Good day, ladies and gentlemen, and welcome to today's Iveco Group 2025 Second Quarter Results Conference Call and webcast. We would like to remind you that today's call is being recorded. After the speakers' remarks, there will be a question and answer session. To ask a question during that session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. At this time, I would like to turn the call over to Federico Donati, Head of Investor Relations. Please go ahead, sir.
Thank you.
Good morning everyone. I would like to welcome you to this webcast and conference call for the IVECO Group second quarter financial results for the period ending 30 June 2025. This call is being broadcast live on our website and is copyrighted by IVECO Group. I'm sure you appreciate that any other use, recording or transmission of any portion of this broadcast without the consent of IVECO Group is not allowed. Joining today are our IVECO Group CEO Olof Persson and our CFO Anna Tanganelli in their presentation. Olof and Anna will be using the material published on the IVECO Group website yesterday evening. Additionally, please note that any forward looking statements we make during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor statement included in the presentation material.
Additional information relating to factors that could cause actual results to differ materially is contained in the company's most recent annual report as well as other reports and filings with the authorities in the Netherlands and Italy. The company presentation may include certain non-IFRS financial measures. Additional information including reconciliation to the most directly comparable IFRS financial measures is included in the presentation material. Finally, let me please remind you that the transfer of ownership of the Firefighting Business unit to listed private equity holding company Mutares was closed and completed as planned on 3 January 2025. One-off effects from the transaction are excluded from all the comparative 2024 adjusted metrics. I will now turn the call over to our CEO Olof.
Thank you very much Federico, and let me add my own welcome to everyone joining our call today. I would like to kick off things by commenting on the major news that was announced yesterday. I'm sure that you all have seen the headlines and carefully read the press release, whose key points are summarized on this slide. Let me now bring additional context to these developments and share our perspective. The offer would bring together two businesses with highly complementary product portfolios and capabilities, and with substantially no overlap in their industrial and geographic footprints, creating a stronger, more diversified entity with a significant global presence. The combined group will be better positioned to invest in and deliver innovative sustainable mobility solutions. By leveraging both supply networks to serve customers globally, it will also unlock superior growth opportunities and create significant value for all stakeholders in a dynamic marketplace.
By preserving each group's industrial footprint and employee communities, this complementary team is also expected to foster a smooth and successful integration process. Tata Motors is committed to respecting and maintaining IVECO Group's corporate identity, integrity, core values, and cultures, as well as IVECO's key brands, trademarks, and logos. Furthermore, Tata Motors does not envisage any reduction of the workforce of IVECO Group as a direct consequence of the combination, and our headquarters will remain in Turin, Italy. Ultimately, by joining forces with Tata Motors, we are unlocking new potential to further enhance our industrial capabilities, accelerate innovation in zero emission transport, and expand our reach in key global markets. This combination will allow us to better serve our customers with a broader, more advanced product portfolio and deliver long term value to all stakeholders.
We also announced yesterday the signing of a definitive agreement to sell Defence business, IDV and Astra brands, to Leonardo S.p.A., as you know, a leading European defence and security company, for an enterprise value of EUR 1.7 billion. The transaction will create an Italian-based European champion in the land defence segment with the scale and capabilities to compete globally. The transaction is expected to be complete no later than March 31, 2026, subject to customary regulatory approvals and carve out completion on completion. IVECO Group intends to distribute the net proceeds of the transaction, subject to closing adjustments, to shareholders via an extraordinary dividend. This agreement propels IVECO Group's Defence business into its proper dimension as a key contributor alongside Leonardo in the creation of a focused world-class player in land defence activities.
Our colleagues in the Defence business, who have done a tremendous job in building this business, responding to the growing need for both land defence vehicles and the technologies we have developed, will become a part of a group with the scale and integrated capabilities to compete on all levels and for all platforms, with all the positive potential for innovation and continuous development. All in all, I believe that this is exciting and positive news both for our Defence business and the wider IVECO Group. We believe that these developments will enhance the long-term prospects of our business for the ultimate benefit of all stakeholders. Let me now move into Slide 4 with the highlights of our second quarter performance. As forecast, this quarter was marked by lower industry demand levels across European truck segments.
