Earnings Call: Q1 2021

May 5, 2021

Hello, and welcome to the Stellantis First Quarter 2021 Results. During the call, you will be on listen only. However, you will have the opportunity to ask questions later on in the call. To register your question at any time. I am now handing you over to your host, Mr. Andrea Bandinelli, responsible for Investor Relations of Stellantis. Please go ahead. Thank you. Thank you, Courtney, and welcome to everyone joining us today as we review Celanctis' results For Q1 2021. Earlier today, the presentation material used during this call, along with the related earnings press release, Was posted under the Investors section of CELANTIS Group's website. Today, our call is hosted by Richard Palmer, the Group's CFO. After this presentation, Mr. Palmer will be available to answer questions from the analysts. Before we begin, I want to point out that any forward looking statements We might make during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor statement Included on Page 2 of today's presentation. And as customary, the call will be governed by that language. Now, I would like to hand the call over to Richard Palmer, CFO of Stellantis. Thank you, Andrea, And good morning or afternoon to everybody on the call. So I'm very happy to be here talking about Stellantis' 1st quarter in absolute terms and for 2021. And we'll start by moving to Page 3. Our numbers, obviously, I just want to make sure that everyone understands the basis that we're using here to compare our performance year over year. Obviously, the merger of PSA and FCA was completed On January 16, 2021. And so in addition, PSA was Decided from an accounting point of view as the acquirer of FCA, given that from an accounting point of view, we need to have an acquirer in the accounting of the transaction. So as a result of this, for accounting purposes, FDA's Results are included in the financial statements of Stellantis from the 1st day following the closure of the merger, which would be Jan 17, 2021, And only the results of continuing operations of PSA are included in accounting For the financial statements from Q1 of 2020 for comparatives. So in order to aid comparability, we have We are presenting here pro form a figures for both Q1 'twenty one 'twenty one and Q1 'twenty 20 In order to show more meaningful results for Stellantis year over year, so the pro form a figures are presented as if the merger had occurred On Jan 1, 2020. So therefore, the Q1 2021 pro form a figures include the results for FCA, Including the period Jan 1 to Jan 16, thus representing a full quarter of activity for the group in 2021. And the Q1 2020 pro form a figures include the results for both FCA and the continuing operations of PSA. So my comments today will be focused on the pro form a results as we explain the business performance. So moving on, please, to the highlights page on Page 4. Can you move to Page 4, please? So as you saw in our press release today, we posted very strong Q1 2021 revenues and shipments With revenues up 14% and up 21% at constant foreign exchange rates. And we'll get into the drivers of the performance on the following pages. Regarding The global semiconductor crisis, which as we're all aware is having impacts across the entire industry. Our teams have been monitoring the very closely and taking quick and decisive actions to minimize the impact on our production volumes and results. In Q1 2021, we managed to limit the impact to approximately 11% of our planned production or 190,000 units. And clearly, this is a competitive game and we are focused on Executing to manage the impact better than our competition as much as is possible. So we do have limited visibility on what the full year impact might be, but we do anticipate that the Q2 impact Will be more significant than Q1. And we do, however, foresee improvements in the second half of twenty twenty one. The improvements will come as a result of the normalization in the supply chain following a stop go volumes in the last year in the automotive sector And as a result of resolution of some serious supply interruptions, which were the result of Manufacturing interruptions in key parts of the supply chain in North America, in Texas in particular And in Japan due to a fire in one of the key suppliers. So those have exacerbated the impact in Q2, But we expect those now to be resolved for Q3. We are also obviously taking Many actions to optimize the solutions in our supply chain and increase our flexibility And ability to react to the volatility in supply that we've seen. And going forward, we expect to see less of an impact in the second half. Having said that, in an overall context of Positive demand in the industry. We saw a very positive commercial performance In our key markets, in Europe 30, we were overall market leaders in combined passenger cars Plus, light commercial vehicles with a market share of 23.6%, up 150 basis points Year over year, in the U. S, our retail share was up 20 basis points to 11.5%, With our U. S. Retail sales up 24% year over year. And we were also market leader in South America For passenger cars plus LTVs with market share of 22.2%, up 5.30 basis points. Our product launches continue on time. A key launch in Q1 was the Opel Mokka in Europe, Rich will turn to the market after being discontinued in 2019. And we are looking forward to key launches in North America For the Jeep brand, with the commercial launch of the all new Grand Cherokee L 3 row in late Q2 And the Grand Cherokee 2 row production starting in Q3 as well as the start of