OPmobility SE (OPM) Earnings Call Transcript

Hello, and welcome to the OPmobility 2024 Third Quarter Revenue. My name is Laura, and I will be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to your host, Laurent Favre, Chief Executive Officer, to begin today's conference. Thank you.

Yes. Good morning, everyone, and very happy to welcome you to the presentation of the Q3 2024 revenue of OPmobility. Stephanie Laval, who is with me here today, and I will present you the main facts and figures during the next 15 minutes to 20 minutes before handing over to you for the traditional Q&A session. Following our very strong growth in revenue in the first semester of 2024, OPmobility recorded again a strong growth in revenue in Q3 compared to 2023. This solid performance demonstrates the quality of our order book, and we will come back to that later on, but also confirms that our strategy is very well adapted to the market transformation market, which remains for sure, very, very volatile. If we have a look on the main facts and figures and numbers, first of all, we are very, very satisfied to post a growth of 4.7% compared to Q3 2023. This growth is mainly driven by our traditional business groups, Exterior and Modules. We are outperforming the market by 9.5 points. As you know, the market is decreasing by 4.8%. And it has to be noticed as well that all the business segments of OPmobility are outperforming the market, meaning that this outperformance is very balanced. We are growing in all regions. That means we are growing in America, we are growing in Europe, and we are growing in Asia, again, showing that our performance is very well balanced. And I want again to notice that the U.S. is remaining our biggest country in revenue since the beginning of 2024 and will be the growth of -- the engine of the growth of OPmobility in the coming years. And last but not least, we are still very committed to carbon neutrality. You know that we are targeting Scope 1 and 2 carbon neutral in 2025 for OPmobility. And we have been very, very satisfied to be recognized by the MSCI ESG rating with an AA rating right now, replacing the A we had in the past. Now talking about the market and talking about our performance in this market. On this slide, you can see OPmobility growth compared to market development during the first quarter, second quarter and third quarter. And as you can see, we have been able to outperform the market each quarter, 4.5 points in the first quarter, close to 4 points in the second quarter, and in the third quarter, we're talking about today, 9.5 points. That means the outperformance of OPmobility is confirmed and is even increasing during the year. The market is, for sure, strongly impacted by a slowdown in BEV sales, that is mainly the case in Europe, but also by high inventories level in Europe, but especially in North America. And that is the reason why Q3 was pretty low in terms of production. But again, we have been able to outperform this low market at OPmobility. We are outperforming the market in Q3 by 9.5 points, as I mentioned before, and we are outperforming the market for the 9 months of 2024 by 5.7 points. And therefore, we are very confident to meet our 2024 objective, which is to outperform the global market. And as you can see, we are well on track, and we will continue as well in Q4. Again, this outperformance is due to the quality of the order book. We have been talking a lot about the order book of 2023, 2022, 2021. It is now transforming in sales. That is the quality in terms of size of the order book, but quality also in terms of diversification, customers and geographies. Again, also this outperformance is demonstrating that our historical businesses, our 3 historical business groups, Exterior, C-Power and Modules are #1 in their respective markets, but are able to continue to gain market share, which is also a target of OPmobility to develop new activities, but to consolidate and to continue to develop historical activities. And those activities, the historical one are driving the outperformance of OPmobility in Q3 2024. Now if we have a look on our outperformance by region, I mentioned before that we are extremely pleased to see that we are growing in all the regions. And I think it is really important as the market is transforming to have a balanced strategy. I'll start with Europe, which is our home market, as you know. Europe is strongly declining in Q3 by close to 7%, but we are growing. We are growing in Europe. We are continuing to grow in Europe, which is, for sure, very important, which is again demonstrating our capacity to gain market share. And therefore, our outperformance in Europe is more than 11 points. To be noticed as well that Europe is now representing 48% of our revenue, which was 50% in the first semester. Second region I want to highlight is North America. North America as well, strong growth, strong outperformance, [ 11.1 ] points, 30% of revenue. And the growth of OPmobility in North America is also driven by our Module business, our factory -- our new factory in Austin, Texas, but also by our activity in Exteriors, both in U.S. but also in Mexico. As mentioned before, U.S. is the biggest country of the group in terms of revenues, and we will consolidate its position in the coming years. Now if we go to Asia, Asia as well, a strong growth and a strong outperformance. We will talk about China in the next minutes, but to be noticed as well that the biggest countries in Asia outside of China for OPmobility are India and South Korea. And in those countries, we are growing a lot, and we are building up capacity for the future in India as well. Now focusing on China. For China, we are in line with the market in the third quarter, but with a different situation by business group. Our traditional business, C-Power is, for sure, suffering from the electrification in China, therefore, underperforming the market. Nevertheless, we do see more and more PHEV activities in China, hybrid, which are giving us a lot of opportunities for C-Power as well. Therefore, we are pretty confident that we will be able to grow the C-Power business in China in the coming years by focusing on PHEV business. For the Exterior business, our joint venture, YFPO having more than 20% of the market in China is outperforming the market in Q3, is continuing to book orders with the winners of today, and we have very, very nice commercial successes, for example, with BYD in the first quarter for plastic tailgate. I hand over now to Stephanie and Stephanie will talk a bit more about the details of the revenue in Q3 compared to last year.

