Good morning, everybody. Hope you're doing very well. I'm Alexandre Leroy, Head of Investor Relations of Aramis Group. Thank you for joining today for the company's H1 2022 Results Presentation. With me today, Mr. Guillaume Paoli and Mr. Nicolas Chartier, Co-founders and Co-CEO of the company. As a reminder, this conference is recorded, accessible both over the phone and internet. A replay will be made available on the company's website, www.aramis.group, and the slides are already there for download. I must remind you that today's presentation contains forward-looking statements, and that future results may differ materially from the statements or projections made today during the call. In particular, the risk factors that could affect those statements are described in our 2021 universal registration document filed with the AMF, the Autorité des Marchés Financiers.
This presentation will be, of course, followed by a Q&A session. Last but not least, I remind you that Aramis Group has a non-calendar fiscal year, given our annual result close at the end of September. The H1 2022 activity and results we are going to comment today refer to the period going from October 1st, 2021 to March 31st, 2022. I leave now the floor to Guillaume Paoli and Nicolas Chartier that will drive you through the main business highlights and financial performance for the period. Guillaume?
Thank you, Alexandre. Good morning, everybody. This first half of our 2022 year has been very interesting, to say the least. As you know, we have founded this company to revolutionize the way people buy cars, and we can say that during this first half of the year, we have progressed on our journey to deliver our customers a great experience and great products. This is absolutely key in our strategy, and we have delivered on this strategy, expanding quickly on the used car market. The teams have done an absolutely incredible job to deliver the growth whilst maintaining the customer satisfaction, and it has necessitated a lot of agility in the current conditions.
Refurbished cars have become, as you know, since a few years, the main strategic driver of the group, and they now represent over 80% of the retail sales of the group. Nicolas will further elaborate on how we were able to achieve such growth on this segment. This in a context where the automotive market has become increasingly volatile, more volatile than we have ever seen on the market since the 20 years we have incepted the company. This had an impact on our pre-registered business. The sales have decreased. As you know, there is difficulties with the OEM production lines, impacted by the scarcity of semiconductors, impacted by the war in Ukraine, unfortunately, and also by some COVID aftermath.
In this context, our level of activity on the pre-registered business has decreased. The financial results we have generated over the H1 reflect both this market reality and also the strength and the resilience of our business model. Even though the market has been complex and challenging, we have been able to remain in positive Adjusted EBITDA territory, showing the resilience of the group model and strategy. Beyond these short-term bumps on the market and on the business, we remain very confident in the prospects of the group. We are addressing a absolutely huge market, over EUR 400 billion in Europe. Buying a car is absolutely central to European lifestyle, and we plan to be the preferred European platform to buy a used car online.
Now, if we move on to the next slide, a few words on our business model. As we have already stated a few times, we have a truly unique business model. It is vertically integrated, truly vertically integrated, from sourcing the car to the delivery of the car to people's home or in a customer center. We have the most extensive and diversified sourcing network in Europe, and we have a unique know-how to refurbish cars that's plugged into a tech and data suite that enables us to deliver very high-quality cars in very short lead times, as short as three days. Vertically integrated, we also have a unique management and work organization.
Inspired by lean management, we have teams that are very much engaged and focused on customer satisfaction, that are empowered, and we have a dynamic of collective learning and continuous improvement that is quite unique in our sector. Also, we have multi-local teams. We have teams in each geography that are very close to customer needs and that tailor the offer to suit the best the customers. Finally, we have a best-in-class, digitally enhanced customer experience. Purchasing journeys and trading journeys are fully digitized, and our customers can choose where to be delivered. This, coupled to our second-to-none warranty level, allow us to reach a very high level of satisfaction and a market-leading return rate.
The three-pillar business model that we have developed over the last 20 years enable us to be very confident in the group prospects. Now I will leave the floor to Nicolas who will go more in depth in the H1 2022 business highlights.
Thank you, Guillaume. Let's go on slide five. Good morning, everybody. Once again, in H1 2022, we have continued to increase the value we deliver to our customers. We have continued to change the way people are buying their car for the better, and this has been possible thanks to our amazing teams that has proven a very strong engagement whatever the conditions they face. This resulted in a very high level of revenue growth. Our sales reached EUR 873 million in H1 2022, representing a massive increase of 47% on a year-on-year pro forma basis, and 78% increase on the reported one. Let me give you some examples of our achievement over the period.
