OPmobility SE (OPM) Earnings Call Transcript

I start again because my mic did not work. Therefore, a big welcome, everybody. Good morning. Welcome here. I'm very happy with Felicie Burelle and with Kathleen Wantz-O'Rourke to present to you today the first semester result of Plastic Omnium. I'm very happy as well because the performance is very strong. We are very satisfied, and I want to use the opportunity to thank the PO team for the strong performance of 2023 first semester. I'll start with some business highlights to explain again why we are so satisfied with the results, starting with the growth because the company was able to grow 35% compared to the first semester of last year, again demonstrating that we are -- with the right customers that we have the right offer, that we have the trust of our customers and the strategy that we have been putting in place the last years is paying off because we are overperforming the market, and we'll come back to that later on. It's not only about growth in terms of activity, but also in terms of profitability because the profitability did improve by 17% year-over-year. That is mainly driven by the historical activities of PO performing very well in growth but also in profitability, but also driven by the fact that we have been able for the newcomers, the lighting activity, to achieve the breakeven for the first time in the month of June, which is, I believe, a really strong performance of the Lighting team. And last but not least, in terms of business highlights, the very strong order intake we had in the first semester. We are very satisfied last year to have the record order intake in the history of PO, beating the one from 2021. But the first semester of 2023 did show even higher numbers because we have been able to book more business in 6 months than what we have been booking in 1 year in the past, again, showing that we have the trust of our customers, which is the most important, that we are able to manage the market complexity on short term, like inflation recovery, but also working on long-term in terms of finding ways with our customers to continue to grow together. It is also very strong, the order intake in terms of quality because we are not depending too much on Europe, 70% is outside of Europe and that is in all activities, historical activities, but also electrification, lighting and hydrogen as well. And these are the topics we will discuss in the coming minutes. Some numbers to highlight what I was mentioning, starting with the turnover, EUR 5.8 billion of sales in economic revenue for PO, which is a record in terms of sales in the history of the company. That is in terms of growth 20% like-for-like. That means organic growth is 20%, which is outperforming the market by 9 points. And even more important, we are outperforming the market in each region as well, and I'll come back to that later on. In term of operating margin, EUR 210 million in the first semester. That is 4% revenue. For sure, pretty diverse, depending on the activity, the historical one performing very well, the Lighting being on track with the recovery plan we have been putting in place and the new activities like electrification and new energy, which are investment so far. In terms of free cash flow, which is probably the best number we have to present today in term of financial performance, EUR 191 million of free cash flow, meaning an improvement of 43% compared to last year, 3.6% of revenue. That is 1 of the target of the group because we have been investing a lot in the recent years. And for sure, one of the target is to deleverage the company and to deleverage the company, the best way is to generate free cash flow. Therefore, we are very satisfied with the free cash flow generated in the first half of 2023. Regarding the growth of the company, you can see here on the slide, the market growth, which was 11.3% in the first semester. These are the S&P numbers. And on the right side of the slide, you see the performance of PO in each region. And what is important to mention is what I said before, meaning that we are outperforming the market in each region, which is important in terms of managing the growth for the future, 7.5% outperformance in Europe. 0.1 point In North America, which is not so strong, but you may remember that in the first quarter of the year, we were underperforming the market by 8 points because some SOPs were delayed with our customers. Now it is catching up. And we are on a good track in North America as well. 10.6 points in China, which is very important for us because, as you know, the Chinese market is transforming even faster than the rest of the world, more electrification, many newcomers gaining market share and the fact that we are outperforming this market does demonstrate again that we are working with the right customers in China. And also more than 10 points in the rest of Asia. Therefore, a very strong start of the year. I mean after more than 6 months, it's more than a start, but a very strong first semester in 2023 for the company. I hand over now to Kathleen, and Kathleen will give you for sure more information about the financial performance of the group in the first 6 months of 2023.