production of the Grand Wagoneer and Wagoneer in Q2. And just to remind you that we have announced that we will be holding an Electrification Day On July 8, July 8, in which we will provide a holistic view of our electrification strategy. Moving to Page 5. We show the shipment and revenue performance For the group, so as mentioned, revenues were up 14% year over year to €37,000,000,000 With an 11% increase in consolidated shipments to nearly $1,600,000 We had increased shipments across all segments except North America, Which was down 4% as demand outstripped production, also due to the impact of the semiconductor shortages And some products were discontinued. The underlying business performance was actually stronger than these numbers imply, As I mentioned, given the negative FX translation impacts due to the weakening year over year of both the U. S. Dollar and the Brazilian real. All segments contributed positively to the revenue growth, which is a testament to the strong consumer demand for our diverse brand portfolio. Moving on to Page 6. We show the walk from pro form a Q1 2020 revenues Of €32,400,000,000 to pro form a Q1 2021 revenues of €37,000,000,000 up 14% as I mentioned or 21% at constant FX. This increase was driven by strong commercial performance Across volume, pricing and the mix. Volume was driven principally by extended Europe And South America in particular and all regions were positive except for North America. Net price was very strong in North America Spending was reduced on incentives, resulting also in some stock adjustments on our incentive provisions And in South America as well as MEA and Extended Europe. Vehicle line mix was also especially strong in North America And Extended Europe. As I mentioned, FX translation was negative for the U. S. Dollar and the BRL. The other category was positive too, driven by lower sales with buybacks in Extended Europe, principally Due to lower Rent A Car customer volumes and higher parts and service revenues as well as higher revenues from our own dealer businesses. Moving to Page 7. We have an overview of performance By region, North America had a very strong Q1 performance with revenues up 9% despite shipments down 4% due to the discontinued Dodge Grand Caravan and Journey and Semiconductor impacts. Our constant FX revenues were actually up 19% with strong pricing and mix achieved. Stellantis sales were up 5% to 532,000 units with U. S. Retail plus 25% And U. S. Fleet down 37% as channel mix was optimized. Deal stock was therefore down And represented 53 days of sales, down from 60 at December. Ram sales were up 14% And Jeep sales were up 10%. Moving to South America, which also had an excellent quarter with revenues up 31% or 68% at constant FX. This was driven by shipments up 49% with the Fiat brand Up 54% due to the new Strada, which was the number one selling vehicle in Brazil in Q1 and the Jeep brand, up 59%. Sales were up 32% year over year in a flat South America market and despite positive pricing actions To offset negative FX impacts. In Brazil, Fiat reached 55% share in the pickup segment Because of the strong performance of the Strada and the Toro, and it was the clear market leader. Jeep reached 23% share in the SUV segments, also market leader. In Enlarged Europe, revenues were up 15% With shipments and sales up 11%. Peugeot was the highest growth brand in the top 15 in the market, up 17%, While Citroen increased 10%, Fiat 12% and Jeep 32%. In Extended Europe, the group is also the leader in the LTV market With a 34% share and sales were up 25% in line with the market. Vehicle line mix was positive, driven by The BEVs and PHEVs across the product range and also by LTV growth. On page 8, we continue with the other segments. Middle East and Africa Showed consolidated shipments up 32% with positive contributions from the all new Opel Corsa Peugeot 208 And 2008 and Citro NC3. Combined shipments were plus 49% due to the Turkey JV growth in the Fiat Tipo and LCVs. MEA Industry sales were up 14% and Stellantis outperformed with sales up 46% with Peugeot brand Plus 56% and Fiat plus 57%. Revenue growth was 20% or 30% at a constant FX. China and India and Asia Pacific posted consolidated shipments up 9,000 units Or 45% driven by Jeep Wrangler and new Peugeot 2,008 and 2,008. Peugeot brand also drove the growth in JV volumes. Revenues were up due to the increased consolidated volumes. Excuse me. Maserati shipments were up 74% due to the launch of the refreshed lineup. Sales were also up 53% and volume was aligned to shipments of 5,300 units. Revenue growth was in line with volume growth with some positive mix Due to increased China volumes offsetting negative FX. Moving to Page 9, We see our inventory status. Inventory levels remain healthy overall with significant reductions in both group and dealer inventories over the last 12 months Due to the impacts of COVID and the semiconductors combined with positive commercial performance. Compared to December 2020, Dealer inventory was down 124,000 units, mainly due to North America down 80,000 units And at 53 days supply in U. S. Retail despite volume being prioritized away from the fleet business. These lower than historic levels of stock are part of the reason for the strong pricing performance in North America as actions to cover raw material inflation And managed channel mix are more quickly transmitted into the market. Group inventory is up To 273,000 from year end, mainly due to normal seasonality as plants come up after the year end shutdown And the stock is built to manage the sales increase