CIE Automotive Stock

Good afternoon, everybody, and welcome to this results presentation.

Today, we have Jesús María Herrera, CEO; and Lorea Aristizábal, who is the Director for Corporate Development. [Operator Instructions]

And now I'm going to give the floor to Lorea. So please go ahead, Lorea.

Hello. Good afternoon, everybody, and welcome to this Q2 presentation.

And I'm going to kick off by reviewing the evolution of the different markets in Q2.

And once again, we've seen that there's been an important divergence between geographies and each region has evolved at different speeds and with a completely different dynamic approach.

But let's kick off by reviewing Europe, where production has been reduced by 2% during the quarter with drop of more than 1% in the first half of the year. However, sales are still very positive with plus 4% in the quarter and plus 4% in the half year.

And this shows that there's a disconnection between demand and levels of production. But most of that disconnection can be explained by the greater penetration of Chinese manufacturers in the European market.

In other words, more and more sales are being covered by vehicles imported from China that is imported in a CBU format that is complete vehicles and also imported in the CKD format.

And this is setting aside the production that was done in Europe historically. And it's true that some Chinese manufacturers are now considering having local assemblage capabilities, but we're still very far away from locating these supply chains or from making a significant contribution in terms of the European industrial fabric.

But it's the context in which we also have a regulatory debate that is becoming increasingly important. In Brussels, they are still negotiating initiatives like the Industrial Accelerator Act that is geared towards achieving a greater localization of our production.

And in Brussels, they're also making it possible to extend import tariffs to apply them to hybrid vehicles that are currently only applied to electric vehicles. But there's another relevant aspect of this quarter in Europe has been the growing penetration of electrification that has been boosted by the fact that the price of fuel has gone up because of the conflict in Iran and also because new incentives have been deployed by several European governments and also because there's an offer of product that is more extensive and competitive.

So this is why electrified vehicles have now come to the forefront, and they've reached now 30% of sales in the first half of the year compared to 24% in the first half of the year of 2025, in this first half of the year in Europe, where CIE Automotive has grown 14% vis-a-vis a market of minus 1% with an outperformance of more than 15 points with a contribution that is close to 8 points of inorganic growth of Aludec.

North America now, we will continue with North America, whereas in Europe, the industry is still dealing with a favorable that is not very favorable because on the one hand, the United States, where production shows that it has become stagnant with a slump of minus 1% in Q2, and it's been practically flat in the cumulative figures of the semester.

But compared to Europe sales, they are penalized by a consumer that is under more and more inflationary pressure and also because there's been an increase in the energy costs originated from the conflict in the Middle East and sales have dropped by 3% in the United States.

And we also have 2 structural factors that do not help the market either. We have levels of mobilization that are very high, nearly 80% of a very, very mature market and the removal of the $7,500 of incentives for the purchase of electric vehicles.

But the positive thing or a positive development was that in June, the Novelis plant opened again in New York after 9 months of no activity.

And considering how important this plant is for supplies in North America, the fact that it's been reopened should make it possible to get things back to normal again in the second half of the year.

And then we have Mexico, where production has only dropped to 1%. The figures have been flat for the semester, mainly affected by the commercial uncertainty with the United States and also because there's been a weak demand from North America.

And there's also regulatory uncertainty in the region that is still pretty significant after the decision that the United States of not renewing the USMCA in its current format. But it is true that the agreement will remain in force until the year 2036.

But now we have entered an annual revision process that reduces visibility for manufacturers. And it's this week when people -- North American and Mexican officials were met up in the city of Mexico to address issues that were related to trade connected to the automotive business and tariffs.

The Trump administration still defends more strict regional rules and it also wants to maintain certain tariffs even within the framework of a renegotiated agreement, although we'll see what happens as regards to future investment decisions in North America.

So in North America has had a decline close to 4%, and the market has dropped by 1% with an underperformance of about 3 points. Now China. China has had a reduction in its production of 3% in the quarter, which means that the accumulated figure is minus 5%, and it's been significantly affected by a very weak first quarter of minus 8%.

There are 3 main reasons that explain this. Internal demand, for instance, there's been a very strong contraction because there's been a reduction in sales of 20%, both in Q2 as well as in the first half of the year, an internal demand that is still being adjusted after the strong rates of growth reported in the years after the pandemic.

This is a market that has matured, that is becoming increasingly electrified with a record level of penetration of 63% of the sales in the month of June. And well, the second factor is that there's lots of competition arising from the persistent pricing war, even though the Chinese government has tried to moderate that pricing war.

And then the third factor is the sustained growth of exports that have been boosted by the combination of a very weak domestic demand and the need to place the production somewhere and also because there are very high levels of capacity that is not being used. So Chinese exports that are growing a lot.

For instance, they've reached 5.1 million vehicles in the first half of the year, which is 55% more than the figure reported in the first half of the year 2025. And in June, they reached a historic maximum figure with more than 1 million exports in the month of June.

But as you know, our exposure to China is pivoted. It's especially limited to local Chinese manufacturers. However, the market share has grown in a sustained manner until the current figure, which is 70%. And this means that we're going below the market levels, although we have a clear and sustained strategy.

In other words, we are not going to sacrifice profitability for volumes. And the outperformance of more than 2 points reported in Q1 responded to the improvement of the competitive position of the Western OEMs, but this has had no continuity in the second quarter, and this has been reflected in an under performance of minus 6 points in the first half of the year.

So let's move on to markets that are better. In Brazil, there's been a very positive move as we also had in Q1, there's been a very strong demand and growing production too. It's a very solid market with a growth of sales of 24% in Q2 and with production levels that have grown about half what the sales have about 13%.

And we have an accumulated figure of the first half of the year, the same as in Q2. It's sales plus 20% and production plus 10%. There's a divergence between sales and production that respond to those sales that still are playing a significant role in the case of Chinese imported vehicles, brands like BYD or Chery or Great Wall are achieving more and more market share and are doing so very quickly, especially in the cheaper vehicles and in electrified vehicles with very aggressive prices and where the traditional local manufacturers are less competitive.

And then we also have the Brazilian production that is being influenced by the weakness of the exports, exports that have grown by more than 20% in the first half of the year. And the main destination for these vehicles is Argentina has also dropped. It's been minus 35% in the exports from Brazil to Argentina.

So we're dealing with Argentina, which is the main destination with a very complicated environment and with a decline in sales of vehicles and production in the first half of the year. And we also have the growing presence of Chinese manufacturers in the country. But even so, the production in Brazil has received a structural support, which is a limited rate of motorization of 30%, a solid labor market as well as better funding conditions.

So there's been an improvement compared to the first quarter and more than half the vehicles are financed and interest rates have dropped to 14.75% or they've gone from 14.75% to 14.5% in June. We've also seen incentives to the automotive business and Brazil has also implemented a new taxation system to incentivate the purchase of efficient models by reducing what they call the tax on industrialized products.

So with this context in mind, we're dealing with Brazil, but in the case of this first half of the year, Brazil has grown by 23% compared to the market growth with 10% with an outperformance of 13 points and a contribution that is very similar in terms of organic and inorganic growth. Let's continue now with India, a market with structural growth and diversified growth.

And I'm not talking about passenger vehicles, but I'm also talking about other segments, too, with a production of passenger vehicles in India that is growing at a very high rate -- that is with 16% in Q2 and 14% in the first half of the year, and this has been followed by a very solid growth of sales.

But it is true that we do expect that in the next few quarters, we will see a slight reduction of growth as the positive effects of the tax is reduced.

And there could also be monsoons, which could possibly be weaker. So therefore, there is a strong Indian market because of structural elements like contained inflation, the launch of new materials, the new export markets, everything helps, of course.

And there's a competitive advantage in India that is based on having technology transfer and diversification and which is helping us in such a manner that what we are doing is presenting [indiscernible] that has grown 22% compared to the market with 14% with an outperformance of more than 8 points and an exceptional first half of the year.

But globally speaking, in the first half of the year, CIE has grown more than 9% with similar levels of organic and inorganic growth compared to a negative market of minus 1%, which means that we have an outperformance of more than 10 points.

But for the year '26, we expect that there will be a reduction in production of minus 2%, which would mean that in the second half of the year, we would have a slump in worldwide production of minus 3%.

So these might seem somewhat negative in the short term. But in any case, these prospects will become positive with growth figures of plus 1% and plus 2% in the next few years, a scenario in which there will be a greater stability of more mature markets, and there will also be growth of other markets like India or Brazil, for instance, that will play a much more outstanding role in terms of international production.

And this growth of the CIE sales can be transferred to the profit and loss account with Q2 that in absolute terms are very similar to Q1 of the year, more than EUR 1 billion in sales, more than EUR 200 million in EBITDA and an EBITDA margin in excess of 19% and EBIT margin over 14% and a net profit that reaches EUR 95 million, which is nearly 10% over sales.

And all of this even in spite of the impact that has been produced by [indiscernible] that is still hurting us with semester which the impact has been nearly EUR 80 million in sales, and this obviously has had a negative impact for our results.

And these are very high figures, very exceptional figures that could be seen in the accumulated data over the year with the first half of the year that maintained sales above EUR 2,000 and EBITDA margin above 19.1% with our guidance.

In other words, an EBIT margin over and above 14%, like our guidance says, as well as the specific features of each market, we have a profitability that presents a very balanced distribution between geographies, which strengthens or reinforces the quality and the stability of the results of the group.

But if we talk about now generation and deleverage, we can see that our cash generation capacity is high and especially recurring because in the first 6 months of the year, [ VM ] has generated EUR 275 million of operating cash flow.

That is 71% has to do with the EBITDA conversion above the 65% that can be seen in our guidance and also a generation that is allowing us to fulfill all of our priorities in terms of capital allocation because we're advancing the integration of new companies like the acquisition of Aludec at the beginning of the year.

We are also paying our dividend to the shareholders. And in the first half of the year, it's been EUR 70 million that were paid with the dividends. And in the meantime, we are still strongly boosting organic growth for the group with an investment in CapEx of EUR 40 million in the quarter and more than EUR 85 million in the semester.

So our net financial debt now stands at EUR 945 million. We have a rate of leverage of 1.19x. That is a historic figure, and it's below 1.26x that was reported 12 months ago. We have a solid cash flow generation, and we have a balance sheet that is becoming increasingly robust, and we're still reinforcing our financial position.

So we're going to close by talking about the future, and I'm about to stress what we pointed out in Q1. And that is in view of the excellent results obtained in the second quarter. And based on our forecast for the second half of the year, we have to reaffirm our guidance. And we're now going to move on to the questions. And today, we have our CEO with us. So thank you very much for your attention, and we're now going to move on to the questions. Thank.

Okay. Well, let's divide this into themes or subjects. What are our plans for India? And well, because of the market share in India and the changes in terms of the market share. So what kind of plans do we have to change that approach?

Well, in the information that we've just presented and talking about CIE in India. And as Lorea just pointed out, we have grown by 22% in this first half of the year.

The market has grown by 13.6%. So that means that we have an outperformance of 8.9%, but like everybody knows, we are focused much more on profitability instead of on growth.

So this is why we have achieved an EBIT of nearly 15%, which is something that doesn't happen all that frequently in the Indian market.

But I can state that we are really putting our stakes on India and that we have a number of greenfield projects because we want to carry on growing organically, and we understand that this is the most suitable way of achieving growth, bearing in mind that the valuations of the companies are really very good.

Okay. Well, continuing with outperformance in the market, there's a double question here. And that is what was the general outperformance like in Q3? And could you say something about NAFTA outperformance there, that is North America, please?

Well, as regards to NAFTA, I think that as everybody knows and since the tariffs were implemented by the Trump administration, what we are seeing is that there's been a minor temporary shift of production from Mexico to the United States in the case of certain manufacturers.