Thank you very much, Laurent, and good morning to everybody, and thank you for being present both physically and online today. I'll move on to my first slide. As mentioned by Laurent, in the first half of 2023, both of the group's business lines reported strong revenue growth as did our joint ventures essentially in China and in Malaysia. Both -- as you can see here, both economic and consolidated revenue grew double digit across all segments and regions, with reported revenue up 35% against the first half of 2022 and organic growth, up 20%. As a reminder, organic growth, as mentioned in the like-for-like column that you can see on this slide, excludes the acquisitions in the second half of 2022 and foreign exchange differences. Both the EUR 5.8 billion economic revenue figure and the EUR 5.3 billion consolidated revenue figure represent all-time records for the group in a given semester. The group recorded 3 months in the semester of over EUR 1 billion in economic sales. Generally speaking, growth has been driven by 4 principal factors. First of all, there is a mechanical impact against the first half of 2022 that saw major uncertainties and disruptions linked to the war in Ukraine. Secondly, a marked drop in the number of supply chain-induced shutdowns even if the situation is not yet completely absorbed, and we still have yet to find the pre-pandemic operational conditions. Thirdly, considerable growth in Germany and Eastern Europe. Germany with 40% growth and Slovakia with 38% growth year-on-year, driven by the backlog and the rebuild of inventories but also by the accelerated growth in BEVs. And last, but certainly not least, as Laurent mentioned, we're starting to see the fruit of the strong order books of the past 2 years that are now beginning to flow into the figures, strengthening the growth in our historical activities. In H1 2023, the group launched a higher number of starts of production, 75 in the first half of 2023 against 67 in S1 2022. If I move on now to the revenue slide. Here, you can visualize the walking growth starting in H1 2022 and moving through to H1 2023, excluding acquisitions, followed by the contribution of the acquisitions to the top line and the reported economic revenue figure on the 30 June. The EUR 809 million organic top line growth in the historical activities of the group is composed of 17% organic growth in the Industry segment and 29% in the Modules business. Foreign exchange differences impact organic growth negatively by EUR 52 million, or in other words, canceled out approximately 6% of growth. I'd like to zoom in now on our ICE business, in particular at this moment. Clean Energy Systems reported organic growth in the very high single-digit range in an addressable market worldwide that grew by 6.7%. Outperforming the addressable market, meaning the nonelectric market, our CES activities continues to demonstrate that it's an actor in the ICE business to be reckoned with. Following the huge order intake for the ICE business in the first quarter, the half year growth figures comfort us in the strategy of the group to remain agnostic in terms of powertrain. We will continue to be a clear leader in the consolidation process that we believe is taking place in the ICE fuel tanks business for the next 10 years, at least. Our Exterior Systems business pursues its remarkable growth trajectory of booking significant double-digit growth in this first half of 2023 and outperforming the worldwide market by a factor of 1.9x. Modules has also been a substantial driver to top line in the first half, clocking up 29% organic growth and considerably outperforming the markets in all regions of the world. Our new activities, the acquisitions, as you can see here, in the bridge contributed to EUR 688 million in top line growth and represent approximately 12% of economic sales. The contribution to the top line is overall in line with our expectations for the acquisitions. In conclusion, on this slide, on a strictly organic basis, the group outperformed the worldwide market by 8.9 points. Coming now on to the operating margin. In the first half of 2023, the operating margin stood at EUR 210 million, up 16.9% compared with the first half of 2022 and represents 4% of consolidated sales. Excluding the impact of acquisitions, operating margin came to EUR 230 million, up 28.2% versus the first half of 2022 and representing 4.9% in operating margin -- in consolidated sales. If we look at the breakdown on this slide now between PO Industries and PO Modules. The group's Industries operating margin stands at EUR 182 million, up 14.2% year-on-year, representing 4.7% of sales. And I'd just like to recall that the Industry segment includes Exterior Systems, Clean Energy Systems, the acquisitions from the second half of 2022 and the New Energies activities. So excluding acquisitions, the Industries segment came out at plus 6.2%, up comparably by 0.6 points year-on-year. And this is a strong testimony to the work that the group is currently doing in terms of the quality of margin and the leverage effect of the additional volumes that we've managed to clock up. In line with our strategy, the historical scope of the Industries segment finances the OpEx growth in New Energies. And in H1 2023, the stronger