Thank you, Laurent, and good morning, everyone. Let's now focus on consolidated revenue for the third quarter 2024. In Q3, OPmobility posted total consolidated revenue of EUR 2.5 billion. As you can see on the chart, revenue is up plus 2.9% in Q3 2024 compared to Q3 2023. This includes an FX effect of minus EUR 23 million, notably on the U.S. dollar and Argentine peso. Excluding this FX effect, the revenue is up by 3.9% on a like-for-like basis. All business segments outperformed the automotive production in Q3 2024, and it is also the case for the first 9 months. Now looking at each segment. First, Exterior Systems, including Exterior and Lighting business groups is down minus 4% like-for-like in Q3, but remained stable over the first 9 months with different evolution between Exterior and Lighting. First, so Exterior, which is the production of Exterior parts, mainly bumpers and tailgates, managed to post a solid performance despite the challenging context, thanks to the strong order book recorded in recent years and new launches. This performance is mostly offsetting the anticipated decrease in Lighting revenue, which is in line with group expectations. I remind you that it is due to a lower order book for Lighting prior to its acquisition by OPmobility 2 years ago. What is important for Lighting is that it continues to record a good level of order intake above revenue, which will contribute to secure its future growth. Modules consolidated revenue is close to EUR 800 million in Q3 2024, with the highest like-for-like growth rate of the quarter at plus 23%. The group saw a significant rise in volumes in North America, boosted by the module plant in Austin, Texas that has started its activity a year ago. In Europe, the group also benefited from the increase in Modules assembled in Czech Republic and Slovakia for Volkswagen and Skoda. Moving to the Powertrain segment. Among this segment, the ICE activity continues to consolidate its leading position in the market where electrification is progressing, but not as fast as anticipated. For the hydrogen activity, H2-Power, the group has continued to book new orders since the beginning of the year, particularly in China and in Europe for railway mobility. Let me now comment on the Q3 business highlights, starting first with Exteriors on the left of the slide. This business group benefits from a strong order book recorded in the past. Exterior is reinforcing its positioning towards new EV players like Rivian for the production of front and rear bumpers for the [ SUV AG ]. Moreover, it represents a further step in the group's strategy of increasing its position in the North American region. Exterior benefits also from recognition from its customers. As an example, for the third consecutive year, the San Luis Potosi plant in Mexico received the General Motors Supplier Quality Excellence Award, reflecting of OPmobility's successful long-term partnership with the American OEM. This award recognized our commitment to meeting and exceeding rigorous production and delivery standards. You can see on the slide some of the key launches for Exterior in Q3 2024. I would like to highlight the key launch in India for Mahindra Thar Roxx [ AX5 ] for front and rear bumpers and for grille. With a strong positioning in India, the group addresses the growing demand for automotive parts. This year, the group started to build a new plant in Pune. This new plant will be the group's largest in the country and will supply Exterior body systems to the Indian automotive market. It will allow OPmobility to strengthen its leading position in this country. Moving to Lighting business group. OPmobility continues to focus its efforts since the acquisition on optimizing resources and improving industrial performance. As already announced, revenue is slowing down in 2024 due to lower order book prior to its acquisition by OPmobility in [ 2022 ]. At the same time, the group is working on securing new order intake in best gas countries like, for example, in Mexico to produce headlamps for a new EV player and for Stellantis for the Ram ProMaster. The 2024 order book for Lighting is expected to be significantly above revenue, reflecting the high level of customer confidence and