But in our case, the industrial mix is different in both countries because in the United States, we are mainly present with plastic, with machinings and roofs, whereas in Mexico, we also have aluminum, stamping, forging and painting technologies.

And as the comparison is carried out with the global management, this displacement of production that's only a temporary thing penalizes us to a certain extent in relative terms. But according to our forecast and according to what our customers say for the next few months and for the next year, we'll see that there's going to be outperformance there, too.

And I would like to stress something that we mentioned previously, and that is, well, we mustn't forget the volatility of the North American market during the negotiation of the USMCA.

I think that's something that will become more stable in the next few quarters in the future, and it's going to give us much more visibility. And we have volatility this year because of the uncertainty, and it's not the best context you can have.

And also it was a double question, NAFTA and Q2, well, it's been very similar to -- if in the semester in the first half year, it's been 9% for year in growth and minus 1% for the market was 10%.

As regards the quarter, it's been something like over 8 and something with growth with the market close to minus 1%. In other words, an outperformance of nearly 9 points, which is very similar.

There's a question on Europe now that the impact that you expect from the reduction in production announced by OEMs and in particular, by Volkswagen.

Well, the truth is you know that we are very diversified with all of our customers, whether they be Tier 1 or OEMs. And the truth is that all of the information that we are currently receiving, well, this is something that we're paying a lot of attention to, but we don't really see any kind of substantial changes.

In other words, fear of the first half of the year is going to be very similar to CIE in the second half of the year. And obviously, with the effect caused by the holidays and by December because you know that the second half of the year is always worse than the first half of the year.

But in any case, let's say that everything is normal, and we can see that there's also recurrence in what is going on.

Well, perhaps there are a couple of more questions here on Europe. So do you think that what do we expect in Europe in terms of our performance? And what about the future market share in Europe?

Well, you've seen that we have gained market share in the first half. It has been very significant and not only because of Aludec, -- because of the presence of Aludec, which represents 4.8 points, but we've also grown ourselves from an organic perspective, we've grown by 4.5 points and the market has dropped 1.

So you can see that we are still growing over and above the market. And in this case, we're talking about 5.5 points. So we have to bear in mind that in this sector, people are suffering a lot.

And this means that our customers are trusting any companies that have investment capacity. And this investment capacity that is given to us by our wonderful ratios of financial debt, means that our customers trust us much more.

So if the market shrinks a little bit, that doesn't mean that is not going to carry on growing and it's not going to increase its market share either.

And well, just to continue now with Europe. When do you expect that new rates will be applied to hybrid vehicles? And what about local content? Anything to say about that?

Well, let's only hope how we know Brussels is going to do things and how quickly...

Well, it seems that we need to have a crystal ball here if we need that crystal ball.

What is true is that in Europe, yes, progress has been made, although we don't really think that there has been a homogeneous European response. So now they're currently working on local content and on measures that have to be implemented to reinforce the European value chain. We think that they're walking down the right path because it's not only about where the vehicles are to be assembled, but rather how much technological and industrial value is created for Europe because having a more local content would be very positive because this is favorable for suppliers that have technological capability and also financial solidity, too.

Well, just to say something positive because yesterday, we saw how Geely has come to Spain to set up a joint venture with Ford. They're going to set this joint venture up in Valencia.

And I think that this does reinforce Europe. It also reinforces the future of its production. But why? What do I mean? Well, because we know that the European market does have absolute freedom or liberty, but I think the worst news would be to have Chinese manufacturers to come along to add on additional capacity.

But I think that this is a very good news because the key word here is efficiency. And it's great to see that they are using the currently available capacity for future local productions. So let's only hope that this kind of approach will be repeated once again in the future and that it will allow us to achieve the localization that our CEO was talking about in terms of production.

So what about the second half of the year? What does it look like?

Well, I think that [ Chris Marek ] has also spoken about -- has already spoken about that, if I'm not mistaken. Well, if you want, I can answer that question again.

Well, it's very similar to the first half of the year, and the only difference is the production [indiscernible] because of the summer holidays and because of the month of December.

Okay. Well, more specifically, they're asking here about the possible impact that Iran could have in the second half of the year. So could you please say something about this? I don't know something about the pass-through.

Well, yes, we have seen a certain amount of tension with Iran, especially in the case of certain raw materials, mainly plastic and aluminum.

Although it is true that what we have to do is review things with our customers. We have nothing on this in the first half of the year, but this will be covered in the second half of the year. And if this issue of the Iran war continues, yes, there will be problems.

And in fact, just to finish off with this. As the outperformance has been very solid in the first half of the year and compared with the guidance, are we considering an upgrade? Are we considering upgrading this performance?

Well, yes, we want to improve our margins, and we want to have outperformance, and we want to be much better than the guidance internally, too. But let's say that we have to be somewhat objective because we are now living in a market that is dropping. It's more competitive.

So let's say that we are managing to forge ahead, thanks to the growth in margins with the very high cash flow generation that we've spoken about before.

But the important thing about this first half of the year is that we have integrated Aludec, as you all know. So let's say that the integration represented something like EUR 200 million.

And in only 6 months, we have been capable of paying out a dividend. And we've also been able to maintain the same financial debt-EBITDA ratio.

And I know of no other companies that can do it in that manner, but you can see how in only 6 months, this ratio between financial debt and EBITDA has not increased even though there was a major disbursement.

So also along the lines of this issue, the Bloomberg consensus. So what do you think about the consensus of the year?

Well, that's a very good question because I think that it's very pertinent to because I believe that there are some -- well, sorry, I was just going to say that the last thing we have on Bloomberg is EUR 4.2 billion and EUR 37 million of EBITDA, EUR 580 million of EBIT and EUR 368 million of net results.

Okay. Well, if I have to refer to the data that Lorea has just pointed out, but I think that as regards sales and as regards EBITDA and as regards EBIT, let's say that we are 100% in line. Although I think that they've been somewhat optimistic in terms of net results because I think that they haven't taken into account that we've lost lots of financial revenues and why?

Well, because it was expected that interest rates were going to drop because of the devaluation of the real in Brazil, we've brought the money from Brazil, and you know that Brazil normally pays you at 15%.

And we've brought this money back because of the possible devaluation of the currency and also because the interest rates were going to drop, and we've used that money to buy Aludec. So in a nutshell, what Aludec is contributing in terms of EBIT is nearly gobbled up by the financial expenses.

So this is why there have been less financial revenues. And this is why that in terms of net results of the bottom line, you've been somewhat optimistic. But otherwise, we are 100% in line with everything.

There's a question now on the working capital. To what extent is it possible to maintain such an efficient working capital?

Well, let's say that we have to bear in mind that historically, the first half of the year always presents a better cash conversion than the second half and basically because of the seasonality of the business and also because of the production calendar.

And as I said before, because of the holidays in August and December, although we still think that 65% is a suitable reference for the overall fiscal year.

So having said that, I believe that the important thing that has to be underscored is that this year, what we have also -- what we also have to do is point out how much strength we have in terms of cash generation.

And it is true that the generation of operating cash flow is 61%. But you have to bear in mind that with the very high investments in growth, this is what allows us to achieve such a significant outperformance even with that investment in growth, even in spite of that, 50% of EBITDA is the flow that is available. It's cash flow that is available to the shareholder or that is available to the company itself.

So it's 50% of EBITDA. So let's say that our company, I'd say it's a unique company in this term. The focus is on the flows and the flows that we are obtaining are very important.

And as I said before, this allows us to acquire important companies and not increase our net financial debt-EBITDA ratio too much. And that is something that you don't see in other companies.

Okay. As regards M&A now, how do things stand in the area of M&A? Could we have an update, please?

Well, I think that everybody knows that as regards of the guidance, what we said is that the target -- well, that we have an auto performance in the market, and it's been attained over and above what we said we've improved the margins to or at least we've reached the same levels and perhaps we are improving to a certain extent.

And then we said that we were going to focus on M&A. So we -- at the beginning of the year, we closed the Aludec issue, and now we are working on different options and some could be sorted out during this year.

And as we've mentioned on previous occasions, we are making investments in countries where there is growth or in products that are global, so to speak. So in other words, we are facing a wonderful M&A moment.

And some people are getting in touch with us directly or companies are getting in touch with us directly because they prefer to leave these companies in the hands of the [ CIE ] and not in the hands of others, whoever they may be.

So I think that this is a very positive moment. And next year, we will be changing things significantly if we manage to close these operations.

Some of them, we are already doing the due diligence in July and August and others, we expect to start off with the due diligence in September. So in other words, it's going to be something very beautiful, and it's also going to make a very significant leap in the short term, and we obviously want to take even further leaps in the midterm.

Our cash flow allows us to do this. Our balance sheet also allows us to do this.

Well, we have a couple more questions here on the P&L that has cropped up here. So what kind of contribution does inorganic growth make in terms of sales and margins? And if the start we saw in the margins in Brazil, is there anything you can say about that or what we could expect in the future?

Sorry, I didn't understand that question.

No, the contribution that is made by inorganic growth in terms of the P&L.

Well, Aludec is contributing something about 4% of the sales. And obviously, this has obviously assisted the EBITDA margin of the group because you've seen that it has increased somewhat.

And the second question was what, I'm sorry...

Of the evolution in Brazil of the situation in Brazil. It was about how the margins have changed in Brazil and the stability in the future. Are they going to be high? Are they going to be recurrent?

Well, Brazil is like the crown jewel for us. It's always been that because we're talking about margins, but let's talk about the EBITDA margin that is at 20% or whether we talk about EBITDA margins that stand at 17%.

That is sustainable, of course, because it's always been the case to a greater or lesser extent. So these margins post no risks and they can be maintained. And with all the growth that we have there and with the growth that we will have with all the inorganic growth that we will have in the future, we will be able to -- we always buy with lower margins, we will be able to achieve these levels of margins and obviously generate more growth or more value for our company.

And changing the issue completely now and with our financial strength and with the weakness of the price of the share, are we going to do any buybacks, any share buybacks?

Well, that's another very interesting question, in fact.

Well, I have to start off by telling you the truth, and that is our gut feeling tells us that all of the members of the Board are very unhappy with the valuation of the stock exchange of our group, and that is an absolute reality.

So this is why at all points in time, what we considered were different alternatives. We've always done that, any kind of alternative -- but why? Well, the answer is very straightforward because we understand that the most profitable and the safest investment in this sector is still [ CIE ] because we have wonderful prices.

And the last question that is related to [indiscernible] if we are going to be selling shares from the portfolio be acquired.

No, not for the time being, no. We have no plans to do that at least for the time being and even less so at these prices. No, we are contemplating other alternatives.

Okay. Well, that was the last question on the list.

Okay. Well, many thanks to all of you. Thanks for your attention. It's been a pleasure as usual for me to speak to you and to participate in this results call, and I hope that you will carry on trusting it. It's like having a life insurance policy in the automotive sector.

And I hope that you have some wonderful summer holidays. And I think that now we all have to relax and take it easy so that when we come back in a few weeks' time, we feel much more energized. So goodbye, everybody, and thank you very much for listening. Thank you very much. So you know that your entire disposal if you need to ask us any further questions. Goodbye.

Good afternoon, everyone. Welcome to the First Quarter results for CIE Automotive. We have Lorea Aristizabal, Director for Corporate Development. [Operator Instructions]

Now I'll hand over to Lorea. Go ahead, please.

Good afternoon. Welcome to this conference call with the results for this first quarter 2026. A quarter that somehow confirms the disparity between markets with markets evolving at very different speeds and with increasingly divergent dynamics in an environment where apart from all the above, demand and production don't always evolve in a synchronized way as we'll see when we review what happened in each market.

