Chairman / President of the Board, CIE Automotive, S.A.
CAPITAL MARKETS DAY CIE AUTOMOTIVE ESP
Transcript (48 segments)
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Host0:34
Welcome to CIE Automotive Capital Markets Day. Welcome to the future, yes to the future, because today we are going to talk about our strategy and the deployment of that strategy over the coming years, a period that will be key for the future of the automotive industry. And we will end the day sharing our 2025 objectives. Are you ready to start this journey? Of course you are. And for that, we have the reason for being of this great company, our great resource without which we could never create this future: the team of people that form CIE Automotive. They will be the ones to guide us step by step through this journey, imagining and shaping the coming years of the automotive industry. So let's wait no more and delve into our future together. The automotive industry is a complex industry in constant evolution. No paradigm is absolute and no reality is permanent. If over the last century we have seen great changes in the sector, the last few years have been especially intense, both from the point of view of the evolution of demand and the need for innovation in supply. Let's review trends with our Corporate Development Manager, Lorea. Lorea, what is happening?
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Lorea2:23
It almost goes without saying that the automotive industry is in a period of profound transformation, evolving towards a new type of mobility. On one hand, new motorization technologies mark the future of an industry whose most immediate challenge is to be sustainable. On the other hand, the increase in connected devices, the focus on design and the user, or autonomous driving, show that consumer demand is changing. In this context, the main role of the automotive industry today is to respond to the evolution of customer expectations while maintaining sustainable and profitable growth. As a utopian goal taken to the extreme, the world of the zero concept: innovate to zero with zero-emission vehicles, zero waste, zero accidents, and zero defects. In this framework of evolution and transformation, what are the trends that will mark the trajectory of the automotive industry? We start by talking about electric vehicles. Demographic changes and new generations of consumers are motivated by factors such as the climate crisis and demand a new mobility ecosystem. Today it is estimated that more than a third of all cars produced in 2025 will be electrified, either in hybrid or purely electric version, which puts enormous pressure on the supply chain. There are many challenges still facing the electric car, but fully aligned with institutions and regulators, a very important segment of the population demands greener cars, and the sector must respond to this demand, so it is undoubtedly a matter of time to gradually achieve these objectives. We continue with autonomous vehicles. In the coming years, a generalization of the autonomous car in our society is expected. It is interesting to see where the industry is heading towards that futuristic landscape of autonomous cars in which we will be drivers and passengers at the same time. It is true that there are still obstacles that hinder its expansion and that it is very likely that we will have to wait a bit longer than desired to have truly efficient autonomous vehicles, but it is a clear bet of a sector that is directing a good part of its investments in this direction. Let's also talk about connected vehicles. If there is a buzzword in the industry, it is connectivity. People increasingly look for a car connected to the rest of their world. They already have it with their mobile phone, their virtual assistants, home automation. Many high-speed connections must be established to reach that level of experience, so car manufacturers will join technology, telephony, and infrastructure companies, and that is how new Internet of Things platforms will launch the next generation of vehicle services. It is important to keep in mind the center of everything: the consumer and their comfort. One of the fundamental aspects when analyzing sectoral megatrends is the importance of the customer. Demand has changed considerably in the industry. Before, power, aerodynamics, or exterior design were bet on. Currently, the customer values other aspects such as driving assistance, space comfort, or an intelligent infrastructure marked by technology. We talk about the adaptation of the physical space of dealerships to the era of digitalization. We talk about entertainment screens that will acquire greater importance inside the car. We talk about opening spaces with large panoramic roofs without losing safety. We talk about comfort in its broadest concept. We now move on to talk about the digital company and Industry 5.0. On one hand, it is expected that in the coming years thousands of new digital companies will alter the current supply chain of the automotive sector, while some of the key aspects of the digital company are already being implemented in our industry: digital manufacturing, connected supply chains, online sales, data monetization. On the other hand, automation, robotics, and artificial intelligence have skyrocketed in the context of the pandemic. The path towards Industry 5.0 will be marked by investments in simulation, cloud platforms, cognitive manufacturing, online robotics, a whole investment deployment quantified in billions of euros that will mark the pace of our sector in the coming years. We continue now with innovation. The automotive sector has shown great efforts in the development of technology to meet various objectives, but even so, continuous improvement and transformation will also be a constant in the future. It is evident that you need to have an agile mindset to innovate, be quick in adaptation, and that is only possible by listening and understanding consumer needs. That base will guide the process of creating strategies, developing new products, the production process, the commercial effort, and will make the difference in maintaining the high levels of competitiveness so necessary in our industry. Finally, we will talk about association. In the most recent present, with the latest mergers between manufacturers and suppliers in the sector, it is already ratified that this trend is a reality. And to face the complex challenges of our industry, unity and joint action are needed. There are many challenges that can only be overcome with collective efforts, seeking synergies. Association and collaboration can adapt unique solutions to unique problems, and we are convinced that it will mark the future of automotive.
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Host9:57
We have heard Lorea comment on the great challenges that our sector poses and that imply action for all market players, each in their context. We have been living the constant transformation of the sector for 25 years and demonstrating that we know not only how to adapt and survive, but that we know how to take advantage of every moment and every opportunity and turn them into a strategic success. And it is precisely about that, our strategic decisions regarding electrification, digitalization, comfort, and internationalization, that we are going to talk now with Iñigo and Ritchie.
