AGM 2020

Sep 23, 2020

Slides

Ladies and gentlemen, I hereby open the Annual General Meeting of TRATONSC from the TRAC Forum in Munich. And in accordance with the of the meeting, I would like to welcome you, our shareholders, ladies and gentlemen of the media and all other viewers. Also on behalf of my colleagues on the Supervisory Board and the Management Board, we would have liked to welcome you personally to our 1st public general meeting here at the TRAC Forum in Munich. Unfortunately, the special circumstances do not allow this at present to the still ongoing COVID-nineteen pandemic and the associated health risks. The Board of Management, with the consent of the supervisory board, decided to hold this year's Annual General Meeting as a virtual meeting without the physical presence of the shareholders and their proxies. We are therefore making use of the opportunity provided by the legislator for the annual general meetings to be held in 2020 with so called COVID-nineteen Act. Due to the existing contact restrictions, we have limited the number of participants here in the track forum to a few people only. Besides myself there, the Deputy Chairman of the Supervisory Board, Mr. Simon Yaris, is personally present here in the room behind the scenes. I would like to welcome the Chairman of the Management Board, Mr. Matthias Gruntler and the Chief Financial Officer, Mr. Christian Schuld. Also present are the notary, Doctor. Oliver Vosius, who keeps the notarial minutes required by the German Stock Operation Act, and the 2 proxies of the company. Other members of the Executive Board and the Supervisory Board are connected via video and audio and have the opportunity to contact us here on-site if necessary. Ladies and gentlemen, first, please allow me to make the necessary formal statements for today's Annual General Meeting. The Annual General Meeting was convened in due form and time in accordance with the law and the articles of association. The convening of the Annual General Meeting was announced in the Federal Gazette on August 12, 2020, and forwarded for publication to media that can be expected to disseminate the information throughout the European Union. We deliberately did not make use of the shortened invitation period under the COVID-nineteen Act in order to give you, as shareholders, enough time to register for our Annual General Meeting. This year, we will again maintain a list of participants. The proxies of the company present at the place of the meeting will be included in the list of participants. Shareholders who have exercised or still exercised their voting rights by postal vote will not be listed in the list of participants. As soon as the attendance has been determined, I will announce it to the Annual General Meeting. I would like to point out at this point that this attendance information will then also be available in this shareholders' portal. All documents and information of this year's virtual Annual General Meeting can be found on our website in the Investor Relations section under Annual General Meeting. All documents were also available there for the duration of the invitation period. And our shareholders can follow the entire Annual General Meeting online via the shareholders' portal. The additional public live broadcast on the company's website includes the speeches of Mr. Grindler and the report of the Supervisory Board. After the Annual General Meeting, a recording of the public part, but not of the entire Annual General Meeting, will be available on the company's Annual General Meeting website. To enable you to exercise your shareholders' rights appropriately at the virtual Annual General Meeting, We have, in accordance with the COVID-nineteen Act, given you the opportunity to exercise your voting rights by postal vote or by authorizing the proxies of the company also at parties. Since it is not possible to make speeches and ask questions in the usual general debate, duly registered shareholders were able to submit questions on the agenda items via the shareholder portal in the run up to the Annual General Meeting. We will respond to the questions following our reports. If you wish to record an objection to a resolution passed at today's Annual General Meeting, you can also do so via the shareholders portal. This function has been activated for you since the beginning of the Annual General Meeting and will be active until the end of the Annual General Meeting. Recordings of the Annual General Meeting are not permitted. A verbatim record will not be prepared. So for the necessary formal instructions. Ladies and gentlemen, I will now summarize the report of the supervisory board and discuss the changes in the supervisory board and the Board of Management since the beginning of the fiscal year 2019 and the implementation of the recommendations of the German Corporate Governance Code. Following my remarks, the Executive Board will give you its report. This is followed by the answers to the submitted questions. Afterwards, the voting will be carried out. Ladies and gentlemen, let me first turn to the supervisory report. The supervisory report, until the change of the conversion of the company into an SE on January 17, 2019, consisted of 12 members. These were Mr. Beystedt, Doctor. Doos, Mr. Kilian, Ms. Lorentzen, Mr. Linxi, Mr. Ousolo, Since the conversion into European company, the U. S. Supervisory Board has consisted of 20 members. On the shareholders' side, these are Doctor. Dose, Doctor. Julia Koon Pich, Mr. Kilian, Doctor. Kirschmann, Ms. Macpherson, Doctor. Christian Porsche, Mr. Schmidt, Ms. Verna, Mr. Vita and myself. The employee representatives are Mr. Stimon Yaris, Mr. Beystad, Ms. Quahalcrest, Mr. Cana, Ms. Lorentzon, Mr. Lutin, Mr. Luongse, Mr. Ousolov, Mrs. Schnur