Starting with China, the Chinese market situation can be summarized under 2 concepts: normalization and competitive pressure. On the one hand, normalization. China has already shown a clear adjustment in demand with sales falling by around 20% in this first quarter compared to a more limited output fall of 10%, a demand adjustment that reflects some normalization after the post-COVID years of very strong growth, an adjustment in demand that reflects a mature market with electrification levels close to 50% in both sales and production and demand adjustment to which, without a doubt, the reduction of incentives for electric vehicles has had an effect, which was implemented at the end of 2025 in the context of reorientation of the Chinese government's industrial policy. And in 2026, it has stopped considering the automotive sector as one of its strategic priority sectors in terms of investment.

We also mentioned the competitive pressure, that competitive pressure and the price wars between manufacturers, which continues to be very, very intense. So the adjustment of the domestic demand, combined with this competitive pressure means that a very significant part of the production, a growing share of production is shifting from domestic consumption towards exports to the world; exports, which in 2025 represented 7 million units, more than 20% of the production.

As you know, our exposure to China is not significant. Our share with local OEMs is limited, and this has led to an underperformance in the market, while the Chinese OEM share has grown. But it's a limited share that responds to an approach aimed at preserving high levels of profitability in that market. And specifically in this first quarter, as our CEO already mentioned at the results conference in February, in this quarter, we recorded an outperformance compared to the Chinese market by more than 2 points, reflecting a certain improvement in market share of several international OEMs during the quarter. We will have to look at the trend, and we'll have to monitor it.

Moving to the North American market to the other side of the world, we find that production has stayed flat in this first quarter. If we focus on the U.S., we see a North American market -- sorry, I mean, a U.S. market with also a flat production during the first quarter, a context where we have an increasingly demanding market with an inflation of around 3% and a rise in the monthly vehicle financing rates, which in this first quarter alone rose by almost 5% compared to the previous year, and this is having an impact.

To this, we must add the withdrawal of incentives of $7,500 for electric vehicles as of September 2025. And all this explains the better evolution in hybrid sales in recent months, showing double-digit growth in Q1 versus double-digit drops in the sale of electric vehicles.

Moving to Mexico. It had also shown a flat evolution in production in this first quarter. It maintains its critical role as an automotive hub with the U.S. depending significantly on Mexico, both because of costs and the geographic position in the context of global supply chain configuration moving away from Asia, a trend that clearly benefits us and from which we hope to continue benefiting through our highly solid position in Mexico.

As an additional context to the American market, next July 1 is the deadline to decide whether the current USMCA agreement is extended or renewed. This second option to the renewal seems to me the most likely. And in fact, certain negotiations are already underway, and we'll have to see what happens. In this first quarter, our growth has been below the North American market for once with a contraction of about 2%.

Brazil, moving on to Brazil. The headlines for Brazil, a strong demand and a recovery in production, a market that continues to show itself very strong with a sales growth close to 15% in the first quarter, supported by a domestic demand that has been favored by a slight reduction in rates and the production that is also growing, but is growing half as much as sales. It's grown 7% in the quarter.

This divergence between sales and production depends on 2 main factors. On the one hand, the fact that sales reflect the growing importance of imports of Chinese cars to Brazil. In this first quarter, the imports grew by close to 70% year-on-year to up to 50,000 units, which represents 9% of total vehicle sales in the country. On the other hand, production, which, as we said, have grown less than sales. And that's because they've been affected by a fall of almost 20% in exports, especially to Argentina, Brazil's main foreign market.

Argentina, besides still having a weak economy, also has an increasing penetration of Chinese manufacturers with imports from China growing more than 80% year-on-year and this is reducing the demand for vehicles from Brazil. In Brazil, our position is based on a strong local presence and our capacity to deliver in a market where relationships are decisive in a market where, again, we have significantly beaten the market in this first quarter with 16 points of outperformance considering organic and inorganic growth.

Talking about the India market, and we have to define the growth of this market, we could say that it is a market with a structural and diversified growth. Passenger vehicle production in India continues to grow at a very strong pace in this quarter, approaching double digits with a figure of 9%. And this strength also extends to the rest of the segments with production levels that have grown significantly: 2-wheelers over 20%, tractors over 30%, trucks over 25%. So an evolution that confirms, as we said, sustained growth with support in different segments and with a very favorable outlook in the medium term.

Our strategy and our great advantage in India is based on the technology transfer. We have already carried out diversification, combining differential technological capabilities, deployment of virtually all our technological production and a diversified and healthy exposure, both in segments and clients. All this is reflected in the first quarter where we have significantly beaten the Indian market with an outperformance close to 14 points.

Moving on to Europe, with sales which have remained practically flat and production, which fell slightly by 1% in the quarter. And this again, reflects that part of the demand is directed at imported cars with Chinese OEMs reaching a market share of almost 11% in Q1 sales, higher than the 8% they reached in 2025 as a whole.

In the European market, electrification has already accounted for 30% of the mix in the whole of Q1, half pure-electric vehicles and half hybrid vehicles. And this electrification is driven by regulation and by the growing offer of more competitive prices for models, both from Chinese OEMs and from European and international OEMs.

How do we feel in Europe? We feel that we are in a good position with an advantage that we could say is twofold. On the one hand, we have a multi-technology position, which allows us to supply components for combustion vehicles, for hybrid vehicles and for electric vehicles. And this addition to our portfolio has occurred gradually and in line with the evolution of our customers' demands. And on the other hand, and this is very important, we have a solid financial position in an especially challenging European environment. In Europe, profitability continues to be the main pressure point with roughly 75% of the suppliers operating below 5% EBIT according to CLEPA data, the European Association of Suppliers.

In view of this, our financial strength gives us a differential position in the sector and allow us to organically consolidate market share through new projects assigned to us by our customers that require investment. The outperformance over the European market in this quarter has been 16 points with about half of that growth derived from the integration of Aludec.

With everything I've said about the different markets in the different geographies, this points to a market that has grown by 1.3% in the first quarter, while CIE has grown by 10.4% at constant currency, with half of this growth approximately being organic and the other half inorganic. And this, in total, implies an outperformance of 9 points, a growth that has also been accompanied by excellent margins with a consolidated EBITDA margin that for the first time has exceeded 19%, reached 19.1% and a consolidated EBIT margin that remained above 14%. Different dynamics depending on the geography, but a very well-balanced profitability by regions, which gives greater strength and recurrence to the group's global margins.

In absolute terms, we have a P&L for the first quarter over EUR 1 billion in sales with a quarterly EBITDA, which for the first time has reached EUR 200 million, an EBIT of EUR 152 million and a net result of EUR 96 million, the highest quarterly profit to date. Figures, which, as our CEO said at the shareholders' meeting today, would have been significantly higher without the negative impact of the sharp depreciation of our currencies and very negative impact. Sales were almost 7% lower due to that effect, EUR 60 million less; an EBITDA with an impact of EUR 12 million; and an impact of EUR 6 million less on the net result.

But as we always stress, excellent figures in the earnings account, but they would lose all their relevance if we did not prove that they become cash quarter after quarter. And in this sense, saying that in the first quarter, we exceeded a 70% conversion rate of EBITDA to operating cash flow with an operating cash generation that reached EUR 136 million and which enables us to maintain a very stable and controlled level of borrowing while financing growth, investment and shareholder remuneration.

Growth having completed the acquisition of Aludec with an enterprise value of EUR 200 million, investment that continues with EUR 60 million in maintenance and expansion CapEx in the quarter and with remuneration to the shareholder, having paid more than EUR 60 million between the 2025 interim dividend and other minority dividends. All in all, net debt, which, as I said, is stable and under control of about [ EUR 1.040 billion ], which implies a leverage ratio of 1.3x net financial debt over EBITDA and which is equivalent to 1.1x pro forma debt without inorganic operations.

We are nearing the end of the conference. There's little else to say, but I would like to close with 5 key messages that I think summarize the quarter. A significant outperformance over the market, 9 points, demonstrating our ability to deliver in a very demanding environment. We have maintained our excellent levels of profitability that is balanced on a global and local level. We have generated a lot of operating cash, which is allowing us to support customers with new investments for growth while expanding our perimeter and increasingly remunerating our shareholders.

So all in all, a first quarter very much in line with our guidance for 2026, '27, a guidance that we reconfirm today and which defines a clear road map for the next 2 years, growing above the market, maintaining excellence in profitability and continuing to strengthen our financial position while we consolidate the sector and increase dividends.

I'm not going to go on any longer. So we will now open the Q&A. Thank you very much for your attention, and I'm at your disposal.

We start with the questions, starting with the sales line, the outperformance and so on. First of all, do we have a breakdown of inorganics by geographies for the first quarter? And what should we expect for the whole of 2026?

Well, as we said, the growth in constant currency for the quarter has been 10% approximately. Half of that is organic, the other half is inorganic. And that inorganic growth by geographies, of that inorganic growth, approximately 1/3 comes from Brazil from the acquisitions last year of Engrecon and Techniplas and the other 2/3 come from the latest acquisition, Aludec and which, as you know, is essentially Europe.

And there was a second part of the question, what do we expect for the rest of the year? Will the annualization of that inorganic growth while understanding that Engrecon, it came into -- in the second quarter, Techniplas in the third and Aludec came in, in this first quarter. So whatever that adds up to? Regarding the Chinese implementations in Europe, could CIE work with these OEMs, bearing in mind the cultural differences and the use of their own suppliers abroad?

Well, the answer has to be yes, obviously, yes. They are different from a cultural point of view without a doubt, so are the Japanese OEMs and the Korean OEMs, and to bring it closer, the Indian OEMs like Mahindra or Tata with whom we work with no problem at all. I think that the decentralization of CIE and the CIE model of empowering and managing locally with local teams means that the culture is close in the case of India, as I said, to Mahindra or Tata. We work with OEMs from different nationalities and different cultures, and we have a strong relationship everywhere. I don't see a major cultural problem in working with the Chinese.

And the fact that they take suppliers to the rest of the world, I think we shouldn't rush in our opinion. I think we still have to monitor how the Chinese OEM deployment is going to happen in the world. There are currently some Chinese suppliers around the world, but it's not a massive deployment. We'll have to analyze the profile of Chinese suppliers in China and whether they have the cultural profile, the international profile, the financial profile and the financial muscle that internationalization requires. So we'll have to monitor all that and see. There will be some for sure. There are also Korean and Japanese suppliers, but the rest of us are all still here.

In the case of China, could you explain the change in our underperformance and the possibilities of consolidating in the future?

Well, we've had an outperformance, but it's just a quarter. I said it and I'll say it again, we're going to monitor the trend. It's true that analyzing the Chinese domestic market this quarter has been interesting. It's been interesting because we've seen changes in the trend. But a quarter is not enough to know whether this is going to be a structural change in the trend or whether it's just one quarter and then things change. What do I mean?

Well, for example, if we look at the sales market share for Chinese OEMs, for the first time in a long time, we've seen drops, double-digit drops in domestic sale going from 12% last year to a share of 9% this year for BYD or we have Geely that has maintained market share or Chery that's also fighting to keep its 3% market share. And on the other hand, we have figures from this first quarter from international OEMs where we see slight positive changes. The Volkswagen Group has gone from 8% to 9%, Mercedes stays at around 2%, but Audi goes over 2%. We've seen Toyota, Nissan, Honda also growing 1 point in their market share compared to last year.

And by all this, I mean, that we're seeing changes in the market shares of the various Chinese and international OEMs in the first quarter of 2026. And this has had an effect on our relationship with the market. But I think that a quarter is not enough to determine whether this is structural or not. But it's a very interesting subject to monitor over the coming quarters.

In the case of Brazil, why has been such a positive evolution this quarter, both in sales and margins? What is the key to your success in this market? Well, we like Brazil very much. And I know it's surprising because our latest organic operations have been over there, and we're growing a great deal, both organically and inorganically. And perhaps the question is based on the fact that not many international players can make money or a lot of money in Brazil, keys to our success.