First, we reinforced our vertical integration within our value chain, developing both the productivity of our existing refurbishing center and opening a new one, in Belgium. We also developed the services we propose to our customers, signing in particular a new important partnership in Spain with Santander. This new partnership will help us to ease the car financing journey for our customers. We have increased our volumes of refurbished used car very quickly, thanks to a high level of agility, of coordination, of involvement, and work of our people. We are not only talking about refurbishing the cars, but also sourcing more from private owners and moving them around the countries.
Three, of course, the most important, we kept on innovating for our customers on improving our value proposition for them, which is already very high. We launched, for instance, a 10-year extended warranty in Belgium and the home pickup of the cars in Spain. In France, our subscription model allows customers that could not afford buying a car or that do not want to buy a car to get one. Our marketplace further deepen our offer. As a result, and thanks to our teams work, our NPS remains very high at 68 at end of March 2022, and we are not going to stop there.
On slide six, the eight hundred and EUR 73 million of revenue we generated over the H1 2022, which represents an increase of 47% on a pro forma basis versus H1 2021, those revenues actually reflect two diverging trends. On one hand, there is a massive increase in the volume of refurbished cars. We have increased by 56%, sorry, on a year-on-year basis, the volume of refurbished used car. On the other hand, we have a decrease in the volume of pre-registered cars given the lack of sourcing on the market. As stated by Guillaume earlier, new car production remains low, and this has, of course, a very negative impact on our capacity to source pre-registered cars.
The overall volumes of B2C cars we sold increased by 16%, year-on-year, with the refurbished used car representing now 81% of the total of cars sold. Now on slide seven, let's go through the sourcing. Of course, to continue satisfying our customers and to develop our offer in this changing environment, we had to develop our sourcing from private customer, which was, of course, existing already, but we have very much developed it. We have multiplied by 2.4 the volume of car sourced from private versus H1 2021, so it's 10,000 cars more on a year-on-year basis.
We have been able to achieve that thanks to the outstanding commitment of our people and also because the needed infrastructure was in place, both in terms of, digital and industrial capacity. As you know, we are sourcing from all the possible sources, in the market. This is one of our strengths, and we have proven that this multi-channel and flexible approach is very efficient. We are, of course, always, careful not to be dependent on any supplier and any specific kind, of source or of supplier. Now on slide eight, let's talk about our refurbishing capacity because offering cars is important, but if you want to make it affordable and, reliable, you need to be very good in the refurbishing area.
First of all, we own massive refurbishing capacities that we constantly develop and continuously improve. We are going to open two more new refurbishing center one in France and one in the U.K. We are talking about a projected in-house capacity of 132,000 cars per year by the end of 2023. In France, our new center will open soon in the southern region of Paris in Nemours. In the U.K., the new center will be located in Goole in the Yorkshire. Now on slide nine, we can talk about our logistics because we, with a wide offer, a top product, quick and reliable delivery help us to achieve an excellent customer experience.
Our H1 2022 performance is also largely due to our outstanding logistics. Logistics has always been a strength of our business. From day one, we have built our operation around a very efficient logistics system, and this is what allows us to have the best lead time of the industry. Of course, this is a huge driver of cost and of capital efficiency. Today, 2/3 of the cars we propose in France can be delivered in 24 hours to our customers. In Spain now, we are even able to deliver some cars in less than two hours, and with financing. We deliver almost over the group half of our customers directly at home. Of course, we are going to continue to accelerate our delivery times for our customers.
On slide ten, as Guillaume previously said, we strongly believe the used car market is a multi-local one. As such, having teams based locally with an excellent knowledge of what our customer expectation is a real competitive advantage. People love the product and services we offer, and always, we have always more visits on our website, as shown on this chart. Now, I leave the floor to Guillaume for the financial performance review.
Thank you, Nicolas. Now moving on slide 12. Let's start quickly with the main H1 financial highlights of the group. We have said 47% increase year-on-year of revenues, fueled by the refurbished business growth at 56%. We have maintained a very high European leading gross profit per unit at EUR 2,311, and we have managed to stay Adjusted EBITDA positive at EUR 2.9 million despite the adverse market condition on the pre-registered business. In the context, it's quite a performance actually. Now, if we move to the segments on the next slide, on slide 13, we have the detail by segment. All segments are growing except, of course, the B2C pre-registered business due to the complex environment that we were speaking of, Nicolas and I.
