Welcome to the Valeo Q3 Sales Conference Call. I now hand over to Mr. Christophe Périllat, CEO of Valeo. Sir, please go ahead.
Thank you and good evening, everyone. Thank you very much for attending the call. Today I'm joined by Robert Charvier, our CFO, François Marion, who is Group Communications Senior VP, and Cyrille-Clémentine Accors, Investor Relations VP. The call will last 45 minutes sharp, including 16 minutes of presentation and 30 minutes of Q&A. Let me start. In Q3, our sales rose by 33% compared to the third quarter of 2021. I think it shows a strong growth and it demonstrates once again the relevance of our positioning and our growth potential. Like for like, OE sales grew by 24%. On a pro forma basis, it means after adjusting the Q3 2021 figures for the high voltage business formerly known as Valeo Siemens eAutomotive, like for like growth comes out at 26%.
You remember that during the presentation on February 25th of our strategic plan that I called Move Up, I talked to you about two points. Point number one, the acceleration in electrification, and point number two, the acceleration in ADAS. Our high voltage sales are up 61% over the quarter, and our ADAS growth is strong at 53% with growth in Europe, in China, and in North America. We walk the talk. On top of that, we have one more time a very good momentum in aftermarket sales. Now, looking towards the end of the year, we saw an acceleration in our business in September vs July and August. We see in Q4 the same trend as in September.
Therefore, with this in mind, and despite the electronic component crisis and the impact of the estimated increase in energy prices, we remain confident that we will achieve our 2022 guidance. Using the slideshow that you have received, I propose that you go on page four to look at the highlights of the last quarter. You know already that Valeo Siemens was integrated within our Power Train Systems business group. That was July 4. We are very pleased with the integration, which places Valeo among the leaders in high voltage electric Power Train Systems at the exact time when the electrification is accelerating. On July 12, at the Eurobike Show, we presented our new fully evolved electric assistance solution for electric bikes with already 20 customers. The technology places Valeo at the very center of new solutions being developed for urban mobility.
The production of this new solution, which is called Cyclee, began in October. In October, we also announced record order intake with two contracts for our Thermal Systems dedicated to EV. A new order for Stellantis with a new smart heat pump and a major order with a leading European automaker under which we will supply the air conditioning unit and the front-end cooling module for EV. Including these two orders, we have secured more than EUR 4 billion for Thermal Systems for EV since the beginning of the year, and it accounts for more than 70% of the business group's order intake for Thermal. As I said, we are accelerating in electrification.
We have as well in the last few days signed two important partnerships, one with TotalEnergies on the development of an innovative way of cooling EV batteries using a quite new and high performance fluid. Also we signed a partnership which is very promising with SRG, which is a company with which we will develop external lighting front fascia that will change the face of the coming EV. Now let's go to page five. Just, you know, a summary of where we are on the integration into the Power Train Systems business group of Valeo Siemens eAutomotive. You remember this subject has been very much debated since it was created, since the company was created in 2016. Now they hit EUR 1 billion of sales in 2022.
In six years, we have built a key player in Electric Power Train, eight plants, 1,600 R&D engineers, 2,000 patents, 21 customer brands currently in production and development, and more than 90 models. I presented to you during this Move Up Investor Day in February that this business is expected to record strong growth between now and 2030, with sales that will increase four times. In the shorter term, the integration of the business is creating EUR 120 million of synergies with the full benefits delivered in 2025. I can tell you we are ahead in this integration plan. Propose we go now to slide six. As I mentioned earlier, our activity accelerated in September, and according to our projections, this trend will continue into Q4.
Again, with this in mind, and based on the S&P Global Mobility latest estimates of more than 18 million cars in 2022, and the current energy crisis estimates for the end of the year, we remain confident that we will achieve our 2022 guidance. The production volume in Europe, according to IHS, will be at the bottom of our guidance. Will be the sales on a worldwide basis before the significant positive impact of exchange rates, which is a positive impact of 4% over the year. You remember that the positive effect of exchange rate on sales has no impact on margins. I propose now we go to page eight, where you see that in Q3, our sales grew sharply by 33% to EUR 5.3 billion. OE sales rose by 41%.