in the early summer period. We expect the group inventory to reduce by end June. Lastly, we can move to Page 10. We confirm our full year guidance margin range At 5.5% to 7.5 percent and despite impacts of the semiconductor shortages, our market outlooks for our 3 main markets are unchanged. As mentioned, we do expect Q2 to be impacted more than Q1 by lost production from the semiconductor shortages, But through disciplined cost management, positive pricing and commercial mix, as we have seen in Q1, we expect our margin performance to be sustained. We expect that the impact of lower volumes will likely cause our H1 cash flow to be negative due to the impact of working capital, Even if operating cash flow ex working capital will be positive. As regards full year cash flow, We expect that to be a strong positive performance as the volumes recover in the second half. Overall, The business fundamentals are performing very well. To close, just before we go to the DNA, today marks just over 100 days of Stellantis. And while we are still ramping up the new company, we are already posting very encouraging results as you can see. The organization is in place and the team is getting into the rhythm of its new governance processes. The progress on Synagis is very encouraging and the numbers we have set ourselves for 2021 beyond. Clearly, the semiconductor issue is a challenge for the whole industry, But with the opportunities created by the merger, we are still convinced that 2021 will be a strong year for the company. And now I'll hand over to the operator for Q and A. Thank you. Thank The first question comes in from the line of Thomas Besson calling from Kepler Cheuvreux. Please go ahead, Thomas. Thank you very much. It's Thomas Vissma with Kepler Cheuvreux. I have two questions, please. First, Richard, I think you've been quoted and you've I think expressed that as well on the call that you have some control on the semi shortage, which I think is Reassuring, specifically compared with what Ford was saying last week. Can you qualify that a bit more? Can you explain if You have some ability to select the vehicles you build if there is any risk on the new products, apparently not, but and whether the output in Q2 Can be higher than in Q1? That's the first question, the semi shortage control. And the second, I mean, you indicated yesterday as a company that Stellantis would no longer use Tesla credit for Europe, Which I think is a great signal. Can you give us an indication on the net impact it has? And I guess you don't have any more to pay Tesla for that, but I assume that you have some costs because you need to raise the share of electrified vehicles On the European side to offset it, so could you give us an indication of the net impact of the Tesla decision? Thank you. Thank you, Thomas. So on the first question, Obviously, our target is to be better in terms of volumes in Q2 than Q1. Seasonally, that would be the case. But as I said, The impact of semiconductors is likely to be higher in Q2 than Q1. So We'll obviously be targeting to minimize that. I think in terms of comparison to competition, The 11% impact we had in Q1 was better than some of our competition. And so and I think some of the guidance given by some of our peers, I think our impact in Q2, we would expect to be Of a different magnitude, frankly, and lower than they are targeting. But obviously, It's a moving target and we are be open to give you as much Transparency is possible. I think Q2, as I said, will still be a good quarter For the group in terms of performance commercially and financially and the only real Negative impact is going to likely be on working capital, given that the volumes Are going to be at a lower level than they were in Q4 of 2020. And as a result, We're likely to have a negative working capital impact. But as I said again, I think that will Reverse through the second half of the year. So I wouldn't worry about that too much. And as I said, the operating cash flow, Excluding working capital, we'll still be very positive. In terms of the credits In the EU, etcetera. Our performance on in terms of profitability As we sell lower emission vehicles, so PHEVs and BEVs, so far has been relatively good And not significantly impacting our overall mix. So I think The level of impact of increasing the penetration It's not a problem. And I don't think we're really doing anything unnatural in the marketplace. I think Demand for these types of vehicles, as we have seen, is increasing across the board. And we have A strong portfolio in Europe of nameplates that have either PHEV or BEV offerings. I think it's around 25, Including passenger cars and light commercial vehicles. And we have further Six launches this year in Europe also. And so I think it's really A question of launching good competitive vehicles into the marketplace and competing To achieve good share in the LEV part of the market because clearly that is Where volume is moving over time. So I don't see that as a negative, I see it as a positive. And frankly, The fact that we won't have the cost of credits in Europe is just a net positive for the European business. Great. Very clear. Thank you very much, Richard. Thank you. The next question comes in from the line of George Galius calling from Goldman Sachs. George, please go ahead. Thank you and thank you for taking my call questions. The first question I had was just on the revenue guide, Richard. I think at the full year, you said something between €150,000,000,000 €160,000,000,000 of revenue For this year, obviously, the