Regarding the refurbished business, the volumes have increased by 56%. The prices have increased by 22%, resulting in an increase of the turnover of the refurbished business of almost 100%, 91%. The revenue of the refurbished business has almost doubled. On the other hand, the pre-registered business have halved in terms of volumes. The prices have increased by 30%, resulting in a lower turnover of the business of 27%. B2B revenues have almost doubled. This is partly mechanical. As Nicolas has explained, we have scaled the C2B sourcing in all the geographies, and some of the cars that we buy from private customers are old, and we don't want to retail these cars, so we sell them to merchants.
Finally, on services, increased by 47% the revenue, fueled both by, of course, increase in the number of cars sold, but also by progress on the penetration of the different services. Now if we move on slide number 14, we take a look at the revenue per country. First, France, which is the largest geography of the group. The turnover has increased by 19%. This performance is generated by the very high growth, almost 50% of the refurbished cars. As you know, France is one of the two geographies that is very much exposed to the pre-registered business. This has, of course, impacted the growth. It is also exposed because now the refurbished business is over two-thirds of the business here in France.
In Belgium, the revenues have increased by 34%, mostly because of the refurbished business. Belgium is the other country which is impacted by the pre-registered business. The growth of the refurbished business which has been really massive has been fueled by the opening of the new refurbishing center in Antwerp in November, as Nicolas was saying. Also, by we have exposed the cars within the group geographies, enabling the Belgians to pick from the cars of other geographies to fuel their sales. In Spain, the revenues have more than doubled. This geography is not exposed to the pre-registered business, and this has been fueled by the expansion of our Villaverde refurbishing site near Madrid.
Finally, in the United Kingdom, there is a high growth in refurbished car volumes. Also, it's the geography where the price effect is the highest, and the combination gives a 69% increase in turnover. The teams have done an incredible job and have the record of the increase of C2B sourcing evolution. Now, if we move on to slide number 15, and talking about the gross profit per unit, we have generated a European leading GPU level, several times higher than some of our listed peers. For us, we are really convinced this reflect the strength of the business model. The lifetime value of a customer in our industry is very different from other industries, and we believe that this reflects the strength of our business model.
It's also the result of our team's work focused on the customer satisfaction and innovation for the customers. If we move on to SG&A now. The SG&A has increased as planned by EUR 92 million year-on-year, which is a 12% increase versus the H2 2021. As planned, we have maintained our marketing investment to drive traffic, to develop the brand awareness, and we have continued to invest in our brands. We have also built the teams to sustain the growth, the refurbished used car growth, and we have put in place the capacity that we need to further grow in the future. We have also strengthened our corporate teams at the headquarters, particularly in compliance, structuring, and control. We do not expect any significant increase of the SG&A during the H2 2022.
With the teams in place, we are operating at a level to sustain more growth. Now, if we move to the EBITDA picture, we have maintained a positive Adjusted EBITDA despite the adverse market conditions. You see the negative impact of the pre-registered volumes, EUR 15 million decrease versus the H1 2021. It was partially compensated by the growth of the refurbished used car volumes, but not entirely, which results in a EUR 2.9 million, as I was saying, a positive Adjusted EBITDA, which in the context of how fast the pre-registered business has collapsed, is finally quite a performance.
Moving now to the operating working capital, you will see that the working capital requirement has increased by EUR 86 million, mainly because of the inventory that we have built up to sustain the growth. There are three effects. One is the change in mix between pre-registered and refurbished used car for 58% of the increase of the inventory. There is an inflation of the cars. It accounts for 25% of the evolution of the inventory. Finally, we have decided to proactively stock the company to make sure that we were going to deliver the growth and to maximize the possibility of traffic conversion. This results in around 48 days of revenue based on the last rolling twelve month, and we do not expect this to exceed this level in the future.
We believe we can improve these figures in the future. Now, if we take a look at the change of net debt, well, it mostly reflects the change in working capital. That is the effect of the inventory increase. CapEx accounts for EUR 12 million, around half for IT, tech, and data investment, and the other half reflects the refurbishing capacity expansion. Now, in terms of situation, the financial situation of the group remains very sound. We are virtually without debt, and we have EUR 380 million of line that we can draw from, including EUR 120 million from Stellantis, which is, as you know, our majority shareholder.
