Edited Transcript of 8TRA.DE earnings conference call or presentation 31-Jul-20 1:15pm GMT

As everyone in our industry, we focused and are still focusing on managed cost reductions and established measures to safeguard our liquidity. However, the economic outlook for 2020 has further been reduced compared to what we saw at our Q1 report in early May. The contract for 2020 is expected to be much worse than it was at the financial crisis in 2008 and 2009. This is why we still stay alerted and focused.

From a position of strength, it is much better to act than if we had to stay reactive. This is why we established our first RCF with an amount of EUR 3.75 billion in the tenor of 5 years, which was an important milestone for the company. The economic downtrend triggered commercial vehicle markets globally to contract significantly. This came on top of already low expectation before the COVID-19 pandemic for the U.S. and Europe. At the moment, most third-party research foresees a decline of the truck market in Europe of minus 30% to minus 50% and minus 15% to minus 30% for Brazil.

Looking at all regions around the globe and taking into account the unpredictable frameworks with many unknowns, there is still a high level of uncertainty for the weeks and months to come. This is reflected in the huge bandwidth of expectations when it comes to future truck market developments.

This time, we should take a closer look on what happened in the time frame between April and June on a monthly basis. As you can see, April was responsible for most of the decline in Q2 within the business. All key KPIs were largely derailed by the production stoppage and the decline in economic activities. As already said, April was hurting us a lot. More than 50% of the decline in incoming orders was caused by the shutdown situation in April. 42% of sales revenue declined and 39% of decline in operating profit are attributable to April. And as you would expect it, we burned roughly EUR 500 million of cash in April but recorded positive net cash for May and July.

The Financial Services business was comparatively stable over the quarter. Sales revenue declined only EUR 20 million year-on-year. The decline was evenly distributed over the second quarter. The operating profit declined by EUR 80 million year-on-year due to the increase in debt provisions, reflecting our customers’ deterioration payment ability at present. Please remember that Q2 2019 was the overall most successful quarter for TRATON since its establishment with boost from the pull-forward effect in demand because of the legislative change for tachographs in Europe and the potential for a no-deal Brexit.

That leads me to the next slide, which is showing the impact on our unit sales. We witnessed the sharp decline in unit sales in April and a stepwise recovery in May and June. As you know, we already expected a significant decline, in particular in Q2 2020, as Q2 2019 was positively impacted by the before-mentioned effects. The expected decline was then further amplified by the COVID-19 situation. All of our production plants were mostly shut during April 2020. The restart is now in full swing, but it will take some time before we get back to old production and efficiency levels. This is mainly due to implemented health regulations, which we have implemented to protect the health of our employees.

June and July continued the positive direction which started in May with book-to-bill ratios above 1 for TRATON Industrial Business throughout Q2. Besides the unit sales and incoming orders, we frequently track the vehicle utilization. With that, we have a good indication how the commercial vehicle industry is developing. As you may know, more than 700,000 trucks for the TRATON GROUP are connected. This gives us a very detailed insight on the activity levels of our fleet.

As you can take from the various graphs, the COVID-19 epidemic strike started to affect long-haulage business in China in mid-January 2020. It took, however, only 7 weeks, around mid of March, to return to normal levels in the long-haulage business. In Europe and Brazil, the lowest point was seen around [Easter]. It took about 11 weeks to the end of June 2020 to return to February 2020 levels in the long-haulage business. Distribution and construction trucks showed a similar pattern.

The bus business, and in particular, bus coach business shows only a very slow recovery. The global bus and coach market has been severely affected by the restrictions that the coronavirus outbreak has resulted in. The demand situation is especially difficult to judge for commuters and tourist buses. For TRATON GROUP, bus business represents 9% of sales. After-sales and service business remained more resilient. Therefore, share increased to 24% of group sales in Q2 2020.

As I summarize the recent development and unit developments, of course, people ask what is next. We can clearly reiterate our chosen path. It’s more important than ever before to act here and now while not losing sight of our strategic long-term goals. In essence, that means for our daily business, as indicated already at Q1 reporting, we have implemented effective countermeasures like the temporary production stops and the subsequent restart thereafter. We use short-term work and comparable measures to reduce personnel costs. We have postponed or canceled projects, reduced overheads and fixed costs and, of course, focused on safeguarding liquidity.

Nonetheless, shoring the core business, pursuing known opportunity spaces as well as investing focused into the future have high priorities for us. All important innovation projects are up and running, including the common base engine. Our global champion strategy is the right setup to bring TRATON GROUP to the next level. Last, other group topics we planned or started remain further on track.