margin in the Industries segment, excluding acquisitions, more than compensated for the OpEx investment in New Energies. Modules improved its operating margin year-on-year coming in from 1.9% in the previous year to 2% in this half year of revenue. In absolute figures, and for me, that's what really counts in terms of bottom line, Modules operating margin grew by 37.5%, well above the growth in consolidated sales of 30.2%. The acquisitions reported a negative contribution of minus EUR 20 million. I'd like to recall that the acquisitions contributed negatively in the second half of 2022 by minus EUR 52 million, and the rock lighting activity was consolidated only in the last quarter of 2022. The group managed to reduce by more than half the dilution of the acquisitions in 6 months. The lighting activity achieved a first month in operating breakeven in June. So the group is very satisfied with this result, which demonstrates our capacity to integrate companies and create value. I'd like to extend a very warm thanks to all the teams that have worked extremely hard to make this possible. Considerable effort has been invested into the action plan, and Laurent will specifically come back to that topic in a few moments. One last point on this slide, inflation remains one of the biggest challenges today. Nevertheless, a certain proportion of inflation of the cost base is here to stay and constant mitigation has become part of our everyday. And this is why the group has chosen to no longer report on inflation. We just have to get on with the job. And our inflation mitigation plans are and will continue to bear fruit as we work through our 4 principal levers. And I'd like to recall what they are. Firstly, relentlessly looking for additional operational efficiencies and growing our structure costs substantially below revenue growth. Secondly, constantly evaluating and monitoring fluctuations in pricing with our supplier base and adapting costs in a very agile mode. Thirdly, ensure that all new quotations include updated cost basis, so it's not to penalize future growth with the cyclical inflationary impact of today. And last, pursue contract reviews, of course, with our customers on an objective and documented basis to pass on part of the impact. So efforts will continue into the second half of the year along the same lines that I've just detailed right now. The net result, group share is stable year-on-year at EUR 100 million, and this is also a remarkable achievement of the group as we've managed to absorb the impact of the acquisitions, but moreover, the doubling of the interest expenses as interest rates have dramatically climbed. The average cost of debt has risen year-on-year from 1.78% to 3.4% for the group. And whilst objectively doubling, the group's very strict financial discipline framework is a key enabler to maintaining these costs under control. In an automotive industry that is in profound transformation and constant restructuring, as we've seen over the past 3 years. With inflation and higher interest rates, we believe that net income is the only real level playing field that's comparable from one company to another. And for Plastic Omnium, the net result group share is one of our major quality indicators. Coming on to my -- just the free cash flow. Free cash flow, as Laurent mentioned, comes in at EUR 191 million or 3.6% of revenue Compared with the first half of 2022, this represents a significant increase of 43.1%. This figure also includes the first deleveraging measures taken by the group in the form of the sale of real estate assets to an amount of EUR 54 million. Excluding this impact, free cash flow came in at EUR 137 million, stable in absolute terms year-on-year, it was EUR 134 million in the first half of 2022 and absorbing the impact of the acquisitions and our continued investment in New Energies. And with regard to capital expenditure, the group invested EUR 205 million, so 3.9% of revenue compared with EUR 154 million in the first half of 2022. This includes the favorable impact of the sale of the real estate assets that I just mentioned and adjusted for this effect, CapEx represents 4.9% of revenue. Coming quickly now to the last slide of my presentation. Net debt at the end of June 2023 stood at EUR 1.530 million, down by EUR 139 million from EUR 1.7 billion approximately at the end of December 2022, and it's in line with the group's debt reduction policy. The net debt-to-EBITDA ratio stood at 1.7x versus 1.9x at the end of December, remaining well below the threshold that we've fixed ourselves of 2x. And we are particularly satisfied with our liquidity at the end of June. We have managed to reimburse the last tranche of our 2016 Schuldschein for EUR 159 million, and we have still managed to maintain liquidity at the same level as at the end of 2022. We have further managed to extend the expiry, the maturities on a number of our credit lines in advance to their expiries in 2024, and we've now increased the average maturity to 3.4 years. So this puts us in a very comfortable position in respect to future debt maturities, and we have now the freedom to decide on future refinancing options depending on how market conditions evolve. And that being said, I'll now pass back to Laurent.