This leaves comfortable headroom to finance our future growth, both internal and external, and fuel our ambitions. This is it for the financial highlights. Now if we move on to the outlooks, well, we are very confident in the potential of the group to grow. In view of the size of the market and all the capacity that we've put in place, we believe in a continued dynamic to grow the volumes of refurbished cars and are very confident in our ability to grow on this segment. On the other hand, on the pre-registered business, volumes will be affected until the situation improves on the production line of the OEMs, and we do not expect this situation to improve during the next months.
We do not believe that this business will pick up steam in the short term. Prices of the cars of all segments will continue to remain high, we believe, in the coming months until the situation probably normalizes a bit. We believe that we'll be able to maintain high European leading best-in-class gross profit per unit levels. Again, this reflects the strength of the business model. We have guided above EUR 2,150 at the IPO, and we believe we can sustain these high levels going forward.
All of our short, medium, and long terms guidances are reiterated, and we are really looking very much forward to the next month, working to satisfy our customers, working to expanding our business in Europe and growing, and even despite these particular market conditions. We have seen other period in the history of the company where the market context was difficult. Again, a message of confidence. Thank you very much for your attention. Now we will open the Q&A session. Operator, let's please start with the questions over the phone.
Thank you. We will now begin the Q&A. If you wish to ask a question, please press star one on your telephone. To withdraw your questions, please press the pound or hash key. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link. Thank you. The first question comes from the line of Christophe Cherblanc from Société Générale. Please go ahead.
Yes, good morning. I had two questions at this stage. First one is on financing. Guillaume, you said you were hoping to improve working capital in the future. From the 48 days that we have at the end of H1, what do you think would be a fair level? Are we going to go back down to 40-45, whatever? Does that mean that we should expect working capital inflow in 2023? Related to that, you had EUR 86 million of outflow in H1. What is your best estimate of the full year working capital? And more broadly speaking, you were insisting on your liquidity, but part of it is the revolving credit facility, which is dependent on the EBITDA covenant. You know, do you...
Should we expect more, you know, options such as ABS financing and that kind of thing to happen in the next few months? Last question on financing again. I understand you are going to buy out the Spanish minorities, so could we have the precise number? I think it must be about EUR 40 million, but I want you to have a precise number. Thank you.
Thank you, Christophe. Regarding the working capital. Yes, we are at 48 days. Again, it's the turnover of the last 12 months have grown a lot. This also should be taken into consideration. No, we are not going to grow above this level. We're not going to give you a precise number at this stage. We still believe we need to prioritize the growth. At this level, we believe we can comfortably say that we will not exceed that. We will not give you a precise number also for inflow regarding the working capital. We know it's very important to control our lead time, to decrease them.
This is something we are very sensitive to. Back in the days, when we set up the companies, this was one of the most difficult part. We have some experience on that. This is something we are tackling right now. Regarding the financing capacities, I did not mention, I should have, that we are currently exploring asset-backed securities, including with very well-known banks that you know of. Regarding the RCF, yes, there are covenants. This is under discussion. As I was saying, we have comfortable headroom, in particular with our majority shareholder, Stellantis. We're comfortable looking forward. Now, regarding the buyout of the Spanish founders, I think we can give the precise number, Alexandre.
It's EUR 35 million to buy out the 35% shares that was held by minority shareholders.
Okay. Thank you.
Thank you, Christophe.
Thank you. Next question comes from the line of Catherine O'Neill from Citi. Please go ahead.
Hi. Thank you. I've got three questions. The first one is just are you seeing any changes at all in terms of consumer behavior or demand across any of your markets? Maybe interest in different categories of cars, et cetera, trading down. Secondly, on SG&A, I think you said you expect the increase in SG&A in the second half to be limited. I just wanted to check, is that compared to the first half? Compared to the EUR 82 million in the first half. Finally, I imagine this involves a crystal ball actually. I just wondered if you have any sense of when you think new car production could start to pick up again, and therefore have a positive impact on your pre-registered and maybe actually, I guess, have a negative impact on used car pricing. Thank you.
Okay. Maybe I take the first question. Thank you, Catherine. If I well understand your first question, it was around do we observe any evolution in the customer behavior in our different markets? I will say yes and no. Yes, because of course, with inflation, with the increase of interest rate, with all the geopolitical situation, of course, this has an impact on them. Some of them could have questioned on is it the right time to change my car? We have also experienced a very high increase of prices on the used car market. Of course, at one stage, this is more complicated for our customers.
