Everybody, very warm welcome to our 12-month 2024 result call with the final numbers. I'm starting in our presentation on page four. We confirm all preliminary numbers we have presented to you some weeks ago. Sales above EUR 8 billion, first time. We outperformed the market by 240 basis points. The profit, net income, came out at EUR 371 million. It's 40% higher compared to 2023. Within that number is the disposal of our joint venture, BHTC, with a book gain of EUR 106 million.
We propose a continuation of our established dividend policy, so overall around 30% on net profit, which is then a dividend of EUR 106.95 per share. As said, operating income, and net cash flow confirmed in comparison to the prelims, 5.6% in operating income and a net cash flow of EUR 189 million, comparable to previous year if we are not considering factoring on a year-on-year comparison.
On page five, we added here the regional mix asset. For us, we have as a target overall to have around two-thirds of our business within Asia and Americas. We see here the split within the different business groups, and especially in electronics, we were very successful with new business win in APEC and as well NSA.
Overall, 74% of our new business outside of Europe, whereas lighting was at 44% and life cycle solution at around 50%. If we look at sustainability, sustainability overall remains a top priority for us. Positively, we improved partially our ratings. Specifically with CDP, we are now with an A rating. As you know, we are working together with FORVIA to improve here towards our CO2 reduction targets.
We are in a good way in terms of our achievements on Scope 1 and 2, where we target to reach at least 80% of reduction on Scope 1 and 2 to the end of this year. We are working now intensively on Scope 3 with our target settings you are here seeing on 2030 and 2045. You can here see on the right-hand side the achievements we reached.
To highlight on the right side, we are working intensively on our product innovations and design to support our CO2 reduction targets. Specifically, we enhanced our electronic portfolio with developments towards supporting e-mobility in the future. Here are two highlights. One is the Cooling Control Hub, and the other one is the High Voltage PowerB ox, but they are more to name.
In lighting, we developed a CO2-optimized product enhancing design, but also making it repairable and especially also recyclable, which would show a CO2 reduction on the footprint of around 70%. This is something we continue now to push for each and every product we develop to further improve here our CO2 footprint in the future. This asset remains a key priority for us also going forward.
Here are some highlights which are also considered in our annual report, just to highlight again our innovative power and also our focus on technology. Some awards we won, some launches we have done in the last year. I think to highlight here, especially specifically on lighting, our new innovations in terms of FlatL ight, Micro-MX, and the display technologies we are developing, where we see strong interest also on the customer side for these new innovations.
On the right side, you see here the Intelligent Power Distribution Module, where we also won two awards with that, which is now going into serial production with the first generation, and where we are working on further business opportunities, which should give us a strong growth potential also going forward for the overall electronics business in the future.
I want again to add up and repeat how we now look at the key strategic initiatives for us and also to focus on the impact specifically for this fiscal year. We continue to work intensively on our fixed cost reduction. I mentioned a 3% reduction on the 2024 cost, which we are working on, and we see with the different structural measures we are pushing and accelerating, as I said, that we are on the right track to reach that.
We reduced around 2,000 headcounts on a year-on-year comparison to end of 2024. In the first quarter of this year, we further significantly reduced the number also of headcounts. We are in a good way to reach that target. On top of that, I mentioned our ambition to reduce our material cost by around 4% with one-hand side purchasing synergies, also the structural changes we are doing in the overall supply chain, and also a lot of redesign to cost measures we are working on.
We will further reduce our R&D ratio and get it to a level which is below 10%. We are close to 10% in this year. We think that with the structural changes we are doing with the effectiveness, productivity, we are working on redesigning our processes, working with new tools, also moving structurally and optimizing our R&D network.
We are in a good way to reach that. On the cash flow side, our target is to be at least at a level of EUR 200 million or more for this year. This means an improvement compared to 2024, where we have been at EUR 189 million, considering that we will spend more than EUR 100 million on restructuring costs, which is included in this EUR 200 million.
This means a significant improvement in operational cash, where we are working on CapEx reductions, but also on further improvements in working capital, where we still see here a good potential in terms of our inventory level, which is still at a too high level. Looking at these measures, we are confident to reach, let's say, the profit range we have given and also the cash flow target we have disclosed some weeks ago.
Having said that, I hand to Philippe, I hand over to Philippe, who will give some more details to the final numbers.
Thank you. Good morning to all. Yes, we are above EUR 8 billion again, which is a 1.3% increase at constant exchange rate, representing EUR 105 million. Above the market, which was down by 1.1%. Again, it's our performance of 240 basis points versus the market. Looking at the performance per segment, if we go to lighting, lighting is showing a growth in terms of sales of 3.3%.
