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Edited Transcript of STLA.MI earnings conference call or presentation 3-Mar-21 2:30pm GMT

·101 min read

Q4 2020 Stellantis NV Earnings Call Slough Mar 3, 2021 (Thomson StreetEvents) -- Edited Transcript of Stellantis NV earnings conference call or presentation Wednesday, March 3, 2021 at 2:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Andrea Bandinelli * Carlos Tavares * Michael Manley * Philippe de Rovira * Richard K. Palmer FCA US LLC - CFO, Senior VP & Director ================================================================================ Conference Call Participants ================================================================================ * Charles Coldicott Redburn (Europe) Limited, Research Division - Research Analyst * George Anthony Galliers-Pratt Goldman Sachs Group, Inc., Research Division - Equity Analyst * Horst Schneider BofA Securities, Research Division - Research Analyst * José Maria Asumendi JPMorgan Chase & Co, Research Division - Head of the European Automotive Team * Martino De Ambroggi Equita SIM S.p.A., Research Division - Analyst * Thomas Besson Kepler Cheuvreux, Research Division - Head of Automobile Sector * Alan Tovey ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Hello, and welcome to the full year results of Stellantis. I will now hand over to Andrea Bandinelli, responsible for Investor Relations of Stellantis. -------------------------------------------------------------------------------- Andrea Bandinelli, [2] -------------------------------------------------------------------------------- Thank you, Jesse, and welcome to everyone joining us today. While we completed the merger of FCA and PSA in January, today, we will review FCA's fourth quarter and full year 2020 results and Groupe PSA's results for full year 2020. Earlier today, the presentation material used during this call, along with the related earnings press release, was posted in the Investors section of Stellantis Group website. As we will be presenting results for both the FCA and PSA, our call today is hosted by Carlos Tavares and Philippe de Rovira concerning PSA and Mike Manley and Richard Palmer concerning FCA. After their presentation, Mr. Tavares will also have a short presentation related to Stellantis. All of these gentlemen will then be available to answer questions. Before we begin, I want to point out that any forward-looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the safe harbor statement included on Page 2 of today's presentation. And as customary, the call will be governed by that language. Now I would like to turn the call over to Carlos Tavares, CEO of Stellantis. -------------------------------------------------------------------------------- Carlos Tavares, [3] -------------------------------------------------------------------------------- Thank you, Andrea. Ladies and gentlemen, good morning and good afternoon. I am delighted to be here with you today, and welcome you to this 2020 FCA, PSA Financial Results Announcement Session. And of course, a dedicated part to Stellantis that will give me the opportunity to share a few thoughts and answer your questions. It is for me a moving moment today, and I'm sure for Mike, as we are presenting the last financial results of FCA and the PSA. But we are happy, and we are so glad to be both of us today with you to kick start the Stellantis new chapter, which is going to be an exciting one with a very important value creation factor. It is my great privilege today to welcome you. I know that you are all very busy people. And therefore, we value your time, and I would like to thank you warmly for your interest in our corporations and your interest in Stellantis. Hopefully, we'll be able to answer all of your questions. And without further ado, I would like to hand over to Mike Manley, the CEO of FCA; and Richard Palmer, the CFO of FCA. They are going to present to you the 2020 results of FCA. Mike, the floor is yours. -------------------------------------------------------------------------------- Michael Manley, [4] -------------------------------------------------------------------------------- Well, thank you, Carlos, and I'd just add my welcome to everybody on the call and good morning and good afternoon. So in our normal tradition, I'm going to take you briefly through our operational highlights, and then Richard will walk you through the financials in much more detail. Obviously, given the unusual nature of the year with COVID-19 having such a significant impact on FCA's results, especially due to the disruption in demand and production shutdowns that we experienced during the first half of 2020, Richard and I will both focus our comments today on FCA's fourth quarter results, which we believe are a better reflection of the group's operating performance in a more normalized environment and then, therefore, I think, more indicative of where many people believe the future environment will be. I'm not trying to minimize FCA's full year results, which was still strong, given the impacts that the group faced and continues to face as a result of COVID-19, but I believe that by focusing on the quarter, is the best way to fully comprehend the capability, strength and solid foundation of FCA as it transitioned into Stellantis, which, as you all know, happened in mid-January. So let me begin. Obviously, we're extremely pleased with FCA's fourth quarter results, and the group had a strong close to the year, delivering a record fourth quarter group adjusted EBIT of EUR 2.3 billion and a record margin of 8.2%. And all regions and Maserati contributed to these results with all segments profitable in the fourth quarter. Now this was the first time that this has occurred since the first quarter of 2019. So I think it is a great accomplishment for the entire group. As you will see, North America continued to be a standout, delivering a record fourth quarter adjusted EBIT of EUR 2.2 billion, which was up 8% and a record margin of 11.6%. And in addition to the tremendous performance in North America, FCA's Latin American operations improved for the second quarter in a row, while still managing through a very difficult environment. As you know, the pandemic is still having a measurable impact on the overall industry, and the Brazilian real and Argentine peso continue to weaken. Another important accomplishment came from EMEA with the region returning to profitability in the quarter. I think that's a sign that the combination of actions taken in the past to improve commercial performance, restructure the business and remove significant cost is bearing fruit. Obviously, there's still much for us to do. But I think the fourth quarter recognized another step forward. FCA also generated very strong industrial free cash flows of EUR 3.9 billion, which reflects the robust operating performance, coupled with continued positive working capital impacts, and this led to FCA ending the year with positive industrial free cash flows of EUR 600 million. FCA's available liquidity remained very strong at EUR 31.4 billion at year-end, an increase of over EUR 4 billion from the end of September, and I'm pleased to report that during the fourth quarter, FCA fully repaid the EUR 6.25 billion revolving credit facility that was drawn down in the second quarter of 2020. And the strong liquidity is another element of the solid foundation FCA brought to Stellantis. Now in addition to FCA's strong operating results, the group also performed very well during the quarter from a commercial standpoint in its key markets despite the industry being down in each of those markets year-over-year. In Latin America, FCA maintained its market leadership, gaining 340 basis points of market share year-over-year to 17.8%. FCA also maintained its leadership position in Brazil, with share increasing by 530 basis points to 24.3%, driven by the success of the all-new Fiat Strada pickup as well as the Jeep Compass and Renegade. In fact, FCA sales in the region were up 16%, which clearly outpaced the industry, which was down 6%. In Europe, FCA was able to improve its market share year-over-year for the second straight quarter, with share growing by 40 basis points to 6.5% for the fourth quarter. And this was achieved with sales remaining substantially flat year-over-year, with the overall industry experiencing a 7% deterioration. And finally, as established under the terms of the merger agreement, the EUR 2.9 billion special cash distribution was paid at the end of January to former FCA shareholders. So let me turn to FCA's commercial performance during the quarter. With the exception of Asia Pacific, the industry in each region declined year-over-year due to the continued impact of COVID-19. While FCA sales in North America were down year-over-year, this was substantially driven by fleet sales, with retail sales increasing by 2% as production for dealer deliveries was prioritized to fulfill the continued strong level of retail demand. Also U.S. dealer inventories remained low, with dealer stock at the end of December at approximately 420,000 units, down almost 170,000 from the end of December 2019. In Europe, as I previously noted, FCA's performance outpaced the industry once again. And for the second quarter in a row, we gained market share, thanks to higher sales of the Fiat Tipo family, 500 and Panda. And finally, in Latin America, FCA remained the overall market leader on the back of a significant share gain of over 340 basis points, while the industry was down 6%. FCA strengthened its market leadership in Brazil, gaining share in important segments such as SUVs, pickup trucks and LCVs. Now as I mentioned in my opening, Richard will take you through the financials in detail, so I'm just going to give you a quick overview of FCA's results for the quarter, which I previously noted were a record for the group. The entire team did a phenomenal job with delivering on improved commercial performance, implementing strict cost containment actions and fully resuming our industrial machines to pre-pandemic levels, without experiencing any significant production disruptions due to COVID-19, and all of this while maintaining our first priority, which is to ensure the safety and well-being of our employees and our communities. Despite FCA's consolidated shipments being down slightly year-over-year, the group achieved record fourth quarter adjusted EBIT and margin while prioritizing dealer deliveries and continuing to maintain strict inventory management discipline. All segments ended the year with appropriate inventory levels, which were lower than at the end of December 2019. As I noted earlier, North America delivered a record fourth quarter adjusted EBIT margin despite consolidated shipments being down 8%, primarily due to the discontinuance of the Dodge Grand Caravan and lower planned shipments of around 1,500 classic in preparation for the much anticipated Grand Wagoneer launch. And as anticipated, FCA experienced strong industrial free cash flows, which amounted to EUR 3.9 billion for the quarter. This not only reflected the record operating performance, but also the continued rewind of working capital and change in provisions which totaled just over EUR 3 billion. And before I hand it over to Richard, I want to conclude by saying that 2020 tested the business and frankly, tested all of us in ways we had not experienced before. But I think it also brought out the very best of who we are: the resilience dedication, creativity of our teams. And I couldn't be more proud of how our people have responded and delivered in every aspect of the business. As I said before, FCA came into Stellantis with a very solid foundation. However, the strongest asset FCA contributed to Stellantis was its people. And I just want to touch on something that Carlos said at the beginning, in terms of his view about the start of Stellantis and his comment that he's happy and glad to be here. I can echo that 100%. I think the work that was done to deliver Stellantis in line with the projections that both Carlos had given was tremendous. And given the year, we all know how tough that year was, I think it was a phenomenal achievement. So I echo his views, I'm happy and glad we're now here at the start of Stellantis. And with that, Richard, if you wouldn't mind, taking everyone through the details of the financials. Thank you. -------------------------------------------------------------------------------- Richard K. Palmer, FCA US LLC - CFO, Senior VP & Director [5] -------------------------------------------------------------------------------- Thank you, Mike, and good day to everybody. I will continue on Page 6, focusing on Q4 performance. As mentioned, consolidated shipments were down 1% with the Fiat Professional and Jeep brands up, offsetting reductions in Dodge due to discontinued products and Ram due to reduced Warren Truck volume has launched preparations for the new Grand Wagoneer proceed. Revenues were down 4%, but up 3% at constant FX due to positive mix in North America and positive price in North America, Lat Am and EMEA. Record adjusted EBIT reached EUR 2.3 billion, up 11% year-over-year, with a record margin of 8.2%, and all segments profitable. Adjusted net profit increased 20% to EUR 1.8 billion, and net profit was flat at EUR 1.6 billion due to increased unusual charges of EUR 330 million for asset impairments and adviser fees regarding the merger. Finance charges were up EUR 22 million to EUR 243 million due to higher borrowing costs and cost of carry, offset by some positive FX translation and lower discount rates on pension liabilities. The adjusted effective tax rate was 12% for Q4 due to some positive adjustments for prior year provision and favorable deferred tax loss adjustments -- deferred tax liability adjustments, sorry. Strong industrial free cash flows of EUR 3.9 billion benefited from the rewind of working capital and provisions were EUR 3.1 billion. Liquidity was boosted further by the completion of the drawdown of the Intesa facility for EUR 1.1 billion, partially offset by EUR 0.6 billion of negative FX translation, and overall liquidity increased by EUR 4.3 billion to EUR 31.4 billion. We can now move to Page 7 and review the adjusted EBIT by driver. As