This does not help our customer to take the decision to buy a car. On the other hand-
They still need a car, they still need to change their cars, they still need a car to go to work or so. There is no changing that. We are used to that kind of situation where the economic outlook is not very good, and people are not maybe take more time to take their decision to buy a car. It's, for us, just a normal situation that we are used to.
Catherine, regarding your second question. What we're saying is that we have actually built the capacities to sell more cars. The collapse of the pre-registered business has been much faster than what everybody expected, including us. Basically, we didn't have the cars to sell, so we didn't sell these cars. Just to illustrate, it's like, you know, in a shop, we produced a lot of refurbished cars and we sold these cars, but we didn't have enough to put in the shelves for the pre-registered cars. Just to give you an idea, I have the figure in mind for France, our offer of pre-reg cars is twice lower than last year. These conditions is very difficult to maintain the volumes.
We do not expect the SG&A figures for H2 2022 to be above EUR 92 million, which is the figures that we have just communicated regarding the SG&A. Finally, on your last question on the new car production. Unfortunately, I don't have insider information. What I understand is that the situation will not improve before at least 2023. We have some different comments by OEMs. The situation will probably not normalize before 2023. We are working internally, looking at. We are not counting on a brightening of the situation regarding this business in the short and medium term. Did I answer your questions? Did we answer your questions?
Yeah, that's really helpful. Thanks. Actually, I just had one sort of short follow-up. I know you've also commented you expect the used car pricing to remain elevated around current levels. I guess we're starting to see used car pricing come off a bit, well, in the U.S. particularly, but even in the U.K. I assume maybe that's a sign of some softening demand. I just wanted to understand a bit more behind your assumption that used car pricing will remain elevated at these levels and whether there's any risk to that.
Nicolas can comment on top if he has something to add. What we can say, if you look at the index of prices in January 2021, and you consider it's 100. Recently it has been 110 in France, around 120 in Spain, and 130 in the U.K. Actually, it peaked at 132. It's now almost 129. We are seeing a bit of flattening of the curve. It's very difficult to do you know a prediction on in this field. We do consider that the prices will remain high in the short term. Probably, they will slightly decrease in some geographies. We are seeing it in the U.K., but it's difficult to tell you more, actually.
Yeah. Okay. No, that's helpful. Thank you.
Thank you. As a reminder, if you wish to ask a question, please press star one. The next question comes from the line of Edouard Aubin from Morgan Stanley. Please go ahead.
Morning, everybody. Thank you so much for taking my question. I just wanted to go back to sort of the 2025 and 2030 targets, and going through those in my head yesterday. Three questions on the back of that. Slightly longer term, and I think you've been addressing some of those already in some of the questions we've had. Firstly, on gross margins, you know, obviously the mix has deteriorated on that. But frankly, although 80/20 may be a little bit unusual and at some stage the pre-registered business in total might come back, should we not think that the business mix is going to mean that those gross margins stay a little bit lower? And what can you do to recover them? The second question is on SG&A.
You know, the SG&A was largely in line with revenues, obviously in line for future growth. I don't have a major problem with that, but obviously was a big chunk relative to the lower gross margin. To what degree do we think that SG&A is gonna grow with revenues, going forward? You've given the answer for the second half of the year, but what about 2023, 2024, 2025? Because the SG&A really has to slow down to be able to get those margins back to 3%, at EBITDA level for 2025. Then the last question, again, you've answered it very short term, but I was looking a little bit longer term.
Working capital, you know, 48 days, maybe that can come down a little bit, but obviously we're still looking for revenues to grow by nearly 50% or over 50% by 2025, and then double again. You know, I mean, that still seems to require a lot of working capital funding. Can you talk about that a little bit more and how are you gonna fund that, please?
Okay. Maybe I can start with number one and number two. Alexandre, maybe you want to maybe give us some color on number two. Nicolas, you want to take number three? I can complete. I mean, at least regarding the number of days. Well, regarding the gross margin. First, the GPU is very comparable. There is no significant difference between the gross margin per unit between pre-registered cars and refurbished cars.
This doesn't really have an impact on the volume of gross margin that is generated. Regarding SG&A, well, we have answered the question on the short term. On the medium term, there is a component of kind of fixed SG&A and variable SG&A. Maybe Alexandre, you want to give some color on that?