and Mr. Zieger. The shareholder representatives are as well until the there were some changes in the company's Executive Board in the fiscal year 2019 until the conversion of the company to Trainacy. Mr. Rensch Lachourdes, Grace Henderson and Schulz were members of the Executive Board. With the conversion of the company, in addition to the aforementioned gentlemen, with the effect of from January 17, the Chairman, Doctor. Inran Levin, were appointed as members of the management board. And furthermore, with effect from 15th July 2020, the gentlemen, Renssela Dries and Doctor. Intra, in mutual agreement left the resigned from the Executive Board. With the fact of July 16, 2020, Mr. Grundla was appointed as Chairman of the Board of Management by the Supervisory Board. And also with effect of July 16, Doctor. Torsten was appointed successor. Doctor. Torstmann is also Chairman of the Executive Board of MAN SE and MAN Truck and Bus On behalf of all members of the Supervisory Board, I would like to take this opportunity to once again thank the members who've left the Supervisory Board and the Executive Board for the good cooperation and their great commitment to the company. So much for the personnel on the Supervisory Board and the Executive Board of the company. Ladies and gentlemen, in the annual report starting on Page 17, you will find the report of the Supervisory Board on our activities in fiscal year 2019. Starting on Page 32, you will also find the declaration on the corporate management, including the corporate governance report of the executive board and the supervisory board. I would like to refer to the detailed reports, but I would like to address a few points in particular. The Supervisory Board of Trade Energy regularly dealt with the situation and the development of the trading group in the reporting year. In accordance with the tasks incumbent on us by law, the articles of association and the rules of procedure, we monitored and supported the executive board, its management of the company and advised it on issues relating to the management of the company and the group. In doing so, we always took into account the relevant recommendations and suggestions of the German Corporate Governance Coach. The supervisory board was directly involved in any and all decisions of fundamental importance for the group. The focus of activities in fiscal year 2019 included the IPO of the company in June 2019, the related preparatory measures and the strategic planning for the coming years. Ladies and gentlemen, the Executive Board fulfilled its information obligations and informed us in written and verbal form as promptly and comprehensively as possible, in particular, about all the issues relevant to the company with regards to the strategy, the business development planning and the company's situation, including the risk situation and the risk management as well as on compliance issues. The supervisory board held a total of 5 meetings in fiscal year 2019. In addition, particularly urgent matters were decided in writing or by using electronic means of communication. In the last supervisory board, 2 or 3 committees convened in the past financial year. The presiding committee and the audit committee each held 4 meetings. The nomination committee did not need to be convened in fiscal year 2019. Ladies and gentlemen, this brings me to corporate governance at TRATON. In December 2019, the Board of Management and the Supervisory Board issued the annual declaration of compliance with the recommendations of the German Corporate Governance Code in accordance with Section 161 of the German Stock Operation Act. An explanation of all deviations from the recommendations can be found in the declaration of conformity. The declaration of compliance is available on the website of Trade and NSE. For further information, please refer to the written corporate governance report. As already mentioned, you will find it from Page 32 onwards in the annual report. It contains a detailed report on the corporate governance structure at Drayton. I would also like to emphasize here that no conflicts of interest of members in the Board of Management or Supervisory Board will report in fiscal year 2019. The remuneration system for the Board of Management is presented and explained in detail in the remuneration report, which is printed in the annual report on Page 79 onwards. This brings me to the annual financial statements that we are presenting to you today. The supervised report examined the annual financial statements of Trade NSE and the Trade and Group as of December 31, 2019, and the combined management report of TradeNSE and the TradeN Group and approved them at its meeting on February 20, 2020. The 2019 financial statement of Trade NSE are thus adopted. On the auditor, PricewaterhouseCoopers, JMPH, Wirtschaftprefungsgeseschaft, audited both financial statements and the combined management report and issued unqualified audit opinions. Finally, I would like to mention that the Board of Management and the Supervisory Board independently propose after comprehensive examination discharge all members of the Board of Management and Supervisory Board for fiscal year 2019. Ladies and gentlemen, thank you very much for your attention. So far, I would now like to ask Mr. Grundler to present the report of the Executive Board. So Mr. Grundler, stage is yours. Dear shareholders, ladies and gentlemen, one of our customers said last year, we've been working with you because you share our big vision and because you are actually on the way together with us. Also, we did none of us knows the exact destination yet. They were talking about the world's largest order of electric trucks to date. Brewery Ambev ordered a total of 1600 vehicles from