Ladies and gentlemen, welcome to Ayvens Q2 2025 results conference call. Today's speakers will be Tim Albertsen, CEO, and Patrick Sommelet, Deputy CEO and CFO. I now hand over to Mr. Tim Albertsen. Please go ahead, sir.
Thank you. Good morning ladies and gentlemen and welcome to this Ayvens Q2 2025 results conference call. As at previous calls, I'm hosting this call with Patrick. First I'll present the highlights of the second quarter and then Patrick will comment on our financial results. We'll then, as always, take your questions at the end. Let's go straight to slide 5 on our financial highlights. Ayvens has posted strong financial results for the second quarter, continuing on the positive trend in the first quarter despite an overall subdued environment. They reflect the disciplined execution of our PowerUP 2026 strategic plan with increasing revenues and constant reduction in operating expenses, margin stood at high level at 550 basis points versus 539 basis points in Q2 2024. Used car sales results after depreciation adjustment per unit stood at EUR 972, up 57% compared to Q2 2024.
It benefited from a sharp reduction in depreciation adjustments due to the end of the PPA amortization in Q1 2025 and lower release of prospective depreciation. Conversely, used car sales results before depreciation adjustment has decreased compared to Q2 2024 and stood at EUR 1,234 versus EUR 1,480 in Q2 2024. These strong revenues combined with the continued reduction in operating expenses resulted in a cost/income ratio of 57.6%, down by 4.3 percentage points versus Q2 2024. Over H1 2025, cost/income ratio stood at 57.8% in line with our guidance for the full year 2025 of between 57% and 59%. As a result, our net income group share stood at a very high level at EUR 271 million, up 39% versus Q2 2024, corresponding to a return on tangible equity of 13.7% versus 10.1% in Q2 2024.
This level of net income has been supported by the strong used car sales results. Going forward, we expect normalization to continue in line with our guidance for the full year 2025. On the balance sheet, our CET1 ratio stood at 13.5% at the end of June 2025, showing an increase of 30 basis points versus March 2025, mostly driven by a decrease in our risk-weighted assets on which Patrick will provide more color when detailing our financial performance. Let's turn to the next page on key strategic developments for the second quarter. Integration is advancing according to plan with IT and legal mergers further progressing this quarter and covering now approximately 70% of the group. Synergies are ramping up as planned, reaching EUR 146 million in H1 2025 in line with our annual guidance of EUR 350 million for the full year.
Now that the PowerUP 2026 strategic plan is well advanced, I have announced my retirement on 1st December , 2025. A smooth management transition has been secured by the Board with the appointment of Philippe de Rovira as CEO of Ayvens starting December 1. Philippe is a seasoned executive in the automotive and leasing industry, having held various positions in business and finance at Ayvens over the past 27 years. Thanks to his strong background and the support of the executive team, I'm sure that he will be successful in leading Ayvens in delivering the PowerUP 2026 plan and embracing the next step of strategy and development of Ayvens in the coming years. Last but not least, ex-LeasePlan shareholders have started to sell their stake in Ayvens as expected through two successful accelerated bookbuilds performed over Q2 2025.
Altogether, they sold around 90 million of their shares to both new investors and existing shareholders, and they now hold around 18% of Ayvens capital versus 29% before these two transactions. Ayvens free float has now increased to 30%. Subsequently, trading volumes are trending higher and Ayvens was included in the STOXX Europe 600 Index in June, contributing to the increased visibility and trading of our share. Let's now turn to fleet and earning assets. The overall economic environment in Europe has remained subdued over the last quarters, also impacting the dynamics of the mobility industry. New car deliveries for passenger cars in Europe are down 2% in H1 2025 compared to H1 2024, remaining well below pre-COVID levels, and demand for leasing products from corporates is less dynamic, also affected by changes in taxation regimes across Europe.
Against that backdrop, we are not seeing yet the results of the commercial actions that we have launched to assume profitable growth in Q2 2025. Our total fleet is down 4.5% compared to Q2 2024, still reflecting the comprehensive review of our client portfolio in 2024, and as a consequence, earning assets are slightly decreasing, standing at EUR 52.9 billion, down EUR 300 million compared to Q2 2024. If we exclude the three businesses under restructuring, namely U.K., Turkey, and the subscription activity in Germany, earning assets were up 0.7% and up 1.1% when further excluding negative forex impacts, underlining that earning assets are still supported by a significant price effect even if lower than before. In terms of deliveries by powertrain, EV penetration reached 43% versus 39% in Q2 2024, with full electric at 30% and plug-in hybrid at 13%.
