian will comment on the key developments and the overall performance. Finally, we will discuss our outlook for the full year 2022. As always, after the presentation, we look forward to answering your questions. Before Christian starts, two housekeeping items. First, I hope that you received all materials for today's call. Otherwise, please have a look at the TRATON IR website, where you can find everything you need. Second, let me make you aware of the disclaimer on page 2 of our presentation. With that, I hand it over to Christian. Okay. Thank you very much, Lars. Also from my side, good morning, good day, good afternoon, wherever you are in this world. Let me start us up with a few key highlights from this first half year of 2022. First of all, the TRATON GROUP, together with our competitors, Daimler Truck and Volvo Group took the final step to form a joint venture and setting up the first high-performance charging infrastructure in Europe. Here, I really would like to congratulate the team for a great achievement and great progress. This is one of the most important bottlenecks in order to get going with electrified vehicles. More so, a further milestone on the way towards sustainable transport was reached at our Scania brand. There we unveiled our first electric truck for regional long-haulage operations and hence covering a much bigger part of our customer base. These vehicles are based on the new battery generation and have up to 624 kWh of capacity and hence offering up to 350 km of range between the charge shifts. On the same theme, to take a front runner position in battery technology, Scania has invested in additional R&D facilities close to our assembly line. A new battery laboratory, which also started up its operation in the second quarter, and having the capacity to test up to 170 cells, modules, and packs simultaneously. Also, MAN is making significant efforts in the battery technology and battery electric vehicles. Starting up early in 2025, we will produce high voltage battery for electric trucks and buses in large series at the Nürnberg plant, in Germany. MAN is planning to expand production capacity to more than 100,000 batteries per year over the next five years. Over to the U.S., where Navistar and our International brand launched the preparations to build our new Common Base Engine, the so-called CBE, in its recently expanded Huntsville powertrain manufacturing plant. The brand plans to introduce this highly competitive engine already next year and then as the second brand in our group. Lastly, our Brazilian colleagues unveiled their new company name at our Capital Markets Day back in May. The new name, Volkswagen Truck & Bus, coincides with the announcement of the expansion of the company's presence in more markets outside of Latin America and then focusing on the West and the North African regions, as well as also evaluating opportunities, in the Middle East. Let's move on to page five. Here we have an overview of the what I would call challenging environment that we are operating in. I believe that you all will agree that times are not just challenging but extremely challenging with tense geopolitical situation, with continuing supply chain bottlenecks, and on top of that, very high inflationary pressures. What is happening is that the war in Ukraine continues. Sanctions against Russia by the international community have been gradually expanded. Energy security and an imminent risk for gas supplies in parts of Europe is coming to top of the agenda. Many industries and economies across the globe continue to be heavily affected. There is a high degree of uncertainty and the risk that these negative impacts will continue, perhaps further intensify in the upcoming months. At the same time, truck demand remains relatively robust. We continue to see strong replacement needs with an increasing average fleet age and lead times that go well beyond 12 months and into 2023. Demand for used trucks on the price level of used trucks are holding up quite well. We also continue to experience substantial supply chain bottlenecks. Semiconductors have gradually improved but the situation remains fragile and hard to predict. As you already all know, the war in Ukraine led to massive supply shortages for truck cable harnesses, resulting in a complete standstill for six weeks at our MAN truck production facilities. This situation has luckily been easing throughout the second quarter. On one hand, the suppliers in Ukraine have restarted production and are ramping up volumes again, but also our own efforts in MAN to duplicate production at other locations starts to pay off. MAN could resume production on April 25th and is since then gradually increasing production levels. Nevertheless, the situation in global supply chains remains extremely tense and volatile. Supplies of important components such as tires and other materials, as well as freight capacity, have become increasingly tight throughout the second quarter. Prices for input materials, freight, and energy continued to rise, resulting in high inflationary pressures. Inflation rates for both industrial and consumer goods reached levels not seen in decades. As a direct consequence, interest rates are on the rise, and companies across sectors face significant wage demands. In this, of course, rest assured that we and our teams continue to work really, really hard to offset these effects with our strong product offerings, with improved pricing, and with an optimized product mix. Let's move into slide number six and have a look at the key facts of our performance during the second quarter. Incoming orders declined by 23% compared with an exceptionally strong second quarter of 2021. Unit sales was likely up by 