us in Latin America. This is a bold step into new terrain. For me personally, this quote gets to the heart of the aspects that are crucial for the vision of a sustainable future the courage to tackle challenges, even big ones a sense of togetherness and also the close cooperation with our partners. Our aim is clear. We are shaping the transportation of tomorrow around the world as a global champion. We do this by carefully balancing the interests of people, planet and performance. That was our mission as we went public last year. I would have loved to meet you, our dear shareholders, in person. No one expected our first public Annual General Meeting to be a virtual one or the more reason to give you a warm welcome today in this format, welcome to you at trade in. For me, successfully shaping the future of trade in is one of the most exciting jobs in the industry. This is the reason why I'm delighted to be back on board in my new role. Back in 2018, I got the IPO preparations off the ground as the company's CFO. There's plenty of work to be done. As a society, we have to deal with the implications of the coronavirus pandemic worldwide. As the commercial vehicle industry, we are on our way to a carbon neutral and digitized future. As a relatively young holding company, the actions we take today determine our future success. So in short, we at TRATON are building the bridges to a new era. Our mission is as follows: 1 to be a global champion of the commercial vehicle industry. This is not an end in itself, but it's the logical next step that we will reach if our 3 brands combine force in the right way: SKAGIA, MAN and our Latin American brands, Volkswagen, Target and VAS, is each brand serves its own segment with specific customers, and we are in a unique position with them because each of them can actually serve customers with its own brand. SKAGNA is an innovation leader for sustainable transportation solutions. The premium segment is a reliable partner for requirements in the commercial vehicle segment and then offers the complete range of products from light duty commercial vehicles to heavy trucks. At Volkswagen Tankmas, the focus is on offering the best value for money for the growth markets in Latin America and Africa. These profiles are suited to different to various customer requirements. The setup of our company enables us to meet those in the best possible way. As a holding company, we are strengthening our common foundation. We are promoting collaboration and expanding the power of each brand. We are aware of the fact that we are just getting started with this development. And the results Traton achieved between 2016 and 2019 show that we are on the right track. We reported record unit sales, sales revenue and operating profit last year. The unit sales rose by 4% to just over 242,000 units compared to 2018. All brands contributed to this growth. Sales revenues increased by 4% and came in at €26,900,000,000 €1,900,000,000 At €1,900,000,000 operating profit grew by 25%. Operating return on sales rose by 1.2 percentage points and stood at 7%. To sum it up, a solid performance in an increasingly difficult market environment. What does that mean for you? A domination and profit and loss transfer agreement was in place between Volkswagen, Aegion Trade and SE until the end of 2019. As a result of this agreement, Tradin was obliged to transfer its net income for the previous fiscal year to Volkswagen AG. However, Tradem converted part of its capital reserves into distributable profit. The executive and supervisor boards propose to use the distributable profit of €600,000,000 as follows: €100,000,000 as profit carried forward and €500,000,000 for distribution of a dividend of €1,000,000 per share. And with this, we want to show you that placing your trust in our in your young company pays off. Since our initial public offering over a year ago, we have continued to evolve not just through cooperation projects within our group and with our strategic partners. Our organization has also grown in terms of its culture. A focal point here is the way we at Trenton, Trenton, work together with diversity and inclusion as integral components. Our aim is to give people from different backgrounds and with different strengths the chance to contribute their perspectives to our company because after all, embracing diversity can only increase our success. This is particularly important to me personally as well. I would like to take this opportunity to give a big thank you to all our customers and partners. Thank you for the trust you place in us. Thank you for coming along on our journey towards new innovative technologies. I would also like to thank our parent company. Now of all times, we are benefiting from the strength of a global group. I think also to our Supervisory Board, especially to Johan Siede Perch, who supported and closely followed Project TRATON from the beginning. Moreover, I would like to thank my predecessor, Vince Renschler, whose heart, soul and foresight all win into laying the foundations for trading's future. And of course, I would like to say thank you to my colleagues around the globe. You have driven trading forward, not least in the last 2 years and especially during the turbulent recent months, shown what makes a great team. In doing so, you've gone above and beyond your actual duties in the companies are, from coffee for tight drug drivers to logistics support for ventilator manufacturers. If things were different, all of you would definitely be hearing the applause that you deserve right now. Where does trade in stand today? And it was already clear that 2020 would not be an easy year for commercial vehicle manufacturers. We pointed out the challenges of the first half of the year in