With having said that, I pass over to Christian who will guide you through our [position].

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Christian Schulz, Traton SE – CFO & Member of the Executive Board [4]

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Thank you, Matthias, and also hello, and a warm welcome from my side.

I’m on Slide 10, and I once more can only just reiterate what was said. For TRATON, a sound balance sheet and an ample liquidity are highly important as they give us freedom to concentrate on the steps necessary to march stronger from this crisis. In general, our balance sheet position is strong, with an equity ratio within the Industrial Business of 36% and a net debt adjusted EBITDA ratio, which is close to 0 even after the end of the DPLTA with Volkswagen for the fiscal year ’19. EUR 1.4 billion were transferred. Our gearing is currently at only 3%.

That also holds true looking at our liquidity, thanks to strict cash management. Unrestricted cash of EUR 2.6 billion and credit lines of EUR 5.6 billion are safeguarding liquidity in these uncertain times. Further reducing operating costs by reprioritizing our CapEx and R&D, we took decisive action. Another important step, solid first-time investment-grade ratings for TRATON were assigned by Moody’s and Standard & Poor’s.

Finally, we were able to set up our debut RCF this week despite the COVID-19 impacted market. The volume is EUR 3.75 billion with a tenor of up to 5 years. It provides us with additional flexibility in these uncertain times. The embedded ESG sustainability link underlines our commitment to sustainability matters and further set financial incentives for sustainable business performance. The credit facility can be drawn in different currencies and serves for general corporate purposes and liquidity backup for the group. The debut syndicated RCF marks for us a very important step and also defines our banking circle and shows the trust that our banking partners have into TRATON.

If you go to Page 12, incoming orders declined by 27% to 87,431 units in the first half of the year. All figures were negatively impacted by the pandemic. Unit sales were down by 37% to 77,738, with a sharp decline in April but gradual improvements, as Matthias has said, over the remaining months in the second quarter. Also, as said before, have in mind, the last year comparison was supported by the pre-buy effect of the tachograph and the potential of a no-deal Brexit. The reduction in the first half of the year was mainly driven by the truck business, with markets down as expected in all relevant markets. All 3 brands saw double-digit percentage declines and trading group sales revenue decreased by minus 26%, but after-sales supported obviously.

Operating profit in the first half of the year was down to minus EUR 220 million, driven by the EUR 380 million loss in the second quarter. That means first half return on sales was negative at 2.2% minus. And it’s fair to say that the deterioration in profits, in particular, in the second quarter, was caused by the volume decline. On the cost and on the price/mix front, we were making further progress as our programs gained progress.

Partly due to the reduced sales opportunities on the North American market in the wake of the corona pandemic, Navistar has informed us that they intend to refrain from purchasing the D38 diesel engine volumes, that they have been homologated for the U.S. market. This resulted in a mid-double-digit [million] expenditure on the MAN side. We will still consider our receivable of EUR 45 million to be recoverable. However, this transaction does not change at all our plans for the cooperation between TRATON GROUP and Navistar, and all other projects are going according to schedule.

Similar to Q1, further costs in relation with the rollout of the new truck generation at MAN and an increasingly difficult used vehicle business burdened operating profits. Profit after-tax declined to minus EUR 289 million as a consequence of the lower operating profit. Last, net cash flow in the Industrial Business was at minus EUR 347 million versus EUR 1.784 billion in — 1 year ago. Please have in mind, last year’s investing cash flow was supported by the sale of the Power Engineering business, I think you all remember that, with EUR 1.978 billion. Excluding this, the swing year-over-year was only EUR 153 million, so it shows also that we gained progress on cash flow in second quarter, especially.

Other topics to mention, no change in status, as Rolf has said, on Navistar. The offer is still on the table. We are in discussions with the Board. Also, MAN new truck generation was introduced, and also there are no news on the MAN squeeze-out, the date for the annual meeting has not yet set. We’ll keep you posted as news may emerge. Last, September 23 has been set as a new date for TRATON SE’s first annual general meeting. We’ll hold this as a virtual meeting.

If you please go to Page #13, let us have a little bit closer look on the 2 segments. Industrial Business, as expected, we saw a sharp decline in Industrial Business, mainly in new trucks but also with declines in used and a little bit less in aftermarket. European as well as South American truck markets were showing severe declines. The incoming orders softened further and declined by minus 41% year-over-year for the second quarter. Combined for the first half of the year, incoming orders were down minus 27%. Unit sales were down minus 37% in Q2 2020 and minus 52% in the first half of the year. However, the book-to-bill ratio in the Industrial Business for second quarter was up to 1.05 year-over-year.