As indicated in previous quarters, a series of commercial actions have been launched to fuel future profitable growth. Let me now turn to the next. Slide and give you some color on. Our Australia and the retail segment, which has a strong growth potential on top of our core corporate client franchise that represents close to 66% of our activity. Ayvens benefits from a wide and well-established retail network, with retail clients representing about 1/3 of Ayvens' funded fleet, of which 65% to SMEs and 35% private individuals. We addressed this retail segment through three channels. First, through 18 partnerships with OEMs, both well-established brands and promising new market entrants, representing 42% of our retail fleet. Second, indirectly through more than 400 partners such as banks, insurance mobility providers, and brokers, representing another 42%. Finally, directly under the Ayvens brand and platforms, representing the remaining 16%, with the Ayvens brand now rolled out across the group.
Our plan is to develop our direct reach with retail clients, offering us full client ownership with greater cross-selling and upselling opportunities and better margins on a growing market segment. For that purpose, we have extended our product offering to meet distinctive and evolving mobility needs for SMEs and private individuals. Besides, we have scaled up our capabilities to develop our direct retail channel with dedicated teams, digital assets, and online offering in our core markets. We are well positioned to capture retail growth opportunities and will continue to develop our capabilities further. I also expect that Ayvens can benefit here from Philippe's vision and experience in leasing to retail clients. I now hand over to Patrick to comment on our strong Q2 2025 financial performance.
Thank you Tim and good morning to all. I will start with a few words on our revenues on slide 10. Ayvens posted very strong revenues in Q2 2025 with gross operating income amounting to EUR 855 million, up 9% versus Q2 2024 and up 4% versus Q1 2025. These revenues were driven upward by both increased margins and higher used car sales results. Margins stood at EUR 712 million, up EUR 25 million versus Q2 20 24.
Impact of non-recurring item, mostly hyperinflation in Turkey, reduced to - EUR 19 million versus - EUR 27 million in Q2 2024. Underlying margin were up EUR 17 million compared to Q2 2024 at EUR 731 million. UCS results from depreciation adjustments were up 46% versus Q2 2024, reaching a high level of EUR 143 million, highlighting the cash flow management of residual values we have put in place over the last two years as shown on the graph on the right-hand side of the slide. This strong EUR 45 million increase result is a result of two opposing trends. First, a EUR 53 million decrease in used car sales with us before depreciation adjustments, which stood at EUR 181 million versus EUR 234 million in Q2 2024, and then a EUR 98 million decrease in negative depreciation adjustments amounting to - EUR 38 million versus - EUR 136 million in Q2 2024.
As Tim mentioned earlier, PPA impact on UCS ended in Q1 2025 and the release of prospective depreciation is gradually reducing. Let's now turn to the next page on margin. Underlying margins were robust and stood at 550 basis points in Q2 2025, up 11 basis points versus Q2 2024. They were underpinned by the ramp up in procurement and insurance synergies. Compared to Q1 2025, margins are down 12 basis points. As explained last quarter, margins were supported in Q1 2025 by a very strong performance in all the services components, which have come down a bit in Q2 2025, especially on short-term rental revenues as well as fleet management and maintenance revenues. From that perspective, Q2 2024 is more in line with the normal quarter.
On the other hand, leasing margins have increased, benefiting from our actions to restore margin and lower reserved values and EVs, leading to higher financial revenues. As indicated in previous quarters, the swing between the various revenue lines from a quarter to another are also partly explained by accounting alignments taking place across the organization along with integration. Overall, margins were strong in H1 2025 at 557 basis points versus 531 basis points in H1 2024. Let's move to the next page. The UCS results and depreciation adjustments reach EUR 143 million versus EUR 98 million in Q2 2024. This is a high level that compares well with the industry, mainly driven by lower impact of depreciation adjustments.
With the end of the PPA amortization in Q1 2025 and lower relief of PDE over the last 3 quarters, our result per unit before depreciation adjustment has remained almost stable overall, marking an apparent pause in the UCS results normalization. Behind this trend, there are strong disparities between portfolios. While ICE UCS results remain strong this quarter, BEV UCS losses are not improving on the back of new BEV prices evolution, notably in the U.K. As indicated earlier by Tim, normalization of used car sales results is expected to resume in line with our full-year guidance, notably driven by the growing share of EVs in our fleet. Going forward.
Volume sold were down 11,000 units versus Q2 2024 at 147,000 vehicles. The decline is mostly explained by the lower number of cars that are being returned at the end of the contract. Indeed, these cars are mostly 2020 to 2022 vintages and as you may remember, production in those years was negatively impacted by supply chain disruption following the COVID crisis and to some extent to the start of the war in Ukraine. Let's turn to the next page on operating expenses. Total operating expenses are trending down, showing a decrease of EUR 28 million compared to Q2 2024. If we look first at underlying costs, they were down EUR 21 million versus Q2 2024. This is a decrease of 4.8%. Cost synergies have gained momentum as IT migrations and legal integrations are being executed in late 2024 and early 2025.