particular, even before the outbreak of the COVID-nineteen pandemic. Our markets slowed down tangibly at the end of 2019. The Brexit debate and the trade war between China and the U. S. Did not make the environment any easier. And you know it as well as I do. Commercial vehicles are capital goods, so they are a sensitive measure of economic cycles. With expected headwind, we suddenly found ourselves in the eye of a hurricane. Our markets are bearing the brand of the global economic slump caused by the COVID-nineteen pandemic. The market for heavy duty trucks in Europe declined by 44% in the first half of twenty twenty. The Latin American market contracted by 20%. These developments also left a mark on TRATON. Unit sales in the first half of this year fell by 37% in total compared to the previous year and stood at just over 77 1,700 units. Order intake was down 27%. Sales revenue came in at just over EUR 10,000,000,000 in total, a decrease of 26%. We reported an operating loss of €120,000,000 with a corresponding reduction in operating return on sales to minus 2.2%. And even though there's been an improvement recently in the business climate for transportation and logistics, a sustained recovery is still a long way off. This means that during the next stage of our journey, things will get bumpy, but we are learning and adapting. Changes are being implemented more quickly. Logistics and with it, the commercial vehicle industry has huge systemic importance. Transportation is and remains the lifeline of our economy. This is especially true for the transportation by road. The empty supermarket shelves during the lockdown showed that quite clearly. This is the reason why we believe that a financial helping hand for our industry makes absolute sense. We welcome the policymakers' intention to support the production and the use of sustainable vehicles. Promoting state of the art trucks and buses while withdrawing older models from the market is also a win win for the environment and for road safety. Expanding the charging infrastructure for electric vehicles is a good and essential approach. It is important not to forget high voltage charging points for heavy duty commercial vehicles as part of the process. There are hardly any at this point in time. What we have to do now is implement the measures that have been announced in a timely manner. The funding could jumpstart the industry's future. The coronavirus before and after will not be the same, Even more so for us than for other branches, now is the beginning of a crucial stage of the journey to climate neutral transportation. We want to make this reality on the roads by 2,050, no doubt about it for the entire trading group. Similarly, digitization will change our industry massively. Vehicle automation is on the rise. Added value continues to be generated increasingly in services. This is the reason why I'm especially delighted to be able to announce today a new cooperation initiative in the field of autonomous driving. We are partnering up with a U. S. Company to symbol to work on the development of the autonomous route to Symbol is leader in the autonomous trucks. We will shortly begin our first test drive to Scania Trucks in Sweden. We have acquired shares in the company to underscore our commitment. We are setting sail for a new transportation year and using this opportunity to set clear priorities. What priorities am I talking about? Number 1, we are stabilizing our operating business. Our plans shut down in the middle of March. We restarted production from the beginning of May, still not at full capacity, of course. Our main focus now is securing our liquidity. As of the end of June, we had unlimited cash reserves of €2,600,000,000 Our credit lines amount to 5.6 €1,000,000,000 To support our liquidity reserve, we took out our first revolving credit line in the amount of EUR 3,750,000,000 in July. This makes our financing framework more flexible and underscores our bank's confidence in our strategy. In other words, our balance sheet structure is rock solid to make sure and stays that way we pursue strict cost and expense management. To us, this includes developing a mobility solutions ready for the daily grind, make the transportation industry industry more sustainable hand in hand with our clients. About our second priority, customer focused innovation, it is an important pillar of our global champion strategy. To move forward faster, we analyze which areas of expertise we can develop or expand for which brand and in the most effective way. One thing is very clear. We will be sharpening our focus further in the future. In the months ahead, we will closely examine every ongoing development project and set new priorities. No rest for us. When it comes to electrification, TRATON will have invested €1,000,000,000 in alternative drives by 2025 despite the crisis. A week ago, Scania launched its electrified series trucks for urban applications. These include a plug in hybrid with a purely electrical range of 60 kilometers and an electric truck with a range of up to 2 50 kilometers. In Scania's uncompromising quality, from now on, Scania will be launching further electric vehicles every year, including for construction trucks and long haul transportation. MAN is manufacturing a small series of fully electric EGM truck, awarded the European Transport Prize for sustainability 2020. Both brands will have launched serially produced electric city buses by the end of the year. Together with partners in Brazil, Volkswagen Truck and Bus is developing an entire network around its electric trucks from production and charging infrastructure all the way to battery life cycle management. Our customers have a wide range of applications and requirements. This is why when it comes