mentioned, all segments are positive in Q4 Despite negative shipments impact for North America of 55,000 units all other segments showed positive volume year-over-year, and net volume was down just 14,000 units. North America drove positive mix, and overall, volume mix was positive for the group. Net price was also strong in North America, Lat Am and EMEA, showing a strong overall commercial performance for over EUR 900 million. Industrial costs were negative in North America due to [weaker] campaign, in EMEA due to product costs on newly launched electrified vehicles and in Lat Am due to inflation and negative FX impacts. The group continued to benefit from SG&A reduction actions across all segments nearly EUR 300 million in the quarter. On Page 8, we show the industrial free cash flow for the quarter, which increased from EUR 1.5 billion last year to EUR 3.9 billion and took the full year number to positive EUR 0.6 billion. Adjusted industrial EBITDA margin was up 90 basis points to 12.4%. CapEx was EUR 2.4 billion below prior year by EUR 0.5 billion, but up sequentially by EUR 0.2 billion as we continued investments in key product launches for 2021. Full year CapEx reached EUR 8.6 billion, up EUR 0.2 billion compared to 2019. Working capital contributed EUR 2.1 billion due to sequential increases in production, payables and seasonal reduction in inventories in EMEA and North America. Finance charges were up EUR 45 million to EUR 190 million due to higher gross debt levels. And cash taxes were EUR 130 million, mainly for U.S. taxes due. The net industrial cash position at year-end was EUR 4.6 billion, up from EUR 1.3 billion at end September due to the industrial free cash flow, offset partially by negative FX translation. Moving to Page 9, we show the adjusted EBIT by segment. As mentioned, all segments were positive for the first time since Q1 2018. North America had a record Q4 result and margin. We also see sequential improvements in Lat Am with strong commercial performance despite the continued market downturn and negative FX impact. Now we move to the regions, starting on Page 10 with North America's record Q4. As mentioned, our sales were down 7%, driven by fleet sales down 40% as we allocated vehicles to fulfill demand in the retail channel, where demand was up 3% and our share was down slightly by 20 basis points. Our fleet sales were 15% of total U.S. market sales as a result, down from 23% last year. North America shipments were 594,000 units, down 8%, primarily due to the discontinued Dodge Grand Caravan and lower Ram 1500 Classic due to planned downtime at Warren Truck. U.S. dealer inventories were up 34,000 units in Q4, but year-end levels were still 165,000 lower than prior year. Revenues at EUR 19.1 billion were down 7% or 2% at constant exchange, with strong positive mix and pricing. Adjusted EBIT increased 8% despite negative FX translation impacts of EUR 140 million. The lower shipments of 55,000 units were more than offset quite positive mix from retail, up 8%, while fleet was down 6% and the car lines due to less Grand Caravans, 1500 Classics (inaudible). Price was positive around 2 percentage points, mainly on the Jeep and Ram brands. Industrial costs were negative due to weaker campaign costs as well as lower year-over-year supplier recoveries and other warranty adjustments. SG&A benefited from reduced advertising spend and reduced G&A costs. Next, on Page 11, we have Asia Pacific's results. Consolidated shipments were up to 23,000 units from 20,000 last year due to higher CBU volumes for China and Japan markets. The China JV shipments were down 39% or 8,000 units to 13,000 units. As a result, combined shipments were down 10% to 36,000. Net revenues were up 19% to EUR 0.9 billion, driven by the 15% increase in consolidated shipments. And the improvement in revenues, together with cost reduction in SG&A, put the region into a profit for the quarter of EUR 34 million. On Page 12, we see the EMEA results. Combined shipments were up 13%, primarily due to a very strong performance in the JV in Turkey, although consolidated volumes were also up 6%, driven by the Fiat 500 BEV and the Jeep [the ATV] launched recently. Dealer inventory levels were substantially flat against end of Q3 at 162,000 units, down from 239,000 units last year. Net revenues were up 8% to EUR 5.7 billion, including price improvements due to the electrified models. Adjusted EBIT was EUR 66 million, with positive volume mix and price recovery of the electrified vehicles offsetting their increased product costs. Year-over-year raw materials inflation as well as the cost of compliance drove negative industrial costs. SG&A cost reductions continue to be a key focus for the region. Page 13 shows the Lat Am results. As mentioned, the commercial performance was very strong with full year market share up 340 basis points to 17.8%, driven by Brazil, up 530 basis points. As a result, sales were up 16% for Q4, driving shipments up 11%, with strong demand for the new Fiat Strada pickup. Dealer stock levels for the region were 28,000 units, down nearly 50% from prior year. Revenues were down 14% year-over-year due to FX weakening of the Brazilian real of over 40%. At constant FX, revenues were up 17%. Adjusted EBIT was also impacted heavily by FX impacts for imported components and purchasing inflation on local components, both driving the negative industrial costs shown here. The region acted to offset these impacts by continuing to improve pricing in Brazil, especially up around 10% year-over-year. On Page 14, we finished the FCA results with Maserati. Sales were down 26% in the quarter, with all main markets down, except for China and Italy. Shipments were up 38% as we launched the MCA versions of all the nameplates with model year '21. Dealer inventories increased as a result from September levels, but were still below prior year. Net revenues increased in line with shipments, and this also drove the improvement in adjusted EBIT to a EUR 12 million profit from a EUR 40 million loss last year. Now I will hand over to Carlos and Philippe. Thank you very much. -------------------------------------------------------------------------------- Carlos Tavares, [6] -------------------------------------------------------------------------------- Thank you. Thank you, Richard. Thank you, Mike. Before I move on with the PSA results, I would like just to express to all of you my very sincere and warm thanks to Mike for his leadership. The outstanding 2020 results and the stellar performance demonstrated in Q4 at the FCA family level has contributed immensely to the robust financial position at the birth of Stellantis. It is very important that we start -- we kick off Stellantis in a sound position. And it is the case. It is a sound position as a starting point for this new company. And it has been so because Mike and Richard have led FCA to this outstanding and robust results in 2020 with a stellar performance in Q4. I would like to recognize that, to thank warmly Mike, to thank warmly Richard and to tell you that since we have signed a binding agreement back in December 2019, I have been personally impressed and inspired by the maturity, by the consistency, by the open mind that Mike has demonstrated in helping us to converge towards the closing in January 16, 2021. We have filed more than 12,500 documents, 12,500 documents. We have discussed with the whole world we have solved many, many issues, many these negotiations, many discussions. All of this was possible within the time window that we have set for ourselves because of the maturity, because of the quality of our relationship, because of the fact that we only had one goal, which was to create this great company called Stellantis in order to open a new chapter in the history of our companies. I would like to recognize that. I know how important egos are in our industry. I would like to testify in front of you, the maturity, the focus, the consistency, the open mind, the business sense that Mike has always demonstrated. I am absolutely delighted to have him with me to support the birth of Stellantis and moving our business forward. This is very important for me to testify this in front of you. And this being said, please enjoy the nice brand-new DS 4 crossover that is going to be launched this year for the DS Premium brand that you have on this slide. So if you look at the results from the PSA family, you can see that PSA was able to achieve a very robust, what we would call all-weather result for this all-weather corporation. Despite the COVID, we were able to deliver 7.1% automotive adjusted operating margin. And this is a result that has been combined with the H2 record operating margin of 9.4%. So the 9.4% H2 operating margin demonstrates that we were on our way to continue to grow our efficiency and effectiveness when the COVID appeared, unfortunately, for all of us. This is coming from a very robust performance from the Peugeot, Citroën and DS brands at 7.3% and from -- and also a very robust performance from Opel Vauxhall at 4.1% that demonstrates that the turnaround of Opel Vauxhall was structural, that even COVID could not bring us back in the red in the Opel Vauxhall operations. And I think it is important that we highlight that. And with these 2 results, we were able to deliver a 7.1% automotive adjusted operating margin for 2020. This is demonstrating: number one, that our guidance was respected; number two, that we are all-weather company. And you have just seen that FCA is also an all-weather company, which is that we are demonstrating that our companies are resilient. And our teams are able to demonstrate a great deal of focus and agility when we are facing these headwinds. Some impressive numbers. Beyond the 9.4% of operating margin in H2, we could deliver EUR 2.2 billion net result group share, EUR 2.7 billion automotive free cash flow and the EUR 13.2 billion automotive net financial position, which is a very sound position that, as I was saying for FCA, contributes from the PSA side to a sound net financial position of Stellantis at birth. I would like, as always, to express to all the employees of PSA my sincere and warm thanks for what has been achieved, not only for 2020, which, as you may imagine, was a very painful year for everybody, but for what we have been doing all together over the last 7 years since I took the helm of PSA. It has been a rewarding experience. It has been thrilling to work with these teams. It has been absolutely something that we will keep in our minds, and we are happy now to turn the page and open the chapter of Stellantis. If we look at another important aspect of our activities is our contribution to tackling the climate change. We have selected only third-party accolades so that this judgment is not biased. Only using third-party accolades, we see that all the targets that have been validated by SBTi are aligned with the 2-degree maximum warming coming out of the Paris agreement for the COP 21. And everything we do is aligned with this 2% maximum warming level that has been set as a ceiling from this COP 21 agreement. It is important that we recognize that. From the Carbon Disclosure Project, Groupe PSA was recognized as the leader of low-carbon transition. And from a global CSR performance, we have received 7 awards, of which 3 have been sector leader awards for PSA. As you can see, we have also been able to reduce significantly our real estate footprint to contribute to reducing the CO2 emissions. And this is, of course, paramount, as it is the fact that we have created a way of working and working processes that are completely consistent with remote working, which is also a very significant contribution to the quality of life of our people as much as it is a contribution to the environment by reducing the CO2 emissions of all the travels and the mobilities on this case. From here, I would like to, therefore, recognize the resilience of the PSA family, recognize that H2 operating margin was a new record for this 7-year journey, recognizing that this could be achieved, thanks to our people. And I would like to thank them all and each of them for their contribution. I would like also to recognize the quality of our co-construction processes with our unions, our union leaders. They are always very demanding. They are more and more diverse across the world as we become a global company. But I do recognize that the quality of this dialogue is also supportive of the performance of the company. And I want also to thank them warmly for our interactions for their demanding stance, but also their ability to contribute and their ability to discuss in a constructive manner with the management of the company. It is also a big part of these results. I would like also to recognize that we have been blessed by the quality of the top leaders of PSA, the members of the Executive Committee team of PSA. It is not easy to be permanently challenged with the results that you have seen. But you see that despite the COVID, despite the improvement of those results across the first 6 years of this journey, this top executive team is always ready to face the challenge, always ready to push the limits, always ready to recognize that we can do better. In terms of mindset, in terms of mental strength, this says a lot about your management team. This says a lot about their ability to be resilient, their ability to face headwinds, their ability to find innovative solutions. And I would like to thank them warmly for accepting me as their CEO that is continuously challenging them on their performance. It's not easy, but it is something that we are doing together. And I would like to thank them warmly and to send them all a very strong digital hug. Last but not least, I would like to thank the Supervisory Board. The Supervisory Board of PSA has been stellar in the way they have been supporting the merger, in the way they have been supporting the management, in the way they have been respecting the dual governance of PSA with the management both from one side and the Supervisory Board from the other side. I would like to express to them also our sincere appreciation for the very proper, the very rigorous governance that we could benefit from over the last 7 years. It has also