Thank you. Mercy, Kathleen, very much for the numbers, the financial numbers. I'm sure you will have a lot of questions about that, but that's for the Q&A session. I hand over now to Felicie and Felicie will start to describe a bit more in detail the highlights of the first semester 2023 beside the financials.

Thank you, Laurent. Good morning, everybody. So indeed, a very solid 6 months of 2023 with a strong activity with many flawless launch. So we said it's 75, so 8 more than H1 2022, which obviously partially explain the solid growth we've been entertaining for the 6 first months of the year. You have on this slide some key example of those launches we had in H1, really highlighting the diversity that we have in terms of models, in terms of powertrain and in terms of region. So all of that putting us in a favorable position to really benefit from the growth in all regions and on all types of powertrain. For you to know, so the -- in terms of BEV segment, in terms of launch, it represented 1/3 of our activity in H1. You have some good example here. So the GM front and rear bumper, which enabled us in the U.S. to catch up on the second part of H1. Also in China, the launch of the NIO, which is a good example of why we do manage to overperform in China as we have a strong exposure in terms of sales to the EV segment. In H1, it was more than 30% of our sales. But not only on the BEV segment, also on the ICE with some very important launches. You can note the BMW facelift for our Greer facility, which has been launched without any problem. A very important launch of Mitsubishi, which will represent 1 million units in the 5 years to come. And a very important also launch in Volkswagen Touareg with bumper and front-end module. So all of that are really representing the [ anchor ] business with a strong activity in the first half. In terms of order intake, we said it. It's been a record high order intake for H1 surpassing only for half of the year the order intake we have registered in the past year. So very, very solid growth to come. We are very proud of that. And thanks to all of the commercial teams that have been highly involved in gaining those successes. All of the business will contribute positively to the growth, which is also very important. Laurent mentioned it earlier, a few indicators to better qualify what is this order intake. So 60% represents NEV. So it means BEV and H2. So out of the 60%, 2/3 is for BEV and 1/3 is H2 contracts that we have gained. On top of that, the really also good KPI is that 70% of this order intake will represent projects to come outside Europe, so in Americas and in Asia, which really fits into our strategy of better balancing the growth to come as we really want to redevelop more Asia and North America. So you've also said it, the -- not only in terms of quantity are we happy of this order intake, but also the quality of this order intake is important in the sense that the average profitability of this order intake will contribute positively to the financial profile of the group in the years to come. A few examples, again, of this very solid H1 order intake. Part of it is coming from our historical business, so really demonstrating again the resilience and still the growth potential of our traditional businesses, ICE, CES and HBPO. But also, obviously, some important new successes in the new activities, namely ACTIA E-Power and the lighting activity, really showing that now we have somehow passed this proving period of the beginning of the acquisition. And really, we do have gained the trust of the OEMs, and we have been able to gain new businesses in the lighting activity for a major European player that will be in Europe and in Mexico and also a very important 48-volt battery pack that will be to serve Europe. So many commercial successes from our new activities, but as we have said it, it's really important that all of this future growth is thanks to our historical business that each of them have their own very specific strategy, but that are fully contributing to finance and generate the cash that we can reinvest to develop those new activities. So yes, we still have pockets of growth to take in some region and with some new customers. And we have this integrated solution that we are developing so that we can capture the synergies of having the envelope of the car, but also integrating it with some modules and some of the lighting activities. CES which has an exceptional activity in the H1 to win some of those exceptional orders, we made a special communicate on that during Q1. And as Kathleen said, we are still capable of growing our market share in this market that obviously, over the years, is reducing. So we are very happy to take this strategy and to be in a position to consolidate this market, which we believe has still some growth to come in the years to come. And the module activity today mainly is still focused on front-end module activity, but that we develop strongly, and we believe there are some new modules that we will be able to propose to our customers in the months, years to come.