ensuring the Lighting business future momentum. Moving to Modules on Slide 7. The action plan started end of 2023 is already delivering promising results with a strong improvement of the revenue in 2024. I want to highlight the strong performance of our team. Modules revenue is up plus 24% on a like-for-like basis in Q3 2024 compared to Q3 last year. This business group continues to diversify its customer mix with new EV players notably. Moreover, as previously mentioned, the strong performance since the beginning of the year is mainly due to: first, a strong increase in revenue from our plant in Austin, Texas, reinforcing our presence in this region with a key EV player. And second, an increase in volumes in Czech Republic and Slovakia for Skoda and Volkswagen. In addition, order intake remains robust and the business group has been awarded in Q3 2024 by a South Korean OEM for the production of front-end modules and carriers. You will see on the right side of the slide some key launches for Modules this quarter, highlighting our geographical diversification. Skoda in Czech Republic for front-end modules for the Karoq and Octavia, Stellantis in Mexico for Active Grille Shutters for the Ram 2500, and Chery in Malaysia to produce cooling modules. Last but not least, the Powertrain segment. In this segment, we address all types of powertrains from ICE to hydrogen mobility. C-Power's ICE business continues to consolidate its leading position. Over the first 9 months 2024, this activity posted stable revenue on a like-for-like basis compared to last year. The group pursued its strategy of last man standing by consolidating in regions where the shift towards electrification is progressing, such as North America or Japan. In parallel, the group continues to benefit from the start of production in different countries like in Morocco with Dacia Sandero and Logan to produce fuel systems. Regarding the hydrogen activity, H2-Power, it has continued to record orders since the beginning of the year, securing its future growth. In addition to the current business with Alstom, the group has signed an award with CRRC, the world's leading Chinese rail manufacturer for a long-term partnership to develop hydrogen mobility solutions. Furthermore, last July, OPmobility signed a contract with Stadler, the Swiss rail manufacturer to equip hydrogen-powered regional trains in Italy with high-pressure hydrogen storage systems and fuel cells. These various contracts confirm our confidence that hydrogen is key to decarbonize EV mobility and strengthens the group's position as a global leader in hydrogen mobility. In the context marked by some delays in hydrogen programs, the group is adapting by deploying gradually production capacity to the volumes ramp up. The start of production of our hydrogen plant in Lachelle, France is planned by the end of the year to produce high-pressure vessels for Stellantis and HYVIA. It will be Europe's largest capacity plant in hydrogen. Let's now talk about sustainability main achievements moving forward on our road map targets. Last August, MSCI ESG ratings awarded the group with AA rating previously rated A, ranking OPmobility in the category leader and among the top 10% of worldwide auto suppliers. MSCI is focused on the group's strengths in social areas, notably the annual employee engagement survey and training program. The steady improvement in the group's workplace accident frequency rate with and without lost time was also noted. It stood at 0.53 at the end of September 2024, down on last year and already close to the 2025 target of 0.5 despite the integration of new activities like Lighting in recent years. The group's ongoing environmental responsibility efforts were highlighted, particularly the commitment towards our technologies to decarbonize mobility through hydrogen and battery electrification solutions. In addition to MSCI AA rating, OPmobility has included a large part of its ESG commitment in 2024, the highest CDP rating of A, the renewal by EcoVadis of the group's Platinum status and the C+ ESG rating by ISS, making the group one of the leaders of the industry. Thank you for your attention. Now I hand over back to Laurent for the last part of the presentation.