semiconductor is impacting volumes, but you seem to be seeing positive price and positive mix. Does that $150,000,000 to $160,000,000 range still seem reasonable to you at this point? Yes, George. It doesn't seem unreasonable to me at all. Obviously, subject to the caveats of The level of visibility we have on semiconductors, but I think we've seen The business is performing very well, frankly, across all the regions. The way we are prioritizing Deliveries to final customer orders, primarily then secondary to Dealers where we have lower levels of stock on car lines And then obviously managing after that profitability and channel mix is all an interesting learning curve For the organization, because I think it's showing us that we can operate with lower levels of stock, be more nimble in the marketplace And still give our loyal customers the vehicles that they want to purchase. And at the same time, it's allowing us to improve our profitability and to Therefore offset some of the impacts of both inflation on the cost side, in particular on the raw material side And on and the impacts of the lower volume. So all told, I think the revenue Range you mentioned is not unreasonable still. Great. Thank you. And then the second question I had, and I appreciate this isn't an earnings call, but wanted to ask, Both Ford and GM reported North American margins in excess of 12% for the Q1. And from the outside, there doesn't seem to be any obvious reasons Why profitability for Stellantis shouldn't be at a similar level. Is that fair? Or are there other factors we should consider? Well, we were in a very similar place to them in the second half of last year. I don't see any reason why we shouldn't be In the first half of this year, frankly. So I don't think it's unreasonable at all. Thank you. And then the final question, just following on from Thomas' question on the pooling. At the full year results, you mentioned €300,000,000 in terms of what you paid Tesla last year, and you said you expected a similar number for 2021. In light of the fact that you seemingly don't need to pool with Tesla in Europe, is it fair to assume that €300,000,000 is Incremental to this year versus what was expected at the start of the year? Well, the $300,000,000 wasn't all related to Tesla, But around 2 thirds of it probably was. And yes, that would be the type of benefit we'll likely get By no longer participating in the pooling agreement for extended Europe. Great. Thank you very much. Thank you. The next question comes in from the line of Jose Asumendi calling from JPMorgan. Jose, please go ahead. Thanks very much, Jose, Sigimora. I regard just a couple of questions, please. Can you help Just a little bit more on the semi disruption for the Q2. Thanks for giving visibility for Q1. In terms of the disruption for Q2, Should we think about doubling up the level of disruption? Would that be a fair statement? Or would that be to conserve Or to bearish in terms of the interruption for Q2. Second question, can you comment a little bit around the New MOCA, obviously, very important vehicle for the whole group, especially in Europe. Can you comment a little bit around the So putting this car on a new architecture and maybe if you could just revise a little bit What's the effect in terms of profitability for these vehicles, I think, is very important. 3, I'm aware this is a revenue call, but if you could kindly comment, please, on just In general, on synergies, how are you progressing? Very interested to hear any comments you could give on Merging engine families across brands or merging the purchasing build up across the brands, how quickly are you able to tackle these Thanks, Jose. Could you just repeat the first question, because I couldn't hear you very well? I apologize. Yes, on the FEMIS disruption for the Q1, you have given us roughly the disruption. For Q2, should we expect to double up that number for the Q2 in terms of disruption? Is that a fair number? Or is that 2 negative. Okay. Thanks. As a base assumption, I don't think it's unreasonable. Obviously, We're trying to do better than that, but that's the sort of ballpark that is potentially going to be the impact in Q2. In the second half, as I said, we expect it to improve and we're managing this on a monthly basis. And like I said, there are, I think, some objective reasons why it should improve given the disruption caused by The storms in Texas, the fire in Japan, etcetera, we should abate. In terms of the marker, I think it's a really important vehicle for the Opel brand and will definitely be Margin accretive to the Oval brand and to the European business. So it obviously benefits from A lot of industrial sharing on the platform side. And I think We'll obviously keep a keeping a very close eye on it, but the initial indications are very strong. On synergies, I think we're clearly focusing on all the levers regarding the execution on synergies. And I think for 2021, you clearly understand that There are some of the synergies will be faster to hit the ground than others, and we're obviously aligning our supply base to best price. We're bundling those areas such as Media purchases and other indirect purchases where we can. I think there's some opportunities on logistics integration that we talked about. And we're seeing also good opportunities in terms of R and D spending and CapEx spending As we start to scope out and approve product programs on common architectures and with a common Philosophy in terms of the industrial investments. So I think as we get more into the detail And basically