Market softness was especially pronounced in the light-duty trucks, where the year-over-year comparison was further worsened by last year's pre-buy effect. In response to those challenging market dynamics, we acted decisively with discipline, execution, and unwavering focus on our long-term vision in both our truck and powertrain business units, in bus and Defence. Meanwhile, we continue to deliver good margins supported by very solid order books. If I break down by business units, in truck, we saw order intake pick up across regions and segments during the second quarter, affirming the momentum of our model year 2024 product lineup, especially for heavy-duty. Powertrain continued to navigate tough market conditions both in on- and off-road application. Strict cost management and the implementation of the Group's efficiency program helped mitigate the negative effects of declining volumes.
In addition, throughout the quarter, we booked higher quality costs to secure superior standards as part of our ongoing drive for increased long-term customer satisfaction. Again, in both the bus and Defence segments, we deliver strong results with continuous margin improvements on a year-over-year basis, backed by solid order books and favorable industry momentum. Our free cash flow performance in the second quarter was positive. We registered EUR 145 million in cash generation, partly due to actions we implemented through the acceleration of our efficiency program.
As you may have seen in the press release published yesterday evening, we have prudently revised our full year guidance as a result of the delay of the recovery we had been expecting in the second half of the year in light-duty trucks, particularly in the chassis cab fleets and rental fleets where the tail of last year's pre-buy effect is taking longer than expected to unwind, as well as ongoing macroeconomic uncertainties. If we go to slide 5, this year marks actually the 50 years of IVECO, and during 2025 we are celebrating the milestone at our facilities around the world. In June, we hosted our main anniversary event here in Turin, a four-day celebration of IVECO's past, present, and future in a truly Italian setting. I'm proud to say that at 50, IVECO is full of vitality and getting stronger every quarter.
We are more agile, more focused, and more driven than ever, and this is not the finish line. It's just a launch pad to the exciting future ahead. To talk about looking forward, we made significant investments in product innovation and customer support, preparing the group for a new chapter of growth in alternative fuels, digital services, and customer-centric solutions. Our ambition is to become a more premium company in every respect, engaging customers with both their heads but also their hearts. We are proud of our Italian heritage, our belief in empowerment, and our commitment to sustainability. These values are embodied in our vision for the next 50 years and every product development that unfolds, including our electric models, the S-Way Arctic, the E- Daily, and the latest addition to our electric lineup, the E- Jolly and the E- Super Jolly.
To reiterate, as we look ahead, our focus is clear: quality in everything we do and a laser-sharp commitment to empowering our customers and drivers. Moving into slide seven and looking at the truck industry volumes and market share on slide 7, in the second quarter of 2025, European industry volumes experienced a decline compared to the same period last year. This was both expected and a continuation of what we saw in Q1. Allow me to give you some numbers. As of 30 June 2025, light commercial vehicles were down by 13%, and medium and heavy trucks were a decrease of 15% compared to Q2 2024. When we talk about LCV's industry performance, please keep in mind that last year's performance was inflated by a pre-buy effect, resulting in a more pronounced year-over-year decline.
To break that down, further decline in both chassis cab and the upper end of the segment was even more pronounced versus the same period of last year. Reflecting on market share during the second quarter of 2025, LCV in Europe remained solid at 11.8%. Our share of the chassis cab segment was comfortably above 30%, and the upper end of the segment came in at 69.3%, which is actually up 5.7% versus the same period last year. Figures like these demonstrate how strong brand recognition and historic leadership can build resilience even during challenging phases of the business cycle. If we then turn to medium and heavy trucks, our market share was 8.5% in the second quarter of 2025. Within this category, our heavy truck market was 7.8%. In maintaining these solid market shares across segments, we pay close attention to our pricing discipline.
If we then look across the ocean, industry volumes in South America were once again strong in LCV and broadly flat for medium and heavy. Moving on to slide 8, in Q2, order intake was up across segments and regions, with our worldwide book-to-build ratio at. For light-duty trucks, European order intake increased by 7% versus Q2 2024 and remained broadly flat. Sequentially, the book-to-bill ratio stood at 0.84, reflecting a 22 basis point improvement over last year. In South America, order intake was up 79% compared to Q2 2024, with a book-to-build ratio of 1. For medium and heavy trucks, European order intake rose 34% compared to Q2 2024, with a book-to-bill ratio of 0.8, marking a 26 basis point increase year-over-year. In South America, order intake was up 20% compared to Q2 2024, with a book-to-bill ratio of 1.05.