Yes. Thank you very much, Stephanie. We wanted also to highlight again, I would say, the success of our strategy, meaning that we are growing in a declining market. We are outperforming the market in all the regions, and we're outperforming the market in all the business segments. And our aim since some years is to try to benefit from the market transformation. And I will try again to explain why -- how we are doing that, sorry. And we are doing that with our strategy, which is basically based on 3 pillars, and that is what you can see on the slide. First of all, technologies, second, geographical diversification and then customer portfolio. Talking about technologies first, I want again to highlight the fact that 75% of product portfolio doesn't depend on the powertrain. That is -- these are the Exterior businesses, Lighting business and Module business, which is giving us a kind of stability, again, not depending on the powertrain evolution. Then when we talk about technology, in the recent years, we have been investing a lot in developing new technologies like, for example, Lighting, making the acquisition of module or developing as well hydrogen. And we are convinced that those investments will bring us middle and long-term, a lot of opportunities in terms of growth. We do see more and more, I would say, willingness or motivation from our customers to work on complete integrated solution for Exterior parts, meaning integrating Lighting into the bumpers and potentially with the modules on top, which is making the offering of OPmobility unique on the market. Therefore, those technologies will bring us middle, long-term, a lot of growth opportunities. Then talking about geographies. As mentioned before, the group is pretty exposed to Europe with 50% of the revenue. It was 48% in the third quarter. And we know that Europe won't be the growth engine for the coming years. You have been noticed before that we are growing in Europe in spite of the market decline. But for sure, we want to overinvest outside of Europe, again, to continue the growth journey of OPmobility. We are targeting the U.S. where we have a lot of opportunities in terms of market share in all the businesses, starting with Exterior, but also Modules. In the C-Power business, we are consolidating heavily the market in North America. Therefore, U.S. will be the biggest growth engine of OPmobility. Nevertheless, we continue to develop also other countries. As Stephanie mentioned before, we are setting up a new facility in Pune in India, which is going to start the production by the end of next year and probably more to come in India. But we are also doubling the size of our Kenitra facility in Morocco, again, to be where the market is developing and to benefit from the market growth. If we have a look on our order book, the order book is pretty balanced in terms of geographies because it's 1/3 in Europe and 2/3 outside of Europe, which does reflect more or less the weight of the different regions in the world of the automotive production. Last but not least, the customer portfolio, we are insisting on that, but that is very important. Again, to remain very strong with our traditional OEMs, and you know that our biggest customers are the Volkswagen Group and the Stellantis Group. We are able to gain market share with Volkswagen and Stellantis. But as you know, they are suffering from the electrification right now. And therefore, for us, key to develop new players. We've been talking a lot about Austin, Texas about the Tesla business. We are developing more and more the business with Rivian as well. And regarding the Chinese OEMs, we are very strong in China, but we are becoming stronger as well with the winners, like, for example, BYD. And BYD is working very closely with us right now to develop and produce plastic tailgates. They don't have the know-how in-house, and they are going to plastic for the tailgates for the future. That is helping us on short and middle term. On middle, long-term, it is also important for us to develop other areas of mobility. That is what we are doing with hydrogen and electrification with, for example, what we have been talking about before, meaning railway business with Alstom, with Stadler, with CRRC in hydrogen, but also in electrification. Again, what is happening right now in the market, meaning this transformation, this shift by geography, the winners and the losers in terms of customers is confirming that we have the right strategy. That is what you can see on the slide, meaning a very balanced strategy in terms of technologies, in terms of geographies, but also in terms of customer portfolio. Now coming back to 2024. For sure, the market is very challenging in 2024, as we all know. You can see on the left part of the slide that S&P after having improved or increased its expectations for 2024 in terms of production volumes in April, at this time, they were forecasting 87.4 million cars being produced this year. They did review that massively down during the last month. And in the meantime, we lost 1.7 million of cars being produced according to S&P. And for sure, that is a challenge for the complete industry. That is a challenge as well for OPmobility. It is mainly coming from the slowdown of the BEV penetration worldwide, especially in Europe, but also for the inventory level in North America, which is negatively impacting the production right now. Therefore, the market remains challenging. We adapt. We are very, I would say, flexible. We are very agile. We are working permanently on our efficiency, on our competitiveness, on our cost base, on our breakeven point, because we are convinced that on long-term, competitiveness and agility will be the key success factors besides the technology factors we are working on. And because we are able to adapt our capacities and we are able to adapt our footprint and our organization and our breakeven point, we confirm our guidance for 2024, meaning an outperformance of the automotive production, but also the improvement of all financial aggregates compared to 2023, meaning operating margin, net results, free cash flow and net debt. It's time now to conclude before handing over to you. Again, we are very pleased to post those numbers today, meaning that we are growing. We are growing in a very challenging market. That means we are outperforming strongly in the market. We are more and more balanced in terms of regions, but also in terms of customers. We have historical businesses, which are becoming stronger and stronger. That means they are able to consolidate their respective markets to gain market share, which is very promising for the future of the company, and this is helping, for sure also, to finance the diversification of the group. The order intake remained at very high level. You know that we posted very high level of order intake in the last 3 years. We are continuing on this path. We are becoming more and more selective because we are confident that we will be able to grow in the coming years. And therefore, we are confirming our guidance in this very challenging market environment. I want to use the opportunity as well to thank the OPmobility team, fantastic team, again, being able to manage both the short and the long-term, short term meaning being agile, working on competitiveness, working on our cost structure, and long-term, it's developing new customers, developing new markets and developing new technologies. That was for our presentation. And now we are pleased with Stephanie to answer your question.