solidified the product plan and the convergence on a global basis. I think we're more and more confident that the synergies that we had talked about are eminently doable in the time frame we've written down. Thank you very much. Thank you, Jose. The next Question comes in from the line of Martino De Ambroggi calling from Equita. Please go ahead. Thank you. Good morning, good afternoon, everybody. The first question is on the price mix. If you could elaborate on the trend for the rest of the year. And Always on price and mix, I assume the bulk comes from North America. But if you could elaborate on the geographical split of these two items, it would be Really appreciate it. The second question is on the CO2 credits. Just to clarify, is there Anything included in your full year guidance for the EBIT? And if so, At what extent? And the second portion of the question is always on this, but These savings on the CO2 credits are included in your EUR 5,000,000,000 Targeted synergies or should be taken on top of these? Okay. So starting with price mix. It's fair to say that if you look at the €2,000,000,000 of mix, About 3 quarters of that is coming from North America and Another good piece is coming from South America. North America is seeing obviously some Reduction incentives across the industry, I think we've seen that from some of our competition as they've reported. And I think the marketplace is clearly there's a very healthy demand function. We are managing our mix as we give priority to retail to ensure that we can Try and service the customer demand that we're seeing from our customer base across the portfolio. And at the same time, clearly, we have, As I mentioned, some cost inflation that we clearly need to recover and the marketplace is being relatively supportive in that regard. So I think North America showed a very positive price and incentive impact for the quarter. Some of that obviously was related to adjustments of provisions, as I mentioned. So we'll see that flowing through in terms of spending in the next 50 days or so. Obviously, as I mentioned, our stock levels are around 50 days And then South America is also showing some very positive Pricing, because we need to offset also there raw material impacts and even more importantly, the impacts of exchange, Which has rendered the cost base more expensive as real has weakened by about 30% year over year and also the peso As we can. So, I think the main drivers of the vehicle net price are North America and South America, but we've also seen positive price in Europe and in Middle East and Africa. And then in terms of the mix equation, Positive mix also in North America, as I mentioned, because of More retail, less fleet because of product line mix into pickup And the larger Jeeps, as we manage the supply and demand, and frankly, the demand is Clearly, we're also very strong in those segments of the market as we have seen. And then also we're seeing good mix in Europe And some of that is being driven by higher penetration of PHEVs and beds, Which have obviously higher revenue function than their ICE equivalents and we are seeing positive mix Also from lower rent to car volumes. So but again, also South America showed positive mix. So I think really all areas of the business are contributing in different ways to the positive pricing And the positive mix. In terms of synergies and the credits, were they included or not, There are lots of moving parts as we move forward here. I think the credit transaction was a very positive one and it's going to Clearly contribute positively to our ability to realize the synergy targets Quicker and we're not going to stop just because we get some positive outcomes on individual transactions. But I think it's important that we realize as quickly as we can all of the benefits of the merger. And clearly, one of the key benefits of the merger For the business is that we are compliant in the Extended Europe, in EU Without any need to resort to the use of credits or pooling arrangements. So I think that's the key. It's just a good place to be. And obviously, it's important that we continue to grow the penetration of our low emission vehicle business. So I interpret it, it's probably additional, but that's my personal interpretation. Last question on the As I said, we're doing well on the synergies. And I think what's more important is overall, we're seeing Good traction across the board on the synergies, but whether I'm not going to get nickel and dimed on everything we do, whether it was included or not. Okay. And very last on the CapEx, if you can provide an update on for the current year? I think CapEx is proceeding as we had talked about on our last call. So Our target in the sort of medium term is to get the business down to around 8% of revenues. Historically, the sort of aggregate spending Of the 2 legacy businesses, PSA and FCA, was around 9%. And so I think we'll be in that 8% to 9% range, We're pushing to get towards the 8% target as quickly as we can. Obviously, also this percentage, obviously, depends a little bit on How our revenues perform, given the pressure on volumes That we're seeing, so I don't think we want to put ourselves in a box where we're managing CapEx to a percentage And then we have issues on timing of some of the key programs that we need to execute on to realize synergies and to be competitive In the marketplace, so I think the 8% to 9% range is still a good approximation for the moment. Thank you, Richard. Thank you, Martina. The next question comes in from the line of Horst Schneider