The aftermarket business enjoyed a good momentum, with sales growing by 10%. You know, this performance was, you know, obviously linked to a favorable basis of comparison. You remember, 2021 Q3 was hurt by the production shutdowns in Malaysia. More than that, I think it reflects as well the very +ve 8% scope effects following the integration of the high voltage business, which grew sharply and recorded sales of EUR 321 million. There's as well a 6% currency impact due to depreciation of the euro against the U.S. dollar and the Chinese Yuan. Like for like, OE sales grew by 24%. Page nine now. Our growth of the quarter benefited from the very sharp growth of the high voltage business.
On the pro forma basis, after adjusting Q3 2021 figures for the high voltage business, the like-for-like growth was at 26%, and this reflects the strong performance of the high voltage business, which grew by 59% over the period and increased itself by EUR 125 million. Page 10 now. We're very happy about our aftermarket business, which recorded good momentum in Q3. On top of the fact that it already grew 18% in Q3 2021 vs Q3 2020. This aftermarket business we like very much and enjoys a strong momentum. Why? Because there's a good service rate. We know availability is a key success factor. Because we have expanded our product range and increased our content, and as well because we have benefited from price increases.
I want to say it's important for all the investors interested in ELG, we are already remanufacturing over 1 million products per year. I propose now you go to page 12, where we can see the growth by region. In Europe, OE sales grew by 29%, outperforming the automotive production by 8 points. ADAS and Thermal Systems were the reasons of this increase. In Asia, OE sales increased by 23%, and this is an underperformance of 7 points. Please have in mind that in 2021, in Q3, we enjoyed an overperformance of 25% in Japan, 11% in South Korea, and 50% in India. In China, we have very good news with our ADAS sales skyrocketing and our high voltage products accelerating as well.
In North America, we have our OE sales growing by 26%, very much linked to ADAS projects, and in South America, 9%. Page 13, I want to comment on the Comfort and Driving Assistance, numbers. It was the most dynamic business group in Q3, outperforming the auto production by 9%. This was led by ADAS. ADAS posted like-for-like 53% of growth. The camera business performed very well. Sharp growth in surround-view cameras, sharp growth in front cameras. There was growth of camera in Europe, in North America, in China. We are seeing a fantastic growth for this camera business. We have already announced that we have produced more than 100 million surround-view cameras in our Irish site in Q1, and we have already produced more than 13 million front cameras total worldwide.
This trend that you are seeing in Q3 for ADAS will continue in Q4 because there's even more production startups and production ramp-ups in front of us. Page 14 now comes to Power Train. It has underperformed the global production by 1 point, thanks to the integration of our high voltage business in early July. You remember we announced during the Move Up plan that this business group will benefit over the quarter from the acceleration in the electrification market, 69% growth in OE for this business, which is reflecting the ramp-up of our customers in Europe. We'd like to highlight that at the Mondial de l'Auto, we presented the first prototype of technology EESM, which stands for electrically excited synchronous motor. That is a new motor free from rare earth that we are co-developing with Renault. Renault is responsible for the rotor.
We are responsible for the upfront starter. The motor is making good progress and is already on our test benches. I already talked about our Cyclee bike with more than 20 customers. Page 15 now, the Thermal business group, which underperformed automotive production by 1 point. We're seeing a performance that has been affected by an unfavorable customer mix in China and the end of a front-end module contract with a Japanese automaker that decided to in-source. Sorry. Since the beginning of the year, we have secured more than EUR 4 billion in orders for EV, including our new smart heat pump. This business that we got, I already talked about it, one with Stellantis on a smart heat pump, and another one with a important and leading European maker.