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Iñigo11:01
Decarbonization of society is a necessity and an unstoppable trend in the automotive sector. We know that we play a key role in the process, and of course at CIE Automotive we have already begun to walk that path. Let me put this path towards electrification in context at CIE, as it may not be very evident how it affects us and what opportunities it generates. It is known that the CIE Automotive model bets on diversification in technologies, geographies, markets, and segments, always seeking that flexibility that has given us such good results since our beginnings. As a result of that diversification, you can see that in 2020, 82% of sales were not associated with powertrain and only 18% of CIE's sales depended on the type of vehicle propulsion. Let's delve into that 18%. On one hand, 15% of powertrain components for internal combustion engines and 3% of the group's sales go to powertrain components for electric vehicles and their batteries. On the other hand, that 15% of internal combustion includes projects in geographies and segments of very slow electrification, so our real risk is reduced very significantly and would in any case be below 10% of sales. In any case, and despite our low exposure to an electrifiable portfolio, it is necessary to do an impact analysis. For that, let's look at an intermediate scenario until 2030 with 30% pure electrified cars in Europe, 15% in China, 4% in North America, 4% in Brazil, and 5% in India. To be more prudent, we have not considered hybrid or plug-in hybrid vehicles, although we all know that the result of the impact analysis for CIE would clearly improve by applying those electrification percentages to our internal combustion powertrain portfolio. The percentage of sales at risk would be approximately 3% in 2025 and 5% in 2030. Taking into account that CIE Automotive captures orders each year for approximately 20% of total turnover, those percentages are very manageable for the commercial and acquisition effort that is carried out continuously and naturally. Having seen that the impact of electrification on our portfolio is in no case significant, let's talk now about the opportunities and challenges that arise and how we are going to face them. Let's understand how a typical medium-sized C-segment car with an internal combustion engine is affected by electrification. Let's start with the electronic and mechatronic elements. CIE Automotive has no presence in them because they are out of the equation. Presence in fuel storage and management, exhaust, engine air intake, and emission control is very little relevant. In the turbocharging area, we only supply hot-side housings and exclusively in certain geographies with no immediate prospects of electrification. Our presence in the gearbox housing, not considering the casings, is very low. We must consider that the differential will be necessary regardless of the propulsion the vehicle has. Although we evolve towards an electric vehicle, the needs for thermal management are still present and even increase. We now focus on the central structure of the engine where, due to the search for flexible means, we have not positioned ourselves in engine blocks or cylinder heads, nor in elements such as valves, camshafts, pins, or connecting rods. It is true that there is an important product such as the crankshaft. If we now analyze the injection system, we see that we have the injection rails and sometimes a pump body. We must also consider that some components will be necessary in both propulsion scenarios: we talk about lubrication pumps, coolant pumps, air conditioning compressors, and the support elements for all of them, as well as for the engine itself. In this environment, we find the natural scope of CIE Automotive: a range composed of aluminum parts and machining of medium size, machining associated with power transmission components and other small components, injection rails, some crankcase that can be stamped or cast aluminum, crankshafts, iron cast turbo housings mainly, a portfolio based on flexible and generic manufacturing technologies. Finally, it is evident that the roof division and practically the plastic division are not affected by this evolution. Now let's see how to face the electrified powertrain. It is true that from a generic point of view it consists of fewer parts, but that does not mean we do not have many opportunities. In fact, we are already manufacturing in series and we have new projects captured in the motor and power electronics part. We find medium-sized cast aluminum parts, motor housings and covers, inverter electronics, on-board charger, stamped covers, the motor shaft which can be of different technologies that fit CIE, and plastic connector. So the content of aluminum parts is even greater in the electrified powertrain, and we can also opt for a small additional content for the plastic division. In the gearboxes, which in many cases are simple reducers, we again have opportunities in aluminum housings and various machined parts. Let's now look at the battery environment, where although CIE does not focus on the production of cells or electronics, there are high-value parts mainly of stamping and tube, both in the housings and in the cooling system, connectors, and protection elements against impact. Therefore, we have a clearly superior business potential in stamping and aluminum, and some opportunity in plastic. In these divisions we are already capturing that type of components both from traditional clients and from new electrification players. Furthermore, we do not forget the important challenges posed by those products that still do not have a clear substitute in zero-emission vehicles. In that aspect, we focus on forged products, some machined product, and cast housings. For this, we have defined a strategy whose basic pillars are: increase our presence in forged chassis and suspension elements in ferrous alloys or aluminum alloys, seeking a greater contribution to vehicle lightweighting; increase presence in machining of shafts and gears for battery electric vehicle reducers; take advantage of our history of supplier consolidation that positions us ideally to aggregate the manufacturing capacity that remains in this area, from which undoubtedly those who start today from a non-financially solid position and advanced manufacturing standards will exit; be active in the outsourcing of traditional technologies that our clients will externalize to focus on new challenges of connectivity, artificial intelligence, autonomous driving, and large systems for electrified vehicles. In addition, ambitious commercial capture objectives have been set in electrified areas that exceed the penetration ratios of electric vehicles. Finally, we will focus on finalizing the innovation plan to increase our competitiveness in forging. As I said at the beginning, decarbonization of society is a necessity and an unstoppable trend. From CIE Automotive we can proudly say that we are already working on it. Moreover, the result will be growth in the propulsion area, maximizing all the mentioned opportunities and materializing the strategic plan that we are deploying in each division and geography.
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Ritchie19:28
As you all know, the heart of CIE Automotive is centered on manufacturing, and within its DNA is innovation and the incorporation of new technologies. That is why at CIE we are already integrating Industry 4.0 into our plants and processes, a set of different technologies that have reached a sufficient degree of maturity at the same time. We are going to show you a large part of them through a real case, say an aluminum casting and machining line. We start with additive casting. This tool is not yet used to produce high-series components directly; we use it for conceptual prototypes and very importantly in our molds and tooling, where we not only introduce our own technology with different patents but also optimize them with the use of additive manufacturing inserts that, for example, achieve heat extraction speeds much higher than traditional ones, a key advantage. The next tool we are going to address is the digital twin based on advanced simulations. It allows us to predict the real behavior of the cell without having to intervene in it. This tool is fed by sensors and data collectors for each key parameter of the line. We will see that data is a common denominator in many of the technologies. Let's talk now about advanced robotics, where robots work collaboratively among themselves and even work in some of our lines hand in hand with people, the so-called cobots. As for what we know as big data, these are technologies that allow capturing huge amounts of information from all available sources in the plant: sensors, quality controls, robots, PLCs, etc., enabling information to be processed in real time. And we advanced the importance of data. On the other hand, through the so-called Internet of Things, the physical world and the cyber or virtual world are connected. For this, we need to give identity to each of the products we manufacture. For this reason, both the tooling that carries the parts and the parts themselves are marked individually to associate all data to each entity we work with, whether machine, tooling, or component. As a complement to these tools, we have the so-called advanced process control, which focuses on the development of modeling of our manufacturing cells and facilities using predictive algorithms known as deep learning. We manage to anticipate the behavior of processes for their control and that of machines for their optimal maintenance. To this we must add the use in the plant of new interfaces that allow everything to be available in a single view with zero paper, enable training and qualification, team communication, and deploy maintenance alerts. Finally, at CIE Automotive we are making use of the cloud, which allows us access to all the mentioned data and its processing in a joint manner, being able to share experiences in different lines, geographies, technologies, and problems. At CIE Automotive, we implement all these technologies in our plants, always seeking measurable improvements that impact the bottom line. Thanks to digitalization, we achieve that our clients perceive that our production has robust, flexible, and continuously improving processes. Additionally, internally it represents a further step aimed at improving profitability, always seeking return on each installation, in line with the investment discipline that characterizes us. Thank you very much.