contributed to the stability and to the ability that was given to the management to do the right things right over these years. And the results are demonstrating that it was the right attitude. It was the right governance. It is very important that we recognize that also given the past history of this company. So from there, I would like to hand over to our PSA CFO, Philippe de Rovira, who is going to give you the details of our results. Philippe, please, the floor is yours. -------------------------------------------------------------------------------- Philippe de Rovira, [7] -------------------------------------------------------------------------------- Thank you, Carlos. Good afternoon, and good morning. It's a great pleasure to present to you Groupe PSA financial results for 2020. Despite the headwinds created by COVID-19 pandemic, the group delivered EUR 3.7 billion adjusted operating income in 2020, resulting in a 6.1% adjusted operating margin. This good result goes down to the bottom line with a net income group share at EUR 2.2 billion. Below the adjusted operating income, restructuring costs amount to EUR 696 million, a 3-digit number as announced last year, with a sharp decrease of EUR 835 million versus 2019. Other operating income and expenses amounted to a positive EUR 65 million, resulting mainly from the disposal of the CAPSA joint venture in China for EUR 204 million, partially offset by the impairments in China and Eurasia for a global amount of EUR 154 million. Net financial expenses amount to EUR 370 million, stable versus last year. Income taxes stand at EUR 628 million, down EUR 88 million versus 2019. The effective tax rate has been limited to 23% as we continue to use our deferred tax assets. Regarding total tax loss carryforward, the roll forward of EUR 8.6 billion to French permanent establishment of Stellantis N.V. is temporarily agreed by the French tax authority. Final valuation will take place in 2021 based on the full year 2020 tax declaration. The line, share net earnings of companies at equity, was a negative result of EUR 87 million is down EUR 63 million versus 2019. The negative results linked with our joint venture DPCA for minus EUR 430 million is partially offset by the very solid performance of our [fincos] in partnership with Santander and with BNP Paribas, which stand at EUR 339 million. Moving to Page 20, we present the P&L statement for the group, excluding Faurecia, which corresponds to all activities that will continue within Stellantis once Faurecia shares are distributed. In the following pages, I will comment the automotive division that constitutes the essential of these activities transferred to Stellantis. Restructuring costs amount to EUR 416 million, which is a reduction of EUR 921 million versus 2019. Net financial expenses are divided by 3 in comparison to the group parameter, with an amount of only EUR 94 million. And net profit stands at more than EUR 2.3 billion in a price difficult year. Moving to Page 21. We present the automotive division review bridge. So of course, the decrease in auto revenue was driven by the volume drop in our main markets, especially in Europe, and the volume effect impacted the revenues negatively by 24%. Product mix continues to be a strong positive, driven by the success of the last launches of the group, in particular, the new Peugeot 208 and 208, the new Opel Corsa and also the favorable impact of the electrified (inaudible). The other positive effects come from the bucket also on the right-hand side, which is linked to the reduction of the [buyback] sales compared to last year. And as planned, the bucket sales to partner is close to 0. We move to Page 22. Worldwide sales were down 28% at 2.5 million units sold, with a strong hit of COVID-19 in Europe, Latin America and China. In this bleached market landscape, Middle East and Africa, which has posted a 20% increase despite the crisis, confirms itself as a powerful growth driver for the group now for the future. Peugeot, Citroën and Opel have increased their market share in the region, enjoying a strong legitimacy. Kenitra plant, which will gradually ramp at close to 150 some vehicles in the course of 2021 will also continue to be a strong lever. In Europe, in addition to the pandemic, the group sales have been negatively impacted by the 5 models discontinued by Opel Vauxhall in mid-2019, but this will obviously change in 2021 with the new Vauxhall commercialization. Let's move now to Page 23. Automotive adjusted operating income amounts to more than EUR 2.6 billion in 2020 H2, posting a record automotive adjusted operating margin at 9.4% versus 8.3% in 2019 H2. In a very contracted year, this H2 reflects the general level of performance delivered by Groupe PSA. And now let's move to Page 24 to go deeper into the analysis of auto division adjusted operating income. So on Page 24, this automotive adjusted income stands at EUR 3.4 billion, the significant performance delivered plus EUR 2.2 billion, mostly driven by product mix and cost savings, has partially offset the adverse operating environment. The worsening operating environment is massively driven by the fall of market demand for EUR 3 billion and to a lesser extent, by FX for EUR 600 million, including a significant hit of Turkish lira on a more limited [one] on the Argentinian peso. On the right-hand side, on the performance side, a continuously robust product mix at more than EUR 700 million, reflecting the success of our last launches, in particular, the renewal of the B segment in the BSB segment. And let me remind that Groupe PSA has been enjoying an ongoing strong positive product mix effect over the last 6 years in a row. We also have a positive pricing effect at EUR 137 million, showing our permanent focus on price and channel mix discipline. New gains of efficiencies evidenced by cost savings on production and procurement were EUR 565 million on SG&A for EUR 913 million and R&D for EUR 335 million. Regardless of the savings made, R&D CapEx expenses remain in 2020 in the range of 8% to 9% that we've maintained over the 5 last years. Last, the other bucket is mainly related to strong destocking of our network, as you will see in more detail in the later page. Moving to Page 25. Adjusting operating income of Banque PSA Finance at 100% stands at EUR 965 million, which is slightly below 2019, a record year. This shows a strong resilience of our partnership business model through the crisis. The penetration rate is up at 32.1% at a record level, thanks to the continuous progress made by Opel Bank on a strong commercial dynamism on the Santander partnership with historical compensation in France, Italy and Germany. There is clearly room for improvement, especially on Opel Bank. Logically, the cost of risk has increased, as you can see on the right-hand side of the chart, but remains at a sound level. Moving to Page 26. The automotive net cash position stands at EUR 13.2 billion at the end of 2020 compared to EUR 10.6 billion at the end of '19. Groupe PSA, excluding Faurecia has generated EUR 6.3 billion of free cash flow in H2 to reach another free cash flow of EUR 2.7 billion in 2020 full year. This EUR 2.7 billion free cash flow results from EUR 4.7 billion cash flow from operations on an improvement of the working capital of EUR 1.1 billion, mainly due to lower inventories. Bank PSA's Finance has distributed a dividend to the group of EUR 111 million. And finally, the sale in Q4 2020 of shares representing approximately 7% of Faurecia share of capital for EUR 308 million will be proposed to distribution by Stellantis N.V. during the next AGM to be held on March 8, 2021. Moving to Page 27. We can see that inventories have been driven down by 19% at the end of 2020 versus end of 2019. Both group inventory and dealers inventory have been reduced and having less than 500,000 vehicle in stock gives us good opportunities for 2021. Thank you for your attention. And now I give back the floor to Carlos. -------------------------------------------------------------------------------- Carlos Tavares, [8] -------------------------------------------------------------------------------- Well, thank you. Thank you very much, Philippe, for this clear presentation. As always, at this stage, I would like to share with you that Philippe has been playing a critical role in all the great results that we have achieved at PSA over the last 7 years. Let's not forget that he was the CFO of Opel Vauxhall during the turnaround of Opel Vauxhall, supporting Michael Lohscheller. Over the last few years, he has been supporting the efficiency gains at PSA. And I would like also to highlight that Richard Palmer and Philippe were at the core of the merger process. They were the ones that solved many of the traps that we had to overcome. They were the ones that discuss the most sensitive and emotional topics. They did this with a high level of common understanding, respect, a lot of understanding of the emotions that could exist from both sides. And they, to a certain extent, protected Mike and myself, from all of those discussions. I would like here to express to both of them, everything they have done to make Stellantis a reality. I would like to thank Philippe specifically for his role as a great CFO of PSA and supporting me in this process. And I'm so happy to tell you that Philippe will now be heading a big part of the Stellantis business, which is related to a significant number of business units that in terms of overall profit account for more than EUR 5 billion of operating income. That means that we are safe on the fact that this significant amount of our Stellantis business is now in good hands. And I would like to thank Philippe for supporting Stellantis on this matter and thank him for everything he has done so far to support us. Moving forward, in terms of Push to Pass highlights, I would like to start with the carmaker part of our business, telling you that we could improve over the last year significantly our customer satisfaction in terms of sales and aftersales. In terms of sales, the recommendation rate moved from 92% in 2019 to 93% in 2020. It was 88% in 2018. And the after sales, we moved from 86% to 89%. It was 80% in 2018. So as you see against 2018, a very significant step of progress to make our customers happy. And I would like to thank warmly all the national sales company that made this possible. It's hard work with the dealer network to make sure that we respect our quality standards. And as you can see, the results are now visible, and we are getting closer and closer to the benchmark in terms of customer satisfaction. In terms of product quality, we had a strong reduction in terms of 3 months in service failure rate worldwide as we were able to reduce by 33% the number of failures against 2015, which is also a good improvement, even though there is more work to be done. We still are not number one. We need to continue to work strongly as this is one of our major objectives of Push to Pass, as you know well. We also need to recognize that the COVID-19 stop and goes in terms of manufacturing was not helpful to give us what we needed to move closer to the benchmark in the direct run rate of our plants. So we still have work to do, but we can recognize that by the end of 2020, the situation was getting better and better. And I think we are now back in a continuous improvement process on the direct run rate of our manufacturing operations now that we can have reasonable conditions to operate regularly. From here, I would like also to share with you the fact that we have now 8 car lines, which are in the top 3 in overall satisfaction, and that means that step-by-step, with a strong focus, a strong persistent pressure on everything we do in terms of quality. We are getting closer and closer to the top, and we will not stop until we reach the top on this matter. If we look at the e-mobility and the clean mobility, our vertical integration strategy is now on the move. And you know that we have made a certain number of strategic moves to make sure that we control engineering, manufacturing and, therefore, cost, quality and performance for the major components of an electric powertrain. So this is something that our company considers strategically important to control in terms of engineering, manufacturing and, of course, quality performance and cost. We have this JV with Nidec on the e-motors, where we are now on the move. And by the end of '22, we will have the first electric motors coming out of the JV. We are benefiting also from our motor racing experience as the DS performance team has been awarded twice world champion on the Formula E championship. We also have the eDCT dual clutch transmission electrified products that we are developing in engineering and in manufacturing with Punch Powertrain. We are also on the move, and we'll be ready by the end of '23. Last but not least, we have, of course, the battery and the battery cells, with a specific dedicated JV that we have created with the Total and Saft Group that will deliver also by the end of '23, the first battery cells. All of this demonstrates that we were able to make the right decisions on the right timing. And this is going to be combined with 2 specific BEV dedicated platforms, which are the eVMP and the eCMP. All of this is going to give us a competitive set of technology that we are going to be able to use across Stellantis worldwide. And this is, of course, a big opportunity for Stellantis moving forward. And as you know, PSA has been leading the pack in Europe in terms of CO2 emission reductions. PSA is the leader. We may not be the guys who create the biggest headlines. But the fact is that we are leading the pack in terms of reducing the CO2 emissions of our fleet. And this is the tribute to this work done by our engineers, done by our manufacturing engineers, done by our strategists in terms of making those deals happen. And I would like here to express to them all my sincere appreciation. This is extremely important for the future of Stellantis right now. If we keep moving in terms of cost, of course, the year of 2020 was very painful because of the shutdown for 2 months of our plants. That was a significant headwind, of course. Despite that, we still have EUR 119 of cost