This is delivering savings increasingly and according to plans, continuous free cost monitoring across the organization also helps drive down operating expenses. This cost decrease combined with higher margins has led our cost/income ratio to 57.6%, down by 4.3 percentage points compared to Q2 2024. Cost to achieve amounted to EUR 26 million versus EUR 33 million in Q2 2024. In line with plans, our CTA over H1 2025 amounted to EUR 61 million and as a reminder our guidance for the full year is between EUR 115 million and EUR 125 million. Let's turn to the next page with the rest of the income statement starting with cost of risk. As depicted on the left-hand side graph, the cost of risk is trending a bit lower than previous quarter. That's EUR 27 million. This represents 20 basis points of average earning assets versus 23 basis points in Q2 2024.
Profit before tax stood at a strong EUR 386 million, up 38% versus Q2 2024. As a result of higher margin, lower depreciation adjustments in the used car sales result and also lower operating expenses as we commented and lower cost of risk, effective tax rate stands at 29.5%. It is in line with our indication for the year and the net income group share is strongly up at EUR 271 million, an increase of close to 39% versus Q2 2024. Let's now turn to our final slide on capital and RWA. As Tim alluded to at the beginning of our presentation, RWA were down EUR 900 million, standing at EUR 55.8 billion versus EUR 56.7 billion in Q1 2025. This decrease results mainly from the four following factors. First of all, the lower earning assets were down EUR 200 million. This is linked to the evolution of the balance sheet.
Second, the market risk-weighted assets which result from the net equity position in subsidiaries outside the eurozone were down EUR 300 million versus Q1 2025 due to intragroup dividend distribution from these subsidiaries, Turkey representing around half of this decrease. Further, RWA on cash deposit declined by EUR 200 million. It's a decay of our deposits indeed. Lastly, RWA on Ayvens Insurance were EUR 200 million lower due again to intragroup dividends, reducing its net equity position. That leaves us with a CET1 capital of EUR 7.5 billion at the end of June 2025. Our CET1 ratio stands at a high level of 13.5% versus 13.2% at the end of March 2025. This concludes our presentation. Thank you for listening. We are now ready to take any question you may have.
Ladies and gentlemen, if you wish to ask a question, please press star and one on your keypad. Please ask your questions in English. The first question is from Jacques- Henri Gaulard with Kepler Cheuvreux. Please go ahead.
Yes. Good morning, gentlemen and team. Congratulations on your retirement. Although we'll probably hear from you later. Lucky you. Two things. The first one is on excess capital. I remember that you linked the usage of the excess capital to the conclusion of the FCA motor finance case. We know that the Supreme Court is going to give its view on Friday, actually tomorrow. Is it fair to assume that we should have a decision quickly after that? The second point is, I appreciate that you gave a bit of guidance for some of the metrics during the call, but you didn't really repeat them in writing. Does it mean that for the outlook generally you leave that to your successor? Should we assume nonetheless that the 2025 guidance is still valid, more or less? Thank you very much.
Thank you. Thank you, Jacques. Yeah, so on your first question, it's true that tomorrow after the market closing, we expect the Supreme Court to give their ruling. It is anticipated that the FCA will come back in September, basically, on how to execute the verdict. We will, first of all, have a direction tomorrow evening, which is good. We anticipate having more clarity by end of September, early October. You're right, excess capital decisions will not necessarily be taken before we have clarity on the U.K. case, on the guidance. First of all, we have a policy of giving guidance once a year and we have not stated it this time. It doesn't mean that we do not keep our guidance for 2025. We are still in line with that. It is fair to say that probably one of the next questions will be about the growth of NEA.
Obviously, the main guidance that has been given is still within reach and we have built ourselves flexibility on all the other metrics if we do not see that the market is coming back to growth, basically. Yes, guidance for 2025 and for that matter for 2026 is confirmed still.
Thank you.
The next question is from Sharath Kumar with Deutsche Bank. Please go ahead.
Good morning. Thank you for taking my questions. I have three, please. Firstly, on margins, I hear you when you speak about the moving parts within leasing and service margins. Do you think going forward, is it fair to expect further softness given that you would expect to resume fleet growth? Any guidance on margins from here would be helpful. Also, we saw some softness in service margins in the third quarter. Is it likely to repeat this year as well? That is the first one. Second, on used car sales results, I again hear your comments on seeing a faster normalization going forward, increasing share of EVs, etc. Even considering this, I feel that your full year guidance of EUR 700- EUR 1,100 is conservative. What reasons have prevented you from upgrading this guidance?
Lastly, just on the succession, what has been the initial feedback received from investors and clients on the new CEO? Can you talk about transition plans that we can expect in the second half? Thank you.