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Presenter30:21
Without a doubt, one of the great strategic successes of CIE Automotive has been its geographic positioning. From the beginnings of the project, geographic diversification was one of the most sought-after angles. On one hand, internationalization and multi-localization of our production plants has been a differentiating characteristic for a Tier 2 supplier like us, favoring the constant increase of our market share and allowing us access to large global platform projects of our clients. On the other hand, presence in different geographies is a very important risk mitigation element against the cyclicality of a sector like automotive, where different regions go through their own economic cycles. The CIE project was born in the Basque Country 25 years ago and expanded rapidly. In the early 2000s, we made the leap to the rest of Europe and Brazil. Then came Mexico. In all those geographies, we were able to position ourselves solidly and intelligently, in many cases initially through local alliances. We always felt we arrived on time, before the explosion of the local automotive market, which allowed us to make the investments profitable. And so we continued developing the European and American markets for years until 2013, when we made a new qualitative and quantitative leap, landing in India. The creation of the MC project and our entry into the promising Indian market marked the beginning of our Asian adventure, a market that almost ten years later we know well and where we work with all types of clients in different segments of the industry. And we decided to continue betting on Asia. In 2019, we added China to our global presence through the integration of the roof systems plants of CIE Golde. As the world's largest automotive market, with a third of global vehicle production and significant growth expected in the coming years, we are sure that our latest geographic bet will undoubtedly prove to be another success. A geographic positioning developed intensely over the last two decades that makes us a reference supplier in each and every one of the main automotive markets. A geographic positioning increasingly balanced between different regions and in which the markets with the greatest future projection such as China, India, Mexico, or Brazil have a relevant role. A geographic positioning that today is a guarantee of success and that we will continue to reinforce day by day. As you all know, we have the capacity to produce components in each and every one of the technologies. Our positioning is thus multi-technological and is differentiating for our clients. In each of the technologies, we have a global technological vision but we adapt the concrete strategy in the different geographic areas depending on the reality of the different markets. Next, we are going to review the future of all of them through the words of our technology heads: Aitor, Justino, Ander, Fernando, Oscar, José Luis, Alex, and Manucho.
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Aitor33:46
With the acquisition of the roof systems division of Inteva in 2019, currently called CIE Golde, and its integration with ACS, it became the third global player in this market niche. Currently, the division has two main objectives: growth and cost reduction. For growth, we have two paths: the own development of roofs in different clients and geographic areas, and on the other hand, the development of ACS products such as the luggage cover or the flash door in the historical clients of Golde. Let's go to the first market in the world, China. In this geographic area, the division has nine plants. In them and in Asia in general, the great challenges that arise are: for growth, work on the development of the low-cost roof to compete with local players, capture projects from new OEMs both Western and local with the aim of expanding a currently undiversified client portfolio, promote additional products to roofs that ACS had in Golde clients such as flash doors or luggage covers, develop the Indian market either with a greenfield or from China as is done now. For cost reduction: rationalize the Golde, Dibuian, and Sace plants seeking structural and operational synergies, and vertically integrate glass encapsulation to reduce purchase costs and access a greater number of suppliers. We now move to the European market, a continent where we have five plants that face important challenges mainly linked to cost reduction, the main ones being: reorganize the plant in Lozorno, Slovakia and use it from the point of view of productive flow, complete the closure of the old Giford factory in Germany, successfully industrialize new projects for a German premium client in the Oradea plant in Romania, change the current ERPs through the implementation of SAP to homogenize with the rest of CIE Automotive, and finally promote additional products to roofs that ACS had in Golde clients such as flash doors or luggage covers. And finally, let's go to North America, a continent whose main objective is growth and where we have plants in Mexico and the United States. These plants have the following objectives: one, capture substitutes for key projects for the Puebla plant due to its high volume; two, successfully industrialize the new project for an American client in the Auburn Hills plant; three, capture new roof projects to grow our division in North America, as well as promote cross-selling of products and clients of ACS and Golde; and finally, change the current ERPs to homogenize with the rest of the group's systems. With all these ambitious challenges ahead, we can affirm that the roof systems division has a great future, both for its high potential for value generation due to the increase in turnover and profitability improvement, and for its presence in one of the segments with the greatest growth projection in the comfort environment. Thank you very much.
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Justino38:24
The CIE Automotive group is one of the most important players in the world of forging thanks to its 17 plants distributed across Europe, India, America, and China. At the European level, the forging division has six plants in Spain, Germany, and Lithuania, all under the umbrella of our listed company Mahindra CIE. The challenges in the old continent focus on the following: develop new forged parts for the electric car, invest in and develop aluminum forging, grow with horizontal press projects to gain market share in driveline, develop competitive solutions for machined forged parts, and finally rationalize and resize the German forge. In India, we have seven plants mainly located in Pune and Bangalore. These plants have a great development project ahead and face the following challenges: capacity expansion with the construction of a new plant in Chakan, the launch of a new crankshaft machining line for a local client, expand forging capacity with a new semi-hot forging press for driveline components in Pune, and finally successfully industrialize the numerous projects captured in the last year. If we move to America, in the north we find our two Mexican plants, Forjas de Celaya and Bill Ford, and in the south a plant of Auto Forjas in Brazil. Our objectives there are three: first, expand the current Bill Forge Mexico plant to industrialize the new captured projects and continue the development of the plant; second, execute the launch of new products in various clients; and third, successfully start the transfer forging line for driveline products in Brazil. Finally, regarding our forging presence in China, we have the Nanjing plant, result of the joint venture with the Donghua group. Here we have planned the following: define and implement the relocation plan agreed with the Chinese government, develop and implement new products and processes hand in hand with the European forges, and continue with the automation of the forging lines developing the piece-by-piece flow efficiently. In short, with these challenges in mind, we are convinced that forging is the technology that can most benefit from the consolidation of players while evolving towards new products that will be implemented in the future vehicle mix. Thank you all for dedicating a few minutes to the forging division.
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Ander42:10
The CIE Automotive group has plants dedicated to the manufacture of machined parts in Europe, America, and India. It also develops a small activity in China in one of our multi-technology plants. In our 17 European plants located in Spain, France, Italy, Czech Republic, and Slovakia, the future challenges us with the following: increase the added value and complexity of products as a differentiation strategy, develop components for electric and hybrid vehicles, for example electric motor rotors, ground gears, or differential housings, and consolidate leadership in chassis parts through a bet on competitiveness and internal efficiency. Let's now travel to America. In this region, we have three plants in Mexico, four in the USA, and three in Brazil. The objectives set for these plants are: continue with business development diversifying the current client base, capture higher value-added products especially for electric or hybrid vehicles, develop the transmission and driveline components business, as well as maintain a prominent position as a strategic and preferred supplier for chassis products, and finally improve competitiveness through optimization of production equipment and automation or digitalization of industrial processes. Finally, if we move to our two plants in India, we find that our greatest challenges are: successfully face the great business growth by expanding current plants and investing in new machinery, take advantage of the context of localization in India of imports from other countries especially from China, and increase export business mainly towards the American market. In short, as you have seen, we focus machining technology towards components of higher added value and complexity, so we expect to grow significantly driven by our extraordinary knowledge of the technology, our strong global positioning, and our efficient business model. Thank you very much.