reductions. All in, everything included, it's still EUR 119 million cost reductions. And this EUR 119 million cost reduction includes a headwind of EUR 400 related to the volume effect. Had we not had this volume effect headwind, then you see that the performance would have been stellar. But we have the reality and we face the reality, which means that we have now a significant task in 2021 that we can achieve if we have some stabilized conditions in terms of markets. And that, as you know well, depends mostly on the reduction of the lockdowns and curfews to ease the visibility of the consumers that will lead to more decisions to purchase cars. This is what we have now ahead of us. So let's keep in mind that despite a EUR 400 adverse headwind, we could protect EUR 119 of cost reduction. The wages to revenue ratio were also affected by the revenue, of course. Despite that, the resilience of the company is visible through the fact that we were able to achieve a quite competitive 11.4% ratio, and we will continue to target 1-digit number for 2021. We have also taken the opportunity to work rigorously on everything that relates to diversity complexity and commercial complexity that is creating a certain number of inefficiencies. Inefficiencies in the showroom, where what we offer to the customer is so complex that even our own salespeople may be facing difficulties to express the diversity of the offer, so it has an impact on the quality of our sales, but also a big impact in terms of complexity in the plants, a big impact in terms of reducing the volume per part. That, of course, is going to somewhere reduce our procurement efficiency at the end of the day. So we have been working on this matter. And with a reference in 2019, this year, we could reduce by 50%, the diversity complexity. And we aim by 2022 to reduce by 85% this diversity complexity. And this is something that makes total sense. If we look at the diversity that we have commercially speaking, we can easily say that with 20% of the specs, 20% of that diversity, we are delivering more than 80% of the volumes, which means that there is huge potential to move in the right direction with this initiative that is driven through a specific cross-functional team led by one of our top executives. So moving to the brands. Peugeot has done a stellar job with a very sound pricing power. Peugeot is now the reference brand in European market in terms of pricing power. You can see that it has been improving since the beginning since 2015. And that has contributed, of course, to the improvement of the margins that we have seen before. While we are improving the pricing power of the brand, we were able to improve the market share. In 6 -- in 5 regions out of 6, including Europe, we had an improvement of our market share with the Peugeot brand. So from my perspective, a great job done. And I'm happy for Jean-Philippe Imparato, who was the former head of the Peugeot brand, the former Peugeot brand CEO is now, as you know, the Alfa Romeo brand CEO. And I think he's enjoying the challenge to improve our performance over there, which is great news. If we move to Citroë, Citroën has been a stellar in terms of maintaining their pricing power and facing, of course, a lot of competition from other brands, which are discounting significantly what they can discount. At the end of the day, Peugeot of course, but also Citroën have been able to protect very robust margins despite the headwinds. And of course, now Citroën is enjoying a much larger electrified portfolio, with the Citroën Ami, which is a downtown urban mobility device, the E variation of the new C4, the C5 Aircross hybrid, the ë-Jumpy, the ë-Spacetourer and the ë-Jumper. This means that progressively, Citroën is now enjoying a full electrified portfolio, which, of course, is going to be paramount for the future. Last but not least, I would like to highlight the fact that the Citroën Ami is bringing to our citizens downtown urban mobility device, which is meeting exactly what we want, which is a safe mobility device, a clean mobility device as it is fully electric and an affordable mobility device as any of you can rent the Citroën Ami for less than EUR 20 per month, which is, I think, a very competitive pricing. And I can tell you, we are still making money out of this project. In terms of premium brand for PSA, DS is our electric haute couture brand. You see that pricing power has also been quite stellar. Coming from a minus near 8% in 2015. We are now plus 3%. And we are managing this brand by the per unit margins. We don't care so much about the volumes. We just care about having a sound, high-quality business model with good products and only [new] service to give consideration to these premium customers. So pricing is great. The market share has been growing by 9%. 1/3 of our sales are now made with electrified vehicles. And if we compare all the premium brands, which are multi-energy, then you will see that DS is the best in terms of CO2 emissions across all of those competitors who are multi-energy competitors. Moving to Opel. In Opel, what is also remarkable is the fact that the pricing power has been improving. As you see, we have been improving better than our road map. Starting with minus 6% against the benchmark, we are now at minus 0.9. And most probably in 2021, we'll be meeting the benchmark and being at the level of the benchmark, which is, of course, very important to improve the margins of the Opel brand, which are indeed improving, which is, of course, a tribute to the PACE! turnaround plan that was led by Michael Lohscheller and by his CFO, named Philippe de Rovira, at that point in time. I would like to tell you that what is demonstrating the quality of the job done is the H2 performance of Opel. The H2 2020 performance of Opel was no less than 5.6% of adjusted operating margin, which demonstrates that the turnaround of Opel is structural, and that is good news for the future as we are now bringing a brand-new pipeline of products that started with the Opel Corsa. And I would like to tell you that the Opel Corsa is now the segment leader in Germany and the #3 in the segment in the European market. This is very important, demonstrates that as a sister car from another car of our brand portfolio, Opel Corsa is demonstrating a great deal of competitiveness and appeal. And we are now launching, as we speak, the new Opel Mokka that you can see on the left-hand side of this slide. And from the order book we have, we believe it's going to be a big success. And that's good news because after this Opel Mokka, we have a very regular pipeline with one new product every year. And I can tell you, the pipeline that was created for Opel by Mark Adams is stellar. And I'm very, very happy with what I have seen, and I would like to thank them warmly for their skills and for their talent in bringing back Opel to the forefront of our markets. In terms of regions, I would like to tell you that in Europe, we were able to continue to improve our CO2 and our CAFE for the sales in Europe through a very rigorous process. We want to continue to improve our market share in the LEV market, which we are currently improving. And we want to continue to improve the LEV mix of sales, which is now above 9%. And this is exactly what you see here. We see that the CAFE is improving as we are increasing the LEV mix of sales. We are doing that in a profitable manner. We are doing that in an ethical manner where we try to bring better and better products, including on the ICE sales, which means that our contribution to fixing the global warming issue is sincere and concrete. And I think this is very important for all of us. I believe it is very important for us to tell our kids and our grandkids that we are working a car company that is bringing its fair contribution, its fair share contribution to fixing the global warming issue. And as you saw from my introduction, everything we do is consistent with the Paris agreement on COP 21, limiting the global warming to 2 degrees. This is the fair share that the societies in which we operate are expecting from us, and we are proud and happy to do this as a contribution to this global warming fix. If we look at the other regions and overseas, we have to highlight here the stellar performance of Middle East and Africa as we could grow the share by 2 points from 5.1 to 7.2. And while we grew the share by 2 points, we could deliver in 2020 the same amount of profit as 2019 despite the COVID. This is an outstanding performance. I would like to thank warmly the regional team and the leadership team for this success. I think it says a lot about the potential of development of Stellantis in Africa and Middle East. And of course, we are supporting this with all the appropriate products and sourcings as much as we need to. On all the other regions, you see that the situation was either flat or almost flat in terms of share. We still have our Chinese problem that we are now fixing or preparing to fix with a very dedicated strategic test team led by one of our top executives, to bring back to the Executive Committee and the Board, the different possible scenarios to fix this in a meaningful way. I just want to state here that it is the intention to stay in China and fix it. That's a very clear position from our management team on this matter. Let me move to the LCV. LCV was, again, a success story. Our leadership in PSA was reinforced to 25.3%, as you can see here. And we could grow market share, not only in Europe, but also in Eurasia and Middle East and Africa. We see that Opel Vauxhall could improve the market share by 0.4 points in Europe and that we have now a full e-LCV range to be offered to the market. And by the end of 2021, we will have a mid-sized van with a fuel cell powertrain, which will be an important milestone in the clean mobility and the clean utility of our LCV products. This is underway. We have also launched this year our brand-new Peugeot Landtrek pickup, one-time pickup. That will be a powerful tool to continue our offensive in Africa, Middle East, but also in Latin America. If I move now to the mobility part of our results, I would like to use one synthesis slide to show that our Free2Move mobility services continue to grow. We could grow 23% in 2020, which is important. But what is even more important is that in H2, the Free2Move mobility services were profitable. And this is a very important milestone. The fact that our teams under Brigitte Courtehoux' leadership have now understood what is the business model that makes mobility services profitable is, of course, paramount for the future of this kind of mobility services. This is something that we could achieve in H2. It was not a walk in the park. We tried many times. We failed many times, but now we understand. And that's important, of course, for our Free2Move as much as it is for Stellantis. Free2Move is a tech company from PSA, and it becomes a tech company of Stellantis, as you know well. In terms of used cars, we have a very strong online growth through our affiliate Aramis. And our profitability was also up, which is good news. We know that the used car market was strong during this very volatile period, and we could capture those opportunities, as you can see here. In terms of aftermarket, the independent aftermarket was -- business was growing with the Euro Repar brand and the Euro Repar Car Service network. All of this is moving. And as you can see, the revenue growth was 11% on this specific value parts that we are now selling to many of our customers. Last but not least, PSA Bank demonstrated a very strong and resilient performance with 70% of loyalty on loyalty products on European new car sales and 80% of B2C penetration on BEV in H2 2020. So we see that our PSA Bank is really supporting the business in a very profitable way. This is what I wanted to share with you in terms of PSA 2020 financial results. I think they speak for themselves. What I believe is the most important is now that we understand through what has been presented by Mike Manley and Richard Palmer, and through what has been presented by Philippe de Rovira and myself, how did this contribute to a strong kickoff of the Stellantis company. And I would like to start and share with you a few comments on the third part of today's session, which is about Stellantis. Stellantis is a new company, a new mindset, a company on the move to make radical choices. Stellantis represents an open window, a breath of fresh air in a shrinking, fast-moving world. And I can tell you that the Stellantis employees perfectly understand this from all the interactions I have had with them over the last few weeks, and I have spent significant amount of my time with our ex-FCA teammates to make sure that everybody understands where we are going and what is the sense of this new company creation. I think everybody gets it. Everybody understands that it's a fantastic opportunity, a breath of fresh air in a shrinking world. So we will focus on the quality of our business model. First of all, it's all about doing the right things right, in a proper way, which is the opposite of quick and dirty. So we have to do things properly. We have to improve the efficiency and effectiveness of everything we do. But it's not only about leveraging a clear governance, leveraging the fantastic diversity of our company, making sure that we create a framing where our talents can unleash their full potential. It is also about making sure that we will be making disruptive decisions as many as necessary to make sure that nobody is going to corner Stellantis as a legacy car company. It is important that we state that. It's important that you understand that. There is no way we are going to accept to be a legacy company. No way. So what we are going to do is not only about demonstrating to you that we can be very efficient and effective in everything we do, but also that we are able to make disruptive decisions when need be to be on the forefront of the new mobility that the citizens of this planet expect from us. So if you look at the major numbers coming from the 2 companies, by combining the 2 companies, you can see that in 2020, we were short of 6 million shipments overall, slightly above EUR 134 billion of