5%+, but adjusted for the integration of Navistar, unit sales were below the prior year level, mainly as a result of supply bottlenecks at Scania and the production stop at MAN. Sales revenue increased significantly with 34%. Also here, the first-time consolidation of Navistar played a major role. We benefited from an improved product mix as well as a strong performance in the vehicle services business. Adjusted for Navistar, sales revenue would have only been 4% below the second quarter of last year. Given the substantial headwinds, our adjusted operating results of EUR 396 million, or a return on sales of 4.6%, was very solid, but it could not match last year's strong second quarter. The net cash flow from trucks and operations in the second quarter amounted to EUR -1.5 billion. Extraordinary cash outs drove this number. The payments related to the Scania antitrust proceedings and settlement agreements at Navistar. Annette will, of course, come back with more details on this later. If we exclude these cash outs, net cash flow would have been slightly negative. A robust achievement, given the substantial working capital headwinds arising from the supply chain shortages and related production shortfalls. On slide page seven, you can see the recent development in incoming orders and unit sales in comparison to the medium-term trends. Due to high order backlogs and long delivery times, well into 2023, caused by supply constraints, Scania, MAN, and also Navistar were very restrictive in their order acceptance throughout the second quarter. As a result, consolidated incoming orders declined 23% or 46% adjusted for the Navistar consolidation effect. Production levels and, as a consequence, unit sales were heavily affected by the earlier mentioned supply chain constraints and the production stop at MAN, which brings me on to page number eight in the presentation. On this slide, you can see the quarterly development of unit sales. While headwinds from the semiconductor shortage were easing during the second quarter, the production stop at MAN had a particularly strong effect on unit sales in the second quarter. They were almost 17,000 units or 26% lower year-on-year without taking Navistar into account. Including Navistar, unit sales actually increased by. Despite the several supply chain challenges, our unit sales does continue at the regional level, thanks to the integration of Navistar. We are working really, really hard to meet our delivery commitment and continue to work ourselves through our order backlog. With that, on to slide number nine. Despite all challenges, we continue to execute also on the long-term strategic agenda, called our TRATON Way Forward. A crucial part of our ambition is to be the forerunner in the electrified business. We have reached several important milestones throughout this first half year on our way to sustainable transport. Of course, charging infrastructure is one indispensable requisite for the success of battery electric trucks and buses. Following recent regulatory clearance, we kickstart the joint venture for high-performance charging infrastructure in Europe together with our JV partners. The team is working quickly to scale up operations and network deployment. It plans to install and operate 1,700 high-performance green energy charge points, and the three parties together will invest EUR 500 million. We're also making progress in battery technology, and as I mentioned earlier, Scania has just opened a large test lab for batteries, and MAN is investing EUR 100 million in its own battery production facility as well as in its Nuremberg site. Production planned to start 2025. In addition, MAN is shifting up the gear in preparing its production footprint for a strong step up in BEV volumes. Production of heavy-duty trucks in Munich, electric trucks in Munich, is now set to start already at the beginning of 2024, a year earlier than what was originally planned. We also continue to further expand our product lineup and help our customers in their transformation towards sustainable transportation, showing that for BEVs, there is hardly any limit at all. Scania delivered, as an example, a 74-ton electrified truck for heavy transport to the Swedish mining company, Boliden. Our brand's electric trucks are successfully operating at an LKAB mine in northern Sweden. Imagine heavy transport off-road Arctic conditions, just to show the world that there is really no limit to what battery electric trucks can do. Also at MAN, we presented a near-series prototype of an upcoming electric truck, which will be launched in 2024. The vehicle's capacity for future megawatt charging has been developed in partnership with ABB E-mobility and will offer daily ranges between 600 and 800 km of range. That takes me to slide number 10. We already have a competitive product portfolio in place for a wide range of different applications, and our range of e-vehicles continue to grow. Already today, we make a difference in the marketplace and provide our customers with highly competitive and efficient vehicles. In the second quarter, we delivered more than 420 fully electric units, bringing the number to 841 in the first half year. Figures are still quite low, but when we talk to customers, the interest is really high. Also for medium and heavy duty trucks, there is growing customer demand for fully electric vehicles. In total, we received orders for 542 electric vehicles in the second quarter and 1,096 in the first half year. The book-to-bill ratio in the second quarter continued to be well above 1.0, giving us confidence that we will continue to grow this momentum. With that, I would like to hand over to Annette. Annette, the floor is yours. Thanks, Christian, and