[Operator Instructions] We will now take our first question from Thomas Besson of Kepler Cheuvreux.

I have a couple of questions, please. Can you say a few words about the Lighting business turnaround and whether you're still happy with the 2027 mid-single-digit margin prospects? And shorter term, talk about the scenario you're assuming for 2025, because I think your exposure to BEV players is quite high? When do we start seeing the first revenues from the order intake that you have generated yourself rather than the one you inherited? That's the first topic. And the second, we've heard automakers, I think, changing tone from everything is awesome. We are making 10% margin and generating EUR 10 billion free cash flow to -- it's becoming quite complicated now, and we need to turn every stone to reduce costs. Can you talk about the evolution of your relationship with your clients and whether you believe this will still remain a fair game or whether you think they are going to be going into an accelerated mode in terms of cost-saving efforts with the suppliers group, their most obvious target?

Yes. Thank you, Thomas. First of all, regarding Lighting, we are confident with our mid-single digits 2027, as we mentioned before. As you know, we made the acquisition of Lighting 2 years ago. Right now, there were 2 targets. One is because we are convinced Lighting is a growing business long-term, and we are booking orders. Therefore, it is a growing business long-term. And Stephanie mentioned before that the level of order intake is very dynamic right now. We are gaining market share, and that's good. And the second target was, for sure, to bring Lighting closer to the Exterior business and to be able to offer something on the market, which is new, which is unique. And that is also what we are developing with most of our customers, and that will be an additional, I would say, growth opportunity for OPmobility in the coming years. Therefore, confident for the mid-single-digit 2027. The order intake of OPmobility started basically in the second half of 2023. You know that we made the acquisition in October 2022. The first target was to stabilize the operation to gain confidence from our customers that we are able to manage that, which was done. And starting from second semester of 2023, we have been booking many, many orders. Normally, there is around 3 years time between order book and production in Lighting, meaning that we will see really the effect of these new orders in the second semester of 2026. Therefore, we predict 2025 being more or less stable in terms of revenue for Lighting and 2026, we should grow mainly in the second semester of 2026, again, benefiting from the order book and then it will continue to grow, yes, all the years after 2026. We are very confident about that. Regarding the relationship with our customers and I think I understood who you are referring to. I don't want to say -- I don't believe that the relationship with our customers is massively changing. I think in the last years, the relationship was very tense because it was, I would say, unbalanced between their profitability, their capacity to partially reduce production, but to increase prices. And I really believe now it's becoming more balanced. Therefore, most of our customers, they are again targeting volumes, which is very important. In the past, they were saying, I prefer value than volumes. Now they all go back to volumes because they do see that without volumes, it's difficult to create value on long-term, especially for mass market. Therefore, they will do everything they can to increase the volumes, which is basically good for us. And more balanced as well because, yes, for sure, they are suffering like the automotive industry is also -- I don't want to say suffering, but it is being challenged. And I think they need us. They need us, first of all, to maintain the supply chain alive. There are many, many small suppliers suffering a lot, and we are protecting our customers from that. And I think they are very positive about the job we are doing to protect them. Therefore, that is something they do recognize as well. And also because we are working with newcomers, which are successful, which are posting profit. Our traditional OEMs, they tend to try to collaborate closer with us to adapt also their way of working, their way of designing products, their way of being faster, I would say, in the development time, again, to learn and to adapt. And in a way, we can also bring in value and show them what we believe we should do differently to become better. Therefore, I don't want to say it's becoming an easy life, but I really believe that, again, they will push on volumes, which is good for everybody. They need us to protect them because of the supply chain situation, and we are very, very, very solid, I would say. And they need us as well to try to find new ways for them to be more competitive. And being more competitive is not only about negotiating new prices, it's also about working differently. And therefore, we have a balanced situation at the end with them, still having very intense discussion on compensation for volumes, but also posting very strong order intake and gaining market share with [indiscernible].