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Fernando45:00
The CIE Automotive group manufactures parts in aluminum injection technology and has a total of 10 plants located in Europe, India, North America, and Brazil. Next, I will talk about the most important challenges we face in each of them. Let's start with Europe. In this area, we have 5 production plants: 3 in Spain, one in Romania, and one in Russia. Our main challenges are: the launch of a greenfield for large injectors of more than 2000 tons in the Casting plant in Spain, take advantage of CIE Automotive's solid financial and technological position to develop our production capacity and act as a consolidating vehicle for the sector in Europe, focus acquisitions on new projects for electric and hybrid vehicles, and diversify our client portfolio by betting on machined injection components of high added value. If we move to India, we have the plants of the company acquired in 2010. These plants are located in Aurangabad, Pune, and Pandharpur and are mainly dedicated to two-wheeler components. In this geographic area, we have several challenges: start production in the new aluminum injection plant built in Aurangabad, transfer CIE's technology and know-how to increase internal efficiency and product quality, and finally capture new clients and develop new high-value products for the passenger vehicle sector (four-wheelers). Regarding our presence in North America, we focus the manufacture of aluminum parts in Mexico in the company CIE Celaya, where we have two great challenges: on one hand, industrialize and start series production of an important new project for a Tier 1, and on the other, continue with the growth and development plan of the plant maintaining and improving operational and economic ratios. Finally, in Brazil we have a plant dedicated to aluminum injection that faces the following challenges: manufacture aluminum components for steering systems as well as high-value aluminum products for engine and transmission. Additionally, we must undertake the automation and digitalization of the main industrial processes. With these objectives in mind globally, from the aluminum division of CIE Automotive we focus on growth and diversification of the client portfolio. In this way, we will continue to contribute to this great common project through a technology that positions itself as a clear winner in the new automotive trends, contributing to vehicle lightweighting and actively participating in the new hybrid and electric propulsion trends. Thank you very much.
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Oscar48:26
The CIE Automotive group is dedicated to the manufacture of stamping and tube forming parts in North America, Europe, India, Brazil, and China. The five stamping plants in Mexico are world reference for their excellence and efficiency. These production centers have several challenges ahead for the coming years, among which are: construction of two greenfields, one for stamping and assembly and another for painting, to cover the need for additional capacity; expand the capacity of Celaya with transfer and progressive presses, as well as increase investment in tubes for steering; take advantage of the opportunity to capture parts for electric vehicles with Tier 1 clients and for roofs; grow in current battery and body-in-white parts on electric car platforms; enter new products: transmission, engine, suspension, and electronic components. In Europe, we have five plants: three in Spain and two in the Czech Republic, whose objectives in the coming years are: rely on the team and knowledge of Mexico to improve the European plants, successfully start the new 2000-ton servo transfer press, develop new products for the electrified car segment, and industrialize already captured projects for new players. If we focus on India, where under the umbrella of our Indian listed company we have 5 stamping plants, it is planned to build a new plant in the south for a client, execute improvements in layout and automation of press lines in Chakan and Nasik, continue with the improvement of internal efficiency of the business, and industrialize new projects captured with local clients. If we move to Brazil, with four plants, our challenges are: install and start the new 1600-ton transfer press in Caçapava, replace Ford sales with new clients that are capturing market share, and expand product portfolio with traditional OEMs in the Brazilian market. Finally, we focus on our plant in China, where we seek to activate the gasoline rails business, capture new clients for steering systems relying on our R&D capacity, and obtain new projects for electric vehicles. And these would be the plans for the coming years in the technology with which everything started, one of the icons of flexibility and adaptation of CIE Automotive, a technology with which we were born and that today is one of the great exponents of the transition towards electrification in our company. Thank you very much.
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José Luis52:27
CIE Automotive has 14 plants in plastics technology located in North America, Brazil, and now also in India in a composites division. The plants in India and the United States. Our factories in plastics technology face multiple challenges depending on their geographic area. Let's briefly fly over the most relevant ones. In North America, CIE Automotive faces several challenges: develop a cosmetic paint line, diversify clients more in the USA, become market leader, initiate a follow-up of the other to transform the USA into a hub, and decide to follow products such as headliner and door panels. Moving now to Brazil, in this market we have five plants with several objectives ahead: among them are 19 products that bring greater added value to the line, the relationship with Asian clients located in the São Paulo region, capture a greater number of chrome parts in Bernardi and less, and expand the vision lines since we are experiencing a greater market demand for parts with internal and external coatings. Finally, we also want to implement electrostatic painting technology for symbolic parts. Moving to the plastics division in Europe, we have plants in Spain, Portugal, Czech Republic. In our plants, we seek to capture new clients and optimize the...
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Presenter54:24
We are expanding our plastic production capacity in Portugal with capital projects 30 and better introducing new national products that we work on, thus broadening our portfolio. Consolidate and reorganize the publicly traded plastics company in the Czech Republic, and finally our vision for composites: we want to grow 10% and return to business, especially for electric vehicles, starting a new composites plant in Key and consolidating the majority of internal efficiency. With these objectives, the board considers a lower weight on total assets, which motivates our plastic technology. We want to continue seeking growth and high profitability, which will undoubtedly be a great contribution to the future value of our company.
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Anton Pradera56:08
Yes, automotive or precision casting, Cali plans in India, in Brazil. My focus is more on the vehicle and the sector. On day 16, casting people are pleasant because the public comes from efficiency in big business track and consolidation. They have been in an online casting, expanding arms and nymphs and litis to increase the value. The strong house at night, having a global expert farm, unspeakable travel with plans, and biblical to sell this group. The man and now you take your given the brand of the current WiFi markets in North America, a consumption export project. The client presents easily consolidated investments in new projects. We strongly count on installations outside the country for initial emerging markets, automatically in classes of casting. Angel Villar expectant means here the champions date, so I am attentive, just as we have seen the operational part of the business is undoubtedly key, but the role played by other areas of the organization in optimizing results and, most importantly, maximizing operating cash generation is also fundamental. We will now see the deployment of strategies in the financial and tax areas, as well as the group's risk analysis and control framework, led by Susana and Laxe and María Tres, our corporate directors.