a warm, very warm welcome to everyone on the call from my side as well. I'm now on slide 12, which shows the key top-line figures for the second quarter with the separate Navistar contribution. Excluding Navistar, incoming orders there at 48,000 units or 36% lower compared to very strong prior year quarter. Against the very high order backlog and long delivery times, we have been very restrictive in accepting new orders. The development of order intake was thus driven by supply rather than demand. Our unit sales declined by 26%, excluding Navistar. This was due to the severe supply shortages and especially the temporary stoppage at MAN's truck production. Including Navistar, unit sales totaled 69,500 units, an increase of 5%. Despite the mentioned headwinds, sales revenue was up by 34% to EUR 9.5 billion as a result of the consolidation of Navistar. Even excluding Navistar, sales revenue was almost stable. This was because of a very strong performance in the vehicle service business and an improved product mix and positioning. On our service business on page 13, which continues to gain traction, sales revenue increased by 62% to EUR 2.1 billion, with improvements in each brand. Again, the inclusion of Navistar was a key driver of the increase. Also adjusting for the consolidation effects, growth in the vehicle service business was at 15%. As a result, the sales revenue share within TRATON Operations increased to about 23% from 19% in the prior year period. We continue to invest to further expand our service business to drive growth, as well as taking advantage of the stabilizing effects on TRATON sales revenue and earnings. Moving to slide 14 and to our profitability and cash generation, again, with a separate Navistar contribution. The adjusted operating result came in at EUR 396 million, EUR 250 million below the previous year level. This corresponds to an adjusted return on sales of 4.2%. The decline was mainly due to the severe supply chain issues and shortages, and especially the production stop at MAN and the resulting lower capacity utilization. Significantly higher prices for energy, raw materials, and other bought in parts, as well as for logistic service, were largely offset by higher selling prices. A quick comment on operating results as booked, which increased by EUR 5 million year-on-year to EUR 306 million in the second quarter. We booked further impairment of a total EUR 90 million in the period under review, mainly related to the war in Ukraine. However, they were significantly below the one-time items of EUR 311 million in the second quarter of 2021. Net cash flow of TRATON Operations amounted to EUR -1.5 billion. Main driver were the payments of a total EUR 1.4 billion related to Scania antitrust proceedings and settlement agreements at Navistar. I will come back to this in a minute. Let us have a look at the segment performance of the second quarter on the next page. Sales revenue at Scania Vehicles & Services were slightly down year-over-year, while MAN Truck & Bus recorded a double-digit percent decline. Because of the integration of Navistar and a very high growth of 36% at Volkswagen Truck & Bus, TRATON Operations sales revenue was 33% higher year-over-year. Financial Services increased by 46%, mainly due to the consolidation of Navistar Financial Services business, as well as continued strong underlying performance. [crosstalk] Scania Vehicles & Services reached EUR 291 million, a return on sales of 8%. Despite the massive effect from the production stop, MAN was able to effectively limit that impact on its result. The brand recorded an adjusted operating return result of EUR -23 million and a slightly negative adjusted return on sales of -0.9%. I will explain Scania's and MAN's result in more detail in a minute. Navistar Sales & Services operating results reached EUR 81 million, a return on sales of 3.1%. The brand continued to be negatively impacted by shortages in supply of semiconductor and other key components. In addition, Navistar booked an impairment related to the sale of the Brazilian engine business, which we did not adjust for. Volkswagen Truck & Bus achieved an outstanding 11.1% return on sales. This performance was driven by higher sales revenue, an improved product mix, and a very strong pricing. Lastly, the financial service business reached an adjusted return on sales of 24.1% and an adjusted operating result of EUR 75 million. Please bear in mind that these results include the negative effects of the purchase price allocation, which totaled EUR 68 million within the corporate items. Excluding the PPA, TRATON's adjusted operating results would have totaled EUR 464 million with a return on sales of 4.9%. Let me provide some more background on Scania's performance on slide 16. Truck unit sales declined by 25% in a challenging environment against the exceptionally strong prior year quarter. This mainly resulted from shortage in supply of semiconductors and other key components, as well as shortage in logistic capacities. The volume-driven decline in revenue was almost offset by a significant increase in sales revenue in the vehicle and service business and improved product mix. As a result, the brand recorded sales revenue of EUR 3.7 billion, only down by 2%. The lower unit sale and production utilization negatively impacted profitability. In addition, earnings were affected by higher costs for raw materials. At the same time, Scania continued to invest, particularly in the further development for e-mobility solutions and the expansion of this vehicle service business. As a result, Scania recorded an adjusted return on sales of 8%. This is roughly on par with the previous quarter, but significantly behind the strong second