Sure, definitely. Just to help you to model the operating leverage in the SG&A. Within the SG&A, you have roughly 60% fixed cost and 40% of variable cost. The variable costs are mostly linked to the marketing expenses and some downstream logistics, sales costs. The fixed costs are mostly linked to the headquarters, I would say, overhead costs, the network of customer centers, et cetera, et cetera. This should allow you to project the SG&A over the next years. I will add something that is also interesting from the analyst side, within the COGS. We're talking about the GPU. Within the COGS, 90% of the COGS are the cost of the car itself.
This means that 10% of the COGS are the industrial costs. Within this industrial cost, you have two-thirds of variable cost and 1/3 of fixed cost, okay? This is like the overall targeted structure we see in Donzère, so in our state-of-the-art best European factory, and the level towards where all our refurbishing centers should converge when they all get the same level of maturity and productivity.
Maybe I can start to answer to the third question regarding the number of days of working capital. If we project to 2025, 2023, of course, this will be very much improved comparing to those 48 days. You know that historically, we've been far better from that. It has not, honestly, been a huge focus in that last period for many reasons. Guillaume explained that we in a market where it's very difficult to find cars, we are more open to keep cars in the inventory, to buy more cars, to take more risk on cars, and first and secondly, this has also helped to fuel growth.
Definitely, the DNA of the company is to be very, very efficient on the working capital requirement. Again, we have proven that during the 21 years of our operations. We have developed the business up to a very high level with very low capital. There is no reason why we will not continue that, because we strongly believe that this is how you make this business a lot of value. This is how you make this business. This is a really important lever to create value in this business. We also are very strong and we developing our business in new countries and acquiring new countries, working with new teams, we also realize how strong we are in the practice of improving the working capital requirement.
This is really something we did not fully realize because we learned to do it very efficiently. We realize when we go to other companies that the strength that we have is not in the other companies, and we can bring it to them. This is what we do with our last acquisition in the U.K. As you can imagine, with all, as I have said, we definitely this must be improved, and this will be improved, and not just a little bit. Now, how will we finance our working capital requirement? I don't know what we say today about that.
On that, just what Nicolas is referring to is sometimes we name it our business logic. We bring this kind of business logic to the new countries. Regarding the financing, I think we have a lot of options. First, we do not intend to remain at this EBITDA level for a very long time. This is what, to be frank, we expected. I think we have a lot of option, including asset-backed securities, which as you know, can grow with the inventory. We have a history of financing our growth with low capital.
We grew the business from EUR 360 million in 2017 to at least EUR 1.7 billion today with a very frugal level of capital, at the very least when you compare to some of our peers. We are confident in our ability to finance it.
Thank you. Can I just add two quick follow-ups on that? On the gross margin, obviously I saw the GPU, but the fact is obviously relative to a higher price of the car and therefore the revenues per unit, the margin dropped from 14%-11%. Is that really just the margin between the buying and selling of cars then, if it's not the mix? Maybe I've misunderstood that. That's my first question on that. Then the second, on the SG&A, thank you for that help. That was very helpful on the operating leverage. Obviously the fixed cost on the SG&A did go up a lot in the first half. Should we expect that fixed component of SG&A to be more constant now at this current level?
Yes, definitely so. The point is that as you spotted well, you have the marketing part variable that went up. The downstream logistics that went up together with the volumes and also the fixed cost part that increased because as said Guillaume earlier, we staffed at the corporate level since we IPO-ed and also we employed some guys in particular to sell more cars. This part is where we're going to contain the growth and we won't reiterate the growth rate, sorry, you saw over the last year. That's the first point. What was your second question, sorry?
Just on the GPU. I saw that you had a flat GPU, but obviously the revenue per unit is up a lot, which means that the gross margin is down from 14% to 11%. So I'm just wondering what drove that. If the pre-registered and the refurb gross margins are roughly the same, then why has the gross margin gone down? Is that just the margin between buying and selling? Or what am I missing?
Where you actually missed the point here is that the price is a pass-through in this business. Meaning that, if the overall prices of cars increase, we got it in the top line, but also in the COGS. Virtually to be a bit caricatural, the price we buy the car, taking the price we expect to sell the car, minus the refurbishing cost, minus a targeted margin, equal the buying price. If you take a private car, the refurbishing cost is virtually zero. You get my point? This is why we can generate a targeted margin that is fairly homogeneous over all the cars in terms of models, in terms of how old or not they are, et cetera, et cetera.