These EV businesses for thermal are 70% of our orders for thermal, and will drive the growth of thermal systems in the years to come. Finally, I would like to come on to page 16 with Visibility Systems, which has been underperforming by 8 points. They are temporarily affected by unfavorable customer and product mix. And this is something we already talked about. There are disruptions still in the electronic supply chain, and the components used by Visibility Systems are the same that are used on such components as ABS or other regulatory components. When there's a lack of components, the OEM are switching to halogen lamps on their cars to use less chips or to allocate the available chips on ABS. This to be highlighted that Visibility Systemss won first orders on the illuminated fascia and illuminated logo.
We've also started production of rear lights based on OLED technology with a premium German automaker. I told you there's going to be more lighting in the front, more lighting in the back, more lighting in the interior. Definitely more lighting everywhere. These are the slides I wanted to highlight. Thank you for listening to my comments on our publication, and I will now be very pleased to answer any question.
Thank you, ladies and gentlemen. If you wish to ask a question, please press zero one on your telephone keypad. First question from Michael Jacks from Bank of America. Sir, please go ahead.
Hi. Good evening, Christophe. Thank you for the presentation. My first question is on light vehicle production. Can you please just give us a sense for the October run rate that you're seeing at the moment, and how OEM production schedules look into year-end? Linked to that, it seems that new light vehicle inventories in China have largely been replenished. Are you seeing any signs of your customers slowing down there, or do you think that's a risk? Just on the cost of electronic components, specifically semiconductors, is there potentially a tailwind developing there for next year, in terms of the pricing, given that you're unlikely to use brokers or be required to buy on the stock market to the same extent?
Can you please just remind us on the contribution of this cost item to cost of goods sold? Thank you.
Thank you very much, Mike. Three questions. The first question is on the October run rate and whether we see a good volume, good production volume at the end of the year. You know, just take the IHS numbers. They have proved to be quite good, quite reliable in the last months. If you look at the IHS numbers for October, for November, for December, this is actually what we see. We are seeing or we have seen in Q3 an acceleration of our sales in September. This is due to the market, but this is as well due to our standard production. This is something that I announced to you in H1, in July, when I released the H1 sales results.
I told you at that time that you were going to see an acceleration of value sales in Q3 and Q4. We've been seeing this acceleration picking up in September vs July and August. When I look at October, we are almost at the end of the month. I see ourselves in line with our expectation. I see that the call outs that we are receiving from customers for November and December are according to our expectations. We are not seeing any downturn on the sales. We're not seeing any cancellation of orders. We're seeing strong demand coming from our customers. We are not seeing any sign of weakness in our production at this time. Second question is on China. We're seeing a very robust production in China.
We're seeing no sign of any kind of weakness of the market in China. There are currently a few lockdowns going on in China. There are lockdowns in the plants of Valeo as well currently, here or there. I have to say that our teams as well as the whole ecosystem of automotive in China has learned how to continue to produce cars and to produce components when some areas are in lockdown. This is what we see. We have a few lockdowns here or there, but we are not seeing any impact on our sales. You remember we saw a dramatic impact in April. This is not the case anymore. Today we're seeing solid sales in China.
The third question is on the cost of electronic components and whether there's, you know, a tailwind. Unfortunately not. I would like to see some tailwind from the electronic component prices. This is not the case. The electronic components have increased significantly in 2022 vs 2021. We're seeing the same order of magnitude of increase in 2023 vs 2022. Nevertheless, we had extremely good compensation from our customers on electronic components in 2022 vs 2021, and we're seeing the same willingness of our customers to contribute in 2023 the same way they have contributed in 2022, meaning close to 100% for electronic components.
That's all very clear. Thank you.
Thank you. Next question from Philippe Houchois from Jefferies. Sir, please go ahead.