We had an issue with the script. It was for you to take a short break. Now besides the historical activities, Felicie was mentioning before, and I'd like to insist on that because we cannot transform the company without having a strong basis. And the 3 historical activities of PO are improving quarter-by-quarter, and that's the key for us to be comfortable in the transformation of the company. For sure, another topic, another challenge was the integration of the new Lighting division, which is, as you know, the acquisition of AMLS Osram in July last year, but also from Varroc Lighting Systems in October. It was an acquisition which was supported strongly by our customers because they wanted us to enter into the lighting business because lighting is growing because they believe as we believe as well that we have a very strong asset with the right technologies, but also with the right footprint. I'd like to say that we are everywhere where it makes a lot of sense as of today, meaning in best-cost countries, we can be very competitive on that. And therefore, 1 of the main targets for the first half of the year was to protect our customers, meaning to have a normal supply chain performance, which was not the case in the past and that is the case today, meaning that our customers are very satisfied with the way we are serving them on a daily base. We don't have any escalation anymore. That is a fantastic job done by the team. And the effect is that we are booking orders and that it is accelerating now because they trust us that we are able to deliver, and we do see a lot of momentum, activities in the order book for the second half of the year. The rest was about hard work to improve the operating performance and then the margin, for sure. You see some KPIs we are following, I would say, at least on a monthly basis, meaning how we have been able to reduce the quality cost, the scrap rate; how we have been able to work as well intensively on the inventories compared to end of last year, but also what the team has been able to achieve in term of plant cost, meaning the cost we need to produce our products, which have been improved by 2 points of margin during the last months. Therefore, that is the job done by the team, which did allow us, as Kathleen mentioned before, to achieve the breakeven for the first time in the month of June. And I like again to thank the Lighting team because it's a fantastic performance, confirming that we have been taking the right decision by investing into this business field. That means we do confirm as well our mid-single-digit operating margin within 24 to 36 months after the acquisition. That is what we did commit on when we finalize the acquisition, and that is what we are confirming today to you, and we are very comfortable to achieve that. That was about lighting. When we talk about new activities as well, for sure, even if it's not new, but that is an activity which is very important for PO, that is hydrogen. You see on the right side of the slide, you see the order book of hydrogen in the first half of the year, but also cumulated, that means cumulated is close to EUR 4 billion now, which is accelerating. If you can see that compared to what we had in the past, EUR 2.5 billion only in the first semester, mainly with a major American OEM, which is not mentioned here, because they don't want us to disclose the name. It's not too difficult because Stellantis and Ford are on the slide. That is the other one, which is not mentioned here. Important as well, when you talk about the order intake, is in which segment, which kind of customer; which segment, 99% is light commercial vehicle or heavy duty mobility, that is important for us because we want to use hydrogen as well to diversify our portfolio of customers to be less dependent on passenger cars. We like passenger cars, but we believe the growth of passenger cars could be limited and then to enter into new fields where the cycles are different, where the volumes are stable and where the margin should be also better. Therefore, 99% of the order book is in this light commercial and heavy mobility and 94% is with established well-known companies. You see some there like Alstom, Stellantis and so on. That means companies investing as well in the infrastructure and not being risky for sure, which is very key when we invested in new fields. Therefore, we are very happy about the momentum in hydrogen. We are building a lot of new factories, capacities everywhere in the world. We will be also very well balanced in terms of geographies in Asia, in Europe and in North America and more to come in the coming months.