Sales revenue in second quarter in the Industrial Business was down by minus 39%, and for entire 6 months, down minus 26%. Operating profit was down to minus EUR 400 million in the second quarter and RoS stood at minus 9.3%. The measures taken in connection with the COVID-19 pandemic, in particular, the closing of our plants in April had a strong negative impact. It is fair to say that all of the decline in operating profit was due to a decline in sales volume. Cost and price/mix had a positive effect and an increasingly difficult used truck market also contributed to the profit development.

Following the significantly negative impact of the consequences of the pandemic on the net cash flow in April, positive net cash flow was generated again in May and June. That’s a sign that our cash initiatives in both MAN and Scania are gaining ground, and the negative cash flow in second quarter was by then only minus EUR 179 million for the Industrial Business.

Let’s now focus on Financial Services. Net portfolio for the first half of the year was down by 2% and the penetration rate at 41%. The Financial Services operating profit in Q2 was down by EUR 18 million to EUR 19 million, driven by lower margins, negative exchange rate effects and higher bad debt allowances.

On Slide 14, as you can see, sales revenue and RoS for the entire group by quarter. I think here, again, the minus 38% on — in the comparison of the 2 quarters. Also growth, as outlined before, on minus 26%.

Page #15 also just for your reference. If we continue to go to Page #16, in this chart, basically, you can see how the market has been developing. Obviously, you see all markets have been down where our brands are in. If you look into Europe, please keep in mind, we have had in Scania in the first quarter of last year, a little overshoot on market share, given the overhang of the volumes from the dual ramp-up and — but this has had extraordinary market shares in Scania. On the other hand, on the MAN side, obviously, the ramp-up of the new truck generation also paid its shares into having the market share development in the European markets.

Page #17. You can see incoming orders in the second quarter declined by minus 41% to 33,270 units. We saw a significant reduction of orders in April but then month-over-month, we see improving numbers. Big question for us is going forward. Now always June is a very strong month. Now we’re heading into vacation period. Question will be, how will be the third quarter and what does that tell us for the remainder of the year? Book-to-bill was 1.04x at MAN, thereby 0.18x better than before Scania with 1.1x, clearly above quarter 2 in ’19. And basically, it’s fair to say that this gives us also some hope going forward. Incoming orders of trucks we have discussed.

Let’s go to the next chart, please. Here again, you see just the quarter-over-quarter development of sales, as I said before, 52% on the — of unit sales and growth diminished as explained before.

Next slide, please. Revenues in the Industrial Business, again, quarter-over-quarter, you saw with already lower first quarter compared to the fourth quarter of ’19. Now the sharp decline in second quarter with year-over-year minus 39% also here reflected, as said before.

Next page, please. What you can see in here is obviously the detailed view on the truck brands within the overall profit situation. Here, you see the sales revenue bridge and return on sales by brand.

I just focus on Q2 2020 now. Sales revenue was down at all brands in a similar magnitude, ending up to the minus 39% sales revenue decline in the Industrial Business. Looking at return on sales by brand, Scania was coming in at minus 1.5% and Caminhões e Ônibus at minus 9.8%. Operating leverage was higher at MAN. In addition to the volume-driven decline in sales revenue, operating profit was also negatively impacted by additional costs in connection with the launch of the new truck generation, as I said before, an increasingly difficult used vehicle business. The operating margin declined to 17.1% minus year-over-year.

Let’s now focus on the financial indebtedness and net liquidity within the Industrial Business. Net financial indebtedness increased by EUR 1.9 billion versus year-end ’19, mainly driven by the cash outflow of the EUR 1.4 billion from the end of the DPLTA with Volkswagen. I’m sure you all remember that this was all connected with the IPO with our capital structure. I guess it’s the last time that we bore you now in this year with this, but we’ll come again in Q3 and in Q4 and for the entire year. Other than that, we see the other changes as part of the bridge that there are no bigger unexpected things at the moment. We ended up at EUR 376 million. And again, as I said before, also with the credit lines, we do have — we are in a solid financial position.

Next page, please. There our leverage ratios. On the left side, we see that our gearing ratio, so net debt to book value of equity increased to 3% as it was negative at year-end ’19, meaning we had net cash instead of net debt. In general, we show a strong balance sheet position in first half of the year. On the right-hand side, we see the net debt adjusted EBITDA ratio is 0.2x, only slightly positive. Again, the end of the DPLTA with Volkswagen in the financial year ’19 is mainly explaining the change in the ratios.