Well, it's a market that has fluctuations in demand that means you have to be agile. It's a market with a diversification in customer segments and products that you need to know how to handle, a lot of bureaucracy with a lot of tax complexities where you need a lot of support to survive in the Brazilian fiscal world, the constant friction with the customer to pass on high inflation rates. It's a market that has been closed for a long time with tariffs on imports. It's an [indiscernible] market. It's a very unique market.

Like in the rest of CIE, we have a local management team that's doing an outstanding job, both in organic growth and in relationship with customers as well as in the inorganic integrations. And I suppose it's a little bit of all this plus a spectacular management team is the key to our success that you were asking about.

The growth in India of some peers is much stronger with an increase in margins. Perhaps will there be a change in strategy there, focus more on sales?

Well, I don't know who they mean, those peers that are growing so much. I think that having 14% of outperformance over the market is growth. 14 points of outperformance in a growing market. I think it's a considerable outperformance. And I think that it shows that we're doing a good job. And it's purely organic, by the way. I think it shows that we're doing a good job.

A change in strategy? Well, we don't like to copy other people's strategies. I think that each player has their own technology strategy or diversification, customer and segment strategies or the way they focus on growth. In recent years, we've been very much focused on organic growth and investments in greenfields that we're getting a return from now. And we've supported our customers in making the market growth. And again, with 14 points outperformance in the quarter, saying that others grow more, I don't know who they mean, but I don't think we need to make the comparison. I think that we have a spectacular absolute and relative growth.

There's a question on the underperformance in North America. Can we add a little color?

Well, as in the case of China, when we had an outperformance, and we said that a quarter -- one quarter doesn't create a trend and the same goes for the U.S. because it is just one quarter. In the last 5 years, we've seen some underperformances in America and Europe, but it's not that important. We should follow the trend. And how do you see Q2?

How do we see Q2? Without major shocks so far, and I say so far, and we have to make a disclaimer because the world can change tomorrow if Mr. Trump wakes up and says something different. But what we have right now on the table, I would say that a solid second quarter with good margins, nothing disruptive. What is the impact of the Iran war on CIE? Perhaps that's what was behind the question. Maybe that was what was behind the question, whether we -- yes, there's another question. Will this affect your guidance?

Well, the Iran war. So far, we don't have an impact on a breakage of the supply chain or lack of supply. There's nothing new in this area. Are there price increases? Well, yes, of course, all over the world. But what do we need to do here? Open negotiations with the customers to try to make a pass-through, as Jesus Maria, said during the shareholders' meeting. We're slightly increasing our safety stocks in certain areas that concern us a little more. We're also developing new suppliers in some areas and a plan B.

So what are we doing? We're managing the situation of uncertainty. That's what everyone is doing. A situation that hasn't had an impact on the first quarter, and we don't expect a significant impact in the CIE consolidated results in the second quarter. If the situation persists and we have oil at $130 for 3 years, it will be a different story. There's an uncertain situation, which is what we have today, and we don't have a crystal ball. But I think that there will be a second quarter without a significant impact.

And moving on to something else. The EUR 263 million in financial debt connected to the purchasing of Aludec with EUR 200 million in enterprise value. Could we explain that a little bit?

There's not much to explain. The adjustment in prices, EUR 173 million. Well, what represent is the variation in net financial debt. So EUR 163 million is the impact on net financial debt.

About Aludec, how is the integration going? And how do we expect it to go during the rest of the year? And is there a possibility of cross-selling with other geographies?

Well, it's going very well. It's a spectacular management team with a marvelous track record. And that's one of the great things about Aludec. Having integrated a team of those characteristics is very good fortune for CIE, and there's a great integration with the rest of the organization. You know that for us, Aludec has meant setting up our eighth division, the branding division, a division which we expect to expand geographically because right now, it's highly concentrated in Europe and has just put a foot in North America, and we expect to grow those North American branding operations. And who knows with the dream of perhaps setting up a world division, expanding it to Asia in the future. Well, I'm getting ahead of myself, but without dreams, you can't reach your ambitions.

And what do we expect? Well, we've integrated a company with a management team that is obtaining an excellent performance, and we expect to maintain it and live up to the support that this division needs.

And we asked about M&A in general. How is it going? They say there has been a lot of activity in the sector from the peers. How is it going?

Well, working very hard on M&A with a lot of operations being analyzed. It's a pity we can't tell you anything about it. But there are operations open, especially in markets, which, as you know, are more strategic for us because of their growth prospects or the position of those markets in the future of automation. And I'm talking about India or going through Mexico or Brazil.

India specifically, there's been a lot of M&A. Yes, India is an active market in M&As. There's a small problem, which are the extremely high valuations which, in many cases, we don't feel are justified. Something we've often said is that in the past, we've used our listed subsidiary in India for the partial payment of some acquisitions, and we may also do it in the future. The fact that we haven't rounded off M&A in India doesn't mean we're not growing in India. But in recent years, we've been more focused on inorganic growth, but we'd be happy if we could carry out inorganic operations over there, too.

And looking at other areas, going back to the North American market. The first question is, are there relevant implementations in the market associated to Trump's tariffs? There's been some news on moves made by some OEMs. How can that be contextualized?

Well, I'm going to answer with objective data, and I'm going to try not to give a subjective answer. We've been monitoring the production forecast in North America, in the United States for the coming years. Since before Trump's election, when Trump came into power over a year ago until today and we've had 1.5 years with all the tariff and protectionist policies with the aim of attracting more volume to the United States. But the objective reality is that we see production forecasts in the United States for the coming years that aren't shifting.

So we're not seeing that the U.S. President Trump's policies are being passed on to a forecast of higher production in the country. That's the objective data and what we see in the IHS forecast. It's true that we're reading certain announcements about increases in capacity from various OEMs, but it's also true that in most cases, there are announcements of investments to be made in the coming years. Perhaps IHS isn't including those volumes. I couldn't say. But the fact of the forecast is that before and 1.5 years after Trump, the production forecast in the United States are not changing.

And the other question about North America, the USMCA, is there anything new?

Well, we don't have a crystal ball, but everything makes us think that the agreement is going to be renegotiated. With Trump during his first mandate, the old NAFTA was renegotiated and became the current USMCA, and we have the feeling that Trump is going to force a renegotiation of USMCA 2.0 to try to close it before the end of this year. The USMCA was 6 years, which in theory ends at the end of this year.

And what might happen? Well, it's being said -- it's just being said that there could be some adjustments in the tariffs for USMCA vehicles. We'll have to see whether the United States manages to bring in something they want to include, which are limitations to Chinese content in the vehicles. It's complicated to control that, but they want to try it.

The limit to labor costs, which is $16 in USMCA, whether that increased that or not or the minimum local content, will it rise over 70%? We don't know. And these are some small changes that might happen. And we say small because we can't forget, and I suppose you can't forget either, all the noise and all the headlines brought about by the NAFTA renegotiation in the current USMCA. And in the end, it's true there were changes, but they were small changes, and it was not terribly disruptive. So perhaps we have to think about a similar scenario, a lot of noise, a lot of headlines and then just small adjustments to the current USMCA, hopefully. That's the probable and desirable scenario.

And that was the last question. Well, thank you all very much for your questions, for your attention, but you know that we're here if you've overlooked anything and need further information. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good morning, everyone, and welcome to CIE Automotive's Fourth Quarter 2025 Results.

Today, we have Jesús María Herrera, CEO; and Lorea Aristizábal, Director for Corporate Development. [Operator Instructions]

And now, I'll hand over to Lorea. Go ahead, please.

Hello. Good morning, everyone.

We're going to start talking about what's happening in our industry, and we're going to review in detail 3 of the major current issues; the Chinese OEMs, the tariffs, electrification. We think that this helps to put our performance into context. On the one hand, and talking about the Chinese OEMs that you ask a lot of questions about, they have continued to make headway during 2025, both in the domestic market and internationally.

Domestically, they have continued to gain market share. They had 65% of vehicle sales in China versus 60% the previous year. China's exports have continued to grow by over 20% during the year. They've gone from 6 million to 7 million exported vehicles, which means exporting 20% of the Chinese production. And a highlight is an increase in exports to Mexico and the Arab Emirates regions where in 2025, they haven't been penalized with tariffs and they have also increased tariffs to Europe.

The tariffs in Europe only affect electric vehicles. So the increase in exports in 2025 has focused on combustion engines and hybrids. In parallel with the exports and due to the tariff barriers that are being imposed, many OEMs are making progress in their implementations outside China. And this we see in different versions. We see greenfields for CKD assembly as BYD did in Turkey and Hungary, both projects, which have been delayed, waiting for the new European regulation on local content.

We have also seen joint ventures like the one -- Stellantis and Leapmotor have a JV, whereby Leapmotor vehicles will be produced at Stellantis plants outside of China. We've seen the subcontracted of CKD as XPENG have done. They've dealt with Magna to assemble cars at the Austrian plant of Magna. We've seen acquisitions of plants abandoned by other OEMs such as BYD and Great Wall did in Brazil or as it seems might happen in Mexico.

The news in Mexico right now is that several Chinese OEMs are making offers for the Nissan and Mercedes plants in Mexico, and that includes BYD, Geely, Chery or Great Wall or just partnerships with Western OEMs. We've seen the alliance between Geely and Renault in Brazil to share resources or the alliance with Geely with Ford in Europe to assemble Geely cars at the European Ford plants.

In any case, regarding CIE, we confirm that we are fully prepared to pick up the volumes of the Chinese OEMs when they produce in the various markets where they are being deployed once they pass the CKD phase and start with real local production. We are confident that we are the type of supplier they need with an international presence with multi-technology production and with investment capacity.

Secondly, the star issue in 2025, the tariffs. And we're going to look at it from the European perspective first. In the Europe-China relationship, Europe announced in January the potential expansion of the current tariffs on imports of Chinese electric vehicles to our hybrid vehicles, too. Why? Well, the European Commission considers that Chinese hybrids, which are flooding the European market receive the same level of aid and subsidies as electric vehicles and should, therefore, have similar tariffs.

In February, this month, a pre-agreement has been reached between China and Europe, which proposes replacing the current tariff regime with a system of minimum prices and quotas. The first case of the system has been Cupra Tavascan, with China and Europe now open to following that model and to carry out an OEM by OEM and model-by-model negotiation. Europe has also reached a historic agreement with [ Medical Sud ], opening new markets for both.

And as far as import tariffs on components and vehicles are concerned, the agreement is a gradual reduction of existing tariffs by both parties. And this would allow for a larger flow than the current one. And to be realistic, is practically non-existent. And there have also been agreements between Europe and India, a very ambitious agreement between the 2 regions by which the tariff rates are significantly reduced on vehicles and components, but the reduction is very gradual over time. So, we are not seeing a direct impact. And in general, Europe and the world, it is true that there have been certain bilateral agreements. But what stands out most is the progress of European authorities in demanding minimum local content requirements that we expect to be published in the coming weeks.

From the U.S. perspective, which is the star focus for the year. There has been a strong initial escalation during the first half of the year and a partial de-escalation. And you're asking a lot about this U.S. Supreme Court ruling, canceling the so-called reciprocal tariffs does not apply to the automotive sector. They continue to be in force. And remember that the U.S. imports approximately 7.5 million vehicles in big figures, 4 million from Mexico and Canada, 2.5 million from Japan and Korea and 1 million from Europe. And although Trump initially imposed a generalized tariff of almost 30%, he has subsequently reduced that in specific geographies.

What do we have right now with the United States to bear in mind? The 4 million cars that are imported from Mexico and Canada, if they are USMCA compliant, it is 0. And otherwise, it's a 25% tariff. And in the case of non-compliance, the tariff is applied to the non-U.S. content. The 2.5 million cars imported from Asia, a 25% tariff. The million cars imported from the European Union, a tariff of 15% according to the bilateral agreement, although now that bilateral agreement is being questioned.