quarter of last year. While uncertainty remains high, we expect Scania to improve its performance in the second half of the year. The semiconductor situation should improve further from here. In addition, we expect additional momentum from the continued introduction of the new powertrain, the Common Base Engine. Moving to the next slide, a more detailed look at the MAN performance. Considering the production stop in the second quarter and the gradual ramp-up of production since 25th of April and the resulting volume portfolio, profitability was very solid. Production levels were heavily affected by the lack of wiring harness due to the war in the Ukraine. As a consequence, truck unit sales declined by 46% year-over-year in the second quarter. This is roughly on par with the volumes in the second quarter of 2020, where we felt the strongest effect from the COVID-19 pandemic. The team has implemented countermeasures to offset these effects, including the duplication of the supply structure for wiring harness and the temporary introduction of short time work. In addition, results are impacted by increased raw materials and energy prices. These effects were offset especially by improved market and product mix, as well as a strong performance in the vehicle service business. Despite the massive effects on the production stops, MAN was able to limit its impact to one site and recorded only a slight negative adjusted return on sales of -0.9%. If you would exclude the production stop, we estimate that the adjusted return on sales would have been between 4.5%-5% in the first half of 2022. Clear evidence that the robustness of MAN's business model and earning profile is structurally improving. On slide 18, and then the net is the net cash flow, which is now referring to the TRATON Operations. Gross cash flow at EUR 862 million in the second quarter was almost on par with the prior year level, thanks to the improved reported operating result. Working capital movements remained a significant headwind. We recorded a further build-up of inventories related to the ongoing supply bottlenecks for bought in parts and logistics shortages, as well as higher trade receivables. In addition, the net cash flow was significantly affected by the payment of in total EUR 1.4 billion related to Scania litigation and Navistar agreement settlements. As already announced in our first quarter conference call, Scania settled the fine of EUR 937 million, which includes interest, imposed in the EU antitrust proceedings. Navistar made final payments totaling EUR 420 million in June 2022 following the court approval of the Profit Sharing Settlement Agreement and the class action settlement agreement. This negatively impacts cash tied up in working capital, increasing provisions. Excluding those cash outs, net cash flow was only slightly negative at EUR -177 million. This was due to further build-up of working capital resulting from supply chain shortages and production shortfall. This leads me to the net debt bridge on slide 19. Compared to the first quarter of 2022, the net debt position of TRATON Operations increased by more than EUR 1.4 billion to EUR 2.9 billion as a consequence of the mentioned payments. We included the net debt position for corporate items to provide a full picture of TRATON GROUP net debt position, excluding the financial service business. Corporate items added EUR 4.4 billion, of which EUR 3.1 billion stem from the acquisition of Navistar back in 2021. In total, net debt of TRATON GROUP, excluding financial service, totaled EUR 7.3 billion at the end of the second quarter of 2022. Reducing our net debt remains a priority. Looking towards the second half of the year, we expect positive effects from improved earnings and lower working capital. Moving on to the full year outlook and starting with the truck market. It is expected that our core markets will continue to grow in 2022, with expansion rates varying from region to region. Most market forecasts foresee an increase of the truck market in Europe in the range between 0% and +10% for the year 2022. For the South American market, current estimates range between -5% to +10%. For North America, market participants are slightly more optimistic. Truck market growth in North America is forecasted to be between 0% and +15%. There's still a high degree of uncertainty and a high geopolitical and economic risks arising from the ongoing war in Ukraine, persisting effects from the COVID-19 pandemic, possible energy shortages, ongoing supply chain, and logistic capacity limitations. This leads me to the next slide, the financial outlook for the TRATON GROUP in 2022. Our outlook is based on our latest internal planning, the market expectation, and our business performance to date. As you are all aware, it remains impossible to predict the effects of the continuing supply chain bottlenecks, possible energy shortages, the development of COVID-19 pandemic, and the further course of the war in Ukraine with sufficient certainty. We continue to closely monitor these situations and to implement countermeasures to limit the impact on our operations. We slightly reduce our expectation for unit sales and now project a substantial year-on-year increase in unit sales. At the same time, we continue to expect a very sharp increase in sales revenue in the fiscal year 2022. Further, we confirm the bandwidth of our expected range of adjusted operating return on sales to 5%-6%. However, in a highly uncertain volatile environment and the given supply chain challenges, the risk is currently more toward the lower end of this range. Our guidance is including the effects on the purchase price allocation, which is expected to range between EUR 270 million-EUR 