revenues and adjusted operating income of EUR 7.1 billion and adjusted operating income margin of 5.3% coming from the combination of 4.3 on FCA and 7.1 on PSA and adjusted free cash flow and automotive free cash flow of EUR 3.3 billion . And what is, of course, the most important number of this slide is the EUR 17.8 billion of net financial position, with EUR 57.4 billion of available liquidity. What does this mean? This means that FCA, PSA did their homeworks by completely leveraging the power of their H2 results to create a sound financial foundation for the birth of Stellantis. And this is, of course, very important for all of us. We are starting with the right foot, with a strong financial situation that was very much higher, much higher than what I had set as a floor, and this is good news, which means that the teams perfectly understood that great news. So we are starting Stellantis with a sound foundation, very sound, as you can see through those numbers. And this is, of course, a great way to look at the potential of this group. If you look at the H2 results, revenues over EUR 80 billion, margin of nearly 9% and a very strong auto free cash flow. We can just consider here looking at these numbers that, therefore, anticipating on some of the questions that are continuously raised that this is not a crisis merger. This is much more than that. This is a merger that is going to open new opportunities for a company that is sound, with talented people, people who want to compete and people who do not want to be cornered in a legacy position or a dinosaur position. It's very important that we all understand this moving forward. So from here, I would like just to highlight the fact that we are going to present here the financial reporting to all of you. I'm sure that this is important for you on your understanding of what we are doing. We will present full financial results twice a year, H1 and full year. And we will present sales and revenues only in Q1 and Q3 so that we can focus on the operations. And I think that, that will lead to good transparency on everything that you need to know. And I think that what you have seen from the PSA experience will support that, would support that. In terms of regional breakdown, we will show you the details on 4 regions: North America, South America, Europe, Middle East and Africa, which represent the biggest profits of our company. We will group the 2 Asian regions as -- for the time being, our business is very small in that area. And we will give you visibility on the unique luxury brand and the business unit dedicated to the luxury brand of Maserati. This is what we intend to do. And of course, we hope that this will meet your expectations in terms of details and frequency of reporting. If we move forward, you have here the outlook that we have come up with for the 2021 year. You see that we see a growth in North America, South America and Europe, which is good news because that's where we have the biggest business and the most profitable business. We see also growth in Middle East and Africa, where we have also a strong profitability and more limited growth in Asia. If we move to our 2021 priorities, I'm sure that many of you are wondering what we are going to prioritize in 2021. And I would like to spend a few minutes explaining this slide. First, we want to establish a very proper governance. I already presented to you the governance, the business governance way with the 9 committees that are going to be used to make all the decisions of the company. This has started a few days after the closing. It is moving very well with a very good understanding from our teams that we need a very sound way of preparing the proposals and then using the valuable time of our top executives for the listening mode, the discussion and the decision mode on those topics. So we have already, I think, organized half a dozen of those committees. They went very well so far with a very good level of synthesis, a very good level of business sense, a very good level of proposals, even though some of them were challenged and there were improvements coming out of those challenges, which is great news. So that's what we are now doing. We have 100 days from the closing to set up the new governance. We are ahead of this. And of course, any meeting I would share is only related to this new governance way. And I think it's moving fast and strong. And I would like here to express my sincere personal appreciation to Mike. Mike is helping me a lot in moving in this direction fast and in a very professional and rigorous way. We will keep our eyes on the ball by making sure that we deliver our business plans for 2021. There was a business plan by PSA, another by FCA for 2021. We have kept those business plans. Of course, we'll try to improve each time we can, but we want our people to stay focused on the business, to keep their eyes on the ball and not be distracted by anything else than just moving forward and getting things done in a proper way. So that's one of the major priorities. We want to have a good result in 2021. We have also put a strong focus and a strong monitoring on the synergy plan. This is our commitment to you. We created this merger because it represents north of EUR 25 billion of value creation through the implementation of the synergies that were presented, which represents on a run rate 5 billion per year. So we have a very detailed plan that we follow up with a specific dedicated team that we call the Synergy Implementation Office. So every decision we make is facing the synergy that is expected from that decision, and we are continuously trying to improve and make sure that we deliver on our commitments, and we will. That's the third priority. The fourth priority is to make sure that we come up with a winning strategy for China. As I said, we will stay in China. We recognize that we have not been successful so far. And we are spending significant amount of time with Mike and a few other executives trying to understand where were the things we couldn't understand and what are the things we need to change to become successful in this market, even though we recognize that we come late after many other people, but that's life. That means that we have an upside there if we do it properly this time. And this is one of the priorities for 2021 is to come up with a winning strategy for China. Last but not least, we are now working on the strategic plan for Stellantis. We have started to set the process by which we are going to create this plan. It has to be a strong bottom-up plan, which will contribute to setting the foundation of this enlarged family, which means that each strategic task team will be staffed with people, with the best people coming from both families so that we can use the building process of this plan as a strong contributor to setting up a sound foundation for the future of Stellantis. We do not forget what happened in the past with the Chrysler Daimler. We do not forget. So we will keep our eyes very wide open to make sure that we create in terms of management, all the appropriate conditions, all the appropriate behaviors to make sure that the building process of this plan is contributing to making a sound foundation for this enlarged family. We will, of course, expect significant bottom-up contribution for our young managers and our young executives. This is going to be a very important listening mode from all of us. And then possibly after the summer break, we'll start converging to what would be finally the decisions of the Executive Committee. And I expect that I will be able to present this plan to you, which will be a long-term strategic plan up to 2030 by the end of this year or early next year. Please understand that Stellantis is not born from a crisis. Stellantis is born from the understanding that the 2 former companies will be stronger together than on a standing-alone basis. And therefore, it is important that we do the right things in a proper way to create this sound foundation. It is also important that we all understand that this is not about creating a defensive plan. This is not only about implementing synergies. It will be also an offensive plan. It will be also a disruptive plan in a certain number of dimensions, and we want this plan to be very strong. And we do not accept -- I repeat, we do not accept to be cornered as a legacy carmaker. And we will have to demonstrate to you that we have this capability to be innovative, to be disruptive in a certain number of dimensions of this plan. But while we do this, we will protect what is best. In what some would call a legacy carmaker, which is our enormous expertise in terms of manufacturing, engineering, development, sales. Many, many things are extremely experts like in our companies, and we will protect and enhance that, while we are going to develop a more aggressive, offensive part of the plan moving forward. This is what we intend to do. From here, what are the actions, the first actions that we are going to implement to deliver on the synergies? I will just like to give you a few examples. Of course, everything which is about sharing assets, engineering assets, platforms, modules, powertrains, will need a certain lead time even though some of those actions are already on their way. But what is more short-term-driven for 2021 is well about best supplier price alignment when we compare the prices of the 2 companies, former companies, and we select the best, and we align on the best. It's about leveraging our scale for everything which is related to commodity buy, making sure that we bundle all of our needs in terms of media buy, make sure that we make more integration in logistics, make sure that we align on commercial policies and reduce the distribution cost. Overall, given the size of our company, given the way we are selecting the most profitable projects, the highest value creation projects, we believe that we will be able to stay below 8% of R&D CapEx against revenue rate, which, from what I have seen is what we need to enhance the efficiency and the effectiveness of Stellantis against what was done in the former mother companies. If I move forward, what will be then the guidance that we want to give you today for 2021? The guidance is that we expect to be between 5.5% and 7.5% of adjusted operating income margin, with, of course, a strong caveat, which is related to the COVID-19. We cannot anticipate what are going to be the lockdowns, if any. We cannot anticipate what would be the restrictions on business, if any. So of course, that's a factor that we cannot control and that we put aside of this guidance. Everything else, you can see it on this slide, we have some tailwinds, which come mostly from North America, great new products, mostly on Jeep coming in. Strong pricing and mix environment are positive in North America. We expect that there will be a non-repeat of disruptions from COVID-19, if that was to be the case, because of the improvement in the vaccination process. If the vaccination process moves ahead as it is moving, for instance, in North America, then we expect things to go in a better direction. We started with a very low inventory level at the beginning of this year, and that is going to support the business moving forward. We are keeping a certain number of cost-saving initiatives from the COVID period on -- in 2021, and we will start benefiting from a certain number of synergies, and we have already seen that on the first decisions we have made. On the headwinds, we have basically, as you know well, 3 big gorillas. The #1 is the raw material cost inflation, which is extremely powerful, extremely impactful. And we are fighting very hard on this matter, and I would like to express my sincere appreciation to all the functions in the company that are fighting against this raw material cost inflation, which, of course, is penalizing the margins of our products. We are also facing a significant shortage of semiconductors, as you know well. From everything we have seen so far, the number of plant closures is for Stellantis quite competitive against what I have seen from other car companies. So so far, I would say, we have been able to push back and to fight on this matter. Hopefully, this will continue, and we are now working hard and as fast as we can while respecting all the quality standards on finding alternatives for the semiconductors that are in short supply, but this is also a very big hit to our business plan, as we all know, right now. And of course, we see that the increase in the LEV sales mix is putting pressure on the margins because, as you know, the cost of electrification is very high. From here, I would like just to say that this band that we are guiding you on is something that we believe we can deliver. But of course, there is something we do not control is to which extent things will improve in terms of health conditions in terms of COVID-19-related business disruptors. This is something we do not control. And of course, we are facing the other headwinds that we have here. So that's the guidance I wanted to share with you. Then moving to electrification, this is to represent all the pictures of the electrified products that we have now on sale. The least we could say at Stellantis is that we are not missing electrified products. This is very representative. And on this slide, you don't have the LCVs, so you have even more than what you see here. We expect to be fully compliant in Europe as Stellantis, and we continue to work aggressively to improve our CAFE in the U.S., understanding that with the new administration, things will be most probably more demanding in the near future, and we are preparing for that, as you may expect. And of course, we have all the technologies that we need for that from the presentations that were made before. Last but not least, I would like to talk to you a little bit about software. When I was telling you that we do not accept to be cornered, we do not accept to be a legacy carmaker, we do not accept to be a dinosaur, we are now preparing for a very strong initiative in terms of software. We understand that software is core. We have counted the number of lines of coding that we have in one of our premium PHEV C segment products. It's around 80 million lines of code. So needless to say that this is a fantastic sophistication of our products. By the way, it's roughly 3x more than a midsized airplane, which tells a lot about the complexity of the car industry. It's, of course, important that we address the key goals that you have on the right-hand side of this slide, which is, of course, attractive and fluid customer experiences of our products. It's about making sure that our products are continuously up-to-date through the over-the-air capability, which is already a reality for the infotainment of our cars. It's about making sure that we scale up in the way we use the data and the way we use artificial intelligence. It's about mostly decoupling completely the software developments from the lead times of the hardware, which are completely different, and that need that we gain control over the software in the value chain. This is what we are preparing for. And of course, to do this, we want to attract the best talents in terms of software. That means that this open window to the world called Stellantis to have a breath of fresh air will be a strong attractive point for many people because we are a highly diverse company. We are open minded. We want to change things. We want to do it faster. And of course, people want to achieve something in their professional life. People want to unleash their potential. They will be attracted by Stellantis, which is an open company, an open-minded company. This is what we are preparing for and within a few weeks or limited number of months. We'll be able to explain to you a strong initiative on this matter, and this is the reason why we have assigned a top executive that will report to the CEO directly called (inaudible), who is in charge of preparing this strategic, innovative and disruptive initiative. This is what I wanted to share with you. And from here, I would like to hand over to you for the Q&A. Thank you for your attention. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And the first question comes from the line of José Asumendi from JPMorgan. -------------------------------------------------------------------------------- José Maria Asumendi, JPMorgan Chase & Co, Research Division - Head of the European Automotive Team [2] -------------------------------------------------------------------------------- It's Jose from JPMorgan. Carlos and management team, just 3 topics, please. The first one, can you talk a little bit about the synergies and the synergies on 2 fronts? As I think about FCA's R&D bill and how much of that is exposed to Europe, and how much can you reduce that R&D expenditure that is exposed to Europe as you leverage on the Peugeot architecture, what is the opportunity, please? And how much of that R&D build is exposed to Europe? Second topic on the synergies, please, the engine on the powertrain opportunity, how quickly can you share powertrain across the Peugeot on the FCA architecture in Europe? And how quickly can you merge those 2 engine families? And then Carlos, please, 2 topics as well. One software as you just mentioned and the second one on the electric vehicle platform. On software, can you talk a little bit more around who are going to be your key software partners to develop the autonomous driving toolkit on Level 2, Level 3 in the short term, maybe in the next 2 years? And then on the EV architecture, you have, I think, a very successful or very solid toolkit with the combination of Nidec staff Punch Powertrain on the different components of EV toolkit. Can you move this toolkit over into North America and replicate the same strategy in Europe as in the U.S.? Or do you need a different strategy for the U.S. market? -------------------------------------------------------------------------------- Carlos Tavares, [3] -------------------------------------------------------------------------------- Well, thank you, José. That's a lot of questions that, of course, need a lot of development. So I'll try to make it as focused as I can. And thank you for raising so many very important and interesting questions, I'm sure for you as much as for your peers. First of all, we see with our Italian teams enormous potential to improve fast because, of course, everything that we are already doing to deliver the 9.4% operating margin by H2 of 2020 is available to our FCA teammates in Europe. So there is many, many things that can be used in a very efficient way very quickly. And we have a lot of references, a lot of internal benchmarks on everything that we have been doing between Peugeot, Citroën, DS, but also with Opel Vauxhall. So all of this is on the table. I see from our Italian teams a lot of interest. I would say they are really eager to jump and see what can be done. I know that they are doing this. And by the way, I would like to thank them for being so open-minded in terms of grasping those opportunities. So yes, it is true that FCA Europe has a big opportunity to be using many of the assets, which are available in Europe coming from the PSA world. But not only, there will be also some of the assets coming from FCA that will be used also by PSA because this is exactly what a synergy means. Synergy means that you can do things that you would not be able to do on a stand-alone basis. And this is going to be both ways. This is something that I can tell you. And I think it's going to move reasonably fast. Of course, you have the lead time of new projects, which generally speaking, is between 2 and 3 years on existing platforms and existing powertrains. But that may represent a very significant part of the synergies. What I can tell you is that all of those topics are coming to the governance bodies that I am sharing. And I have already -- we have already decided on many of those over the last couple of weeks. And we do not forget, you and me, that the closing was on January 16. And we are on March 3. So many of those decisions are already in execution mode, which is good news, and it is also the big demonstration that our teams are eager to use those assets and use those opportunities. It's going to be the same thing in powertrain. Of course, in terms of ICE, we do not intend to invest more. We are going to use the existing assets from both companies and trying to leverage everything we can and use the existing capacity as much as we can with the existing ICEs. We have very good proposals from both families. I would say, smaller engines more from PSA, bigger engines more from FCA. And we see that those opportunities are going to allow us not to invest more despite the needs and despite the new norms, et cetera, which is great news in terms of synergies. And on the powertrain, I see a lot of cross sharing between the 2 families. I also see that in terms of electrification, everything we have invested in Europe is a blessing for Stellantis, the electric motors, the dual class transmission electrified, the battery packs, the battery cells. All of this is going to be available for FCA Europe, which is, I think, very good news to improve very quickly the performance of our sales. And the only thing I can anticipate is that by 2025 -- and please remember this, we'll be very happy by 2025 to be in control of the full value chain of the electric powertrains. We will be very, very happy in 2025. And by the way, that's a decision that we have made a couple -- most of those decisions were made in 2014, 2015. And the battery cell company was decided last year, as you know well. In terms of software and autonomous vehicles, well, we have a great deal, a great deal that was crafted and negotiated by Mike with Waymo. It is a great partnership between -- it was a great partnership between FCA and Waymo. And now it's a great partnership between Stellantis and Waymo. So now we are going to execute this strategic partnership and make those autonomous vehicles with the Waymo software technology, which is the best way, of course, to learn, is to do things and of course, to come up with the appropriate projects that will be announced shortly. But you see, it's very simple. To a certain extent, PSA was coming with a lot of good things, good assets in terms of CO2 emission reduction, and FCA was coming with great things in terms of autonomous vehicles. And now all of this is part of the assets that the family can enjoy. For the EV architecture, we are still working on the architectures. You have seen from the PSA presentation that we have 2 platforms, which are very much B and C segment dedicated platforms, the eCMP and the eVMP. The eVMP platform is going to give us a very strong improvement in terms of range, in terms of, I'm sure, satisfaction for the customers, given the range that will be offered because the packaging of the battery pack is absolutely efficient in the way it is sought out in the platform layout. Are those assets usable in U.S. with the caveat that they need to be federalized in some of their dimensions? The answer is yes. Will we do it? We'll see. So far, it's too soon to say. We still have a lot of work to do. We are now preparing for the product strategy for the next 10 years for the 14 brands of Stellantis. So I think you can imagine 10 years' time window, 14 brands, product planning strategy, technology strategy. All of this needs to be combined. We are working very hard on that core model strategy, of course. It's moving very well and very fast. It's still a little bit premature for me to give you the details. But of course, one of the major drivers of this global initiative is to make sure that they are shared assets because those shared assets are the best levers we have to be more competitive than our peers. And at the end of the day, through our efficiency, continue to invest in our future. This is where we are today. So could we use those assets in the U.S.? The answer is yes, as long as we federalize what we need to federalize based on the U.S. regulations. That's my answers to your questions, José. Thank you. -------------------------------------------------------------------------------- Operator [4] -------------------------------------------------------------------------------- (Operator Instructions) And the next question comes from the line of Martino de Ambroggi from Equita. -------------------------------------------------------------------------------- Martino De Ambroggi, Equita SIM S.p.A., Research Division - Analyst [5] -------------------------------------------------------------------------------- Okay. I would try to ask just 2 questions. The first is on the guidance for 2021. Could you elaborate a bit more on your top line in the sense you presented some indication coming from independent sources concerning market volumes. Just to have a quick comment on the ability to outperform mix and ForEx, just to have an idea. So the end of the question is 150 roughly billion is a reasonable number on what to build your adjusted EBIT guidance. And the second is more general. In your comments, you said we are prepared for disruptive decisions. Is there any example you could provide, you could share with us? -------------------------------------------------------------------------------- Carlos Tavares, [6] -------------------------------------------------------------------------------- Well, those are 2 great questions. Thank you. I will answer the second one and then give a few minutes to Richard to answer the first one about the top line that is supportive of the guidance that I presented. On the disruption, one example I can give you is the recent investment we have made in the Archer Aviation company to develop vertical flying devices for urban mobility, which is a very different kind of mobility that we are now here facing. This is one example. We believe that this strategic investment in Archer Aviation is going to be highly convergent with the technology that we need for the automobile world in terms of energy management systems, in terms of lightweight batteries and in terms of fast charging of those batteries. So that's a very clear technology convergence between aerospace and automotive. And this is why we have done this investment in the Archer Aviation a few weeks ago because we believe there is value creation potential in terms of technology road map for the electrified components of our powertrains. That's an example. I don't want to give you more examples right now with my apologies because as long as we have not decided them yet, it is, I think, respectful to you and to your peers that we not talk about things we have not decided to do. But what we have decided to do and that I can share with you is the fact that we are not going to let ourselves be cornered as a dinosaur. That's clear. You see that's something that I can easily capture from our people, from our executives. They understand that we can be much more efficient and effective in everything we do. And the internal benchmarking is showing that, which means that we have great potential to improve our results but for the purpose, for the purpose of making sure that in this fast-changing world, in this volatile world, in this chaotic world, we are not going to be cornered because we would not be bold enough, because we would not be fast enough, because we would not be innovative enough. This is something that is coming up strong from my top executive team, and I was talking to them 300 top executives just before the session. I think that they completely understand. And of course, there is a big question mark in the room, as you know well, which is the valuation of Tesla, which is always there somewhere. And we will make sure that we compete in a way or another. I don't know what the valuation will be, but I can tell you that we are not going to be a legacy carmaker cornered in legacy products. This is not the intention of our top leadership team. This is not the intention of the CEO of the company. This is something that we need to create and, of course, to present to you at the appropriate time. So that's where we are on that topic, I'm sorry for giving you only one example at this stage. Richard, would you like to answer the question on the top line, please? -------------------------------------------------------------------------------- Richard K. Palmer, FCA US LLC - CFO, Senior VP & Director [7] -------------------------------------------------------------------------------- Sure, Carlos. Thank you. Hi, Martino. So I think, as you saw in the second half of last year, our revenues combined were EUR 80 billion. Simple math would indicate that we should be a little bit higher than your [1 50]. The big unknown, clearly is the impact of the chips issue, particularly on the first half of the year. So I think a range of [1 50 to 1 60] is probably a reasonable assumption given the volatility that we're facing, both in some of our markets and particularly because of the availability of chips in the short term. -------------------------------------------------------------------------------- Operator [8] -------------------------------------------------------------------------------- The next question comes from the line of Thomas Besson, Kepler Cheuvreux. -------------------------------------------------------------------------------- Thomas Besson, Kepler Cheuvreux, Research Division - Head of Automobile Sector [9] -------------------------------------------------------------------------------- it's Thomas from Kepler Cheuvreux. I have 2 questions as well, please. The first is about capital allocation. Carlos, I think you mentioned EUR 17.8 billion is an important figure. It's effectively higher than what we had in mind on cash generation. Could you give us an idea of how much net cash you think that Stellantis needs in absolute terms or as a proportion of group revenues and tell us eventually whether the EUR 1 billion dividend that you had considered after the change in terms of the merger in September is enough or maybe could be more given the prospects of free cash flow generation? And mention what you'd like to say on dividend policy from here. I mean you've said 8% CapEx and R&D. So lastly, there's a lot of room for free cash flow. So basically, an overall question on with the strong net cash position, how much do you think Stellantis could return from here? The second question is to come back on the synergies, please. We've seen in the press several reports suggesting that there could be first CMP vehicles from the FCA family coming as early as mid-2022. It would seem extremely quick compared with what you managed to achieve with Opel, but I'd like you to comment, if possible, on the timing of the first vehicles coming from Jeep or Fiat that could be shifted into the CMP vehicles in Europe to have a first idea of the sequence for synergies. And that's it. -------------------------------------------------------------------------------- Carlos Tavares, [10] -------------------------------------------------------------------------------- Well, thank you, Thomas. As always, great questions, not easy ones. I would like to ask Richard to comment on the net cash position of Stellantis. I would like to say a few words about the R&D and CapEx and the dividend policy. The dividend policy will be presented to you later on. It's not the right timing for us to do that. The right timing right now is to close the loop on the deal that was concluded to create Stellantis. That's the sense of the dividend, the distribution that was announced, it's to close the deal-related to the merger. That's why we are proposing to the shareholders to make that decision in terms of distribution, close the deal of the merger. In terms of R&D and CapEx, I have presented to you the fact that I believe that we can stay below 8%. Why? Because I can see the needs coming from the brands, including the brands that have been a little bit starved over the last few years. But I also can see the efficiencies and I believe that Stellantis can be one of the best players in the world for the efficiencies when we are doing the sister cars from leading cars, which means that we can be very efficient in the way we build the business plans that fly because our [inter] tickets and the way we have to engineer those sister cars is very competitive. So I believe that being below 8% will demonstrate that we can, from one side, be very efficient. From the other side, if we have to rank the projects, we will, of course, cancel the ones which have the lowest value creation ratio, which then means that it is going to improve the overall margin, income margin rate of the company, as you, of course, understand. So the 8% ceiling comes from the efficiencies that I see, both from PSA and FCA, and I will give you 2 examples. I think that PSA is coming with a very clear understanding that we can do a sister car for a very competitive inter ticket. And I think that the FCA is coming with a very clear development process that is faster than the PSA one. So from one side, they have one family telling me that they can do the things at a faster pace. From the other side, I have another part of the family that is telling me that they can do it in a more efficient inter ticket. So if I combine both, I should go fast and I should be very efficient at the end of the day. That's the reason why we create Stellantis, by the way. So I think you can easily, easily think that within 2 to 2.5 years, we can have some of those products on the market, which is something that is reasonable, given the fact that we will make top hats on existing platforms. That's something that you can understand. And regarding the dividend policy, we'll talk to you later in the year, most probably about this. At this stage is too soon for us. We have too many things on our plate. We need to set the direction, start creating the value, discuss with our Board, and then we'll come back to you, I'm sure, later in the year. Richard, would you like to take the comments on the net cash position of Stellantis, please? -------------------------------------------------------------------------------- Richard K. Palmer, FCA US LLC - CFO, Senior VP & Director [11] -------------------------------------------------------------------------------- Sure. Thanks, Carlos. So Thomas, a couple of premises. Obviously, one, volatile markets and continued risks in some of the marketplaces we're operating in. Secondly, we have about EUR 13 billion of maturities in the debt ladder, which we need to address in the next 3 years, half of which is in 2022. So clearly, we're investment grade. We have a very, I think, attractive set of (inaudible) refinancing the debt should not be an issue, but we will -- that's the first priority, I think, to do that as we look at our liquidity position. And then secondly, if you think about percentages of revenues, I suppose, in terms of what sort of liquidity we should be holding, I think 25% to 30% of revenues is a number which people consider to be a reasonable range for a car company, currently with the volatility we're facing probably on the high end of that. So I think that's the sort of target we'll be looking at in the shorter term as we refinance the maturities. And then as markets stabilize, we'll continue to look at that number going forward. One fact on the EUR 57 billion, the EUR 57 billion of liquidity we show clearly sort of needs to be normalized for the EUR 2.9 billion extraordinary dividend we paid in January, the 0.3 that will go out with the Faurecia distribution, the EUR 1 billion of special dividend that will go out, if approved by the AGM. So the AGM. And we also have a EUR 3 billion RCF that expires in April. So the number is a little bit lower normalized for those factors, but it's clearly very strong, and we will keep it very strong. I think maybe for some people too strong until we have refinanced some of the maturities that come due. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- The next question comes from the line of Horst Schneider from Bank of America. -------------------------------------------------------------------------------- Horst Schneider, BofA Securities, Research Division - Research Analyst [13] -------------------------------------------------------------------------------- Yes. I'll try to keep it brief. Regarding the 2021 guidance on operating margin, Carlos, as we know from Peugeot, you have been always very cautious in setting guidance. So I want to understand now the guidance that we got today, is that now different from the guidance that we got in the past from you? So in other words, is that now really a realistic guidance or you would still call this guidance cautious? And in that context also, I want to understand what amount of synergies is already baked into this guidance? And what is the counter-effect from the semiconductor shortages and the raw material inflation? Apart from that, I want to understand a little bit structural on premium cars, for example, if you want to continue to have the DS brand next to Alfa Romeo and Maserati. It appears from the outside that you have got now many small premium brands but not one large premium brands. So maybe you can explain a little bit on that. And the last one is on financial services. You want to have that in the future, again, fully owned by your group or you will continue that in your JVs? -------------------------------------------------------------------------------- Carlos Tavares, [14] -------------------------------------------------------------------------------- Well, those are great questions. Thank you for making those points. Are we being too cautious in the 2021 guidance based on the -- your knowledge of your CEO? I would not make that assumption. First, because your CEO has to learn many things, and he may change. And secondly, because when you look at the headwinds, we need to be realistic on the power of those headwinds. And third, because some of our peers have been guiding on a lower number. So I would like just to tell you that please be cautious on that one. This guidance, I think, is a good guidance. I think it's representative of a balance between the risks and opportunities. As you know, one thing did not change with your CEO is that he's a competitor. He will remain so, and he will continue to compete and do his best with his team to deliver as much value as we can. But I would not consider, certainly not this guidance, as being cautious. I would not say that because the power of the raw material cost inflation, what is to come in terms of semiconductors is very much the unknown. We are told that things will go better in the second half. I'm not sure that, that will happen. Because the evidence that supports that, it's not so obvious. So at the end of the day, my answer to you, with all the respect, is don't consider that this is a cautious guidance. Consider that it is a centered guidance. I think that's the best way to look at it. And of course, you can count on your CEO and you can count on our CFO and the top management team to fight against the headwinds as strongly as we can. But of course, there are some other things we cannot always control. The second question was about the premium brands. Your point is valid. It's also about value creation. You see we have 3 premium brands: the DS brand, French sophistication; the Lancia brand, the Italian elegance; and the Alfa Romeo brand, which is an iconic brand, that needs to find a better fit with the potential target customers. On those 3 brands, there is a huge amount of synergies that our brand CEOs are now working on. And this is the reason why you have seen that for each of those brand groups, there is one synergy reference. In this case, is the Alfa Romeo brand CEO, Jean-Philippe Imparato is in charge, of creating and executing those synergies within the brand group. So you can expect that those synergies between the Lancia, DS and Alfa Romeo are going to happen. And of course, that is going to, to a certain extent, allow a better market coverage at the end of the day, against another scenario, which is the one that you have mentioned, and it is fair to mention that, why don't you have only one premium brand, which could be eventually your strategic thinking. So far, we are not there. So far, we believe that if we are quite strong with DS in France and neighboring countries, if we see that the Lancia has a big potential in Italy and neighboring countries, if we see that Alfa Romeo can do a better job everywhere in the world, starting with Europe and the U.S., it's because we believe that we can leverage the already visible equity value of those brands. But your question remains valid. But for the sake of being totally transparent and honest with you, I must say that our first direction is to give to each of those brands a car model strategy and a chance to build the future based on the great achievements of the past. And that's why we have assigned one brand CEO for each of those brands. And as you know, we have Béatrice Foucher taking care of DS. Jean-Philippe Imparato taking care of Alfa Romeo and Luca Napolitano taking care of Lancia. So we are working on that. And I can assure you that against having one single brand, I would say that if we have a strong amount of synergies between the 3, perhaps we can enjoy the benefit of the synergies and at the same time, have a better market coverage. Perhaps this is where -- and now we are working on the brand strategies that we are going to be reviewing between now and the summer break. That's what we are doing right now. On the financials, what we are seeing is that we are enjoying. We are enjoying a significant collaboration, positive collaboration with our banking partners on PSA as much as on FCA. I think that we are going to leverage on those partnerships. I believe that we will simplify what we have today to make it more efficient and effective in each market we operate. But of course, this is still in the make. We are still discussing and appreciating the benefits of each scenario, but we will continue to enjoy strong partnerships with some of our current partners. That's clear. And we'll see how we can use the potential of our partners to be more aggressive and more impactful in some of the business areas of our global business, starting with the leasing activity, which is, I think, a very important one for the future of our business. So this is right now in the making. We will be discussing these matters from the end of this month. And I think that by the summer, we'll have a clear direction on this matter. But so far, what is coming up is that we are happy with our partners and we will continue