Carbon neutrality road map, which we announced a while ago, so around 3 levers: reduce, replace and compensate. So when it comes to reduce, we've continued to really very rigorously deploy this road map, which means that we managed to be more efficient in terms of energy consumption by 4% and that's despite the fact that the activity has strongly increased over the -- over H1 2023. That has enabled us, since January 2023 to integrate the Euronext CAC SBTi 1.5 degree, which 1/3 of the SBF 120 companies are part of when they do have a decarbonization trajectory that is aligned with the Paris Climate Agreement. So it's a very good also indication that indeed PO is really committed to make it happen. So that was for the reduced part. But on the replace. So going to renewable energies. We are on the path of doubling the installation on our site. So there were 10 end of last year. We are targeting 20 minimum by the end of this year. So to have access to either photovoltaic or wind turbine on our site. That is obviously very important for us. Energy autonomy is good, not only for decarbonization, but also as a lever of competitiveness to really control better our cost. On top of that, we are also spending a lot of time integrating and educating our suppliers and integrating into our journey towards carbon neutrality. We do believe, obviously, it's a virtual cycle to include them in our -- using our best practices but also obviously contributing a lot to having a more sustainable ecosystem of green suppliers over the long term.

Thank you, Felicie. Now it's time to talk about what's next and to conclude also the meeting of today before handing over to you. What's next is, first of all, about the market. You see here the S&P numbers for the first semester and the second semester. These are the latest S&P numbers and they see the market being more or less stable in the second semester. Traditionally, Q3 is pretty weak because of summer vacation. Q4 should be a bit higher, but we do confirm our view on the market for this year, as mentioned at the beginning of the year. We are pretty confident as well to continue to outperform the market. Again, we have a very strong order book, as we said before. We have still many launches to come in the second semester. We still are still working on mitigating the inflation with our customers and internally as well. And for sure, the Lighting breakeven in June is very encouraging, and we will continue in lighting as well to improve month by month the performance of this new division. That means we are pretty confident to confirm our objectives for 2023 and 2025. You can see them on the slide. That means a strong growth and the outperformance of the market, which we have, without any doubt, in the first semester, EUR 400 million at least operating margin, which would be an increase of 10% compared to last year, and we are well on track with that with the EUR 210 million in the first semester and the EUR 260 million of free cash flow, knowing that we had the first semester above EUR 190 million it is making us very confident as well to achieve that and to continue to deleverage the company until the end of the year. For 2025, it will be about continuing to grow the order intake we have, and we are still booking also extremely confident to achieve the revenue growth you can see on the slide, but the revenue growth will be also associated for sure with more operating margin, more free cash flow as well and we will continue the transformation -- the easy transformation of the company, Plastic Omnium. Conclusion. Without repeating what we said before, which is always a challenge. But basically, we are very satisfied today about this result. It's again, in a very challenging market environment with a lot of inflation still, with a lot of new technologies, a lot of newcomers as well in terms of customers, we are able to work off with all of these newcomers. That's the reason why we are continuing, for example, to outperform the Chinese market. The historical business of PO is extremely solid, and that gives us a lot of confidence to continue to outperform the market and to be able to transform the company in the coming years while generating a high level of free cash flow, meaning deleveraging as well the company. And last, but not least, the order intake we had in the first semester is just fantastic, and it's very encouraging that we are on the right path. That was for our presentation. We try to keep it as short as possible in order to have an open discussion with you. And now I hand over to you starting here in the room, if possible, for the Q&A session.

And we have a first question here.

Thomas Besson. Two things, please. First, I'd like to come back on the improvement you show for the acquisition, so EUR 20 million for 6 months versus EUR 50 million-plus for 3 months. So it's substantially better. Can you help us understand the shape of the improvement we should expect in the coming semesters. So you're targeting mid-single-digit margins by 25 broadly speaking. So is it going to be something like very back-end loaded or is it going to be something more linear as a pace of improvement? Can we expect to have, for instance, a neutral-plus figure for the full year or is it too optimistic? And can you remind us the European BEV exposure of the Lighting business because I think you've commented on with media saying that it's a bit concerning to see European automakers having difficulties to sell their BEVs at the current prices. So I guess it probably relates to the exposure of our activities businesses? The second thing I would like to discuss with you, please, is can you remind the audience, the Plastic Omnium consolidated exposure to China in terms of revenues and consolidated exposure to Chinese automakers? And finally, and linked to that, can you remind us your consolidated revenue exposure to the current winners among the automakers, so BYD, SAIC, MG and Tesla. Altogether, if you want or separately, if you can say the numbers?