Order book visibility in Europe is about two months for medium and heavy trucks and slightly shorter in light-duty trucks. Let's move on to slide number 10 with the bus industry volumes and market shares. We not only held our leadership position in Europe in the city segment in the second quarter, but managed actually to increase it by 2.3 percentage points to 53.9% compared to Q2 2024. In the European city bus segment, we maintain a solid 12.4% market share during Q2 2025, and as we mentioned in our first quarter earnings call, we expect to accelerate deliveries in the second half of 2025 in line with the seasonality of bus tenders. The electric city bus segment registered a solid 11.8% market share at the end of Q2 2025.
Throughout the quarter, Iveco Bus stayed firmly in the number two position in the European market with a 19.7% market share, largely due to the strong momentum of our innovative products. We then move to Slide 11. In the second quarter of 2025, our bus order intake increased by 10% compared to Q2 2024, while deliveries remained substantially flat on a year-over-year basis. Our book-to-bill rate there was 1.08 at the end of Q2 2025, which is up by 11 basis points year over year. The order book is strong, providing long-term visibility, and it goes all the way through the second half of next year. To step up production of electric city buses, we have introduced a second shift at our Annon I plant as of April. This resulted in some additional cost and negative impact on our production cost for Q2, but it is a temporary situation.
On Slide 13, we have the delivery performance for our powertrain business unit, and looking at our E-T rucks, powertrain continues to face a challenging industry environment, particularly for off-road applications where demand is sharply down. Engine volumes reduced by 13.6% in the second quarter compared to Q2 2024. On the positive side, we are expecting progressive recovery in deliveries to third-party clients in the second half of the year, and as I said in my opening remarks, we booked higher quality costs during the quarter, expenses that will secure superior standards and help realize our ongoing ambition for increased customer satisfaction. These necessary additional costs impacted profitability in the second quarter. To counterbalance the decline in volumes and strengthen our resilience throughout the industry cycles, we focus heavily on implementing our efficiency program and containing any additional costs.
On Slide 15, we highlight the strong performance of our Defence business unit in the second quarter. Our order intake continued to be healthy and supported the increase in our order books, which is now at EUR 5 billion. Increased sales of high-margin vehicles and continuous positive aftermarket contribution gave rise to an all-time high adjusted EBIT margin of almost 14%. Slide 17 takes us then to the year to date performance of our electric vehicle portfolio and looking at our E- Trucks product lineup. All these vehicles not only add to our extensive electric product portfolio but also bolster our in-house expertise. The vehicle was primed to team up with Stellantis Pro One for the supply of two new 100% electric EV brand advanced the E- Jolly and the E- Super Jolly.
With the launch of these vans in Europe in 2026, IVECO will be the only truck maker to offer complete fully electric LCV products lineup with LCV vehicles ranging from 2.5- 7 tonnes. Our E-T rucks maintain a good level of performance despite softening market demand and the plan for our heavy-duty electric vehicles is proceeding apace. We have already introduced our rigid version on the market and we expect to introduce the Arctic version in the later part of this year. The electric bus segment boasts a strong order book which is now full through the second half of 2026 and we expect deliveries to ramp up in the second half of the year. With that I have finished my opening remarks and I will now hand over the call to Anna.
Thank you Olof and good morning everyone. Let's now take a look at the highlights of our second quarter 2025 financial results on slide 19. Q2 2025 closed with consolidated net revenues of EUR 3.8 billion and net revenues of industrial activities of EUR 3.7 billion, contracting 3.5% and 3.1% respectively on a year over year basis, mainly due to lower volumes in Europe for truck and powertrain and the negative FX translation effect.
Primarily in Brazil and Turkey.
Group adjusted EBIT closed at EUR 215 million with a 5.7% margin, with the adjusted EBIT of industrial activities reaching EUR 187 million with a 5.1% margin, both contracting by around 180 basis points versus Q2 2024 but increasing sequentially compared to Q1 2025. As expected, net financial expenses amounted to EUR 71 million in this quarter compared to EUR 49 million in Q2 2024, which as you might recall had been affected by a positive hyperinflation accounting impact in Argentina. As already disclosed in our first quarter earnings call, starting from January 1 of this year, as a consequence of changes in our business model in Argentina, the U.S. Dollar became the functional currency also for our local truck legal entity, thereby eliminating hyperinflation accounting fluctuations going forward and as a result further minimizing the volatility of our results in that country.