The cars produced in the United States, there's a credit equivalent to almost 4% of the vehicle selling price, which offsets tariffs paid on imported components. So regarding CIE, this protectionist wave of local production and tariffs should involve a partial reduction in global vehicle exports, and we feel very comfortable with our local-to-local model, which gives us a natural protection and provides leverage in the local implementation of the various OEMs.

Finally, electrification, what progress has it made with very different -- in the different markets. In the case of China, the penetration of electric vehicles has continued to rise. Electrified vehicles now amount to 50% or 55% in 2025, with the support of the extended incentives from '24 to '25. In Europe, it's also true that there has been a considerable advance in the market share of electrified vehicles with an increase of 6 percentage points in 2025, where electrified vehicles in Europe reached 27% of market share in sales, an improvement supported by the incentives brought in, in some key markets like Germany and the launch of new electric models that are affordable or more affordable by European OEMs.

And finally, the case of the United States, which is the opposite to what has been seen in Europe and China. The penetration of the electric vehicle in the U.S. has fallen. It's fallen 1 point compared to 2024. In September, all the incentives were removed associated to the purchase of electric vehicles, and this has penalized the situation.

What do we expect for 2026? Well, the prospects for electrification are not particularly good. In China, because the incentives have already been reduced. The local incentives have been removed and there are anti-dumping policies that have been imposed by the government. So in theory, vehicle prices will rise in Europe because there's been a relaxation of European emissions from '25 to '35, which could increase the lives of combustion engine vehicles. And in the case of the U.S., because the incentives to electric vehicles has been withdrawn and the negative impact of the whole regulatory environmental review carried out by Trump. Well, it seems that this is going to have a negative impact on the sale of electric vehicles.

And you will have seen all the impairments and all the write-offs that the Big Three in Detroit have carried out with over $50 billion in impairments related to the new electrification strategies. And in fact, you will also have seen the review of analysts like IHS regarding the forecast for the penetration of electric vehicles in the future and how these figures have gone down.

From our perspective, the rate of electrification is not a critical issue with us. And what's very important, more than 80% of our sales are agnostic to electrification. We have flexible production means, and we adapt to demand. What has the market done during this fourth quarter and in 2025 in the midst of all these variables? Europe has remained flat in the fourth quarter. And there has been a year of minus 1% overall. North America has shrunk 1% in the fourth quarter and also minus 1% for the whole of the year. Europe and North America are very similar. Brazil has contracted slightly in the fourth quarter. But after a boom and very good figures in the first 3 quarters, the total growth in Brazil for the year has been 5%.

The best news come from India, where production in the fourth quarter has had a spectacular growth, plus 19%, driven by the VAT reduction, the reduction in the tax on vehicles, which has been very significant as well as a good monsoon system and the fact that the Diwali festivities have been concentrated in the last quarter of the year. So, India overall has grown by more than 8%. And other segments that are not passenger vehicles have also done very well, positive in 2-wheelers with 8% trucks, 17% in tractors. It's all helped. And finally, China has grown 3% in the quarter and 10% for the total year.

Our total market, 4% for the fourth quarter and 2% for the total year. Our sales have grown 10% in the fourth quarter, which implies a strong outperformance of 6 points with regard to the market, an outperformance that is still mainstream in the various markets. And in 2025, CIE has grown by almost 4%, 2 points more than the market, accompanying an EBITDA that has grown 8% in the last quarter to EUR 183 million, with an EBITDA margin that has expanded by 80 points in the total for the year and EBITDA that has grown 2.5% to exceed EUR 746 million, with that 19% EBITDA and EUR 543 million in EBIT, almost 14%.

Below EBIT, lower financial expenses than last year, offset by higher fiscal expenditure. So, growth in net profit of 4% in the quarter, up to almost EUR 70 million. And in the total for the year, the profit amounted to EUR 335 million. The headlines, an outperformance of 2 points with regard to the market with a significant growth and an EBITDA margin of 19% and a record net profit of EUR 335 million. That's the summary.

If we look at it from the point of view of cash generation, bearing in mind the complex environment in 2025, our focus has always been on protecting and optimizing profitability and cash flow, a cash flow, which has been very solid, especially during this fourth quarter, bearing in mind that there are no cash outflows related to acquisitions and dividend payments in this quarter. So, we have generated EUR 86 million in the fourth quarter, and this has contributed once again to deleveraging our balance sheet with a new historic debt low of 1.18x net financial debt EBITDA.

We've had headlines for P&L. What would the headlines be for cash flow? We have reduced debt by almost EUR 100 million. While we have closed 2 acquisitions, we have carried out a sort of takeover bid where we have acquired 1% of the capital, and we have paid EUR 125 million in dividends. So the extremely high recurrent cash generation allows us to grow and create value, both through M&A and with remuneration to the shareholders. And also in 2025, we've closed a strategic plan where we have reached all our goals.

Our sales goal has been exceeded 25 points during the period of outperformance over and above the market, an EBITDA margin of 19%, excellence in the sector, excellence in the sector. And that in spite of the huge negative impact of all the variables that we've discussed and we'll continue to discuss with a CapEx at EUR 20 million and complying with the most important thing of all. We have reached a cash generation of EUR 500 million in the year. And achieving those EUR 500 million in cash generation is a special merit considering all the adverse circumstances you're aware of and that this is a goal in absolute value. So, we have to highlight it.

In parallel with meeting our financial goals, we have also met our ESG commitments in the environmental area. We have reduced Scope 1 and Scope 2 emissions and intensity in energy use. In purchasing, we boosted proximity purchases with a percentage of local purchases that's almost at 80%. Safety continues to be our top priority in people management and an essential pillar of CIE culture, with a percentage of plants with an ISO 45001 certification of 100% of the certifiable plants and sustainable financing, green financing that amounts to 70% of our gross financial debt.

And I'm coming to the end, we believe, that this shows an impeccable performance in 2025 and over these 5 years that should consolidate our reputation for financial discipline and full and unwavering compliance with our commitments. We have closed a plan. It's time to talk about the future, a future that remains uncertain with a great deal of uncertainty. But in spite of that, we believe that we're going to continue to grow in size and results, thanks to our financial model, our business model -- sorry, our financial position and an extremely committed CIO organization. That's where our guidance comes from.

You've seen that we can comment on them during the Q&A, a 1-digit outperformance of the market, maintaining the excellence of operating margins in 2025, a number of ESG commitments with regard to the environment and the social area, attracting talent or in governance and EUR 1 billion or more than EUR 1 billion in operating cash generation. And this takes us to a net financial debt of 0.7x, net financial debt to EBITDA in 2027 and a low debt that allows us -- and this is one of the major headlines, to increase the payout and the remuneration for our shareholders. An increase in remuneration that we can reconcile with the inorganic growth that we expect to have in these 2 years without excessively penalizing the company's debt, thanks to our high cash generation profile.

And now the Q&A. You'll be able to talk to Jesús María, our CEO, who will be delighted to answer all your questions. Thank you.

We're grouping the questions by themes because there are a lot of questions to make it more efficient for everyone.

We'll start with the final acquisition or the latest acquisition. Can you give us more color on the acquisition of Aludec?

Well, good morning, everyone. I'm Jesús María Herrera. And first of all, I think that we have to celebrate the strategic plan 2021-2025 and congratulate all the CIE Automotive team. Regarding Aludec, I'll start by saying that I think that it's one of the few family companies that today can contribute a great deal of value to CIE Automotive, first of all, because it's going to allow us to continue to diversify.

We're going to create a new division, the branding division. And we are also going to be able to grow the current European presence and a small presence in North America, both in Mexico and the United States. And with the synergies with the rest of the group, we have to take this to much larger dimensions. And in the midterm, the goal of also growing in Asia with them. So therefore, we're very pleased with this operation. Very few operations, as I said, can contribute so much value to CIE in the medium and long term.

Some questions on the guidance. On the sales side, how is the plan distributed in '26, '27, softer in '26, stronger in '27? Any clues?

Well, this time, comparing it with the previous plan, perhaps, the previous plan, 2021-2025, you will remember that we grew a great deal in the short term in 2021 and 2022 because we came from major acquisitions in 2019, that with the group synergies and the coming in of new customers brought about a very large growth in the short term. And then in the medium and the long term, like the rest of CIE, we work at medium or low single digit. For the next couple of years, we don't have any major acquisitions, let's say, that will make us see a different 2026 and '27. They'll be very similar, plus or minus 1 point.

And the margins in the guidance, are you being somewhat conservative perhaps because we can see there's an increase in sale, but there isn't an increase in margins. What's the hypothesis behind this? Well, I love the confidence you have in CIE. I love it, how 19% seems like very low. They are insatiable, Jesús María. Insatiable.

Those of you that know me, know that my goal has always been to reach 20%. It's true that we reached 20% at many plants, but it's also true that there are some areas where reaching that result is really very difficult. I think that setting 19%, which I hope will be 19.1% or 19.2%, but our ambition isn't going to stop at 19%, although I think that we have to give it the merit it has.

There's a doubt about whether the guidance includes Aludec. And if so, what's the debt guidance if we include Aludec with the new payout, of course?

Well, let's see that the guidance, as usual, are an organic guidance based on the companies we have as of 31st of December 2025. So, that doesn't include Aludec with regard to the guidance we've presented. As we said, the major cash generation allows us to take the net financial debt to EBITDA to 0.7x. So, we've been to provide a greater payout and includes -- raise dividend to 42% and 50%. If we bear in mind only the dividend, that EUR 0.7 becomes EUR 0.73, 0.74. So, absolutely nothing changes because the dividend in 2026 is paid out in '27 and the 2027 payout will be paid out in 2028 beyond this 2-year perimeter.

And the matter of Aludec, the EUR 200 million, that you all know is EV for the company. With the high generation it gives us, it will be at level of close to 0.9 financial debt to EBITDA because we have to bear in mind the extremely high cash generation that CIE has. And as I always say, CIE almost tends to 0. Over a few years, we are practically without debt. So, carrying out integrations like Aludec that are going to make a very significant contribution. The net financial debt to EBITDA ratio, if there isn't a major acquisition, it's unlikely that it will be over 0.9 and certainly under 1, as I said.

Continuing with the guidance, we are asked about the CapEx guidance because there's nothing in the guidance on this.

Well, I think we've always said that at CIE, in order to grow with a medium to low outperformance, we need 5% of the CapEx. And this 5% coincides with the 5% in amortization. If we can sell and amortize the same amount and yet grow with that medium, low single digit, so we'll continue along the same lines.

We're asked about the geographic evolution and the EBITDA margins in the fourth quarter. Are there any extraordinary elements?

None at all. I think we just have to analyze the margins globally. And globally, they are the recurrent margins for our group. There's nothing to be drawn from it.

And connected to this, we are asked about depreciation and CapEx in the fourth quarter. It's been a bit higher in the fourth quarter, depreciation and CapEx in the fourth quarter.

Well, I said earlier, we have to bear in mind that 5% amortization, although in some months or some quarters, it's a little bit higher or lower depending on production. But we have to bear in mind the recurrency. And over the years, that 5%, which goes between 4.5%, which is the amortization of fixed assets and 5.5% in IFRS 6, this is what's constant and recurrent.

And completely changing the subject, we've seen significant one-offs in OEMs because of the investments in electric vehicles. Does this have a direct impact on CIE?

None. None. We don't have any impact on this year's accounts. CIE has a value of 2 or 3x the assets it has. So, there will be no impairment in that area for CIE in the coming years.

And a very specific question on recent news from Mexico, whether this has had any impact on our activity, the struggle against drug trafficking we've seen recently.