Thank you, Sharath. I'll let Patrick comment on the margins, but let me just do the used car sales and the succession plan first. On the used cars, there's quite a different trend in the market. Overall, it looks pretty good, as you mentioned. What we see is the ICE cars and the hybrid cars are performing extremely well, and we anticipate that to keep going. We are seeing that the BEVs are actually trending a bit worse now. It's quite specific markets. I think Patrick mentioned the U.K., which is a real problem, to be honest. Overall anticipation is that I would say ICE cars remain strong, and the hybrids for that matter. As you know, we will have a bigger portion of BEVs coming through, and we have not seen an improvement there yet. Obviously, we expect to see that normalization coming through.
The EUR 700-EUR 1,100 is still a valid guidance on that point. On the succession, first of all, this has been obviously planned well. The board have had time to go through proper selection process, and I think the choice of Philippe has been very well received. I think it's well received that it's an executive coming from the automotive industry. Personally, I think that's also very good. When we look five years ahead, the transformation in the automotive sector is quite significant for the time being, and obviously it will have an impact on our business as well. Hence, having a deep understanding of how the automotive industry will evolve over the next five years is certainly a plus. Again, the feedback both from clients, partners, and the markets have been positive. Also, it has been done in a very orderly manner. I think that's important.
Patrick, on the margins.
Yes, thank you for the question. Indeed on the margin. We had indicated in previous calls that forward integration we were aligning the accounting practices and the accounting classification, the various types of revenues. This is explaining this quarter a bit, not all of it, but a bit. The lower service margin that we have had representing approximately EUR 20 million from Q1 to Q2 and from Q2 to Q2, it's between the margins revenues. It's also between service margin and UCS as we have aligned the classification on some fees which are earned through the sale of UCS cars. It's something which needed to be done. It is behind us now. We might still go through some alignment in the following quarters, but expected at lower level. It should not be noticeable going forward and that has taken place.
Apart from that service margin, I think I indicated on the call on Q1 that all the subcomponents of service margin in Q1 were at record level this quarter. Some of them, and it's really business as usual, are a bit weaker. That's explaining the other part of the weaker service margin that we have in Q2. It's not something that we can predict or we can say it will reproduce or not, it will come again or not. It is clearly visible this quarter despite the extraction also of higher synergies. I think you have question as well. You have questioned us as well in Q3, which obviously stage I cannot comment as the month of July is barely over.
Thank you.
The next question is from Geoffroy Michalet with ODDO. Please go ahead.
Thank you. Congratulations for the results. I have two questions on UCS. The first one is if you could give us a bit of help on the mix element in the Q2 UCS results. I mean, has the share of EVs resold this quarter gone down versus previous quarter, for instance, that would have been a support for the overall margin per unit. The second question, also linked to UCS, is can you give us some element to appreciate the range of profit that you are making on ICE per unit and a range of loss that you are making on EV? Thank you very much.
Thank you, Geoffroy. To be honest, we don't really give numbers on the different powertrains, but obviously let's say the ICE cars are trending still very high compared to the past, mainly driven by natural. I think we mentioned that before. The supply and demand situation is that there is still obviously less ICE cars, used ICE cars for sale. Also, the manufacturers have stopped producing the segment A cars like the Fiesta, Corsa, these kind of cars, which means that the entry level pricing is high and it means that people typically are buying maybe a used car instead, which helps the ICE cars to perform really well. I would say structurally we believe for at least the next 12 months- 18 months. As I mentioned, on EVs it's not a clear picture. It's quite specific to markets. The U.K. market is particularly badly hit because of big volumes and batteries.
Also, the fact that we cannot bring these cars elsewhere, they stay in the U.K., you have to sell them in the U.K., whereas in mainland Europe we are actually, I think we said that before as well, we are cross-border selling typically up to 50% of our EVs and bringing them to the markets where we obtain the best prices. The more mature the EV markets are, the better the performance is. Typically in the Nordic countries you actually see already a kind of maturity of the EV markets and people looking for used EVs. That's not the case in Germany, it's not the case in France, it's not the case in Italy and Spain yet. We expect that to come, but we don't necessarily expect a big improvement on the website for the time being.
To your question, we have been taking more and more EVs into the fleet since 2020 or 2021 and the number of EVs going through the used car sales is increasing. The majority of our sales is still ICE cars. I hope that answers your question.
Just maybe. To help us understand better, are we speaking about a couple of hundreds of lots or a couple of thousands of lots on EV?
We talk in thousands.
Okay, thank you very much.
For any further questions, you may press star and one on your telephone. Mr. Albertsen, there are no more questions at this time. The floor is back to you.
Okay, thank you very much for listening. Thanks for the questions. I think from our side we want to wish you all a nice summer vacation. Of course, if there are any further questions, you can always address our investor relations teams who are ready to answer any question you may have. Thanks a lot and have a good summer.
Thank you very much.
Ladies and gentlemen, this concludes today's Ayvens conference call. Thank you for your participation. You may now disconnect.