Reported income tax expenses were EUR 36 million in Q2 2025 with an adjusted effective tax rate of 26% sequentially flat, resulting in a consolidated adjusted net income of EUR 106 million, down EUR 56 million versus last year and with an adjusted diluted EPS of EUR 0.39. The adjusted net income attributable to IVECO Group closed broadly in line with the consolidated figure at EUR 105 million, down EUR 67 million versus prior year. Moving to our free cash flow performance in the quarter, Q2 2025 closed with EUR 145 million cash flow generation mainly driven by a positive year-over-year working capital and above all inventory performance as well as by lower investments thanks also to the Efficiency Investment Reprioritization program.
at the beginning of this year.
Finally, available liquidity including undrawn committed credit lines closed solidly at EUR 4.7 billion on 30 June, including EUR 1.9 billion of undrawn committed facilities. Let's now focus on net revenues of industrial activities on slide 20. As you can see from the chart on the right-hand side of this slide, all regions contracted compared to prior year excluding South America, which was up 9% versus Q2 2024, confirming the region positive trends started already in Q4 of last year. Looking at our net revenues evolution by business unit, Bus and Defense were solidly up versus prior year at 23% and 19% respectively, while Truck and Powertrain both contracted versus Q2 2024.
More in detail, Truck net revenues totaled EUR 2.3 billion in the quarter, minus 9% versus prior year as a result of the largely expected volume contraction in Europe in the first half of 2025 and an adverse year-over-year foreign exchange rate trend.
In Brazil.
Bus net revenues were up as said 22.5% in Q2 2025, reaching EUR 750 million thanks to higher volumes, a better mix resulting from the ramp up of electric vehicles production and deliveries, and the positive pricing. Net revenues of Defence were once again substantially up versus prior year, posting a plus 19.3% increase to EUR 340 million, driven by higher volumes and a positive product mix effect. Finally, Powertrain net revenues were down 10.4% year over year to EUR 878 million, mainly as a result of the continuously challenging off-road industry performance as well as lower volumes in truck, with sales to external customers accounting for 45% in these quarters. Turning to slide 21, let me briefly comment on the main drivers underlying the year over year performance and our adjusted EBIT margin of industrial activities.
Volume and mix contributed negatively for EUR 39 million in the period, mainly driven as said by lower volumes in Europe for our truck and Powertrain business units, combined with lower deliveries of light-duty trucks, which further negatively affected the overall truck profitability. The negative year over year net pricing impact of EUR 29 million is mainly a result of, one, last year's extraordinary positive pricing leverage deriving from a still exceptionally high number of weeks of production already sold, and two, a strong pre-buy effect in Q2 2024, particularly of light-duty trucks on the back of the subsequent launch of our new model year 2024 truck range. It is worthwhile to be noted that our sequential pricing performance, on the other hand, was substantially stable in light-duty trucks and even slightly up in heavy-duty trucks, thereby confirming our effectiveness in maintaining a diligent pricing discipline also in this challenging market environment.
Finally, the year over year improvement in FGA costs totaling EUR 40 million in this quarter and EUR 32 million in the semester is again a result of the efficiency actions announced and launched at the beginning of this year. Let's now take a look at each industrial business unit adjusted EBIT margin performance in the quarter on slide 22. Truck closed with a 5.5% adjusted EBIT margin as a result, as said, of the largely expected volume contraction in Europe combined with a negative mix linked to lower light-duty truck deliveries, only partially compensated by the cost containment actions implemented in the period. Pricing in Europe remained broadly flat sequentially. Bus Q2 2025 adjusted EBIT margin closed at 5.6%, up 40 basis points versus prior year thanks to higher volume. A better mix resulted from the continuous ramp up of electric vehicles production and deliveries and the positive pricing defense.
Adjusted EBIT margin posted a 400 basis point uplift versus prior year, reaching an historically high 13.8% on the back of increased sales of more profitable vehicles and a continuously positive aftermarket contribution. Finally, powertrain adjusted EBIT margin closed at 3.9% in the second quarter due to the severe volume drops suffered in the period and, as previously mentioned by Olof Persson, due to higher quality costs only partially compensated by continuous cost management actions. Excluding the higher quality costs incurred in the quarter, powertrain profitability would have landed at around 6%. Let's now have a look at the performance of our financial services business during the quarter on slide 23.