to leverage that moving forward. -------------------------------------------------------------------------------- Operator [15] -------------------------------------------------------------------------------- The next question comes from the line of George Gallierst from Goldman Sachs. -------------------------------------------------------------------------------- George Anthony Galliers-Pratt, Goldman Sachs Group, Inc., Research Division - Equity Analyst [16] -------------------------------------------------------------------------------- So the first question I had was just around electrification. You've been very clear in your remarks that you don't want to be seen as a legacy carmaker, but one question which frequently comes up in discussions with investors is your relative positioning on electrification, and specifically on battery electric vehicles. And on Slide 51, you do lay out your plans for high-voltage variance, but you don't make any distinction between BEVs, PHEVs and range extenders. So when you consider Stellantis globally, how do you believe your positioning on battery electric vehicles specifically will compare to peers 5 years from today? And are there any segments or regions where you believe there is a competitive gap that needs to be addressed? And how quickly can you address that? -------------------------------------------------------------------------------- Carlos Tavares, [17] -------------------------------------------------------------------------------- This is a very fundamental question. Thank you for asking that. We believe that the mix of sales within the LEV world will move very fast to pure BEVs, which means that we believe that the societies and the markets in which we operate will have the tendency to ban ICEs. That's the reason why we have created eVMP. That's the reason why we are now working on a strong evolution of the current CMP to simply bring what the customers expect from us, which is range and affordability. This is where we are today, and the eVMP is a very good technical answer to that. We have already presented the range more than 600 kilometers, more than 100-kilowatt hours of energy storage with all the other attributes that you expect from a very comfortable product C&D segment. So we are there, and we expect to compete in terms of platform capability. You know that this is a strength of our families. We do not expect to be anywhere in trouble on the platform architecture and the platform capability, being all the conventional dimensions or in energy storage. And we are working very hard, not only on the energy storage, but also on the energy efficiency ratio, which is all about the electric motors. This is all about the transmissions, which is all about the aerodynamics of our products. So it's not only one factor that is going to give you the energy efficiency in number of miles per kilowatt hour. It's a combination of aerodynamics, weight, efficiency ratios in electric motors, efficiency ratios in electrified transmissions, capability to store, capability to charge and capability to use the full energy that you have stored in the battery. All of this combined is what we are now working on to make sure that in terms of range and affordability, we are going to be meeting the expectations of our customers. So I'm not worried about that. I'm challenging hard my engineers on this matter, and I'm pushing them hard because I know that this is where the battle will be. The battle will be within the 3 to 4 years on to which extent did we remove the range anxiety factor from the BEV world, to which extent are we able to make that affordable in an attractive packaging inside of a car. So in a nutshell, the message I would like to convey to you is that we are full throttle on the BEV. That's where we are. We are not thinking that we still have the PHEV or the MHEV. No, no. We just believe that, that is going to disappear because there will be a ban on ICEs. At which speed, will that disappear in all the regions? I don't know. But for the regions that are leading the way in terms of zero-emission mobility, we are focused on the pure BEVs. That's where we put the focus. And that's where we put the most significant challenge and demand to our engineers. And I hope that we will be able to discuss that in a couple of years and check both of us that we have done a good job in that area. But of course, that's still in the making right now. That's my answer to your question. -------------------------------------------------------------------------------- Operator [18] -------------------------------------------------------------------------------- Next question comes from the line of Alan Tovey from The Daily Telegraph. -------------------------------------------------------------------------------- Alan Tovey, [19] -------------------------------------------------------------------------------- Mr. Tavares, on the 19th of January, you talked about -- it would be weeks before you made a decision on a new model for Ellesmere Port. We're now at March 2. And at the time, you also said the decision would depend on the U.K. government being willing to protect some sort of auto industry in the country. The U.K. government is talking about being intense discussions with the company. What are they offering? And what will it take to get Stellantis to put a new model or electrified models into the U.K.? Or is the plant's future decided already? -------------------------------------------------------------------------------- Carlos Tavares, [20] -------------------------------------------------------------------------------- [Thank you] for making that question, I was expecting that question sooner in the session today, but I'm happy that you could raise it. Let me go back to the different events and the sequence of events that happened on this topic. We were preparing after a very hard work that was done with our teams in Ellesmere Port and with the support of our local unions, we were preparing for a new investment in Ellesmere Port, and it was clear in our mind what we wanted to do precisely at the moment where the U.K. government announced that they would ban the ICE-powered cars by 2030. Of course, with that brutal announcement that immediately suspended the decision on that project, which were -- which was a multi-energy project. We are not going to invest in the U.K. market, a product that is going to be banned from 2030 onwards. So that decision was suspended. So once we suspended the decision as a consequence of the U.K. government announcement of banning the ICE cars from 2030, then we went back and tried to find a solution. Why? Because we believe in the U.K. market. We have a stronger British brand called Vauxhall. We respect our people and we protect our people in Ellesmere Port because we have been doing difficult things with them, and we respect our union partners who have been supportive and collaborating with us in finding solutions. So we figured out what was the need for those electrified products in the U.K. It happens that those products, they already exist somewhere else. They are already planned to exist somewhere else. So why would we double the [succinct] in Europe for the same kind of products in this situation where we are able to meet all the requirements of the Brexit deal. Well, if there is an intention to protect in the U.K. this automotive industry, this zero-emission automotive industry, which I could understand because it's consistent with the decision to ban ICEs, then, of course, from a pure governance perspective, I can only double the succinct for those products and go to the U.K. if, from a governance perspective, I am supported in the investment by the U.K. government. And I can, therefore, confirm that we have good discussions with the U.K. government. They are collaborative. They are productive. They are open minded. But of course, this is a business, I have a very clear governance rules in my company. I can only make decisions based on facts and based on commitments. So at this stage, we have those good discussions. We need to make sure that we get from the U.K. government the commitments on the support that we have been discussing. If those commitments happen, then the good things will happen. If not, then we'll have to assess the situation. But please understand that this is a very specific sequence where we have clear Brexit deal rules in terms of local components that we can respect in any way with a single Continental Europe sourcing. And if we want to duplicate that, then we need support from the U.K. government, if there is intention from the U.K. government to protect a local automotive industry because those investments are, of course, significant. And there is a clear governance in our company where we should not spend R&D and CapEx if it doesn't make economical sense, which, of course, I'm sure you understand. So at this stage, what I can confirm to you is that discussions are productive. Discussion are positive. They are ongoing. But to make a decision, we need a commitment. If there is no commitment in terms of governance of our company, we cannot decide. So when is the U.K. government are going to commit? And how is this going to happen? This is what we need to understand from now. But the discussions are productive, and let's see what comes up. And we have a deep respect not only for our people, but also for our union partners. And of course, we want to support our Vauxhall brand in the U.K. We believe this is also somewhere -- something that is part of the equity of Stellantis. This is my answer to your question. -------------------------------------------------------------------------------- Operator [21] -------------------------------------------------------------------------------- The next question comes from the line of Charles Coldicott from Redburn. -------------------------------------------------------------------------------- Charles Coldicott, Redburn (Europe) Limited, Research Division - Research Analyst [22] -------------------------------------------------------------------------------- I've got 2. The first on China. So what are the things that you need to change in order to be successful in this market? And maybe you could sort of comment on what you think is the blue sky scenario for profitability in China. Has the target become as profitable as you are globally? Or could it even be a premium like it is for the German carmakers? And my second question was, I noticed that the FCA European CO2 pool with Tesla was formally confirmed last week for 2021. Can you confirm what you paid for CO2 credits in 2020? And maybe comment on what we should expect for 2021. -------------------------------------------------------------------------------- Carlos Tavares, [23] -------------------------------------------------------------------------------- Thank you. Thank you for the 2 questions. I will let Richard answer the second question, as I'm not sure that we can unveil to you those numbers. So Richard will tell you because he knows this deal much better than I do. But on the first question, what I can tell you, if you ask me, what do we need to change in China? Well, many, many things. Many, many things need to change because we see, obviously, that we have many problems related to the respect of our brands. We believe that brands represent a strong equity of the company. They have to be respected. And the way to respect our brands is to make sure that we communicate properly on our brands that you -- that we respect the pricing power of our brands and that we do not commoditize our brands. That's obviously one of the things we need to change. We also need to make sure that the way any strategic collaboration would work is fluid, is focused, is purely business-oriented and make sure that when we do that, we are only looking at the market and not as something else. So we need to be focused on the market, focus on what the Chinese customers are expecting from us. And of course, we need to have the right business framing in terms of regulatory framing, in terms of CO2 performance to make sure that we can bring the right technology in the right way. You see, so far, our performance is met by some of our competitors using only CBUs, not even localized, which clearly demonstrates that there is a lot of things that need to change. I would like to stop here on this matter because it is premature for me to comment on the different scenarios that we are now preparing for. Some of them are concepts, some of them are already under negotiation. But of course, we are not going to stay still because we have nothing to lose. As we are not happy with the results, it's only about upside. So if we want to capture the upside, we need to change many things. And that's why we have different scenarios. And that's why it's still premature. But as I presented to you, we can commit that this new strategy will be released within the year of 2021. This is what we can say today. And Richard, would you like to comment on the Tesla deal, please? -------------------------------------------------------------------------------- Richard K. Palmer, FCA US LLC - CFO, Senior VP & Director [24] -------------------------------------------------------------------------------- Yes, Carlos. So Charles, we had costs of credits in 2020 of around 300 million for Europe, most of which were Tesla, and we have a similar number in 2021. It goes down, but not significantly. -------------------------------------------------------------------------------- Carlos Tavares, [25] -------------------------------------------------------------------------------- Thank you. Well, thank you, Richard. Thank you to all of you. I think we are over now. I think we have dedicated, hopefully, enough time to your great questions. I still would like to tell you that I very much appreciate each of your questions. I think each of them is helping us to think in a better way. And I would like to take this opportunity to express to you all my sincere appreciation for the support that you have all given to FCA and to PSA up to now. And I would expect that we will meeting your expectations within the Stellantis world moving forward. I expect to see you very soon. Thank you very much. Have a great day. Bye-bye.