Here we have the combined effect of new programs ramping up in North America, especially with Chevrolet and Cadillac, which was a good level of sales. On the other side, we have sales going down in Europe, also with some programs ramping down in Europe, like Tesla or the V-Class. At the end, we have the full benefit in terms of sales of the HBBL consolidation, representing EUR 271 million for lighting.
In terms of operating income, we reach 3.2%. Here we have an improved gross margin thanks to the consolidation of HBBL, which is accredited to the results and also good mix effect. On the other side, we have some higher R&D expenses on lighting for the new programs and new launches that are going to happen in 2025. On electronics, we have sales which are at -1.2%. Here we have also a combined effect with good radar business in North America, again with GM, and also a solid radar business in Europe.
On the other side, in Europe, we have been affected by the slow ramp-up of the electrical market, especially with the German OEMs. We have also negative product mix in China with some good products which are ramping down in China.
We have also faced some programs postponed by the OEMs, which have affected our sales compared to our expectation in 2024. Here we have a profit which is at 6.9%. It is in line with 2023, with the combined effect of lower gross profit, but reduction in terms of R&D and savings on the R&D side compared to 2023. Lifecycle is showing sales at -3.6%. Here we have also, let's say, a combined effect with aftermarket going well in 2024.
On the other side, we have the workshop products which are going down with a very low demand, especially on the construction and agricultural business, which has also led to a little bit of underutilization of our special application plants, also reducing a little bit our gross margin in lifecycle.
At the end, we are at 9.6% operating margin versus 11.9% last year, still a solid performance, but slightly lower than 2023. When we look at the sales per market, basically, HELLA is outperforming everywhere in every market. You can see the figures here on the chart. Each region is above the market and the production. Looking at the full P&L, again, we have a gross margin which is at 23% versus 23.7% last year.
Here we have a low gross margin due to the mix effect, and as I said, coming from and also volume reduction coming from electronic and workshop activities. On the other side, we have been able to offset part of it with R&D spend, which has been reduced to 2023 to the level of 10% versus 10.2%.
SG&A are flat in percentage of sales, increasing a little bit in absolute value due to the consolidation of HBBL and PAGID also in the lifecycle solution, which has also led to an increase of the distribution cost in absolute value in our P&L. Operating income 5.6%, as already said, and EBIT at 5.9% versus 5.8% last year.
Here with the combined effect of the BHTC gain and restructuring also accrual, which has been made for around EUR 110 million in Europe, and leading to a net income which is at 4.6% versus 3.3% last year at EUR 371 million. For the cash, we are ending up at EUR 189 million versus EUR 205 million. As I said here, if we exclude the factoring variation from one year to the other, we would be very similar to 2023.
We also can mention that we have a higher operating cash flow, which is partially absorbed by higher tax payments a little bit versus 2023. We have also a good development of the working capital and especially some reduction in inventories, which have been positive for the cash. Our tangible CapEx are EUR 440 million. It is minus 2% versus last year and still a level which is allowing us to be prepared for the coming launches and future growth in the coming years.
Thank you, Philippe. Going to the outlook, it is unchanged to what we have shown to you some weeks ago. The market is stable, a negative volume ambition or expectation on Europe and as well Americas. Asia was a slight positive. This is how actually we also see it.
If we look at the first quarter, it is basically within our expectations so that we are in the sales range we have expected, which is related to our guidance, a slight decline also on a year-on-year comparison. Here, especially considering that within lighting, we have with important customers have seen a ramp down and now a starting ramp up for new car models, which impacts us so that the lighting is as expected with a negative year-on-year development.
On the good positive note, I can say that electronics, we have already seen in the fourth quarter a good development, and this has continued now in the first quarter overall. If I look overall at our view, this is unchanged.
We guide on a sales range of EUR 7.6 billion-EUR 8 billion on an over-eye margin between 5.3% and 6%, and on a cash flow, as said, at least EUR 200 million. To wrap it up, overall, we confirm, as said, the numbers. We have preliminarily communicated. We propose the dividend of EUR 0.95, considering our net income of EUR 371 million.
This considers the BHTC disposal at least on the book gain of EUR 106 million, whereas we distribute 30%. This is a continuation of the dividend policy. Going forward, we continue to focus, as we said, on the top key priorities.