Q2 2025 adjusted EBIT closed at EUR 28 million with a managed portfolio including unconsolidated joint ventures of EUR 8 billion at the end of the period, of which retail accounted for 43% and wholesale 57% at EUR 4.3 billion compared to 30th of June 2024. Stock of receivables past due by more than 30 days as a percentage of the overall own book portfolio was sequentially down 20 basis points to 2%, in line with last year. Return on assets remained solid at 2%. Moving to our free cash flow and net industrial cash evolution on slide 24. As said, Q2 2025 free cash generation closed at EUR 145 million with a EUR 243 million improvement compared to prior year, largely as a result of a positive working capital and above all inventory performance.
In fact, as you might recall, Q2 2024 working capital had been negatively affected by the extra effort put in finalizing and getting our model year 2024 vehicles ready to ship, thereby resulting in a temporary exceptional increase in our inventory levels, which was then reabsorbed during the remaining part of 2024. Investment totaled EUR 146 million in Q2 2025, down EUR 60 million versus the same period of last year, in line with the already disclosed acceleration of our efficiency program and specifically of the reprioritization of some.
Of our less strategic investments.
Moving now to my last slide for today, page 25, our available liquidity as of June 30, 2025, stood solidly at EUR 4.7 billion, with EUR 2.8 billion in cash and cash equivalents and EUR 1.9 billion of undrawn committed facilities. Looking at our debt maturity profile, as you know, the majority of our debt will mature from 2027 onwards, and our cash and cash equivalent levels continue to more than cover all the cash maturities foreseen in the coming years. Thank you. I will now turn the call back to Olof for his final remarks.
Thank you very much, Anna. I would like to conclude this presentation by looking at both the outlook for the industry and our own financial guidance. I will also, as usual, provide some takeaway messages from what you have heard today. In terms of total industry outlook for the current year for some regions and segments, we have updated the preliminary industry outlook we provided in May, and I would like to provide a little bit more detail on that. We now forecast that the light-duty truck industry in Europe will be down between 10% and 15% versus full year 2024, coming in at around 620,000 units.
The revision is mainly due to the delay of the recovery we have been expecting in the second half of the year, particularly in the chassis cab fleets and the rental fleets where the tail of last year's pre-buy effect is taking longer than expected to unwind. That said, customer fleets are aging, and we are expecting a progressive recovery principally in the chassis cab subsegment. We have lowered our expectations slightly for the medium-duty trucks in Europe to 26,000 units versus the previous forecast of 30,000 units. Heavy-duty trucks are confirmed at between 280,000 and 290,000 units.
In South America, we confirm our expectations for light-duty trucks, but we are lowering our forecast for medium and heavy-duty trucks to be between negative 5%- 10%, mainly driven by Brazil where the interest rates increases since the beginning of the year have negatively impacted consumer confidence and willingness to invest in trucks. On the other hand, in Argentina, we experience a more dynamic industry scenario supported by government initiatives and cash injection in the country allowed by the International Monetary Fund. In the rest of the world, both subsegments are forecasted to be either flat or slightly down. Finally, we expect demand for buses to remain flat across all regions. The next slide has our full updated full year 2025 financial guidance, which does not reflect any impacts from the separation of our Defence business. Our full year 2025 financial guidance has been updated.
This mainly reflects a slower than forecast recovery in light-duty trucks for the remainder of the year, negatively affecting our truck business unit's full year profitability. Based on the updated industrial outlook, our solid order backlog in both bus and Defence and our continuous focus on cost management, we are updating our guidance as follows. At a consolidated level, Group adjusted EBITDA at between EUR 880 million and EUR 980 million versus previously EUR 980 million and EUR 1,030 million, and for Industrial Activities, net revenues including currency effects to be down between 3% and 5% year over year versus the previous flat expectations. Adjusted EBIT from Industrial Activities at between EUR 750 million and EUR 850 million versus the previous EUR 850 million and EUR 900 million. Industrial free cash flow to be between EUR 350 million and EUR 400 million versus the previous forecast of EUR 400 million and EUR 450 million.