Many, many questions related to the acquisition. I will start and Kathleen and Felicie will complete. Regarding the -- first of all, the acquisition, the scope of acquisition is not only the lighting, it's also the electrification. Therefore, we have to have 2 different approach. Electrification is an investment for the future, new technology for us. We are investing in R&D. We are booking orders. You saw Felicie mentioned that, that we have been booking a very important 48-volt battery pack for major global OEMs. And for sure, we will continue to invest in this electrification. It's not about turning around this business, it's about creating value for the future. And therefore, I do want to say that it will remain a loss-making business, but we don't target the turnaround in the next 18 months for this electrification because, again, it's about having new way and creating value for the future by booking orders and by investing in technology. For the lighting part. Lighting part, it's, for sure, much more about turning around a business which was suffering a lot. As mentioned before, the month of June was good because it was a breakeven in operating margin for the first time of this business. Q3 will be probably a bit weak in volume like it is usually because of summer, summer break and so on. Q4 should be positive in terms of operating margin. We are talking about 24 to 36 months because the margin will depend as well on the volumes, for sure. And we will have a certain drop in sales in Lighting next year due to the fact that not many orders were booked by the company before we came. It was a kind of missing trust from the customers, which we can understand. Therefore, next year, the sales will decrease. It's good in a way because we will be able to do many things we couldn't do otherwise to continue to downsize the structure costs, to continue to invest in some key technologies, mainly in electronic in order to be more competitive, but we will have a drop in sales next year. And we are pretty confident that it will start to increase again in 2025 because we do see a lot of customers willing to move to us. And therefore, it won't be a linear curve in the Lighting. It will be linear in terms of performance improvement, but we will have also to compensate the drop in sales next year and that is the reason why we talk to 24 to 36 months when we talk about the mid-single digit target for the lighting business. BEV and the depend -- I cannot answer the number in terms of how we do depend on BEV in percentage in Europe. Today, we don't see any negative impact from the potentially issues some customers could face on BEV. We are also working with Tesla on BEV for [ I think ], as you know, that therefore it's a customer having a lot of success, as you know that. But we don't intend -- although we don't see major risk on BEV in Europe for the lighting business. We are also very conservative when we assess the order intake and where we assess the potential revenues of the company, that means for some customers, for some segments, for some cars, we do discount a lot compared to the volumes they are giving us to be on the, I would say, on the safe side. Regarding the revenues for the newcomers, you're mentioning BYD and Tesla and more open to China. In China, we have closed -- in our exterior business, we have close to 50% of the revenues, which are not with the traditional ones. It can be the pure Chinese or it can be Tesla because we consider in a way Tesla is being a kind of Chinese because they are exporting a lot and they are gaining market share. I cannot disclose or Kathleen maybe, I don't have the numbers exactly for those customers, but they are very small today. What is important is you should take a company like Tesla. Tesla will be the biggest customer of HBPO in the coming years, replacing Volkswagen. We have nothing against our Volkswagen, but we're happy to contribute to the growth of Tesla. And Tesla will be 1 of the top 10 customers of PO pretty soon in the years to come. For BYD -- and Kathleen will give you some numbers. For BYD, when we talk about bumpers and modules as of today, a big part of their production, they do internally. When they do outsource some bumper business, they do outsource to us in China, basically. Therefore, we have a good foot in the place, but for BYD potentially -- yes, potential to do more basically.

So just quickly coming back to China globally, the group does just over EUR 1 billion per year in China -- represents in H1 just over EUR 0.5 billion, logically speaking. So about 2.9% of group revenue in China. And with the pure players, the pure, excluding Tesla, it's about 22% roughly of the Chinese revenue. With the pure Chinese players, with the exception to Geely, most of them are still under 1% of the Chinese revenue today, so but growing once again with a lot of potential.