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Lorea58:44
Let's move on to talk about the compliance function at CIE Automotive, responsible for the operation of the second and third lines of defense. It reports hierarchically to the CEO and functionally to the Audit and Compliance Committee and the ESG Committee, both dependent on the Board of Directors. Within the second line of defense, we distinguish on one hand the area of good governance, which includes the definition and supervision of compliance with the internal ethical framework and the commitments acquired by the group, as well as monitoring compliance with legal requirements. On the other hand, the operational area, which is directly related to risk management and internal control of financial and non-financial information. The third line of defense, the assurance of internal audit, is coordinated globally by the compliance department, although its annual plan and necessary resources are managed and approved independently by the Audit and Compliance Committee. The annual plan includes periodic auditing of the most critical processes in the group's process map, a rotating audit plan for all plants, and a detailed review of the most important investments, with the aim of comprehensive management of the department, as well as consolidation and standardization of its operation. The management of the compliance department in the operational area is based mainly on the SAP RC Governance, Risk and Compliance tool, where the risk management module elaborates the company's risk map, the process control module supervises and monitors the financial and non-financial internal control system, and finally the audit management module coordinates and manages the work of the global internal audit team. Risk management: let's look at the 2020 risk map, which included 19 risks: 6 ESG, 5 strategic, 3 operational, 3 financial, and 2 compliance. 66 professionals from senior management and the management team with a global scope participated in its preparation. The evaluation of risks is based on the calculation of the probability of past and future occurrence, as well as their impact in three categories: economic, organizational, and reputational. The highest valued risks, although in all cases the probability of occurrence is medium and the impact is low, are: 1) cybersecurity, 2) fraud and corruption, 3) changes in market trends. After the year lived in 2020 with the forced digitalization due to telework and the progressive automation in processes linked to Industry 4.0, cybersecurity and information protection have become even more relevant, thus confirming the trend of recent years. If we talk about fraud and corruption, I would like to refer to the 2020 Transparency International report, where we include the anti-corruption laws in force in the countries where we are present. The risks of market trends are largely linked to global movements aimed at mitigating the effects of climate change, with their direct impact on consumer expectations and fostering a very strict regulatory framework in terms of energy consumption, greenhouse gas emissions, waste management, circular economy, etc. In our markets, Europe and China are the most demanding in environmental legislation, with the firm purpose of those regions becoming climate neutral. As I mentioned at the beginning, risk management is the responsibility of the compliance department. For risk mitigation, we have an integrated internal control system in the tool that integrates and consolidates the different ERPs, both SAP and NOS-UP, that we have in all plants. Finally, I highlight that the internal audit department follows a mixed resource scheme, counting on outsourcing and dedicated internal staff, as well as mixed internal teams composed of business controllers and corporate staff, thus combining the best practices and knowledge of each and enabling synergies. In summary, this is the work we develop in the compliance department, a job that helps CIE Automotive be a benchmark also in this area. Thank you very much for joining me on this journey through the compliance function.
A
Aitor1:03:46
We understand that maintaining a solid financial position is fundamental to generating long-term value, and therefore we focus our financial strategy on the following pillars: diversified financing sources, ESG-linked financing, an adequate liquidity reserve, and active management of the capital structure. Let's focus first on the diversified financial strategy. We set a medium-term objective to balance financing sources with a balanced contribution of bilateral gross debt, structural and institutional financing, and financing from the capital market. Our financial strategy has an absolute commitment to the ESG criteria that govern our business model, which will translate into achieving that 28% of the gross financial debt linked to ESG criteria in 2020 reaches levels of 50% in the coming years. We will thus prioritize the balance between industrial activity and its positive results, and our commitment to respect the environment, social criteria, and good governance of the group. The third pillar of our financial strategy is to guarantee an adequate liquidity reserve. In this sense, we will continue on the path of recent years, in line with the different stakeholders, while guaranteeing a liquidity reserve of approximately 60% of gross financial debt, a liquidity reserve that is liquid in the long term and with an optimized cost. The fourth and last pillar of our financial strategy will lead us to promote matrix coordination that allows maximizing opportunities in the different countries. In this way, we will continue to be able to undertake active management of the capital structure, optimizing working capital to reduce debt, extending the term of the same, which at the end of 2020 was 3.2 years on average, and achieving that around 70% of maturities are longer than 3 years, maintaining our financial expense policy, which currently accounts for just over 1% of sales, and which will gradually decrease in the coming years, in parallel with the company's deleveraging. We will achieve an optimal capital structure combining natural hedges and non-speculative derivatives that adapt to our risk profile, achieving active management of potential exchange rate risks, always seeking the balance between generation and debt currencies, and reaching in the coming years a fixed interest rate exposure of approximately 50%. In short, I would like to emphasize that the group's financial strategy is and will be linked to credibility and solidity in management, promoting close collaboration with current and future financiers who are travel companions on this new and exciting challenge. Thank you very much to everyone.
F
Fernando1:07:46
From our beginnings in CIE Automotive, we have always promoted a tax action of respect and compliance with regulations, aligned with value generation. Some years ago we made the first definition of a corporate tax strategy, establishing a framework of action and a unique tax culture for the entire CIE group. Since then, this strategy has been constantly reviewed and enriched, adopting the best and most demanding practices in transparency and tax conduct. We could say that the CIE tax culture is governed by the following principles: first, responsible compliance with our obligations and a reasonable interpretation of the regulations of all the countries where we are present; we avoid any type of artificial or opaque tax structure, we even distance ourselves from those that, without being so, appear to be; tax engineering has no place for us. We invest many resources in the prevention and reduction of significant risks. Additionally, we promote a relationship with tax authorities based on transparency, trust, and mutual collaboration. Finally, we understand our tax contribution as a contribution to society, considering CIE Automotive as a social agent that contributes to the development of the countries where we operate. In summary, we have a robust tax management model to which we dedicate the necessary resources to guarantee a responsible and efficient action that does not stray from our operations and is very aligned with our business. In this line of responsibility, this year we have gone a step further in our commitment to transparency and for the first time we have published our tax contribution report, with the spirit of facilitating understanding of what the tax and social contribution of our group is. Among the data published in this report, I want to highlight that during 2020, a pandemic year, more than 1,000 million euros of value were generated for society. Almost 200 million euros were allocated to our shareholders through dividend distribution and capital reduction. More than 400 million euros were paid as salaries to our employees. 350 million were allocated to the payment of taxes, both own and collected from third parties. Finally, we remunerated financial institutions with 35 million euros. In parallel, convinced that the tax actions we carry out at CIE are appropriate, we have requested our adherence to the Code of Good Practices of the Tax Agency, thus reaffirming our duty of responsibility and transparency in tax matters. After talking about the global tax contribution, I would like to focus now on corporate income tax and its expected evolution for the coming years. We must start by contextualizing our tax perimeter: it is very heterogeneous, with companies in 20 countries under 22 tax jurisdictions with very different and changing legislations. On one hand, we have Brazil, which accounts for approximately 7% of the group's total sales and pays a nominal rate of 34%. In North America, where we have around 26% of our business, we pay a nominal tax rate between 30% and 25% depending on whether we are talking about Mexico or the US. In Europe, with 41% of our sales, the tax range is very broad, between 15% and 28%. Finally, in the Asian part, we have China and India with nominal country rates of 25%. As you can see, it is a very diverse mix that, weighting the contributions of each geographical area to the group's results, results in a theoretical nominal rate for CIE of 26%. But this theoretical 26% is not our reality. As I mentioned before, we carry out a responsible tax action, but like in other areas, we seek excellence and work to achieve efficient tax results as well. That is why we carry out optimization work that allows us to position ourselves sustainably over time at an effective expense rate of around 22%, which in payment terms is reduced to 1 point below our theoretical nominal rate. And how did we achieve these results? Well, among the different tools we use, we can highlight that we have known how to take tax advantage of our inorganic growth, relying on optimization levers such as the tax amortization of financial goodwill or seeking the maximum use of incentive regimes, such as in China, where due to the nature of our activity, we have achieved that most of our operations are subject to a nominal tax rate significantly lower than the country's nominal rate. I insist that the most relevant thing about these figures is not the past data or the current situation, which is very efficient, but that as a result of our management and with the visibility we have over the coming years, we can affirm that CIE Automotive will be able to maintain these levels of efficiency even beyond the time horizon of our strategic plan. As a summary and to conclude, we can conclude that committed to a rigorous, responsible, and transparent tax practice, at CIE Automotive we manage the taxation of a very complex and plural perimeter in a highly efficient and sustainable way over time. Thank you very much for your attention.