to Rife technology, we maintain the required degree of openness to all types of technology working on working on at TRATON. We currently have customers in Norway, for example, testing 4 fuel cell trucks As well as decarbonization, our 2nd key topic of the future is digitization. During Innovation Day a year ago, we presented the Scania AXL concept, an autonomous vehicle without a driver cab designed for mine operators. We also began a long term cooperation with RISE, Swedish Research Institute, in February. We are initially focusing on cybersecurity and artificial intelligence. This ensures we have a steady footing today and good prospects for the future. It also requires our brands to be strongly positioned by 3rd priority. You do not need to look hard to find proof of our brand's potential. Scania is the 1st major manufacturer of heavy duty commercial vehicles to have its its climate protection goals recognized by a renowned science based targets initiative. MAN launched a new truck generation in February after 15 years, featuring the best working conditions for the drivers, new assistant systems like the traffic jam assist and up to 8% lower consumption. You can see the truck here on stage. Volkswagen Truck and Buck has significantly expanded its market share for trucks over 6 tonnes in Brazil in the first half of this year. And the new heavy duty truck series, Meteor, premiered just a few weeks ago. We have an enormous task ahead of us. That much is clear. After all, we want to achieve our profitability goal. That means a return on sales of 9% over a cycle for the group as a whole. We had in-depth discussions in the Executive Board team in the last few weeks on the best way to go about this, our conclusion. We plan to give the members of the brand's Executive Board's increased responsibility for the profitability and performance of Scania, MAN and Volkswagen Trucks and Bus. Our brands need freedom in order to hit their profitability targets. An important issue we are currently looking at is the positioning of MAN. I'm confident that there is a strong line inside MAN, but we have to awaken it because it's also clear. Right now, the company is not where it could be. In order to get it there, restructuring measures are unavoidable. The week before last marked the start of joint discussions between the employer and employee representatives on the fundamental realignment of the company. The executive boards of MAN SE and MAN Truck and Bus SE presented a plan outlining the key aspects of the transformation to the General Works Council. We want to reach an agreement that is acceptable to all parties as soon as possible. Performance. To us, performance means merging powers, skills, expertise and commitment. Tradition and courage to create something new. The goal, boosting collaboration and at the same time, living individual strength. We gain traction. Our priority number 4 is the role of the TRATON Holding Company. As a holding company, we add value to the group. To become even better at that, we are currently reviewing our structures and processes. Doing so will make us an increasingly attractive employer for the most talented individuals in the market, and we are continuing to bundle our purchasing power. There's still room for improvement here. We are also initiating strategic issues for the future of the for the entire group because in that future, the classic core vehicle business will not be the only one calling the shots. We are absolutely confident that with the right partnerships, we will gain ground in new markets and fields more quickly than alone. This is why Traditant has had a clear focus on partnerships and alliances from the outset. The strategic partnership with U. S. Commercial vehicle manufacturer Navy Star is of particular importance to us. You know that, Trey, made an initial offer to acquire the outstanding common shares of Navy Stars at the end of January 2020 and increased it again on September 10 with good reason. For many truck manufacturers, North America is the most profitable market and, in absolute terms, the world's largest profit pool to which we currently have no direct access. Plus, as electrification moves forward, requirements from the commercial vehicles become more similar internationally, which means we can scale our offering even better. Our cooperation with Japanese manufacturing, Hainou, is another partnership we are very proud of. On the one hand, the joint venture allows us to leverage synergies in procurement. On the other, we plan to collaborate on all key electric powertrain components like engines, batteries or auxiliary systems. In addition, we are investigating further possibilities to collaborate in other future fields of technology. To become even faster and more flexible. We are accelerating the development of our future technologies, and we are realigning the group to make it even more powerful. Regardless of who I talk at TRATON, I always get this sense of passionate dedication to the future of the industry and of our company. This makes me proud and even more confident. Reliable and sustainable trucks and buses remain at the heart of a connected economy. And at TRATON, we want to be the driving force behind them. Thank you very much. Many thanks, Mr. Gerundler. Ladies and gentlemen, this is where the public live broadcast of this Annual General Meeting ends. Only the company's shareholders and shareholder representatives can follow the further course of this meeting via the shareholder portal. To register there, you need your access number and your access code. You will find this data in the top right hand corner of your access card. I would also like to point out that the voting results will be available on the Internet after the end of this meeting.