We will continue to manage cost on production capacity for trucks in Europe with caution, especially in the light-duty truck segment where, as I just mentioned, we're expecting a slower than forecasted recovery in the second half of the year. Now on Slide 29, let me provide takeaway messages for today. Q2 earnings call. First, as I just mentioned, we revised our full year financial guidance mainly due to a slower than expected recovery in light-duty trucks in Europe. As a consequence, we will adjust our production levels in the second half of the year to meet forecasted industrial demand, thereby maintaining tight control over channel inventory. Second, the increase in year over year order intake levels across truck segments confirm our model year 2024's momentum and a progressive positive perception of the range despite challenging industrial levels.
Third, for both bus and Defence, our order books continue to be solid, providing a good long-term visibility and underpinning profitability improvements for both businesses. Units in Powertrain, we expect deliveries to third-party clients to progressively recover in the second half of the year. Fourth, we are proceeding apace with the acceleration of our efficiency program and the reprioritization of certain investments, confirming the expected EUR 150 million in savings in CapEx and OpEx for the current year. We have also identified additional areas of improvement which could potentially deliver further full year savings. In conclusion, regarding the updates on Tata Motors' offer for Iveco Group and our Defence business future, I would like to reiterate that all in all I believe that this is exciting and positive news for both our Defence business and the wider Iveco Group.
We believe that these developments will enhance the long-term prospects of our business for the ultimate benefit of all stakeholders.
Thank you.
That concludes our prepared remarks and we can now open it up for questions. To be mindful of the time, we kindly ask that you hold off on any detailed modeling and accounting questions, which you can follow up directly with me and the Investor Relations team after the call. Operator, please go ahead. Taking the first question.
Thank you. Our first question will be coming from Alexander Jones of Bank of America. Please go ahead.
Great, thanks. Good morning.
Thank you for taking my questions. Two, if I can. First, on the Defence sale, can you help us bridge the EUR 1.7 billion enterprise value, which I think is about EUR 6.36 per share, to the EUR 5.5- EUR 6 that you mentioned in terms of, you know, any net debt in the business, taxation on the disposal, or how we should think about possible closing adjustments. My second question on production levels, you talked about adjustments, lows in H2. Given your sort of revised demand expectations, could you give us a little more color and split that between LCV and any changes you're making on the medium and heavy side? Thank you.
Okay, I start on the production level. Basically, given what I just said during the presentation, the main adoptions would be in the light commercial vehicle. On the LCV side, we will of course make sure that we don't overproduce on the heavy-duty as well. What we see right now is we have a good production pace going into the second half of the year. We keep some flexibility to make sure that we can react quickly to the end market demands. It's mainly within the LCVs that we're adjusting the production rates. That is because we really want to make sure that we don't use other cash flow to create vehicles that stand on the yard. We again have full focus on making sure we have a very good breathing machine when it comes to the number of production, the sales, and our inventory levels in that respect.
On your first question.
Yeah.
As you correctly said, the EUR 1.7 billion is the enterprise value, which then will translate into a EUR 5.5 to EUR 6 billion.
Per share extraordinary dividend. As you correctly pointed out, the difference.
Between the two figures are all the closing adjustments that need to occur.
As we said and as it is stated in the press release, closing is expected.
To occur in Q1 2026.
Obviously, the type of the closing adjustments will also be the full year 2025 reported Defence financial statements, as well as other factors, which should in any case be denied. That's broadly speaking the difference between the two values.
Okay, so there's no material net debt or cash tax you're expecting to pay when that closes?
No, in relation to material cash tax impact.
Yes, definitely.
We need to look at December 2025.
Balance sheet of Defence, including the financial position at this time.
Thank you.
No problem.
Our second question will be coming from Nicolai Kempf of Deutsche Bank. Please go ahead.
Hi, good morning. Nicolai from Deutsche Bank. Couple of questions on my side. Can you just highlight on the remaining business of truck, powertrain, buses, how many bidders were there for this asset? I will start here.
I think we basically had a position to take where we are looking at the bid that we had and there was only one firm bid to take consideration of and that was from Tata Motors and the Board believes that this is the best interest for the company. It promotes the sustainable success of the company and of course provides, as I've said before, also in terms of strategic and complementary clear benefits to all Iveco's stakeholders, including its shareholders.