290 million. We confirm that our net cash flow for TRATON Operations is expected to range between EUR 700 million and EUR 1 billion. Please note that does not include the mentioned cash out in connection with the EU antitrust proceedings. Now let me hand back to Christian for his final remarks. Okay. Thank you very much, Annette. Before entering into the Q&A session, just let me summarize some of the main takeaways from the call today. We are in TRATON pushing our strategic agenda forward with very strong progress in driving electrification. We achieved a robust development of sales revenue in the second quarter, despite extremely strong headwinds in production and unit sales. Our results development underscores improving resilience in a highly challenging environment. Cash flow and the net debt were impacted by further working capital build-up and payments related to legal proceedings. While we continue to see high risks in our environment, we largely confirm our outlook and expect improved earning momentum and net cash flow in the second half of 2022. With that, I stop and hand back to you, Lars. Thank you, Christian and Annette. Let us now open the floor for the Q&A. Thank you. Ladies and gentlemen on the phones, if you'd like to ask a question, you may do so by pressing star one on your touchtone telephone. Star one for questions. Please make sure the mute function on your phone is turned off so the signal can be read by our equipment. Star one for questions. We'll pause a moment to assemble the phone queue. We'll take our first question from Klas Bergelind with Citi. Please go ahead. Thank you. Hi, Christian and Annette. Klas at Citi. My first one is on the margin in Scania. How much of the drag here is linked to investments in R&D group platform, et cetera, into rest of the group? Christian, you talked about this before. When are you planning to allocate R&D more evenly through the brands? I think, this is something you talked about at the CMD. Obviously, the Scania margin is yet again underperforming key peers, or is it something else going on? If I look at the ASP, it's very solid. Looks like driven both by strong services and higher prices to compensate for cost inflation. I'm just interested in that investment impact. I'll start there. Yeah. Good question, Klas, and I perhaps thought in the end of your question. Of course, none of us is happy with Scania performing anything below double digits in the strong demand environment that we're working in right now. Mainly the lower performance is explained and solely explained by low truck deliveries. In combination, of course, with full manning. Worst of two worlds, you can say. We are, and we were, as you know, expecting to ramp up fast during Q2. We didn't manage because of shortages and also because of changing over to the completely new driveline, the group driveline, where we actually changed more than half of the components on the truck. Having full manning, so full costs and low production output is of course a lethal cocktail. That is actually the explanation of the Scania performance. Moving on to the beginning of your question. Okay. Scania has of course been acting as kind of a bank in the former setup of TRATON and doing the absolute majority of the R&D investments and then getting money back over license fees once the other brands start to take the common components which will by the way then start up with Navistar next year. Well, not only the engine but the complete driveline. You're right, and that is gonna change. Maybe Annette can comment upon the details of that, but we're planning already as from next year to have another model where the brands pay for their R&D engagement as they go, regardless of where they happen in the system. Meaning that we will have a combined R&D budget for what is combined development and then pay that throughout development time as if it was one brand. That is going to change quickly. I think that is one of the key elements in our new setup with combined industrial operation and the combined product planning. But maybe I hand over to Annette to give some more details on when you're ready with the new financial steering model. Yeah. Thank you, Christian. As you mentioned, with the new setup of the industrial operation, we working on a new steering model, how to allocate the cost in a better way, that we can reflect where the R&D belongs to in which period. We're really working on a different view that we not have only a legal entity steering, we also have a management steering. I think this is the main part. We will implement this, and we are working on the next steps. We also will foster this closer cooperation and be more transparent how we work together and how we really allocate the cost. This is really the cornerstone to get the further efficiency, the better cooperation between the brands. This is really important that this is transparent and shown, and we work then on coming workshops together and working with the methods and how we can reduce this efforts really to negotiate. Yeah. I think this will be a main keystone to go forward. Thank you very much. Just a follow-up, Christian. You said that the main explanation is the production stops. Did you have more stop days quarter-over-quarter? One of your peers had almost a week better production quarter-over-quarter. I just want to understand sort of, if you had more production stops sequentially. Yes, we had. Of course that was not something we expected, but the beginning of the quarter was really tough when it came. I mean, it was again the semiconductor related to our engine control system, where we have one unique part and one unique supplier. Same thing that hurt us during Q1. We really strive, and it