The variable of adjustments is how aggressive we are when we bid on the car. Get my point? This ratio you're talking about gross profit out of top line by definition, because the top line gets the full price effect, which the GPU, GP, sorry, doesn't, gross profit doesn't take into account, and it's the same for the EBITDA, makes that this ratio. You know, you understand you have just. You're dividing by your sales that are the price effect, something that has not the price effect inside. You get my point? That also explains, it allows me to bridge to a question over internet that asks how we decreased to 0.3. To 1.5% target, targeted EBITDA margin to 0.3.
First of all, of course, the overall EBITDA decreased in amount, in millions of euros. Besides that, you have this ratio effect that makes that even if we would have done the EBITDA originally planned at the beginning of the year, which was roughly EUR 25 million, out of a top line with a price effect that is not reflected in the EBITDA, the ratio would not have been 1.5%. You follow me, I guess.
Yeah. I guess we were thinking about the margin as a percentage of revenue when you're talking about a flat margin per car. Maybe that explains the effect. Thank you for that. I mean, sorry, just as a follow on though, does that mean that we should now forecast going forward at, sort of, that 11%? You know, i.e., the GPU stays the same even though the revenue per unit has gone up. Is that correct?
It's difficult to give you a fixed answer because there is also another effect. As the mix of pre-reg, pre-registered cars are more expensive than a refurbished car for a private customer. You also have this effect to take into account. It's difficult at this stage on the 2025-2030 horizon to give you an answer because to be frank, we don't really know how the prices will. We think they will stay high in the coming months. At one point, they will decrease. To tell you when, it's a bit difficult. I'd like to.
All right. Okay. Thank you.
I'd like to come back to the commitment the company made at the time of the IPO. It was a GPU fairly stable around EUR 2,150 per car. This is the info that was communicated. We go back to the margin per car you are mentioning, and this is what the company commits on. From there on, if you assume something like that, you can estimate the overall gross profit in millions of euros and how much it is able to absorb in terms of cost structure.
Right. Okay. Thank you.
Thank you. Next question comes from the line of Christophe Cherblanc from Société Générale. Please go ahead.
Yes. Hi again. Two quick ones, just on pre-reg. I think you mentioned that today you had 50% of the supply you had a year ago. Should we assume that 50% or about 3,000 cars is the absolute minimum, the trough that we're going to see as long as the current market situation goes on? That was the first one. The second one was on Spain. Spain was outstanding again. So can you explain what's happening in Spain? Are you getting close to capacity on your Villaverde center? Will you need to open a second center anytime soon? Thank you.
Maybe I can answer the first one and take a shot at the second. I'm not sure I understood your question on pre-reg. What I said is that if we take a picture of last year and now, we have roughly twice as less offers on the website in France for the pre-reg. You have seen that we have sold basically twice less cars to simplify. We don't expect
For the next month, our sourcing will become easier for the pre-reg. There will be a minimal level, but we don't know exactly if we touch the bottom for the moment.
You could say it's worse and worse on the pre-reg.
Yeah.
Because it's just following the production of the OEMs. Regarding Spain, yes, H1 has been very good again. We can say that we have the Villaverde production center has been a boost. We'd say it's at its best. We also have been very aggressive in the growth in Spain during this period. Well, of course, we can say that we are going to reach a tipping point regarding the production center in Villaverde, because you cannot improve it with no limit. There is no announcement yet to make regarding the opening of another center.
Okay, thanks.
Thank you. Next question comes from the line of Mourad Lahmidi from BNP Paribas Exane. Please go ahead.
Yes, thank you for taking my question. I just want to come back on your answer on the pre-registered level, because I didn't really hear what you said. The 3,000-ish units that you sold in Q2, could that go to zero? Is there a scenario where you would sell no pre-registered car? That's the first question.
No, let Nicolas add on that. No, there is no scenario where we sell zero cars. What I'm saying is that we're not taking into account an improvement of the situation. It's difficult to give you a figure for going forward because it really depends on how the production lines of the OEMs evolve. Last time we spoke, there was no, I mean, there was no war in Ukraine. Of course, this is a very dramatic situation, and this is just an aftermath, and it's not very important, but it has had a big impact on the OEM.
The level will never reach zero, but to tell you that it will maintain at this level, we can't take this commitment at this stage.
Okay. A follow-up one. Once the OEMs restart production and things go back to normal, I don't know when, but once this happens, I think that you are probably not their priority. How long does it take for your pre-registered division to come back to pre-crisis level once things go back to normal? Either a matter of months or a matter of year?