calling from Bank of America. Please go ahead. Yes. Thank you for taking my question as well. It's Horstio from Bank of America. The first question that I have that relates Again, to the volume path, which we are going from here. So in Q1, of course, I mean, you have destocked, Therefore, wholesale is probably below retail sales. When you say that you're going to catch the shortfall in H2 up versus H1, Does it mean that on a full year basis, retail sales will be equivalent to wholesales? And then looking more Forward already into next year or maybe the next few years, you expect the real restocking effect to happen then only in 2022? And to which extent Will you go back to the previous inventory levels that we had? Or do we now talk really about the new normal with sustainably lower inventories also in the long run? That's question number 1. Question number 2, given all the statements that you made on earnings, regions, catch up effect, etcetera, I still struggle to understand if now in terms of profitability, for example, if H2 going to be stronger than H1, given that the volumes Most likely in H2, it will be also higher than H1, but I have problems to reconcile the price impact versus the volume impact. So which impact is then stronger in H2? Or have we got basically now already peak margins and we declined thereafter? Or is it more the opposite that H2 even can be stronger? And the last question It's about special items. Just an update what we should expect for the group this year. Thank you. Thank you, Horst. So in terms of it's a good question, what is the optimum level of stocks? I think To some extent, it's very healthy to have, obviously, A relatively lean inventory picture and makes the business more nimble. It makes The efficiencies in the supply chain all the way through the distribution channel easier to execute on. And I think we're seeing some of that with the profitability Commercially that we're realizing in all the markets. So, I don't think That we would push to necessarily build stock significantly From here, I think there are some areas of the business where it would be better to have Slightly higher stock levels than we're currently at, and that probably is largely in North America. And that will, I think, start to be visible In the back half of this year, hopefully, depending on supply and demand, obviously. But I don't think we will be pushing to Not necessarily go back to the same levels of stock we had in the past because I think there's definitely a benefit to Managing a lean distribution channel. So we will see some restocking, but I don't think it will be Necessarily, I don't think we will arbitrarily decide to take it back to the levels we were at in the past. Not that they were that unhealthy frankly, but I think The organization is sort of learning to function with lower levels of stock and seeing the benefits and that's I think a good thing. In terms of H1 versus H2, I think I don't see any reason why H2 should be worse than H1, frankly. Now clearly, The volumes should improve, as I mentioned. So we expect to be, I think, Strong in terms of margin performance through the whole year, and we will maximize our margins as best we can. I think the 5.5% to 7.5% guidance was predicated on some level Risks related to raw materials and to the semiconductor challenges And clearly, also COVID, I think COVID we're seeing Seems to be on the wane in most jurisdictions and demand is good And consumers are returning to the marketplace. I think in terms of raw materials, those continue to be a headwind And potentially a larger headwind than we had initially envisaged. But at the same time, I think the market in terms of Price mix, we're also executing very well on that. So we don't see Any concern in being able to manage the raw material Inflation for the year and to hit the numbers we've talked about. So we'll obviously give you a better update on margin performance For the in the first half call, but I don't see any reason why we should see And a significant difference in performance from the first half to the second, frankly. And we had a very strong second half of twenty twenty, Which obviously have various benefits in it that weren't all carried over into 21 from a cost point of view, but I think we're seeing the business performing very well and in a similar way that it did in Q2 of So in H2 of 2020, our target is to continue to execute at similar levels, notwithstanding The headwind related to the semiconductors. And special items? I'll give you an update in July on special items. I don't think there's going to be anything unusual compared to what you've In the past from PSA in terms of restructuring charges, there will be some through the year, but nothing out of the ordinary. And I don't think we'll have anything else. Obviously, we're going through our planning process. And so that's an item that I think I can give you a better update on in July. All right. That's great. Thanks very much. Thank you. The next question comes in from the line of Stephen Reitman calling from Societe Generale. Please go ahead, Stephen. Thank you. Good afternoon. Richard, my question is about how Stellantis is being controlled at the moment. Are you kind of running still with the management system from PSA and management system from FCA? What progress are you making in integrating them and Moving on to the sort of regional level that you'll be reporting during the course of the year. It's a good question, Steve, I'm sure some of my team would like to answer you directly. I think what we're doing very