Yeah. Thank you, Christophe, and thank you for the presentation. I just want to come back on the guidance. I think you hinted at the fact that large parts of the sales will be supported by FX. I think you said around 4%, that doesn't have an impact on the earnings contribution. Is it still fair to say that you are sort of guiding towards rather the lower end of the operating margin range as previously? Or given that you are seeing better volumes and IHS has upgraded for this year, there's also scope potentially for you to get towards the midpoint of the operating margin guidance. And then my second question is just on the latest order side on the high voltage businesses.
Obviously there's a strong growth in the sales figures there, but is there also an update on the RFQs that you're seeing in the market at the moment? Has it changed over the last couple of months? Do you see the market consolidating? Any color there would be appreciated. Thank you.
Thank you, Philippe, for your questions. Related to the first question on the guidance, you have well understood what I wanted to say. You said the volumes are strong. No, the volumes are not strong. If you remember, our initial guidance, it was between 79.9, or the assumptions we made was between 79.9 million cars and 84.something million cars. Happens that, you know, it will be 81.8 million cars according to IHS, but with a production in Europe that will be lower at the end of the day than the assumption we took for Europe when we computed the 79.9 million. Of course, the sales of Valeo are still, you know, close to 50% in Europe.
I would not consider, I will not say that the volumes are good at this point of time. They are better, but they are not good. You know, it's reflected in our sales. We had a significant growth in Q3 due to electrification and to ADAS, but we have sales that are close to the lower part of our guidance due to the fact that you need to subtract from the sales that we reported the impact of Forex. As a consequence, having the volume close, and the sales close to the lower part of the guidance, you are legitimate to think that I'm guiding for the lower part of the key financial numbers.
Related to the second question on high voltage, in the last three months, I've not been asked any more about insourcing, outsourcing. It was a permanent noise, a permanent question mark from many people. This is not a question anymore, and this is not a question anymore because we are receiving a lot of RFQs, a tremendous number of RFQs. I'm very happy to share with you that since the acquisition or the announcement of the acquisition by Valeo of the Siemens share and the fact that it has been integrated, we have definitely activated the gas pedal.
When we integrate Valeo Siemens eAutomotive into Valeo, we are enabling the former Valeo Siemens eAutomotive activity to benefit from the 100s of engineers that were specialized in how do you say, high voltage electronic. As power electronics, sorry, I was looking for the word. It's not high voltage because they are low voltage, but it's power electronics. You know, it's the same engineers that can actually use or be used to further accelerate in high voltage. Today we have a combination of Valeo Siemens eAutomotive that has become Valeo and is much stronger than before. We have activated the gas pedal because we have a few 100 engineers that are available right away to convert to high voltage power electronics coming from low voltage power electronics.
We have a technical roadmap that we have much improved, creating a lot of standards. We have four standards of motors with four different diameters of motors, three type of inverters, three variations of reducers. With this combination of four variations of motor, three variations of reducer, three variations of inverter, we are covering the full market from 60 kW to 350 kW in a very standard manner. We are becoming stronger and stronger.
Thank you.
Thank you. Next question from Christoph Laskawi from Deutsche Bank. Sir, please go ahead.
Good evening. Thank you for taking my questions, Christoph Laskawi from Deutsche Bank. The first one will be on the performance vs production that we've seen in Q3. You gave plenty of reasons already, and part of that should be resolved with semi availability improving. The question will be how much of the rest is sticky? Is it really reversing in Q4 already, or should we expect the factors that have weighed you down rather to reversing in Q2 next year? You elaborated on lower volumes in Europe. Is that having also an effect on working capital and cash for the year? I mean, you kept the guidance unchanged, so assume you can offset that through other measures in case it has an effect.
I know this is a Q3 sales call, but I'll still try and ask for a couple of comments on 2023. Could you remind us on the exposure to wage inflation, energy inflation, and then on cash, does higher rates actually have an impact when it comes to working capital financing? Could you see all of those metrics actually being up next year? Thank you.