What we think, it's something like six-12 months, just because, you know, you have a strong backlog of cars to be delivered from the OEM. If you are a private customer and you want to go to an OEM and order a car today, it's probably something like six months delivery time, maybe nine months if you want the Peugeot e-208, I think. Then even some OEMs, they have decided to stop taking orders from customers. We can imagine that they will have a strong backlog to deliver, and, as you say, we will not be their priority because it's, we are not the higher margin cars they sell.
We consider that when situation will be back, kind of more or less back to normal, we'll have to wait still six-12 months before we will be able to get some more pre-reg cars.
The situation will go back to normal at one stage, but it's difficult to tell you when. The positive aspect of it is that we are focusing even more efforts on the refurbished used car growth, and now it's 81% of our total volumes.
The other positive, it drives. Catherine asked us earlier if we see some changes in the behaviors of our customers. This scarcity of new cars drives our customers to refurbished used cars. It's not exactly the same as a pre-reg or a new car. If you cannot order from an OEM and you need a car, the refurbished used car is a very good solution for you. This is an opportunity also for us.
Thank you very much. A follow-up one on your SG&A going forward. You probably beefed up your sales teams to cope with upcoming growth. Are you expecting such an SG&A increase next year? I know it's probably too early, but just to have a sense of where the margin should go in 2023, assuming current market conditions stays the same. Is it going up?
Yeah. We're not going to give you a figure right now because it's too soon to give you a direction. What we can say is that we believe we can continue to grow on the refurbished used car business, that we have beefed up the team. We should be able at this level to sell more cars. We are constantly working. We were discussing that yesterday with Nicolas on waste, because we saw some cost-cutting thematics in some other peers. Actually, we are always working on the waste, and we're trying to be more efficient.
Today, we're equipped with more than what we need to do the volumes we are doing now. Plus, we know we have some productivity gains that we can do. I won't give you a direction for the moment for next year. It's a bit too soon.
Okay. Sorry, just the last one. You show on your slide the 132,000 capacity in terms of your reconditioning centers. When do you think you can fully use this capacity given the current ramp up?
As soon as possible. We're not going to give you a figure either on the growth of the refurbished used car business. This figure, and we're very happy to open this center in France and everyone in. There are three things we are doing, and Nicolas knows this better than me, but we are opening new sites, we're expanding the current ones, as we have done in Villaverde, and we're also improving the performance of the current ones. This 132,000 is a reflection of these three factors.
Okay, great. Thank you very much.
Thank you. There are no more questions on the phone lines. I would like to hand back over to Alexandre for the web questions.
We have a few questions on the internet. There's a question on the covenants to start with and on our capacity to draw on the credit lines. The covenants are 3.5% of the last 12 months trailing EBITDA to make it easy. These covenants apply to EUR 200 million out of the EUR 380 million of credit lines we have. We're already working, of course, on the topic as I think the alternative, we might have to replace that line. In any case, this leaves EUR 180 million worth of line without any covenants. That is like, as Guillaume said previously, more than enough to finance next year growth, both internally and externally.
This is for the covenants. There is another question on the governance. Investor is asking to clarify why one is CEO, the other one is deputy CEO, et cetera. Just for your knowledge, there is in place since if I'm not wrong, the inception of the company, a rotation scheme between Nicolas and Guillaume. That is one CEO a couple of years, then the other one CEO a couple of years, et cetera. It happens that from a strict legal point of view, at the time of the IPO, it was your turn, Nicolas, to be the CEO. Nicolas is officially the CEO of the company and Guillaume the deputy CEO of the company.
This is pure, I would say, from a legal standpoint, because internally, we're not organized like that. Each one has his, like, I would say, expertise, but they would better elaborate than me on that point. This for the governance. As for the investor that might be worried about capital increase, I can say that this is absolutely not on the table as of today, given the level of the stock. We all perfectly acknowledge that there are other way of funding that must be favored in current environment and given the level of the stock Guillaume mentioned we are thinking about ABS, I mean, securitization of stock.
There are several other possibilities that are currently being assessed and that are like fairly common across the industry. With that, we answered all the questions online, given the answer we also gave before.
Okay. Any more question over the phone? Maybe.
There are no more questions on the phone lines.
Okay. Well, thank you very much for your attention and for your questions, and, we look forward to speaking again, in the coming month.
Thank you very much. Have a very nice day.
Thank you.
Bye.