A
Anton Pradera1:13:44
Throughout the afternoon we have seen from the hands of the group's executives how the strategy is perfectly aligned with the sector's trends and how we respond to the challenges that arise in each of the technologies we work on. We have also seen our corporate approach, all developed with a very clear objective: maximizing cash generation from the different areas through the deployment of specific strategies. We always seek excellence and focus all our effort on results, as proven by the very high levels of profitability, above the sector average, that we obtain in all the countries where we operate. And how do we achieve it? Thanks to our business model, a business model that we have been developing and improving over the last 25 years and that has already demonstrated on numerous occasions its ability to face crises and come out stronger. I have always said that our management style is different and unique, and our intention is to keep it that way. Let's briefly review the six pillars that support it: 1) Geographical balance. Our presence in the main automotive markets with 110 production plants and 10 innovation centers in 16 countries allows us to be a global reference supplier while helping us mitigate the risk of exposure to the cycles of different geographies. It should be noted that Asia, the world's largest vehicle production market, now represents almost a third of our sales, when a decade ago we had no presence there. 2) Commercial diversification. A portfolio made up of both OEMs and Tier 1s, in which we avoid concentration and overexposure, and which allows us to maintain freedom of investment guided exclusively by profitability criteria, not commercial criteria. 3) Multi-technology. Our product portfolio, formed by all manufacturing technologies, allows our clients to select the technology that best responds to their needs at any given time, thus enabling them to redirect their investment efforts towards the technologies with the highest demand, always guaranteeing our future. 4) Strict financial discipline. Excellent commercial policy, operational excellence, and continuous improvement of process efficiency, low fixed investment with a ROIC above 20%, effective financial and tax policies. All CIE decisions are framed within a rigorous financial discipline focused on cash generation. 5) Decentralized management. We firmly believe in the lean structure, local management, and operational autonomy of the plants. This philosophy guarantees quick, simple, and direct decision-making, becoming even more relevant in difficult times like the pandemic. 6) Integration of ESG standards. Allow me to delve a little more into this last pillar of our business model, the most recently incorporated but of growing importance. After four years of intense work on ESG, in 2019 we officially incorporated this sixth pillar into the scheme of our business model. Reality showed us that ESG is part of our organization, strategy deployment, daily activity, operational decisions, and relationships with different interest groups. The ESG strategic plan 2020-2025 is the culmination of this integration, a plan with four main lines of action: first, ethical commitment based on the principles of transparency and legality in management, responsibility and integrity in decision-making, and articulated through the code of conduct. Second, eco-efficiency: environmental commitment focused on critical aspects such as contributing to decarbonization by making production more efficient, controlling and reducing our environmental footprint, and moving towards a circular economy with resource optimization and material reuse. Third, people culture: training and empowering, attracting and retaining talent, promoting equality, diversity, and respect. Fourth, active listening: continuous and proactive communication with all our interest groups, promoting honest relationships with all of them. Four lines of action of an ESG strategic plan deployed in all the group's plants through the implementation of an ESG scorecard with 79 indicators for reporting and periodic control, which we will share with you soon. In short, six pillars that support a solid, coherent, and resilient business model that allows us to look to the future with optimism. That is why we are here today at this Capital Markets Day, to talk about the future, our future, and to talk about our commitment for the coming years. Today we launch our strategic plan CIE 2025, a very ambitious plan that will undoubtedly mark a before and after in the history of our group. If in 2020 75 million vehicles were produced, it is estimated that in 2025 96 million will be produced, representing an increase in volume of 28%. In that same period of 5 years, also taking the 2020 financial year as a reference, CIE's sales will increase by almost 50%, about 20 points above market growth, gradually raising our market share in all geographies. Of course, we always speak at constant exchange rates and constant perimeter. In 2025 we will exceed the EBITDA margin on sales of 19%, reinforcing our position on the podium of the most profitable suppliers in the sector. We expect to invest around 1,000 million euros in the five-year period, a capex that represents around 5% of sales and is distributed equally between maintenance and growth projects. In line with the tax plan presented earlier, we consider an annual corporate income tax payment of approximately 2% of sales. With all this, we are talking about a new CIE capable of generating a flow that during the plan period will maintain a conversion ratio of EBITDA into operating cash of around 65%, a sustainable operating cash flow of approximately 500 million euros annually, 500 million euros annually from 2025, compared to the more than 300 million generated before the pandemic. We insist once again that all the commitments are made at constant exchange rates and the current perimeter of the group. In that perimeter, meeting these objectives will mean a very significant deleveraging during the period, which will bring debt to levels of 0.5 times net financial debt/EBITDA, and will allow us to invest up to 1,500 million euros without the net financial debt/EBITDA ratio exceeding 2 times at the end of the period. The plan, 1,500 million that can be allocated to any type of corporate operation: acquisition of companies, treasury stock, minority interests. The focus and decision will be directed to the greatest generation of value. As you can see, this new CIE means greater generation capacity, more size, financial solidity, sustainable profitability, and ultimately being in a position to obtain an investment grade. And before moving on to the Q&A, I would like to end by saying that I envision 2025 as a magical year. It will be the moment when our dream finally comes true: that CIE Automotive becomes a company with 1,000 million euros of EBITDA and 500 million euros of net profit. A very ambitious dream that will test us once again and will demand the best from all of us, but without a doubt a dream within reach of a CIE that has all the necessary tools to make it a reality, including the most important of all: the more than 25,000 workers of the group, which makes us a unique company in the sector. Thanks to what we all form together, we are a great team. We never give up, we are illusion, we are integration, we are technology, we are sustainability, we are resolute, we are efficiency, we are innovation, we are human, we are ambitious, we are diversification, we are development, we are close, we are family, we are future. We are CIE.