efficiently And Quickley is moving the business to one set of KPIs, which I think is critical for the management team to be able to focus on a common set of KPIs, so that we get to a common set of Decision drivers and language, which may seem, banal, but is clearly Challenging in an organization of 300,000 people. So I think it was very important to get the organization In place quickly, which we have done. So sort of the first level of the organization, the second level, the third level, and we're working all the way down into the organization. But Effectively, that is in place now. The governance process is very clearly defined. The sort of delegation of decision making is clearly defined. And so that together with a clear set of KPIs to measure performance Of the various business areas, both from a functional point of view and from a Regional point of view and from a brand point of view, obviously, this is a matrix. All those things need to be clear to people and clear to the team. I think we've made an awful lot of progress frankly, better than I had expected. So I think we are acting as one team now. It's true clearly that Your KPIs are aligned. Some of the systems and processes by which those KPIs are produced and managed are not. And so there is More of a sort of a slightly longer term project where we need to make the processes converge and We're efficient also the systems, so that we can be faster and Less labor intensive on the reporting process and get more people Involved in value added activity on the front end of the business, but those are things that all businesses need to confront. I think frankly, the merger gives us an opportunity to clean up the house on both sides. And there's a lot of energy from the team. The team is contributing across the board With a lot of energy and creativity, and I think the dynamics are great. We have a diverse team, which makes life Interesting and rewarding. And clearly, we want Stellantis to be a place where people Want to work as well. And I think that is a key part of the story. And I think the progress we've made so far is very Positive and all goes well for the future. Thank you. And just a follow-up. We know very well that you've been husseting your Limited numbers of semiconductors and reducing car production to favor SUVs and pickup trucks in North America. Any scope for doing them on a global scale as well or even the organization using some of the uniform standard of those parts? There is some scope for that, Stephen. It really depends on the individual part, the individual vehicle. So where we can Do that, we're doing it. I think going forward, there's also an opportunity and this is part of the synergy process that was already sort of mapped out as a target, but Obviously, become even more clearly necessary because of this semiconductor issue is to Move towards more standardized parts, more interchangeability Between vehicle lines on the same platform and between different platforms. So I think that's clearly something that we are very focused on, but we do have some level of interchangeability, not always to the level we would like, frankly. Thank you very much. Thank you. The next Question comes in from the line of Patrick Hamill calling from UBS. Patrick, please go ahead. Hi, everybody. Patrick Good afternoon, Richard. Let me start by saying that I think I and many of us would look forward to discuss the Q1 and Q3 EBIT, again with you in the not too distant future. So I hope once you've concluded all the Internal cleanup work, that's going to be part of our conversation going forward again. Two questions for me remaining, And the first one is, are you drawing any structural conclusions from this current semi shortage situation? There's a lot of talk in the industry about how semis are going to be produced and where they're going to be produced and how they're going to be sourced by the OEMs. So Are you planning to get more directly involved into the sourcing of semis? And would that potentially come with additional financial Commitments by CELANTIS, that's my first question. Well, it's a good one. I think my view initially would be From a financial commitments point of view, I don't think we're going to get into producing the parts. So I would imagine that Any impact from a financial point of view would be minimal. I think it's possible There's a possibility that we need to look at how we manage the supply chain, so we have more visibility of What's happening in the various tiers of the supply chain so that our intelligence It's more immediate and we can move faster. But I think we have our supply chain And purchasing team is working on that, and they are already putting some of those things into action, as we manage through the crisis Of the parts. So I think, yes, there's some things that we're changing the way we manage our process. And it's really all about Getting more visibility on the one side and then in the medium term, some of the things I just mentioned was visavis Stephen's question on increasing the interchangeability and the standardization of the components. So that's really how I would say it today. Obviously, this is a developing area. And also, to some extent, I think, As we develop our strategic plan, which we've talked about and which we will bring back to yourselves Late this year or early in 2022, I think the way we manage The supply chain is going to be a part of that, which we will address. Okay, great. And my second question relates To your EV strategy, I know there is an event coming in July and you probably don't want to