To take advantage of the growing markets in Asia, getting a higher business or increasing our business share in the Americas and accelerate on the structural measures and focus on a further cost reduction going forward, increasing our target in terms of cost reduction in comparison to what we initially anticipated in 2024. That would be all from our side. I'm happy to take your questions.
First up is Sanjay Bhagwani from Citi. May we have your question, please? We kindly ask all questioners to limit your questions to a maximum of three. Thank you very much. Let's start with Sanjay Bhagwani from Citi.
Hi. Thank you very much for taking my question. Three questions from my side. The first one is on the Q1 trading update. I understand you mentioned that some of the trends of Q4 on electronics are continuing and lighting are continuing. You have also seen a significant reduction in the workforce in Q1. Putting it all together, how do you think the Q1 latest trading has been? Do you expect the margins already to be at the lower end of the guidance range? Maybe some color on Q4, sorry, Q1. I'll just follow up with the next question after this.
Q1 overall, I said that I see the positive trend continuing on electronics. We have seen, and electronics was pretty weak on a year-on-year comparison. That electronics, I see a positive momentum. Lighting was negative on a year-on-year comparison. This has to do with some changes, ramp-downs for us on a year-on-year comparison, high runner programs where now the ramp-up will only be now early Q2.
This is something which has impacted lighting. Lighting had a negative growth. Life cycle, overall, we had still a strong Q1 on a year-on-year comparison. We see in comparison to Q4 that it has stabilized. It is getting better. On a year-on-year Q1 to Q1, sales is negative. Overall, sales will be negative in Q1 on a year-on-year. We expect outperformance on the OI. We will certainly be within the range.
You said better than the lower range. This I can confirm. We were somewhere between the lower range and the midpoint for Q1.
Thank you. That is very, very helpful. Maybe the second one is on the disposals. I think your parent announced kind of that there can be sizable disposals overall for FORVIA consolidated levels. Do you see any implications if this pertains only to the FORVIA standalone, or this may also include something from HELLA, for example, lifecycle solutions or something like that?
We are not working on a substantial change of our portfolio today. For sure, we look at continuously on our overall portfolio if we look, let's say, within the segments, how to focus really on key products and key areas also going forward where we believe this pays strategically off. We are not today questioning overall, let's say, sizable big business groups.
Thank you. My final one is on China. I see that APEC organic growth outperformance, but that's probably just because of the consolidation of the JV. Maybe a bigger picture question. Can you please remind us the proportion of the local OEMs you have in the China mix? Where do you think your product portfolio is strong versus where do you see there is more vulnerability if you have to keep in mind the local competition and also the insourcing strategies of the OEMs?
Today, if I look at the sales we had, then around overall, on lighting and electronics, around 40% is with Chinese OEMs. If I look at the order intake we reached, it was more or less two-thirds with Chinese OEMs. We will see now in the upcoming years that the proportion with Chinese OEMs will increase significantly.
On the product side, what we now see is for lighting that they are very much interested in the newest technologies, especially on HD technologies, but also display technologies, even considering these new innovations earlier than European customers. We can here see that there is a clear interest also to differentiate because of the signature and the design aspect also with the lighting in the design of the overall car.
Overall on the OEMs, there is a clear trend where we see for our full product portfolio a very high interest overall. In electronics, we are very well positioned in terms of all that is related to our sensor and actuator business. There we are also perceived as a very strong partner. What we now see also with the new regulation, meaning that radar needs to be in a car going forward, there is also a good interest now in radar applications, which is coming up.
On top of that, if we look at all that is high voltage or what is within our product portfolio of energy management, there it depends on the customer base. If we think about high voltage, low voltage solutions, on BMS converters or also X and 1 solutions, there it is very different.
Some of the customers are more highly vertically integrated. There the interest is not high, but there are others also where the interest is there where vertical integration is not the same. In general, I would say a good and strong product interest.
Thank you. That is very, very helpful.
Thank you, Sanjay.
Next up is Christoph Laskawi from Deutsche Bank. Just a second. I'll open the line now.
Good morning. Thank you for taking my question as well. It's actually only one or two. The first would be just on your remarks to the start of the year. Could you comment also on the volatility of the call-offs that you see from customers? Has that improved a bit across the board and also by region? After the announcement of the European Union to change the CO2 regulation, obviously, it's not yet come into law.
Do you already see the customers reacting to that with regards to mix? Any impact you can observe? Does that also improve the volatility of call-offs? Is that in general giving you a bit more stability? If you could comment on that, thank you.