Well, you know that this started over the weekend on Sunday. And it's true that during the night shift where we started the week on Sunday, we weren't able to work. There was a kind of state of emergency in many places, but we did start to work normally on Monday morning. So it was just a shift, one shift. People were very nervous about what could happen, but the plants have been operating normally since Monday.

A question about China, which was a highly profitable business and the size is smaller now. Does it make strategic sense to continue in that market?

Well, yes, you've just said it. It's so profitable and it generates so much cash that we are going to continue. And I hope to give you good news this quarter because I know that you ask a lot of questions on the performance we've had in China, and we may turn things around this first quarter and give you the surprise of going from an underperformance to an overperformance. So, we still have full faith in China, and we have a fantastic team that we can't even think of doing without.

And then we have a question about M&A. How much gun powder do you think you have for M&A? And should we not consider relevant operations? In other words, how far could you go in leverage?

Well, the figures are very clear. As we always say, with our extremely high cash generation and the net financial debt to EBITDA situation, we could have up to EUR 2 billion and not exceed 2.5x net debt to EBITDA. These are our figures. So regarding the second question, obviously, we can undertake a major significant inorganic growth.

And coming back to the other question on M&A. Can we say anything about the growth and margins expected for the coming years, especially in 2026?

Well, the good thing about Aludec is that it does have a growth plan, a significant growth plan, especially in North America with diversification and in the medium term in Asia. And regarding margins, the margins are more or less in line with the CIE margins. And therefore, for the first time or one of the first times, an integration doesn't mean that CIE will have to drop 3 or 4 points in its margins. And that's why we say that it's a company that's going to help us to stay at the extremely high levels of profitability of our group and extremely high levels of cash generation.

And now we're asked about connecting with the call from CIE India the other day. Let's talk about taking production from Europe to India. Can you give us more color on that strategy beyond what was already said and can this be expanded to other regions?

There are hypes and our customers sometimes get nervous. And like 30 years ago, it seemed that everything was going to be produced in the East of Europe. And in the end, it all came to nothing. There are certain tensions. But in our case, since we're local everywhere, our risk is nil or extremely low, negligible, I would say, a nuance. The person asking the question, if you heard the conference call, we weren't talking about a massive transfer of production from Europe to India. We spoke about one-offs to make use of the production in India where we have high growth.

Okay. We are asked about the development of the RONA. How has that evolved?

Well, as you know, we closed the RONA, I think, at 20.6%. In other words, CIE, in its normal evolution that you see quarter-to-quarter with its historic records, it improves its RONA. After the acquisitions 5 or 6 years ago, the RONA dropped around 15% more or less. And in these 5 years during the strategic plan, we've improved it by 1 point per year. RONA of 20.6%. It means of all the assets we manage, we obtain 20%. And the assets are financed at a much lower cost than that. So the profitability for the shareholder is almost double that figure of 20%.

After the Mexico greenfield, is there any relevant greenfield planned?

There are countries where we constantly carry out greenfields, countries like India, where you know that M&As are very, very expensive, and we carry out small greenfields every year. And it's true that the most important greenfield we've done recently is the greenfield in Mexico, and we'll do another important greenfield in Mexico with a different technology. So it's the countries where there are the most opportunities like Brazil for doing greenfield. So, organic growth through greenfield and inorganic growth will always continue to be the way our group grows.

Our opinion on the Bloomberg consensus for 2026?

Well, that's a good question. A good question. Well, first of all, I know that you're all very, very, very optimistic about CIE, and we're grateful for that confidence you have in CIE. But I would like to highlight the kind of exchange and euro against other currencies. In 2025, we've lost EUR 150 million to EUR 146 million loss in sales because of the devaluation of all currencies against the euro.

In the first quarter, based on the information we have for 2026, we're going to lose over EUR 60 million, I think you said, because of the exchange rate. So if we properly analyze the exchange rate, we will be in line with the figures we have in our head. And the differences have been based on an erring calculation of the exchange rate versus the euro.

Do you have any views on the remuneration of USMCA?

Well, it's early yet to anticipate the possible results of a possible renegotiation. Historically, this kind of process tends to be long and gradual. But in your case, USMCA is very well positioned. We operate in North America with a high local and regional content under the current treaty. We don't see a direct relevant impact on our operations right now, quite honestly. But as usual, we'll analyze the situation closely and adapt together with our customers if necessary. And about this and other sectoral issues and tariffs, these are things that we've talked about on many different occasions. But there has been nothing that has substantially affected CIE.

Changing the subject. Can we give some color on the European local content legislation? A lot have been said about it, but what is the actual situation?

Well, as you know, as usual, Europe reacts late, but in the end, it has to react. And regarding local content, I don't know if 70% or 80%, but that has to be the solution. What's obvious is that there's a very strong competitive industry in Europe and the European economic community will apply requirements. And it makes every sense to back the localization or internal production here within the community.

And a more philosophical question has just come in. Has anything changed specifically at CIE that explains the 17% rise in the stock market versus the auto sector?

It's very easy to answer this question. We have a strategic plan 2021-2025, where for 4 years, the share price hasn't gone up. It's almost gone down, but it hasn't gone up. And we've just closed with this rise in this year 2025. But what has happened during this period, 2021-2025, what's happened is that CIE has increased EBITDA by almost EUR 200 million. This by a multiple of 6 gives you a value of EUR 1.2 billion, and we've reduced the debt by almost EUR 500 million. So, we've generated a value of some EUR 1.7 billion.

The growth in 2025 doesn't pick up even half of what we've actually done and achieved. So, we hope that from now on, it will pick this up as many analysts highlight and that this will bring us to values close to EUR 40. Now that we've exceeded EUR 30, analysts believe that CIE should be close to EUR 40. So, we have to continue with our improvements and believe that we'll get closer to that figure of EUR 40, which I think is where we should be.

Well, that was the last question.

Okay. Well, thank you very much. As usual, it's been a pleasure to give you a full transparent information on CIE. Continue to trust. We have a unique model, and the most efficient management in the sector worldwide. And obviously, with an outstanding team that is very ambitious and the desire to make this group much bigger, and we will continue to provide significant remuneration to our shareholders. Thank you all very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good afternoon again, and welcome to the results for the third quarter of 2025 CIE Automotive. We have Lorea Aristizábal with us today. There will be questions at the end of the session and questions can only be asked in writing via the webcast tool.

And now I hand over to Lorea. Go ahead, please.

Good afternoon, everyone. It seems there's been a problem with the microphones, and we've received 300,000 messages saying that you were hearing us. I hope we didn't say anything terrible. But good afternoon, everyone, and welcome to the CIE Automotive 2025 third quarter results conference.

But before moving on to the results, let's briefly review what's happened in the markets to put our performance into context. Starting with Europe, where production has grown by 1% in the quarter, although in the accumulated 9-month figure, it's still below last year 2%.

News for the quarter in Europe. Well, in the trade area, we have to highlight the agreement reached on July 27 between the United States and Europe, which has somehow helped to ease tensions, an agreement that avoids the initially planned increase to 30% of the tariffs and establishes a tariff of 15%, which is added to the tariff of 2.5% that already existed for vehicles exported from Europe to the U.S., and which is applicable retroactively from August 1. This agreement provides a breathing space for the European car industry and brings some stability.

On the other hand, the European environment is still marked by competitive pressure from Chinese manufacturers who continue to gain market share in Europe through imports. According to the latest data available between January and August, their sales increased by 75%, reaching a share of 4.9% of the market compared to 2.9% in 2024. August was also the fourth consecutive month with a market share for Chinese manufacturers of over 5%.

It is true that the expansion of Chinese manufacturers in Europe is showing different dynamics. Hybrids are gaining ground, which have reached almost half of sales in recent months compared to pure electric and combustion vehicles, mainly due to the fact that hybrid vehicles are free of tariffs.

It's also important to mention that some Chinese OEMs have started local production in Europe. This is the big headline that we are reading every day, but always under the CKD model. That is by assembling vehicles from complete imported kits with little local content. This is the case, for example, of GAC or XPeng, which have started to assemble at Magna's Austrian plant in Graz. BYD is also expected to begin assembly later this year in this new plant in Hungary and Turkey, with a planned capacity of 200,000 and 150,000 vehicles per year, respectively. While Chery has already assembled since 2024 in Barcelona in collaboration with Ebro.

Other variables affecting the health of the sector in Europe, the penetration of the electric vehicles, which continues to consolidate its position in the market. In the third quarter, electrified vehicles, electric plus hybrid accounted for 27% of sales in Europe compared to 21% in the same period last year, a significant increase.

Today, the European regulatory framework on emissions is still uncertain and generates a certain caution among consumers. But it's true that the demand for electric vehicles is being favored by issues such as the launching of new models. And in particular, we believe, because of the new incentives as those announced in July by the British government, in September by the French government, in October by the German government.

This is the scenario. And with this scenario, a fall in European production in 2025 is expected of 2% in an environment of capacity utilization of approximately 60%, which reinforces the need for structural adjustments in the sector, including capacity closures and further consolidation between suppliers as we have been discussing for some time. In fact, several Tier 1s have announced important adjustments this quarter. We've heard Bosch that expects to eliminate 13,000 jobs by 2030. Conti at more than 10,000 cuts, ZF with a reduction of up to 7,600 jobs, Maleo, Schaeffler, et cetera. All these examples illustrate the magnitude of the adjustment process facing the European supply chain.

If we now move on to North America, the market has recorded a growth of 5% during the quarter. And in fact, it's the first quarter this year with a positive evolution putting the accumulated 9 months in a decline close to 1%, a quarter led by a production growth of 8% in the United States, caused in particular, by the advanced sale of electric vehicles following the cancellation of the federal tax incentives on September 30.

In this third quarter, we have also learned that the Mexican government has ruled out BYD's plans to install an electric vehicle factory in the country, given its own trade uncertainty with the United States and because of Trump's tariff policy pressure towards China and also affecting Mexico. With a view to the end of 2025, we expect North America to end the year with minus 2%, with Mexico falling slightly by 1% and the United States falling 2%, reflecting an environment that is still heavily conditioned by trade volatility and uncertainty.

Moving to the other end of the world, China, which has recorded a very solid quarter of growth with an increase of 10% in vehicle production during the third quarter, which means a cumulative growth of 12% in the first 9 months of the year. This is and continues to be the main driver for world car production. The Chinese domestic market has been supported by the expansion of the replacement and decommissioning programs with grants of up to CNY 20,000, approximately EUR 2,500 for electrical hybrid vehicles and up to CNY 15,000, approximately EUR 2,000 for more efficient combustion models.

But these amounts have to be added to the already historic tax benefits for the purchase of electrified vehicles which are enforced until 2027 and which have historically boosted demand. Meanwhile, Chinese exports remained very strong during the quarter, over 500,000 units exported only in September, which has meant a 21% year-on-year, 6% compared to the previous month. They continue to grow. In the first 9 months, exports reached 4 million vehicles, 12% more than in the same period of the previous year. In this context, September, has been the highest monthly production level of the year with 2.4 million vehicles with new energy vehicles already accounting for more than 50% of total production.

The competitive environment in China remains to be tremendously demanding. The price war between manufacturers continues to push margins. We see this every time the results are released from the Chinese manufacturers and there's an extremely high turnover of models in the local market. A context that speaks of a very probable consolidation process in the Chinese market.

There are currently over 120 brands of electric vehicles to give you an idea when the forecast suggests that only about 15 will be able to maintain a profitable position and survive beyond 2030. Meanwhile, Chinese manufacturers continue to consolidate their dominion with a share of 66% so far this year, compared to 24% for Western companies and barely 10% for Japanese and Korean companies.

Going back to America, to Brazil, which confirms its role as of the most dynamic geographies this year. Vehicle production remained flat in the third quarter, but the market has accumulated a growth of 5% in the first 9 months of the year, supported by strong domestic consumption in a solid labor market and also supported by exports.