Okay, got it. My second one would be on the new guidance, which is actually quite large, looking at the earnings range, actually bigger than the one before. Should we look at the midpoint of this new guidance, guidance range for the upper end and lower end? Any cut on that?
Thank you.
I think the reason is as I mentioned, we have a visibility now of about two months on the heavy-duty, medium, and we are basically slightly shorter on the lights. We also have the uncertainty going into the section. I think that is the reason why we contemplated to have a little bit of a wider range, seeing where this market will come and see how it will.
Okay, Scott, thank you.
It's a visibility issue right now.
Our next question will be coming from Martino De Ambroggi of Equita.
Your line is open.
Thank you. Good morning everybody. The first is a general question on what are the main synergies that you see from the deal with Tata and specifically from a technical standpoint, the engines provided by Cummins could be replaced by yours or maybe with just technical adjustments, I don't know. The second question is on IDV, if you could split the $5 billion backlog among the different products, armored, multirole and trucks and off road, and the margin was the historical peak, should we take it as a starting point. There were no recurring elements in this high profitability for IDV and what is the current capacity utilization for IDV?
Let me start with the synergies, and I touched upon it in my commentary. I think there are a number of synergies that we look at. One is, of course, geographical, definitely geographical. You start to see if you map out the geographic complementary, there's really not much overlap at all. The second one is on the product side and the customer segment side, which is also very complementary in terms of supporting between the Tata products and the products that the vehicle makes. The third one is technology. There are technology developments that are not always the same technology developments and trends as in Europe. We basically could align to and also be taking advantage of that as a synergy. There are a number of those synergies because of the complementary situation of the two companies, which makes it very exciting and really looking forward to that.
When it comes to the details, as you mentioned, around the different situation, that is something that has to be worked out over time. I just want to highlight once again the strategic match in terms of complementary is quite very high on the IDV. I can already say from the beginning that we don't give any details on the order backlog. Anna, if you want to perhaps give a little bit other color on the second part of the question.
Sure. On the marginal profitability performance of IDV, there are no non-recurring elements. It's all ordinary.
I think the performance, I mean we had very.
Good two quarters in a row.
Defense, that I think is a proof of the solidity and the good marginality of the business itself. I wish, we all wish that.
Would continue in the future, but that.
remains to be seen. They had a very strong year. Let's hope it continues. They have their own business plan which released last year, so that still stands. I think that's what I can say for now.
In terms of capacity utilization, IDV has flexibility, first of all, to fulfill their.
Full backlog without significantly increasing their related investment. I cannot provide you with %.
Because we don't disclose that.
What I can say is that as I said they can fulfill the backlog and the revenue performance, the revenue.
Expectations they have in the plan without.
Incurring into additional significant investments as of today.
Thank you.
Our next question will be coming from Akshat Kacker of JPM.
Your line is open. Morning. Olof and Anna, Akshat from JP Morgan. I have two questions please, both on the proceeds from the Defence post special dividend. I just want to make sure I understood this correctly. Firstly, could you just explain what is the book value of the Defence business please, and what do you estimate as the corporate tax liability on the capital gain expected from this transaction? The second question is if you have received any guidance from tax authorities on the withholding tax rate that will apply to this extraordinary dividend for different shareholders, and if there could be any exemptions or reductions that we should be aware of. Thank you so much.
Thank you for the question. We don't disclose the book value of IDV. What I can say is the proceeds, as said, of the sale itself.
They're estimated, though you've seen that between EUR 5.5 and EUR 6 per share. I think that's what I can say. Aside, we don't disclose the book value of IDV as of today.
Anyways , in terms of impact, tax.
Impact from distribution of the extraordinary dividend per se.
As you very well know, Iveco Group is fiscal resident in Italy. Therefore, dividend distribution will be subject to the Italian tax rules as any other.
Past dividend distribution Iveco Group did.
The withholding tax obviously may vary according to the legal form of the shareholder.
Receiving the dividends itself as its country of residence. As said, it really depends from.
The jurisdiction and the form of the.
Shareholder receiving the extraordinary dividend. The distribution itself will be subject.
To the same tax rate and withholding.
Tax rates as any other distribution of.
Dividends we made in the past.
I hope I answered your question.
Yes, thank you so much.
No problem.
That will conclude the question and answer session. I would now like to turn the call back to Federico Donati for additional closing remarks.
Thank you all for your participation.
Have a nice day.
That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.