Okay. Thanks, Christoph Laskawi. Let me try to answer the three questions. On electronic components, yes, it's sticky in a certain way. I've always said that, you know, it's improving quarter after quarter, but it's not yet at the point where the OEMs can produce as many cars as they want. I continue to say that the situation is gradually improving, but still is and will be a constraint in 2023 one way or another. When it comes to the second question on Europe, we are confirming our guidance of EUR 320 million of free cash flow despite some of the headwinds, especially in Europe that I mentioned and you reminded as well.
We are confident on being in a position to generate this EUR 320 million of free cash flow in 2022. Related to 2023, you tried. It's a good try. I will not comment on 2023 before the end of February when we release our numbers because there's, as you know, a lot of uncertainties in 2023. We've not made internally yet all the decisions on exactly what kind of volume we're going to work on and some other aspects. Still, you asked a question related to energy, and let me answer this question specifically because this I know already. The volume, I don't know yet. Some of the inflation points, I don't know yet. Energy we know.
Why do we know for energy? Because in February and March 2020, we have seen the energy price at the very bottom of the cycle. We have decided to extend at that time as many contracts in as many places as possible, benefiting from the low prices that were available at that time. Most of the contracts where it was possible to do it have been extended until the end of 2023.
This being said, it means that, using the current spot price for the countries where we are—we don't have this coverage, what I'm seeing for 2022, and given the contracts we have in the countries where we are protected, I'm seeing an impact on our costs in terms of energy in 2023 vs 2021 of EUR 60 million. EUR 60 million, which is around a 1/3, 30% of our energy bill. It's of course much less than what we would have had if we had not made this decision in 2020. We are of course, as any additional cost that we're going to face in 2023, already asking for compensation, full compensation of this cost to our customers. Our customers are open on electronic components. They are open on energy costs as well.
Thank you. Just two brief follow-ups, if I may. The first one will be on the customer mix statement that you made. Are the customers that have dragged you down in Q4 already improving, or is there a problem at the OEMs which needs longer fixing? Then, just on the cash guidance, is it then fair to assume that you are capping CapEx a bit, or is that still on the run rate that you've highlighted before? Thank you.
Okay. We don't comment on customer momentum. Just use the IHS numbers again. They have proved to be reliable in the last months, and you see they are not moving a lot. If you want to analyze the numbers by customer, you can really go for that. We have different momentum as far as value is concerned, depending on the customers. You know, this is not something I want to disclose here. The second point on CapEx. We're going to achieve our guidance on free cash flow. We're going to do it despite the fact that our working capital will not decrease. It will not decrease. Remember, I hoped it was going to decrease in this one, and I said it will not happen because it's not the right time.
The supply chain is still extremely disrupted. I said, I hope it will be done in H2. It's not going to happen in H2. You are even seeing other companies now saying that they will increase their inventory, given the supply chain disruptions. You know, this is a headwind. Our working capital will not decrease. What we are not going to get from the working capital decrease, we're going to get it from a very strict control of our CapEx and of our R&D expenses. This is why I'm confident that we're going to achieve, at the end of the day, our guidance when it comes to free cash flow.
The good news is, you know, when this lever of working capital has not been tapped in 2022, it means it remains fully intact for 2023.
Thank you, Christophe. Very clear.
Thank you. Next question from José Maria Asumendi from JP Morgan. Sir, please go ahead.
Thank you. Hi, Christophe. A couple of questions, please. The first one, coming back to the guidance. I'm seeing a strong year-end in terms of volumes. We're seeing how your competitors are able to pass on some price increases in the second half of the year. I'm a little bit struggling with the guidance. For me, it looks quite cautious. I'd love to hear if I'm missing anything in terms of headwinds, because I think we should be much more on the upper end of the guidance range than down the lower. Any comments on that, if I'm missing any headwinds, just simply in the light of the strong volumes and the strong pricing power we're seeing on the supplier industry.
Is there a number you can share with us in terms of headwinds you had, inefficiencies in 2022 on stop-and-go, higher freight costs, just items that if the momentum normalizes next year, we will not have these headwinds anymore next year. If you have a figure, that will be great, please. Thank you.