During this quarter, the implementation of aid programs have continued. In this case, we have the MOVER program, Green Mobility and Innovation, which came into effect in June and replaces the previous program, Rota 2030. The new program brings in a program of incentives and penalties based on the energy efficiency of the vehicles with more than EUR 600 million in aid for 2025 and over EUR 3 billion up to 2028.

And at the same time, and this is very interesting, Brazilian government has strengthened the protection measures for the automotive industry in Brazil. On the one hand, while adjusting import tariffs for electrified vehicles, electric vehicles, imported electric vehicles have gone from a tariff of 18% to 25%, hybrids from 25% to 30% and the plug-in hybrids are from 20% to 28%. And this has been the penultimate step in the tariff escalation since the last stage of the increase is scheduled for July 2026, when the rate -- the tariff will reach 35% for all types of imported electric vehicles.

What has been the trigger for this fast change in tariffs, the fact that almost half of the 200,000 vehicles imported by Brazil in the first part of the year have been electrified models. On the other hand, what else has Brazil done? They have brought forward by 1.5 years the tariff increase for CKD vehicles originally planned for July 2028 and which has now moved to January '27. At this point, the tariff for CDK (sic) [ CKD ] vehicles will go from the current 14% to 35%. All these are decisions that reinforce the country's priority to accelerate the location of electrified vehicles in the supply chain and to enhance local value.

I was saying before that exports have also been one of the pillars and they've showed an exceptional performance. In August, almost 60,000 units were exported, the highest level since 2018. And in the cumulative figure up to August, there were almost 400,000 exported vehicles with a year-on-year growth of more than 50%. Argentina has consolidated as the main destination with close to 60% of Brazilian exports after increasing by more than 150% compared to last year. With a view to the end of the year, Brazilian production is expected to grow by around 8% with a strong final quarter and becoming the geography with the largest expansion this year without a doubt, consolidating its leadership among emerging markets.

We finished this review with India, which adds one more quarter of sustained growth and remains one of the strongest and most stable markets this year. In the third quarter, the production of passenger vehicles increased by 5% and to 1.5 million units. And in the 9 months of backlog, they have advanced by 4% driven by domestic demand and by a more favorable monetary environment. The Central Bank has applied 3 interest rate reductions, 25 basis points in February, 25 in April, 50 in June and has put the reference rate at 5.5% in a country where the vehicle financing rate is around 70%. These decisions have helped to improve access to credit and to sustain consumer demand.

The third quarter has also been marked by the coming into force of the GST reform, which is effective since September, reducing the tax on small- and medium-sized cars from 28% to 18%, while larger or luxury vehicles, however, are taxed at a rate of 40%, a tax simplification that seeks to boost fleet renewal to stimulate demand. And it said that it is expected to have an effect of between 5% and 10% on sales in the fiscal year 2026.

With a moderate inflation in the range of 1.5% to 3% and a monsoon that has been favorable, it has just finished, the market dynamics have remained positive across all segments the various segments we're in, tractors, trucks, 2-wheelers. And including all the segments, India has already consolidated its position as the third world automotive market. And again, including passenger vehicles, bikes, trucks, tractors, and they have even surpassed Japan with a total volume of close to 25 million vehicles per year, a market that continues to grow and which is reinforcing its structural weight in the global industry.

We closed the chapter on markets by referring to the global market, where our market grew by 3% in the third quarter and 1% in the first 9 months of the year, a context where CIE has recorded a growth of more than 7% at constant exchange rates in the quarter, surpassing the global market by 4 points, and excellent performance in the third quarter that has offset the lower growth we had in the first half of the year, and which has consolidated the outperformance in these first 9 months of the year.

For 2025 as a whole, the CIE market would close with a growth close to 1%, supported by the strength of the emerging markets, particularly the growth in Brazil, India and to a lesser degree, China, which will offset the moderation of other geographies and mature markets. This is the market context. This is what has happened in this third quarter.

And what has happened at CIE during this third quarter? Well, sales that reached EUR 974 million, 2.5% more than in the third quarter of 2024. Despite an unfavorable currency environment that has greatly affected the reported figures, almost by EUR 100 million, accumulative figures up to September, where sales grew 1.9% at constant exchange rate, which means doubling the 0.9% growth of the market in the fiscal year 2025 and operating results where our margins again show a very solid levels.

In the quarter, EBITDA stood at EUR 184 million with a margin of 18.9%, an EBIT of EUR 133 million with a margin of 13.7% and an EBITDA that grew by 4% in absolute terms compared to the same period the previous year, EUR 184 million, we have said, compared to EUR 177 million last year. Without the negative impact of the exchange rate, the EBITDA would have exceeded EUR 200 million. In the cumulative figures up to September, an EBITDA of 19% and EBIT of 14.1%. And this should remind us that our margins do not depend on the where, but on the how of the management model because the homogeneity of margins between geographies confirms the strength of the global margin.

So to round off, operating results, we show a net profit of EUR 80 million in the quarter and EUR 266 million in the first 9 months of the year, which would have been more than EUR 275 million at a constant exchange rate.

We now move on to the cash flow and the balance sheet where the performance is reflected. In the first 9 months of the year, CIE has generated EUR 384 million in operating cash flow, which is equivalent to a conversion rate of almost 71% of EBITDA, a performance that is supported on the one hand, by efficient working capital management, on the other by a CapEx of EUR 144 million, 4.8% of sales, the lowest level since 2022, reflecting an investment that I have to say has already been normalized after the practical completion of the greenfield plant in Northern Mexico, a plant that's in the ramp-up phase and a project that will bring a significant growth in sales and results progressively over the coming quarters.

So discipline in the use of capital with financial payments and taxes as foreseen, a payout to the shareholder of EUR 54 million, the supplementary dividend for the financial year 2024 paid out last July and the self-takeover for a final value of EUR 27.4 million.

In the area of inorganic growth, and I'd like to remind you that during the third quarter, the acquisition of the Brazilian company, Techniplas was formalized, a Brazilian subsidiary of the Techniplas Group for an amount close to EUR 65 million. With Techniplas, a company specialized in plastic injection, we strengthened our historical relationship with European and American manufacturers in Brazil and our most recent relationship with important Asian manufacturers in Brazil. This means an important complement and an upgrade for our technological portfolio. It's a project that offers us the opportunity to grow significantly in the coming years, thanks to projects that have already been brought in and investments in production capacity that have already been made.

And despite the disbursements for the dividend payout, the takeover and the acquisition of Techniplas, the net financial debt stands at EUR 981 million, with a leverage ratio of 1.3x EBITDA at historic lows. If we adjust this figure for the nonrecurring effects, such as the acquisition of Techniplas and the self-takeover, we will be talking about a net recurring financial debt of around EUR 888 million, equivalent to a pro forma ratio of approximately 1.2x net financial debt EBITDA, a position that reflects a balanced and sustainable balance sheet, which is strong, sustainable and with a very high generation capacity.

With 9 months completed and with this snapshot, we confirm the objectives for our strategic plan 2021-2025, which we will achieve, thanks to the balanced performance and the contribution of each and every one of the geographies and the operational cash flow generated quarter after quarter.

So thank you all for your time and for your interest in CIE. And with this, we conclude the presentation, and we are available for your questions.

Okay. We have a lot of questions. Let's try to group them together. I'll start with questions regarding Q3 at CIE. I'll put 2 together, the impact of the hack suffered by Jaguar Land Rover and how much the acquisition of Brazil contributes to this third quarter?

The impact of the hacking at Jaguar Land Rover. Well, first of all, Jaguar Land Rover is not a significant customer among our customer list. There's been a small impact, a direct impact for some of our Euro plants and an indirect impact through what we supply to some Tier 1s such as WALLNER, but nothing relevant.

What was the other question, sorry?

The contribution of Techniplas in the third quarter.

Well, I think it's in the presentation. When we talk about growth, there's part of the growth this quarter, which is -- well, the 9 months given in the presentation is approximately EUR 0.6, which in round numbers is about EUR 15 million.

And another couple of questions on the third quarter. Can we give some details on the currency impact by region and the impact of energy in India in the third quarter, the Maharashtra issue?

Yes, this was mentioned in the results call. It was mentioned in the results call for CIE India the other day because qualitatively, it was important to highlight it. It hasn't been relevant enough for CIE India to give a quantified number. So it's even less so for CIE globally where the figure isn't significant. So we don't think it's going to be a relevant impact.

And regarding the currency, those of you that were connected at the beginning, I think, heard us talking about it. There has been practically a negative impact on all currencies, a double-digit impact in Brazil, an important impact in India and somewhat less significant impacts in China and NAFTA. But yes, we've seen that the impact of the exchange rate at 9 months means almost EUR 100 million in sales, EUR 18 million in EBITDA. Yes. And in fact, it's been important.

Moving on to the market, the market in the fourth quarter. What are our estimates for the fourth quarter and also for next year, estimates in general.

This is as simple as giving the IHS figures. I believe you all have them, and I don't think they add very much. But I would like to make a reflection here about this subject beyond the concrete volume. And if you like, I can talk about the concrete volume that IHS says, and they say that there've been a global quarter of 22 million vehicles, 23 million in the second, and they're talking about 23.5 million for the fourth quarter with an increase between 22.5 million and 23.5 million in the third and fourth quarter, 1 million vehicles and practically, this can be attributed to China that goes from 8 million in the third quarter to 9 million in the following quarter. It's true that Europe also goes up a little bit, offset by the fact that North America goes down.

So this is simplified by saying that in the last quarter, there's going to be 1 million more cars produced in China. But beyond that -- and volumes for next year, sorry, to give the whole answer. Volumes for next year, according to IHS, this year, we're going to finish at 91.5 million vehicles and next year at 91 million.

And then I move on to what I think is important, the reflection. I don't really know how valid those figures are. Why do I say that? And I'm talking about real figures. In the second quarter of 2024, just over a year ago, we said that in 2025, there were going to be 92 million vehicles produced in December '24, the figure had been dropped by 3 million. It was said that 89 million were going to be produced that year. At Easter, the forecast for this year had dropped below 88 million. In summer, we were caught at 90 million. And now we're talking about a market forecast of 91.5 million for this year and 91 million for next year.

What am I trying to say with this? Well, that the world has changed. 10 years ago, when we spoke about estimates, there was a lot less volatility and much fewer impact variables. And I think that estimates were more reliable. Right now, I think that the degree of uncertainty is tremendous, and that means that the volatility of any forecast made by IHS or any other analyst is somewhat more limited in value. So these are the figures, a stronger last quarter, especially because of China. And next year, it could be practically flat globally.

And now also talking about the future, but more related to CIE, there are a couple of questions. One regarding the outperformance we've recovered in the third quarter. How sustainable is it in the future through new contracts or whatever, whether it's sustainable? And how we expect to reach a margin according to the guidance in Q4 that is worse as a season?

Well, things have to go very badly in the fourth quarter, not to reach the 19% in our guidance, to be diverted from that figure of 19%, something terrible would have to happen that we don't currently foresee.

And the outperformance, how sustainable is it after this Q3? Well, it's true. In the first and second quarters, things were a bit weaker, flat and trend to a slight underperformance. And the third quarter has been very strong in outperformance. What does this say? Well, what we always tell you, and this reinforces it, you can't look at a single quarter or just 2 quarters or 3 quarters. You have to look more long term. When we gave the guidance for outperformance for this strategic plan, it covered 5 years. And I hope that nobody expected the 5 years to be mathematically the same and much less 5x for 20 quarters that are mathematically the same.