improved a lot throughout the quarter, and our volumes then gradually came up. May was kind of acceptable, and June was actually pretty good. I'm expecting that when we start up again now after the industrial holiday in Sweden, that we are not on full capacity utilization, but that throughout Q3 we ramp up to be in Q4 to full capacity utilization. We do not foresee any chip shortages. There might be, you know, one or two stop days, but we're not foreseeing this massive shortage that we have suffered throughout this half year. That is- Mm-hmm. ... That is fully confirmed by all our suppliers at this point. That's good. My second one then is on MAN. Yeah, more positive development, obviously nearly break even in the environment of wire harness issues was actually quite good and came back nicely in June. I heard you say, Annette, the 4%-5% adjusted in the first half, but can we talk about the exit and the start of July? Is the line in line with that level, 4%-5%, or is it better? Or just so we understand the starting point of the wire harness. No. We will not guide on months, you know. Mm-hmm. We are happy they managed really good in the third quarter and in the second quarter, and we believe that they also work on the third quarter. We have the summer break here. We have to change over to Poland, you know, because as you know, Steyr will stop next year with production. We really also prepare our production here for the move. We believe that we will really not be a lot weaker than we expect, but we cannot predict at this point in time. Yeah. I will not, you know, this is already starting off vacation in some areas, so that we ramp down, in August we have the break. Yeah. Yeah. Yeah. Yeah. We will not discuss it any longer. We hope that they continue because they managed it really well, you know. Remember last year when we had this semi-finished good that they also managed really good with the missing semiconductors. I believe that they continue, but this is what I can say. Yeah. Very quick final one on Volkswagen Truck & Bus. A strong margin yet again. How much of this is price mix on the new product ranges, which will face a tougher compare into 2023 versus structural improvements? Yeah. One thing, the Swedish, they were really successful with the really position of the new heavy truck line, you know, that is really the material and so on, very good. They have a good pricing momentum. As you know, the headwinds of price increases also in Latin America are increasing. They feel now the shortage of parts. You know, this is also happened there that we have higher inventories there because they also have the same bottlenecks there. This is really the question now, how they continue this, but they are used to high inflationary environment better than we are here in Europe and U.S. We hope that they continue, but will it stay double digit? Nobody knows. Due to the fact the shortages plus raw material and other price increases, it could come a little bit lower in the next quarter. Yeah, we have to really manage this expectation because it's extraordinary high, you know, with the double-digit margin and services product portfolio. Yeah. Yeah. Thank you. Welcome. We'll take our next question from Michael Jacks with Bank of America. Please go ahead. Hi. Good afternoon, Christian and Annette. Thanks for taking my questions. The first one is just on the downward revision. I know it's a slight downward revision to your unit sales guidance. Just wanna understand what's changed there to drive this, and which brand is it in? Christian, I know at the CMD, you'd expected Scania to have a significant volume ramp up in the second half. Is this still the case? I'll stop there, and I'll ask the second question afterwards. Yeah, I can start on the volume. Yeah. You can follow up, Annette, on the guidance. You're right. I stated that we will have a significant ramp up. I actually thought we would see these numbers coming through already end of the second quarter, which didn't really happen. Again, it was not only shortages, also the changeover of the into the new driveline. You can imagine the, I mean, we changed around 60% of all the components, and what happens is that we change many of the suppliers. As we are then late, we also run into problems that when you abandon a supplier and on top of that you are delayed, then of course they are not very friendly towards you, helping you, support this delay. That's just to give some further explanation to why didn't we ramp up during Q2, as we expected. Yes, we are now counting to start to really take back volumes in the second half. The order book is solid. Customers still are screaming to get the products. How much we actually get out, I don't dare to promise, but that it will be significantly better than the first half. That is absolutely clear. Annette, please fill in. Yeah. Because as we mentioned before, when we started the year, we told everybody it will be a very strong second half year and not too strong first half year. The units we lose in the first half year we cannot make up because all production slots are filled already with this high ramp up. We have to reduce a little bit, and it's not a lot. The difference between the two guidance are five percentage points. This is where we play around three, four. It's nothing big, but we have to adjust how we make the ranges, and it's still a good increase of over 15%, you know. We guide this, and I think it's a good thing, but as you know, we have only production slots, and they are filled already with this deep ramp up that we expect. Understood. Thank you. My second question is on gas in general and shortage risks there. Can you perhaps share what your contingency plans are in the event