H
Host1:23:25
Well, we start this panel with all the questions you are sending us and that my colleagues are trying to group into blocks to avoid repetition. Remember that you can continue asking us questions through the text box that appears below this signal. And nothing, we start. If you like, directly with the first questions that come in. Let's start then by clarifying: when you talked about the 2025 dream of the 1,000 million EBITDA and the 500 million result, does that include inorganic growth?
J
José Luis1:24:00
Well, we have commented that at the organic level we had five important objectives. We talked about sales growth well above the market, we talked about margin growth up to over 19%, we talked about very important capex control, we talked about a 2% tax payment, and we talked about great cash generation in the period, more than 2,000 million of cash generation. Evidently, with that cash generation we can undertake inorganic growth and thereby achieve the dream of reaching an EBITDA of 1,000 million and a net profit of 500 million euros. So, answering the question: yes, the dream includes inorganic growth.
H
Host1:24:46
Let's continue then. In recent years, CIE's sales pie has shown a greater weight of OEMs versus Tier 1. Why has this happened? And speaking of OEMs, how are the mergers between OEMs that we are seeing impacting? Dolores, it's your turn, I think.
L
Lorea1:25:05
Well, yes, indeed, we are seeing mergers between OEMs. We understand that it is something totally natural that makes economic sense. After all, we see in recent years OEMs facing giga-investments that in no way can they get a return on individually. So these alliances, these operations between companies, aim to make those giga-investments profitable. But besides, we are not only seeing it at the OEM level, as you ask, we are seeing it at all levels of the supply chain: we are seeing it in governments, we are seeing it in Tier 1, and we are seeing it in Tier 2. In fact, I think we are the best example of concentration in our Tier 2 space. On the other hand, you asked about the weight of OEMs in our customer pie. It is true that they have been gaining weight. I would say two reasons: on one hand, the incorporation of Inteva Roof Systems in 2019, where we sell directly to OEMs, has influenced that pie. On the other hand, it has to do with the intense growth we are having in emerging markets such as India, Brazil, or Mexico, where the figure of Tier 1 is much less developed and where we sell directly to OEMs.
H
Host1:26:32
Well, let's continue, if you like. You have not mentioned the future shareholder remuneration policy. What can you tell us about this?
J
José Luis1:26:42
Well, I apologize because today I forgot to comment on the dividend issue, but evidently we are going to continue with the same dividend policy, which as everyone knows is a payout of one third of the net profit. As we have been discussing in our presentation, the growth of the base net profit is very important in the coming years, so the same percentage will increase the dividends. And do not forget that we are always focused on shareholder profitability, and evidently we can do, as we did in 2020, a share buyback to reduce capital again, as long as we understand that the market does not reflect the real value of our project.
H
Host1:27:22
The next question says: 'The lower level of maintenance capex in recent quarters is striking, and that helps you with the objective of the operating cash conversion ratio. What can we expect in the future regarding maintenance capex and growth capex?' And another question: 'Will the percentage of growth capex differ by geography?'
A
Aitor1:27:51
Well, I think this is a topic we have already discussed in recent quarters. We are aware that the percentage of maintenance capex has been decreasing in recent quarters for several reasons. On one hand, I mention again the integration of Inteva in 2019, because being a much less capital-intensive business than the rest of our Tier 1 businesses, it affects the percentage of maintenance capex. We also have a conscious decision, I would say, to stop investing or at least sharply limit investment in some divisions, such as our German smelting plants in Europe. And finally, I think the systematic control of capitalizations that we are deploying also influences. With all this, that traditional 4% is true that it is becoming a thing of the past. Jesús María told us a moment ago that we are going to invest about 1,000 million euros in the period of the next five years. That is equivalent to approximately 5% of sales annually. In that 5%, a little more than half, between 2.5 and 3 points, will be the maintenance capex part, and the rest, 2 to 2.5 points, will be the growth capex part. You know that growth capex has to do with new expansions, new capacities. And to the question about geographies, I would say yes, it is going to be quite concentrated, especially in those regions where we see very intense growth in the coming years, such as India or Mexico.
H
Host1:29:32
Let's continue, if you like. Two questions on electrification: first, how do you mitigate the fact that an electric car has fewer components than an ICE? And second, is your electrification strategy different by country?
I
Iñigo1:29:52
Well, the really important thing for CIE is not to compare the number of parts that an internal combustion powertrain has versus an electric powertrain. As we tried to explain in the presentation, in the internal combustion powertrain there are many parts that we actually do not make. So what we have to do is compare the target value in parts we make for the internal combustion engine with the potential value in parts we already make for the electric powertrain and those we can make. So comparing a whole with a whole does not make sense for CIE. We have to compare CIE's scope in both propulsions. Doing it that way, in any scenario we come out ahead, so we see many opportunities in the future. Regarding the strategy in different geographical areas, yes, we have different strategies in different geographical areas, but it is really the market and the pace of electrification that sets the pace. We are technologically prepared to follow the demand that arises, but it is the demand and the customers that will set the pace in the different geographies.
H
Host1:30:43
Next question: 'After the 19% EBITDA margin, will it have reached its maximum profitability potential in 2025?' The little question...
J
José Luis1:31:28
Well, those who know me know perfectly well that my dream is to reach 20%. Let me tell you a little about how this works. When we do M&A operations, we generally integrate companies with lower margins, so we are diluted quite a bit. That happened in 2019, for example, with different integrations, and we fell to a 16% EBITDA. Then the work to generate value in the following years is to increase that 16% to 19% as I mentioned before. In these next five years, we are going to generate a lot of cash, so there will be important M&A operations and we will go back to the same process: initially reducing margins, then generating value by increasing those margins.
H
Host1:32:15
Perfect. The next question says: 'Regarding growth, what organic growth can we expect in the period? That outperformance to the market, is it sustainable in the medium and long term? And is it in all geographies?' Many questions.
A
Ander1:32:37
Well, Jesús María mentioned a moment ago how the market is expected to grow approximately 28% in the coming years, which would mean going from almost 75 million vehicles produced in 2020 to 96 million vehicles we expect to be produced in 2025. That growth would be approximately a 5% compound annual growth rate, but things are not so mathematical or linear. We will see years of strong growth, like 2021 in a post-pandemic recovery, and then we will see other years of lower growth. In that context, Jesús María told us that CIE is going to grow more, not that 28% but almost 50%. That growth we expect in our sales would be equivalent to almost 8% compound annual growth rate. But just as I said with the market, we are not going to be linear or mathematical either. There will be years of more growth, years of less, years of more outperformance, and years of less outperformance to the market. What all years have in common is the scenario behind it. The scenario behind it is a very clear scenario of supplier consolidation, a scenario in which we see ourselves as winners. In the end, we are global, we are multi-technology, we are capable of reorienting our offer to where the demand goes, we are capable of investing, we have the financial strength to invest when the project requires it. So I say, I think we are exactly what the customer wants.