Thank you for your question, José María Asumendi. Well, you know, when it comes to 2022, there's been quite a lot of analysts that told us that we will not achieve our guidance for the reason that we are now integrating our members fully starting July 1 via Valeo Siemens eAutomotive. If you remember, the conference call in July, I received quite a lot of questions from some people saying, "Well, how are you going to do it? How are you going to achieve your guidance?
Why is there going to be such an increase of profitability between S1 and S2 when at the same time you are incorporating into your H2 the members of Valeo Siemens eAutomotive? I tried to explain, you know, why we were going to be in a position to do it. Again, I think our guidance is not disappointing. I think that given the fact that, you know, there's still some headwinds, that the volumes are not so strong, that there are still some stop-and-go effects, you know exactly what you described, José Asumendi, and inflation as well.
Despite the very much success we have in getting compensated by our customers, I think the guidance that we do is a good one, given the fact that it now includes Valeo Siemens under circumstances where the volumes and the sales are good, but not absolutely fantastic.
Okay. Thank you. Bye, Christophe.
Thank you. Next question from Thomas Besson from Kepler Cheuvreux. Sir, please go ahead.
Thank you. Hi, it's Thomas Besson. I have a couple of questions, please, that will focus on Power Train. I know that with the volatility in production, the concept of performance and the performance is a bit irrelevant. I was surprised to see that Power Train was underperforming by 9 points. I'd like you to give us a bit more flavor on that. Also, if you can give us the organic growth of the high voltage business. I think you give us the absolute revenue figures at EUR 321 and the 61% growth rate, but we don't have the organic growth rate. That's the first question. The second, I'm really happy you give us the details on the impact of the acquisition and revenues.
Could you give us a qualitative comment on the improvement on the earnings contribution, knowing that we have seen in the past that higher revenues did not necessarily mean-
One moment.
Yes. The second question is on the qualitative comment on the improvement you're seeing with the integration of high voltage. Because we had seen in the past when it was still a joint venture, that higher revenues did not necessarily translate into better profits or higher profits. Thank you very much.
Thank you. Thank you, Thomas. Related to the first question, I'm not sure I've fully understood you. I thought.
The underperformance of
You said that. There's two sub comments. Sub questions to the first one. There's the underperformance of 9 point some PTS.
Mm-hmm.
You need to get used to it in a certain way, because the BEV are now, you know, getting a lot of momentum. It's already 10% of the market worldwide. It's 10% since the beginning of the year. If I would take the Q3 numbers, it's more. It's 17% in China.
The reason why I was asking is that I understood you had a very strong momentum on 48-volt and other products that were supposed to offset that initial increase in BEV. I should have mentioned it. Sorry.
Forget about business is continuing to increase. There's no significant disappointment here. You have to have in mind, of course, that now we are calculating or dividing the sales of PTS before integration of high voltage to a market that is reducing now significantly because of high voltage. This is the reason why we have, you know, -9%. Now we'll look more in detail.
Mm-hmm.
At 48 volts in Q3, and we may come back to you on the topic.
Mm.
The second sub-question was the organic growth of high voltage. I think it's
No, in fact, it is not mentioned in the document, but the 69% of growth for OEM sales of the high voltage business is equal to this organic growth.
It says 61% on your press release. Is it 59% or 61%?
60%-
No, 60%-
I was thinking of the growth.
69% is for OEM.
For OEM.
61% is total sales.
Total sales.
Because there's tooling that you can sell. You know, you can sell R&D.
R&D sales, et cetera. Yeah.
Okay.
When we speak of OEM sales, the organic growth is 69%, as it is 61% for the total growth of the high voltage business.
Okay. Thank you very much.