of shortages and what your exposure is to higher energy prices going into the winter months? I think you have to be aware that on our European production, so MAN and Scania together, we account for 1/3 of our total consumption. One-t hird of MAN, and Scania is not significant. Sorry, I made it wrong. One- third of the energy consumption in Europe at MAN is gas, and for Scania it's not a significant amount. We have also with MAN production sites that are secured in gas supplies. It's like Turkey or Poland. The main topic is here on our German plant where we have a potential risk of shortage. We're working with the team together to minimize the impact of our production. We have really starting with different measures to reduce the risk that we have there. We also think about if we can go with alternative for heating. It's oil, coal, propane, electrification, you know it. We work on this. Our exposure is not so high, but it's a risk. You are right. Understood. Thank you very much. You're welcome. We'll take our next question from Himanshu Agarwal with Jefferies. Please go ahead. Hi, Christian and Annette. Himanshu from Jefferies. Thanks for taking my questions. My first one is on the order intake. I understand you have been restrictive in booking orders, but still, can you talk about the significant sequential decline in order intake? Because I understand the lead times are still the same as Q1, around 12 months. There was a significant slowdown in the order intake. Also, I think based on 12 months, you probably would have a good idea about the demand in 2023 because half of the year is full. Can you talk about the second half of 2023? How much acceleration should we expect in terms of the order intake related? Christian here. I can start. I understand the figure that we showcase is causing some concern and some questions. You're right. We have changed our strategy, you could say, when it comes to handling the order book. We realized that going beyond one year and up to one and a half years in this environment with big uncertainty, high inflation, it doesn't make sense. It doesn't make sense to us, because we cannot really foresee what is the cost over there, and we cannot properly price the product. It also doesn't really make sense for our customers, as we have been not very good also in predicting when we actually can deliver the product that the customer wants. On top of that, we do then the transition over to the new driveline and have ramp-up challenges. We decided to start to allocate month by month, and keep our order book at 12 months, which give us some reasonable oversight of both capacity and cost. What we actually do is that we release the slots to the dealer network, and they get a quota, and then they locally have to do the balancing between their customers, which is, of course, a tough work because it means that it doesn't necessarily mean you say no to customers, but it means they get less number of vehicles than what they would like to have. It also means that we on a central level can prioritize more profitable markets, which we have done. You can see in Scania, it particularly saying that Europe is growing at the expense of other markets because that's where we have the most profitable customers and markets. I mean, do we foresee 2023? I mean, we could have filled 2023 with orders without any doubt, I would say, with all our brands. We choose not to because what are these orders then worth? That is the question. That brings me into the topic of cancellations. Right now we have very, very low cancellations. We had, when we made the fourth price increase in MAN on the order book in relation to the cable harness problem, then we had a number of customers who said they wouldn't take it and they actually canceled their orders. On the other brands, we have very low cancellations, which leads me to believe that customers really need the vehicles that they have ordered and that the quality of the order book, even at these interest rates and these price levels, is very robust. Still, we in the management feel more comfortable having a somewhat shorter order book and also giving us a chance to start to work during next year to work it down to more reasonable lead times. Because the risk is always that you, if you have a huge order book, you don't see when the market turns down because you get bad visibility. I must say also at 12 months order book, it is a little bit difficult to really see what is happening down the line. So far it looks solid. I know I don't fully answer your question, but I think that's as much as I can say at this point on the order book. Annette, do you wanna, you know, fill up? No, you explained it very well already. I cannot add anything. My second one is for Annette. You talked about reducing the net debt as one of the priorities, and I understand. Given the macro uncertainty, how do you feel about pausing dividend for some time to accelerate deleveraging? I think we promised when we did the IPO that we have a 30%-40% of our earnings after tax that we want to give to our shareholders. This is really our guidance and this is where we want to stick and make the contingency there. Yeah. What are our initiatives to bring it down is, as we explained, reducing working capital, increase our cash conversion rate at the year-end. We're working on our self-helping measures to reduce the net debt, you know, and this we are doing in the second half of the year. I think this is most important that we get a grip on this one first and then not discuss a dividend policy. I think it's more that we operate this work to bring our net debt down. Okay. Just lastly, a quick one. Can you quantify the short-term benefit you received at MAN in Q1 and