Next one?

Michael Foundoukidis, ODDO BHF. Maybe a quick question on the order intake on the Lighting. Do you already have discussions with some customers regarding some bundled orders between lighting and exterior parts and when could we see some announcements on that? That's the first question. Second one on the ICE business and notably on CES. You were saying that H1 performance was really strong, both on the margin and order intake. Would you expect CES margins to further improve in the coming years from today's level as long as you continue to consolidate the business? And maybe a last one on Greer profitability improvement, I mean it's not a topic anymore. But would you say that it's still significantly below where it should be or, let's say, below your average in the North American region?

I start with the lighting and the bundled offer. Today, the order book we have is 99% for pure lighting normal business, which is normal because the rest is a kind of new offer, but we are very happy to see that it is speeding up. We didn't have a lot of orders in the first 4 to 5 months because, first of all, we needed to fix the operation and to restore the customer trust, which is the case, but July was very good in term of order intake and more to come for traditional business. And when I say more to come, much above what we have in terms of revenues. That means we will have growth anyway in the lighting business without talking about the bundle offer, that is happening right now and that is good to see. The bundle offer, we have activities today with some customers in the U.S., in Europe and in China as well. We have some small orders, but for illuminated grill, as you can see here, but not really relevant in terms of size, and we are expecting to do much more. When can we have, I would say, an important order? I think it won't be before beginning of next year, and we can talk about that because, again, it's a new process for our customers. They have to organize themselves a bit differently. It's also new for us. We have a dedicated team to work on that. Therefore, this year, the order intake of Lighting will be mainly done by traditional approach, lighting for lighting. Next year, I'm pretty confident that we could have the first important orders or significant order where we integrate the function in the Lighting business. CES ICE. I'm happy that you asked the question because I always like to talk about CES ICE. Why? Because you may remember that we said we want to see in this business. We are very happy about the electrification because of everything we mentioned before. But we believe that even in 20 years, there will be ICE business in the world because not all the countries are going to the same pace and probably some of them will never go to the electrification. Therefore, for us, the strategy is to remain to adapt, to downsize in some regions and to shift capacity in other regions where we do see market growth in ICE. The first semester in term of order intake for CES ICE was extremely solid. And we believe for the full year, the order intake will be, could be much higher than the revenues in the CES ICE, not because the market is increasing, but because the consolidation is speeding up, is accelerating. And you have seen some examples on the slide of Felicie before. We have more and more customers, major customers, willing to work with us because we are the #1 in terms of size in this business. On the long-term strategy, to make sure that we will continue to stay with them and that they will consolidate the market around us, that means they will reduce probably the number of players, the number of suppliers they have in order to be sure that they have always access to some technologies like the fuel tank. And we are confident that we will be able to grow our market share from 22% some years ago, up to 30% at least in the coming 4 to 5 years, showing that we are able to mitigate at least partially the electrification and to reduce -- I mean, the fact that this market is reducing. What does it mean in term of profitability and cash? It should remain a very good cash machine for us, which is fantastic in terms of developing new technologies like electrification or new energy. If we have only a look on this powertrain business in terms of profitability, we are happy with the profitability of today, but we believe it could be even more in the future because normally, if you are less players, you have higher pricing power on the market, but that's what we see in the coming years. Regarding Greer. Greer had also a very solid first semester. That means the profitability is improving in Greer as well. The volumes are very high because our customer is very successful with this kind of vehicle. It's really a very, very nice factory, now Greer, in terms of operation. You're invited to come, if you want. A number -- frankly speaking, it's a very nice one. Are we already on the level we would like to be in term of quality, in term of productivity and so on? No. We are not. Is it dilutive compared to the rest of the group? Yes. But it is very satisfactory where we know where we are coming from to see that it is improving year-over-year, and I'm sure it will be even better next year in Greer as well.

We have 2 questions by the phone.