The first 2 years, '21 and '22, we've had a stronger outperformance. We've had weaker years in outperformance. But we have to look at longer time periods. I think that if we analyze longer time periods and not just a quarter, what it tells us is that on a structural basis, CIE is growing more than the market in general in all geographies. I'll leave China aside. And I think that this can continue to happen, not because we have a contract more or less or because I'm thinking about a certain figure or another figure, but because we're the kind of supplier that customers need. We are global with all the technologies to be flexible and supply all kinds of vehicles with a presence, as I said, in the main markets with the main technologies and with a solid balance sheet that enables us to run through the filter that many companies use to decide who has the capacity to invest. I think that, that gives us a great deal of strength. And conceptually, beyond a certain figure, I think that CIE is doing a better structural job than the market.

A very specific question about steel in Europe and the possible impact of the possible measure to reduce quotas or increase tariffs on imports.

Well, I don't know much more than you do and what's been published. Brussels, the other day proposed reducing steel imports by half. tariff-free imports that the European Union allows and double the tariff from 25% to 50%. Well, the goal is very clear to fight against surplus capacity in the sector and especially to fight against the subsidized Chinese industry.

As far as I know, this still has to be approved by the Euro chamber and the member states. It would come into effect, if I'm not mistaken, in June '26, and we'll see what happens then. There's not much else I can add, except that it's another one of those protection measures from the European Union against the different manufacturing conditions and the subsidized manufacturing conditions in Chinese industry, in this case, with steel.

A question from Robert on hybridization. There are some European players that are talking about a greater demand of electric or hybrid vehicles, and this will give Europe higher content in vehicles. How would this higher demand affect CIE?

Robert, always not now or 5 years ago, when we started to talk to the electric car manufacturers, and I'm talking about a decade ago practically, I think that everybody conceptually and in an intuitive way felt that moving from the combustion engine to the electric car would be easier by using a bridge, hybridization. European legislation has tried to force that bridge to be very short. But the end consumer, I think, is saying that, that bridge needs to be longer than the European legislation provides.

So great, everything that means a gradual transition. For industry in general, I think it's helpful and also for us within that industry. So I think that reality comes from the end of consumer instead of trying to force through legislation.

And now regarding the possible impact of Expedia, the chip issue. And are we facing a new chip crisis?

Well, that's a good question. Let's hope not because our hair stands on end when we remember the 11 million vehicles that weren't manufactured in 2021 and almost 4 million vehicles that weren't manufactured around the world in 2022 because of the chips. But it does seem that there might be some minor tensions. I'll leave it at that and not talk about crisis. I assume everybody knows the story. The Dutch company, Nexperia, with Chinese capital has been intervened by the Dutch government at the end of September, concerns over national security. And as a response to that, China controls the Nexperia plants in their territory. So there isn't a natural flow in the supply chain to the European plants of Nexperia.

So there could be a certain impact in the supply from Nexperia for those automotive chips. If I understand it, the Nexperia chips are very basic. They're not the most sophisticated, but because they're basic, they're absolutely indispensable. And we've been hearing about some customers like BMW, Mercedes, Volkswagen, Stellantis. We even heard it from Bosch saying that they have stock. They have a certain amount of inventory, but they're talking about a few weeks. And a number of emergency groups have been set up to look for solutions and evaluate the damage.

Could production be affected in November? Well, let's hope not. Let's hope not. I think that they're forcing the Netherlands to negotiate with Putin to see how the controls can be adjusted, but this is just another part of these tense geopolitics. I'll answer quickly. I hope it won't be a new crisis, but there may be some slight tension.

We're now asked about the future of the CapEx in view of the CapEx in the third quarter. What can we expect in the future in terms of CapEx? And related to this, what is the ramp-up for the Mexican greenfield?

Well. Let's take it bit by bit. The Mexican greenfield and CapEx, starting with the Mexican greenfield. The Mexican greenfield is a project. I think we told you about it. It's been EUR 80-some million, about $100 million in round numbers, almost 70%, more than 2/3 of the investment was made in 2024, the rest in the first part of 2025. A plant that is expected to reach a volume of $200 million, but that won't be until 2029. And then gradually, this year, it has started to operate. And until 2029, sales will gradually be added on with a couple of more significant jumps in '26 and then in '28.

Regarding CapEx, well, because of this project, we saw a year 2021, '22, '23 with around 5% over sales or 5-point something. And we saw a 2024 that went up to as much as 6% CapEx over sales because of -- or basically because of the deviation in this plant. Without that plant, we would have been talking about 2024 also around 5%. And 2025 where we have that figure of 4.8%. And without this Mexican plant, it would be closer to 4%.

So what am I saying with this? The question was what CapEx we can expect in the future? Well, now since there are no other projects of this magnitude planned in the short term, in principle and on a normalized basis, we ought to be around 4-point-something, 5% that we saw before this nonrecurrent period with a somewhat higher CapEx. I'm not going to go into details on the figures because this comes under the umbrella of the future guidance beyond the strategic plan. In this strategic plan, we're going to meet with that approximately 5% in CapEx over sales that we planned.

Talking about the strategic plan, there's a question. Do you know whether a strategic plan is going to be presented soon? And could an extraordinary dividend be considered if there's no M&A?

Well, I'll give the same answer that Jesus Maria gave when he was asked this question in June, I think, in the results for the second quarter. And that is that we still haven't finished the current strategic plan. So we can't set dates to present the future plan. In February, we'll all come back here to talk about it, I hope. And there, we'll close a 5-year period that has been complicated and it's also been very ambitious. And from there on, we'll see what the future guidance is. But I'm not going to go into the strategic plan or dates for his presentations. I'll defer this for when we discuss it in the fourth quarter.

And the other question, whether there could be a special dividend if there's an absence of M&As. Jesus Maria also said something along those lines. The payout to the shareholders is, without a doubt, one of the most important capital allocations if there's no significant M&A with the extremely low debt and with the very high cash generation, it wouldn't be the first time or the second in the history of CIE that there are extraordinary payouts.

Connected to this, a question has come in regarding what we plan to do with the shares bought in the self-takeover bid.

Well, the obligation is, and this has been published, these are shares that we cannot use to reduce capital. These are shares that should naturally be put on the market and try to atomize them as much as possible because the only goal was to create liquidity. And completely changing the subject, we asked about another possible disruption, the possible impact of the fire at Novelis in the United States.

Novelis in the United States, -- if I'm not mistaken, this is outside the third quarter as such because this was at the beginning of October. But it's true that it's happened during the last few days. There was a fire at a very important company that supplies aluminum. Have we had a direct impact? We don't have aluminum operations over there, but it's true that it could have an indirect impact through our customers. I think that there were customers from the beginning like Toyota or Hyundai that said that there wasn't a major effect. Stellantis spoke about temporarily shutting down one plant.

I think that the most affected was Ford. They were affected because one of their best-selling models, the 150 pickup, which is very aluminum intensive was penalized. And in fact, they talked about an outage of approximately 3 weeks in October of a couple of their plants in the U.S., their plants in Michigan. Perhaps we'll suffer a small indirect impact through this, we don't expect it to be significant. If you like, we can discuss it at the fourth quarter.

There's a question regarding that there has been significant progress in CIE India when it comes to getting into new segments in the end market and in the customer diversification.

I suppose that's a way of looking at it. I would say that it's been tremendously successful. First of all, we can't get into more segments because we're already in all of them. And secondly, commercial diversification, we continue to work on it every day. And I'd remind you, when we bought these plants, just over 10 years ago, they had 2 main customers that had all the sales, Tata and Mahindra. And nowadays, we work significantly for the #1 in the market, Maruti Suzuki. We work for the #2 Hyundai Kia in the market. We've included new segments and have practically covered all segments. So I suppose it's a matter of perception. If you ask me, I think that the success has been enormous.

Could you give us an update on tariffs, especially for 2026 with the potential review of the USMCA?

Tariffs. Well, the news from the last few days, I'm not going to say they're positive because talking about tariffs is implicitly negative. But I do think there's been a slight deescalation because we've had the agreement between the U.S. and Europe. It may be good or not. Some people believe 15% is higher. But at least we have a scenario that companies can work with and make decisions. Apart from that deescalation in recent days, we've seen how the trucks produced in Mexico and Canada and which had tariffs are now like passenger vehicles, and they don't have that tariff if they're USMCA compliant, obviously.

We've also heard the U.S. Secretary talk about potential tariff relief for aluminum and steel imported into the United States. The trade department is saying that it will evaluate almost on an individual basis, that's what we've understood, the request from each company, but they will consider whether it comes from Mexico or Canada and is USMCA compliant or whether it has been melted in Mexico or Canada or comes from other markets. And they put a lot of emphasis on the fact that they're going to consider whether there's a commitment from the company, a commitment that can be proven that they're going to set up capacity in the U.S. and will pass part of their aluminum and steel production to those plants.

So these are some things we can think of in a situation, which I'm not going to say is getting more stable because with Mr. Trump, we don't know if that's how things are going to stay or whether there will be more news tomorrow. But we do see signs of a deescalation, and it seems that it's coming to a certain stability, but with a lot of quotation marks.

How do we see India as an export hub for the Asia Pacific market?

For the Asia Pacific market as an export hub for that region, let's say. Well, there's a lot of important competition in that region from countries that are tremendously competitive like Thailand, Vietnam, the ASEAN area. If Indian plans to export, I don't think they're thinking of exporting to Thailand, Vietnam or that area. We're thinking about a very competitive India trying to export to markets where production would be more expensive. If I'm not mistaken, India exports almost 4 million bikes, 700,000 or 800,000 passenger vehicles and local production expectations in India. And we'll see what happens with the tariffs. But India is implicitly attempting to be a production and export hub for the world.

How is CIE coping with the loss in market share of the Western manufacturers versus the Chinese OEMs?

In China?

No, in general. They don't ask about a specific market, the general loss of quota.

I don't think it makes sense to talk about China because we all know what the situation said. And I've said that the Chinese quota in China is being reinforced. They're already at 66% and Western companies have lost 25% of the share. So knowing that our main customers are Western companies is not good news. But for the rest of the world, I think it's too early. We're still talking about shares in the rest of the world.

Well, I'm not trying to say that only 5% of the European market is covered by Chinese cars. But there's very little we can do when there's a CKD import model and with the local content is tremendously small. So that's not good news in the short term. It's true that we all believe that this is going to change in the medium term. And when that changes, we hope that there will be a supply chain from Chinese manufacturers to the rest of the world that will be normalized like American companies in the world, European companies in the world, Japanese companies in the world and Korean companies in the world, where there's a balance between the original suppliers and local suppliers. Why not believe that this is also going to happen with the Chinese?

And an update on M&A, where are we? And also about the rationale of looking at Thailand because of the 2-wheelers.

Where are we in M&A? Very active, working very hard. Nothing new as to what we're looking at. You know that because we've always said it. Strategically, it makes much more sense to concentrate on all our efforts on growing markets, not on mature markets. And by mature markets, I mean basically Europe and United States. And by growing markets, I mean more Mexico, Brazil, like the case of Techniplas, India. And you were talking about Thailand as an example, for a new market. I think that's fine. Any country, Vietnam, Indonesia, Thailand are interesting countries, countries where analyzing ASEAN produces more than 4 million vehicles, may call it the second Asian Detroit or the Asian Detroit because it produces a lot of pickups. It's the second part of the world with the highest pickup production.

And as we've always done, when we were only Europe, we went out to America. And when we were only Europe and America, we went out to Asia. In the 25-year history of CIE, we've always had an eye on markets where volumes start to become of interest and where it would make sense to go. And I think that ASEAN is a part of the world where especially in the short term, there are certain question marks. But I think in the medium and long term, it's a market that makes sense. And what are we doing? We're working on it.

We don't have any more questions.

Well, exactly 1 hour. Thank you all very much. And again, we regret the somewhat chaotic beginning, and I hope that we didn't say anything awful. Thank you all very much for your attention, and we're at your disposal if you have any other questions.