Q2? No, it's a minor amount. It's nothing big. Yeah. It's not like- Okay. No. We would not give- Okay. ... We d efinitely do not publish it, but it's nothing. It's a measure, but we don't give amount, but it's a low amount that I can say you. But it helps. Thanks. Okay. Thank you. Star one for questions. We'll take our next question from Hampus Engellau with Handelsbanken. Please go ahead. Thank you very much. Two questions from me. Christian, could you maybe talk a little bit about what you see, I mean, the Scania's connected fleet in terms of customer activity and service business during the quarter. Have you seen any kind of changes sequentially over month that is maybe not seasonally related? That's my first question. Second question is more on Navistar. Very interesting to hear that you're putting out the captive engine in Navistar for next year. Could you talk a little bit how you see the contract with Cummins and our customers. Have you seen any customer feedback so far from testing? Also, what kind of a aftermarket potential that would generate? Those are my two questions. Thank you. Hi, Hampus, great questions. Perhaps starting from the back then, Navistar. I agree with you. It's extremely promising that not only it's the group driveline, it's a captive driveline, that is going into to the International brand next year. Of course, our strategy is not only to challenge Cummins' position, but also to kind of drive customers from the 15-liter segment where Cummins dominate also with our competitors, down to 13 liters, where you get a much better torque-horsepower ratio, therefore get much better fuel efficiency. Not only will we with our state-of-the-art engine, which is, you know, some 8%-10% better than the peers, we will also gain from this downsizing. Of course, that's a challenge to convince the customers, but as they test it, I'm quite sure, and we have talked to big customers, big fleets. They're all into this, so they understand that logic. We are not yet having customer reactions. The first vehicles are tested. They run in our internal fleet, and they are confirming extremely good fuel savings compared to what we can offer today. We're not talking 8% like in Europe. We're rather in the range above 12%-13%. That's, of course, extremely promising. When it comes to the after-sales impact, of course, well, the downside is that you have to wait until you build up the fleet, so the impact in the first couple of years will be minor. Per vehicle sold, we think that we can at least double the after-sales revenue by not only being captive but also being much more aggressive on selling contracts, something that Navistar today understandably is not very good at, as they don't have these products. When you look into what our peers, Daimler Truck and Volvo, are doing, I mean, they are like in the rest of the world and specifically in Europe, they are selling a lot of contracts where maintenance and repairs are included at a fixed cost. That is going to be the strategy. Over the course of five years, you're really gonna see an impact on service revenues, which is of course badly needed in Navistar, as they've had a hard time coping with the ups and downs in our market. I don't know, Annette, you want to comment on Navistar? No, I think you explained already. Nothing to add. Thanks. Of course, you also asked about the relationship with Cummins. Of course, Cummins, like they are our partner also in other parts of the business, they are fully aware of what we're doing. Of course, they are determined as good competitors also to give us a match, which could also be a good thing for us in order to get better conditions out of Cummins. Let's see when we have the engine fully launched. Second question or your first question actually was on the connected fleet. Yeah, that's one other reason why we continue to be rather optimistic around ordering intake, at least short-term. We don't see any significant reduction in driven kilometers, and we still see old vehicles being engaged in rather frequent transport, which means that the transport capacity is missing. And of course, that is also driving much of the increase in service revenues that we see from us and from our peers. With some exceptions, these exceptions are only the markets that are neighboring Ukraine. These are the only ones where you can see that. The transport in and out of Ukraine and, of course, transport in and out of Russia, that's the only parts of the world where you see decline in vehicle usage. That's on the truck side. On the bus side, you actually see increases all over. That to me means that people are starting to use public transport again post-corona. It also means that people start to go on tourist trips on tourist coaches, and that's also what is reflected in our order intake. Nothing worrying in the utilization, actually. At least not yet. We follow this on a weekly basis. I think it's rather consistent and good data we have. I hope that answered your questions, Hampus. More than well. Thank you, Christian. It appears we have no... Yes, star one for questions, please. Star one for questions. We'll pause a moment to assemble the queue. It appears we have no further questions at this time. I would like to turn it back to your presenters, Lars Korinth, for any additional or closing remarks. Yeah. Thank you. Thank you to everyone on the call for the good discussion. Please reach out to the Investor Relations team in case of any further questions. We are ready to take them and your calls. I wish you all a nice remaining day. Thank you for joining us today. Goodbye. Bye-bye. Ladies and gentlemen. Ladies and Ladies and gentlemen, thank you for your attendance. This call has concluded. You may now disconnect.