H
Host1:34:25
Next question: 'What volume of investment do you estimate you could undertake in M&A over the horizon of the strategic plan, and how would it be distributed approximately among the different years? In which countries or technologies do you see yourselves investing more?'
J
José Luis1:34:41
Well, as we mentioned before, this great cash generation will make the organic net financial debt to EBITDA ratio around 0.5 times. If we do not want to exceed a net financial debt to EBITDA ratio of 2 times, we have 1,500 million euros to carry out corporate investments, but most of them will be acquisitions of new companies. When we talk about which periods, well, really, as you know, in our history there have been years in which we have not integrated any company, and there have been years in which we integrated three or four companies, so it is very difficult to determine which specific year. When we talk about technology, obviously it is the winning technologies, the technologies that will have the most demand in the future. And when we talk about geographical areas, those areas that have the greatest growth for the coming years. If you remember, in the slides we gave in 2021, we talked about two strategic successes: one was the issue of roofs at the technological level, and the other was the growth we had in Asia, both in China and India. And I would like to comment on the topic of India, that our subsidiary MCOS has a huge market growth in the coming years, and ours is above market, and also a very important growth in margins for the following years.
H
Host1:36:05
The next question says: 'Could a tightening of regulatory and emissions targets in Europe or other countries be an obstacle to your growth?'
R
Ritchie1:36:08
No, really. A change and acceleration of the objectives and timelines in the regulatory targets set by the administrations would have a first implication, without a doubt, on the OEMs, who will have to redirect and accelerate their investments. Subsequently, it would have an implication on the Tier 1s that have a product related to those regulations, who would undoubtedly have to accelerate their product development and generate products with a new generation. But that is not our case. We are a process company. Our innovation focuses on developing processes with maximum excellence and maximum efficiency, but not on generating new products with new functionalities. Therefore, we are not in need of making R&D investments, neither now nor in the future, to meet the demand of our customers, and we also do not depend on the rhythms of the regulatory frameworks.
H
Host1:37:22
What is the financing strategy for growth? Is there a possibility that a capital increase is needed? Is the sale of any division considered?
J
Justino1:37:25
Well, obviously, thinking about a capital increase at this moment is impossible for two reasons: first, because of the great cash generation I mentioned earlier, which is evidently sufficient for all the growth of the next five years; and second, because as you know, we have a hard core of shareholders who do not want to open the door to a capital increase. When we talk about divisions, keep in mind that at CIE we have 25 divisions and all of them are profitable, so we are not considering the sale of any division. It could happen that we have an asset that does not fit the entire CIE profile and we could decide to sell it at a reasonable price, but nothing important, because as I said, the 25 divisions of CIE, and this is very important, are super profitable.
H
Host1:38:27
Next: 'What can we expect regarding the evolution of working capital? Do you expect any change in policy? And what are the levels of factoring you assume in the future?'
F
Fernando1:38:41
No, the answer is no. We do not expect any change in the working capital policy. As you know, on one hand we have the net operating working capital, which is managed by the plants themselves, that does not include factoring, and there we have a very clear policy and objective: the objective is to grow trying to invest as little as possible in working capital, without significant investment in working capital. On the other hand, we have the central finance department, which manages factoring, a non-recourse factoring, and a factoring in which, well, as long as I have been at CIE, I remember that the same policy has been followed: that policy is to factor a maximum of one third of our gross accounts receivable. So it is possible that in recent years you have seen that the level of factoring in absolute value has been increasing, but not because the policy has changed at all. The policy is the same and we expect it to remain so in the future.
H
Host1:39:42
Next question regarding a topic: 'Inteva, a topic with less than 9% EBITDA. How is the integration going almost two years later? What levels of profitability is Inteva at? Is there room for improvement?' Many questions, it's hard to cut them all.
J
José Luis1:39:46
Well, I am very happy with that question, really. I only have good words to talk about Inteva. It is obvious that we have integrated a multinational with a completely different culture from CIE, but it is true that in these two years we have dedicated ourselves, on one hand, to operational improvements both in Europe and the United States, and then integrating the CIE culture, you know: our strict budget control, our financial discipline, our strict commercial policy, etc. All these improvements have meant roughly a one percentage point improvement year after year. Still, obviously, we have another 2-3 years of important improvements that we will be seeing and sharing with all of you. We are in an important improvement and I think that in the short term you will see a company with double-digit EBITDA, which is the same as we have in the rest of the group. And as I said before, what you have to understand is that it is a non-capital-intensive activity, so the cash generation of Inteva is similar to the rest of the group.
H
Host1:41:18
Next question: 'Is there a risk that certain technologies in our portfolio will disappear by becoming obsolete earlier than expected or cannibalized by other technologies?'
O
Oscar1:41:20
No, no, no, we see no risk of obsolescence. We have also tried to explain this situation in the presentation. We believe that all the technologies we currently have in the group have a future and a great future. It is true that certain technologies are winners in a more natural way, such as the plastic roof business, aluminum casting, and stamping, because ultimately they are the technologies associated with the products that our customers will demand in the car of the future. For other technologies, we have already deployed a very exhaustive plan, both in the commercial part and in product and technology, to ensure that future, such as forging and machining technologies. It is also true that there is some technology that perhaps does not seem so winning, such as iron casting technology, but if we look at certain places where electrification is moving at a much slower pace, such as Brazil and India, and in certain segments of very slow electrification, such as the heavy vehicle segment, we believe the future is clear and with a very important space for us.
H
Host1:42:56
A direct question for Jesús María: 'Do you have the team to face the organic growth you are talking about? Is it the level plan? And for inorganic growth, can human resources be a limitation?'
J
José Luis1:42:57
No limitation at all. But we have a wonderful management team, which is also the team that will be responsible for taking on the new challenges, and we have a second team absolutely prepared to take on the current one. Keep in mind that in recent years we have worked a lot on the succession plan in all areas of the company. Also keep in mind that we have inorganic growth, we always integrate people, and those people can also be key to the growth of our group.
H
Host1:43:44
Last question, that's it. With this last block of questions, we end the Q&A. Thank you very much to everyone for participating, for sending us your questions. If anyone feels that some question has been left unanswered, please do not hesitate to contact us. We are at your entire disposal. Well, then we consider this CIE Automotive Capital Markets Day finished. Thank you to everyone, thank you to the CIE Automotive team for their behavior to make this event possible. Thank you also to all those who have accompanied us in this streaming. Without a doubt, today we begin a path, a path full of commitments and full of dreams to achieve. Today we also begin the future together. Thank you.