Just a moment. I need to open the line of the speakers. Sorry for that.
Okay. I think in general, the volatility and uncertainty remains high. What we can say is that we still see in Europe some delays on the ramp-ups on some of our customers in comparison to our expectations. This is not at the same degree as it was last year. We were also more cautious in our own planning.
Against the customer plan, there are deviations. Against our own plan, what we considered, we are more or less spot on what we reached in terms of sales. It remains high, this volatility. Volumes in the Americas still are stable. I spent with the customers last week basically having a tech show, and I spoke to all of the customers. You can imagine the uncertainty with all the tariff discussion is very high.
Volumes are still okay, no big impact as of now to all deliveries and also production schedules. There we are more or less still in a stable situation. For sure, the uncertainty remains very high with decisions which could be taken. China was as expected, and I said last time that we have seen, especially for the months of January, so before Chinese New Year, that there was some preponing of the volumes.
The market was, especially before Chinese New Year, a little slower, but which was seen already into the start of the year. Now we see that it is ramping up. It is a little below our expectation, but not significant as of now. It will be interesting and certainly important to see how the market then develops in the second half of the year where normally volumes are much better.
This is, I think, quite difficult to predict as of now. I'm not sure if I answered the whole of your question, Mr. Laskawi, because the line was interrupted when you asked the question.
Sorry. Yeah. Just one on the CO2 regulation in Europe and if that is already leading to change of behavior at your customers that you can see or for now no change as it's not set into law yet.
As of now, no change.
Thank you.
I haven't seen any change.
Thank you. At the moment, there are no further questions. We have a follow-up question from Mr. Laskawi from Deutsche Bank. Please, your line is open again.
Sorry. Yeah. Just me back in the line. I forgot to ask one question. Just on tariffs in the U.S., if you could share your thoughts on that. Are you USMCA compliant in Mexico? Are you prepared to take on the tariffs? Are you currently paying tariffs? Just how also the product flow from Mexico into the U.S. works for you in case there's larger exposure? Thank you.
We have not paid tariffs yet in terms of the tariff impact if it comes to the flows between Mexico and the U.S. There is a tariff impact for the additional tariffs for China-imported products related to electronics, so the semis especially, which is around, on a full year, which is around EUR 5 million, where we have now started negotiations with the customers to pass.
In terms of the flows Mexico to the U.S., the most significant is USMCA conform. In electronics, I can say it is basically all. For lighting, the largest part of it. In terms of our exposure, most of the deliveries we do, our customers are picking up so that the tariffs are not on our side. Or we have the possibility to deliver into a free trade zone, which we contractually agreed.
For sure, we are in a very close dialogue with our customers to work then on the solutions dependently on what decisions would be taken going forward. There is a task force. We are working on it. At least I can say for HELLA overall, the overall risk exposure, even if we would see these 25% of tariffs as of today, is not a significant one on the HELLA side as of today.
Thank you. Very helpful.
Thank you. We have another follow-up question from Sanjay Bhagwani. Please, your line is open again.
Hi. Thank you for having me back again. This is a follow-up to Christoph's question. I think from Mexico to the U.S., it's very clear that either you have an option for FTA or free trade zone, or there is some sort of, let's say, the customer picks up the products. So what I understood is it's mainly the second-degree effect where you basically negotiate the price through. Are you able to share the similar insights on if there are tariffs from Europe to the U.S.? Is the exposure similar, lower, and yeah, some similar thoughts on Europe to U.S.?
Europe to U.S., it is not clear what would be the tax impact. What I can say is, for example, on steel and aluminum, there is basically no impact for us. We are looking at, for example, copper, what is in discussion as well. There is a little impact. We have not finalized now our full assessment if this would come, but it should also not be significant.
If there would be tariffs on cars, certainly this is something where we would have implicitly an impact depending then on volumes, which could be lower. This is difficult to judge. In general, we can say that the biggest part of our business we are doing in NSA, cars are produced in Mexico or the U.S. For sure, there could be an impact if cars would have a tariff.
We have no assessment yet or no estimation on that one. On potential other tariffs, I think there is no clarity for us. For sure, we also have some material flow from Europe to our production sites in Mexico and U.S., but it is not very important. We would have to see if tariffs would then be there. This is something we have not looked at in detail without knowing what tariffs could come.
Thank you. Very helpful.
There are no further questions.
Thank you very much for joining this call. Thank you very much for the interest in HELLA in our 12-month result call. I wish you a very good day and hope to speak to you or see you soon. Bye-bye.