And we will now move on to our next question from Michael Foundoukidis of ODDO BHF.

Yes. So 3 questions on my side. So first one, even though you unsurprisingly described the market as challenging, you seem less concerned than value management a couple of days ago. So could you tell us exactly if you noticed any particular deterioration in the past weeks? And if yes, why are you less worried than some of your peers? Second question is on Modules. I mean, I know it's not an earnings call, but what can you tell us about the operating performance in Modules in the high growth context we are seeing maybe for H2 and looking ahead in 2025? And last one -- last small one on hydrogen. I mean you already commented in the past months about some SOPs delays and investments being postponed as a result. But could you give us a bit more color regarding the financial implications?

Thank you, Michael. I mean, first of all, as you know, we don't like to comment what our competitors are or our peers are saying. Do we see a huge deterioration in the market since 2 weeks or 3 weeks? No. I think we know since many months that the market is challenging that it's a combination of electrification not developing as fast as expected for many reasons, but mainly because of price reason and less subsidies as we all know in Europe. And that -- and we also know that inventory level in the U.S. is pretty high. It's also not new. We noticed that in the -- at the end of the first semester. Therefore, if you remember, we said we were pretty cautious at the end of the first semester regarding the second semester because we noticed that everybody that the inventory level in the U.S. was pretty high, meaning that there was a potential, I would say, risk in terms of production for the second semester. Therefore, what should happen is happening right now. The market is not improving, but it's not a huge surprise for us. And for sure, we have some customers delaying some start of production, but we don't see any major news right now compared to 1 month ago. It's the same trend that what we had at the first of the -- at the end, sorry, of the first semester. Regarding Modules, as mentioned by Stephanie before, we are very satisfied about the turnaround of the Module business, which was suffering a lot last year for many reasons. You know that we have been changing a lot of things, starting with the management in Modules. We were having -- we had an operating margin stronger in the first semester this year than the second semester last year. It was 2.2% in the first semester, it was 1.6% last year in the second semester. And we do expect at least a similar level in the second semester. This year, as alluded, it's continuing this transformation. It's continuing to benefit from the growth we have in Austin, which is a very -- I would say, a very good business for us and continuing as well to work on its cost structure. Therefore, second semester should be at least as good as the first semester for Modules. You know that for Modules, we target always around 3% margin. That is structurally what we can aim for. It's a business which is generating free cash flow, which is having very low invest. Therefore, the ROCE is very high, in terms of margin, 3% is benchmark. And between now and 2026, we will achieve the 3%. 2025 will be a step in between. Regarding H2, H2, it's -- I would say it's a mixed picture. It's a bit like the electrification, meaning that in some areas, in some markets, there is -- there are projects being postponed. The good news is all the truck makers, all the EV duty players, they are going to hydrogen. There was a couple of weeks ago, the IAA Transportation in Hanover, and we have been talking with all the customers, all the truck makers again, and they all have vehicles with hydrogen starting between 2028 and 2030 to be in line with the target from Europe in 2030. That is the fact in Europe, and we are working with all of them, so it will come. But as you mentioned before, some of our customers have been delaying their start of production by 1 year or 2 years, meaning for us, we continue to gain market share, which is important because, again, we are convinced this business will be bringing a lot of value to OPmobility in the coming years. But we need to adapt our investment pace. Therefore, we are investing much less than expected. We had announced last year to build up a big factory in the U.S. in 2026. It will be postponed to 2028, 2029. And we will start delivering the U.S. market out of the new factory we are building up in France, is what we are doing is we invest in France. We will start the production with Stellantis and HYVIA. And out of France, we will deliver U.S. as well until the capacity is fully utilized and then we build up capacity in North America. Therefore, we don't stop hydrogen for sure. We gain market share, but we adapt our pace of investment to the reality of the market.