When it comes to your second question on revenues, you ask for qualitative comments. Well, you know, the integration is going on as planned. We expect to extract synergies earlier than we thought, so it's really going well. As I said, we are today very much confident by the technical roadmap, what we can put in the hands of our customers. The same, the kind of comments that we are receiving and the net losses of Valeo's former Valeo Siemens eAutomotive that we projected to have in 2022 vs 2021 will happen as planned.
Great. Very clear. Thank you very much.
Thank you. We have maybe three more minutes.
Okay, perfect. Maybe last question from Pierre-Yves Quemener from Stifel. Please go ahead.
Good evening. Can you hear me?
Yes, absolutely.
Bon soir, Christophe. Bon soir, Robert. Bon soir, François. Et bon soir, Pierre. I would have two questions just to wrap up too, and a follow-up to Thomas' question regarding Power Train. Is it fair to assume that the legacy business is down, simply down, organically double-digit business, and that could be a run rate going forward for the Power Train business for the legacy part, excluding low voltage and excluding high voltage? That will be the first one.
Not sure I've fully understood the question, Pierre. The legacy business.
For the Power Train outperformance, it's -1% vs LVP, including VSE, -9%, excluding VSEA, but including the low voltage. If I strip that out, all the low and high voltage activity, the end performance should be negative double-digit. Is it something that we need to factor in going forward for the Power Train business vs live vehicle production?
No, in fact, in China, our transmission business suffered from a negative mix which could reverse. The trucks business, which was very low in the Q3. We believe that this business will grow. Of course, the market share of ICE cars is globally decreasing. It will have an impact on this business. It is clear that the gap will be closed thanks to the low voltage and high voltage business.
Looking just at ICE, you know, if we would qualify the overperformance, underperformance on ICE, we expect in the future to overperform.
Yeah.
The former perimeter of PTS divided by the number of cars ICE. Given the success we have with some products at many customers, we are expecting this business to overperform. They are of course less than the high voltage because of the content per car of the high voltage components.
Okay. Your ICE business, you expect it to outperform the ICE LVP going forward, right?
Yeah, absolutely.
Okay. One final question in three small parts very quickly. Heading into next year, how should we think about the different building blocks of your full year 2023 operating margin excluding the ACA? How should we think about LVP? Is it gonna be up or down in your mind? How else should we think about inflation? I know you touched base about energy, and you're probably better sheltered than many other competitors with only EUR 60 million of inflation as far as I understood. There will be also labor costs in 2023. The last part of the question would be, what is your ability today to mitigate those cost headwind depending on the assumption regarding LVP you can make from today's perspective into 2023?
As I said before, we've not yet fully decided what kind of volume we're going to take for 2023. I think this decision we don't need to make now, we'll make it later, with as much information as we can. Now your question is, there will be inflation still on some raw material. There will be decrease in some others. The energy price going up EUR 60 million, I said, already. There will be a labor cost increase. This we already know. What we are already knowing, we act on it. You know, as I think I said in July, we are already in pretty deep discussions with all our customers relating to these items to get compensation and the right level and the appropriate level of compensation.
You know, whenever we talk about 2023 in February, we should have, you know, a good view on what's going to happen. The same way when I talked in February 2022 during the Move Up plan about inflation. You remember? I said EUR 200 million at that time, which was a surprise for a lot of people. But we could keep this number because we had already worked a lot on the issue at the end of 2021 and in the first months of 2022. The same thing happens now.
We are working on compensation now, and we are expecting and working to get the maximum level of compensation so that whenever we talk to the market at the beginning of or at the end of February, we have a good view and the best possible view on what's going to happen in 2023. I'm confident that given the relationship we have with our customers, we will get the necessary compensation of the cost levers in 2020.
Thanks.
Thank you very much for.
Thanks team.
Sorry?
In 2023.
Okay. Thank you.
Thank you.
Thank you. Thank you very much for your questions. It was, I hope, an interesting 45 minutes. Thank you for attending the call.
Thank you, ladies and gentlemen. This concludes the conference call. Thank you all for your participation. You may now disconnect.