front run that. But I'm just curious, you already gave a glimpse What's going to happen at the AGM, talking about the next generation platforms. And I'm just wondering how that will affect your CapEx plan. You said you stick to the 8% of revenue target, but it seems like what you have in the cards is going to require Additional investments and other OEMs are also talking about a higher degree of vertical integration, doing more in house, So even to the extent that OEMs commit money to manufacturing battery cells, I'm just curious in your thought process On that front, is there going to be much, much more CapEx on the EV side than what you had factored in? And would that offset some of the synergies you have in your plan? Well, I think it's a good question, Patrick. And I think to your point, I don't want to front run the EV event. We're not that far out. So I think I'll punt the question to some extent to then. I think what's positive is, obviously, we have a large part of our synergies coming from The CapEx and R and D spend where clearly there was some duplication between the two companies. As we put them together, There are important opportunities to be more efficient there. I think Both companies in the past have been relatively capital efficient. And I think we need to Continue to be very capital efficient and not create very large Programs that maybe we're not in the best place to manage from a core competency point of view. And so I think we're going to be judicious in our use of capital and judicious In assessing what we should do in house and what we should do with partners and what we should buy. But I think all of that will be Part of the July 8 presentation. So I will leave it till then to give you more information on that, Patrick. All right. Looking forward to that. Thanks, Richard. Thank you. The final question comes in from the line of Charles Caldergaard calling from Redburn. Charles, please go ahead. Hey, thanks for taking my questions. I just had 2 final ones. Firstly, coming back to pricing. How much of the pricing uplift that you're enjoying at the moment do you think is sort of the temporary result of the chip shortage? And if the industry can sort of permanently operate on leaner inventories like you said you're aiming to, then do you think the net pricing has Structurally improved. And the second one, the used car market obviously is really strong right now. You still own 70 percent of the online used car market business, Ceramis Auto. And they've said that they're exploring an IPO this Yes. So can you provide any details on that, maybe probability, timeline, whether you intend to reduce your Yes, sure, thanks for the questions. On pricing, I think If we look over the last few years On ex PSA or ex FCA, we've seen margins improving steadily through the period and a large part of that has been An improvement in average transaction prices and price positions. And so I think We are seeing a benign pricing environment at the moment, in particular, probably In North America. And so maybe there is some level A perfect market position where you have some level of scarcity, you customers coming back into the market post COVID. The economy It's ramping up. And so there is some positive context around that. But I also think that in general, the industry has got much more focused on profitability On pricing, and I think ex PSA and ex FCA, in particular, have been quite successful in improving their price positions Over the long term, and I think that will continue to be a focus. So I would proffer that this is not Overall, a temporary trend. I think it's been a long term trend Investors and analysts have been a little bit skeptical about and maybe we're getting a bit of a boost at the moment, In particular in North America, but in general, I think the trend has been steady. And I think in our Particular case, it will continue to be an absolute focus, because clearly, We need to make decent levels of profitability across the whole portfolio. We need to justify the capital that we're deploying. And to do that, we need to make sure that Price positions are good and obviously price is a function of brand, quality and product offering and all of those things Need to be managed very carefully, but I think with our portfolio and our diverse Brand, weak diversity of brands, we can actually be very effective in positioning ourselves well in the marketplace. So I think it's a long term trend that's continuing. In terms of Aramis Auto and the used car business, I think Arithata is an interesting asset that we have, and it needs to be developed. And that's why It's looking at the possibility of raising some capital. And As we get as we study the market and look at the opportunity, we will update you As things get clearer, but I think it's definitely in an interesting position. Some of its competitors have obviously Raised capital in the market successfully. It needs to invest to grow its business. And for the questions before, We have a business to run and capital to allocate. And if we see it as positive for the business to raise some capital, so it can invest in Also, it can invest in its activity in an unconstrained manner that I think it would be a good thing for Aramis and good thing for us. So We'll keep you updated on that. And with that, I think we're done. Thank you, Charles. Thank you to everybody for attending the call. And as I said, I think we had a strong quarter. We're ramping up Stellantis. We're 100 days in and we're excited to continue Jurney and we appreciate your time. Thanks very much.