And we will now take our next question from Ross MacDonald of Morgan Stanley.

Two questions from my side. Firstly, on Modules. Just be useful, I think, to understand the sort of sequencing, let's say, for the outperformance versus light vehicle production over the next few quarters. You've obviously posted very strong 20% outperformance plus versus LVP this quarter. Should we expect similar magnitudes of outperformance over the coming 2 quarters or 3 quarters for that division? That's question number one.

Then I answer the question number one. Module, yes, is strongly outperforming the market. A big part of this outperformance is coming out of the U.S., out of Austin, Texas. It's a new factory. We started the production last year in September, October, but it was, I would say, slow volumes. And the real ramp-up was happening at the beginning of this year. Therefore, for sure, by definition, we have much more turnover this year than what we had last year. And next year, we'll see again a strong growth in Module in North America, still in Texas because it's a customer -- I mean, you know the customer, but they have launched a huge SUV. Now the volumes are pretty stable and increasing, and they will launch a new vehicle, a new model cheaper next year. Therefore, it should boost the production as well. And they are also producing in this factory, the best selling car in the world, and they will launch a new model facelift by end of this year. Therefore, next year should be also benefiting from that. Therefore, Module, we are confident that we will continue to strongly outperform the market. The outperformance is not only coming out of the U.S. for Module. It was noticed by Stephanie before. We have put in place new capacity in Eastern Europe for Skoda and for Volkswagen, which will continue also to outperform the market in the coming years. Therefore, to your question, yes, we will continue to outperform the market. Module is very important also for our customer intimacy. Because we are working so closely to those customers, we are able to develop new opportunities for the other business groups, and that is what we are very confident to transform as well in the coming months. Therefore, not only for Modules, but for the other business groups to outperform with these customers.

That's very helpful. Second question, just picking up on your slides and a number of new product launches coming out of Mexico, how should we think about -- obviously, we have a U.S. election coming up next week, and some of the narrative around that election is maybe promoting U.S. produced cars over imports. How should we think about your preparedness if we see, let's say, tariff barriers rising on Mexican imports? And how do you think about that issue?

Yes. I think, for sure, it's a question everybody is asking is what could be the impact of the American election on the market, all in all, we don't believe there will be a huge impact. If you have a look on the last 10 years, we had different administration in the U.S., and there was no major change in the production. I think U.S. market needs Mexico as well production because Mexico is very competitive in terms of cost, as you know, because unemployment in the U.S. is really low. Therefore, I don't believe there will be a major change, at least for the American OEMs producing in Mexico and the capacity to export to U.S. Therefore, we don't see that as a risk or as an opportunity. It won't change massively. We are continuing to develop our business in Mexico. It's a growing country, but also the U.S. Therefore, we are pretty balanced.