As we conclude the Industrial Business slides, let’s have a look on the Financial Services business. Sales revenue was down by minus 2% in the first half of the year, respectively, minus 9% down if we look at Q2 only. Return on sales was at 9.5% in Q2 as operating profit decreased by minus 50% to EUR 19 million.

Some more details about the decline in operating profit. The decline was the result of first, low margins; second, negative exchange rate effects; and the higher bad debt allowances. Because of the coronavirus outbreak, we have been rescheduling approximately 25% of our existing portfolio. We are working very closely together to support our customers in these tough times and by this act, like I have described.

Year-over-year net portfolio fall by 7% to EUR 9.3 billion, resulting from lower financing activities due to the reduced unit sales and negative currency effects. Penetration rate was at 41% for the first half of the year, up versus Q1 ’20. In those markets where Financial Services operates, the rate was helped largely due to the lower truck unit sales in second quarter. The Financial Services book value of equity decreased slightly compared versus year-end to EUR 957 million but increased from Q1 levels.

This leads me to the next slide, similar shown at the Q1 and it’s basically the million-dollar question. Yes. I mean you see here, our ranges were between 30% and 50%, down compared to ’19 for Europe and for Brazil, minus 15% to 30%. As I said before, April seems to be the trough with some slight hope in May and June. Now the overall question is, is this a sustained development? Do we see it in the second half of the year? Or do we have a second wave on the pandemic? Then the picture might completely look different. But this is basically where we see our business at the moment, some slight hope at the horizon. But the question is, does it come on? Is it sustainable?

Good. We now continue with the last section of the presentation. And basically, we put in here a couple of future developments. You see our supply chains are still very solid, and we do not have any disturbances at the moment but it’s a watch out. We need to see how suppliers will develop now in second half of the year if we have bankruptcies coming at the horizon in this financially distressed times. But we mirrored that very closely.

We have said before, business outlook for the entire year, given the things that I’ve just explained, is currently not reliably possible. And also, we need to see how the recovery develops in the second half of the year.

Next page, please. Here, you basically saw how our markets have been set up in the last recent years. We just discussed 2 days ago, situation in Brazil. Brazil was fairly coping okay in the second quarter. Even with high, increased infection numbers, truck business was negatively affected but still okay in the development downwards. Now we need to see how this goes as infection rates continue to go up. And basically, for the EU, I have just made my explanation.

So again, when you see here the remaining target of the 9% over the cycle, remains as a target when we will ever get out of the current, obviously, biggest prices after second [world volume indices].

Good. Rolf?

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Rolf Woller, Traton SE – Head of IR [5]

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Yes. With that, we are very happy actually to take any questions you might have.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And the first question is from Hampus Engellau, Handelsbanken.

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Hampus Engellau, Handelsbanken Capital Markets AB, Research Division – Automotive Analyst [2]

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Two questions for me. Maybe we could start off on the cost situation. If you could, maybe add some more light on what you’re doing on the cost side. We saw the Scania announcement of the headcount reductions, and I guess there’s a similar work done on MAN, and maybe how we should think of that.

Next question — second question is related to that. And you highlighted in the report that you’re not ruling out losses for the full year. And my question is, is this related to the range that you were talking about, the market outlook for Europe, minus 30% to minus 50%? Is that kind of the minus 50%? Or how should we think about that comment on losses — to [transferred] losses for the full year? Those are my 2 questions.

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Matthias Grundler, Traton SE – Chairman of Management Board [3]

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Okay. Maybe to your question on the market, it’s really the question, Hampus, how does the second half evolve. And my comment was referring to that. If we see that things improve like we saw it now in the order situation in June, one could be a little bit more optimistic. If we do see that maybe it was just a short, let’s say, bounce back, and we have, again, a little bit more severe situation in third or fourth quarter, that might obviously then harm the entire year. And as you have rightly said, my comment was faced towards this.

Second thing, you have seen that we — basically, on the Scania side, have confirmed again that we work on 5,000 people that are being released. We’ve discussed before, as you know, about the dual ramp-up costs that have been phased out in the system and the optimization on the material cost. But we also want to further, let’s say, optimize the cost structure of Scania in order to restart after the crisis respectively, with new fresh power.

On the MAN side, well, as you all know, we’ve — just recently have 2 members in Truck Board. One is Matthias, the CEO of Trade and sitting next to me. The other one is Mr. Tostmann, who is now serving as the CEO of MAN. Currently, there are discussions on a comprehensive program that will be discussed with the union representatives in the beginning of September and similar topics will be addressed there. Please do understand, Hampus, that we can, by now and especially after this change, give not any details on what is on the agenda there. But there is also progress in discussions.

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Hampus Engellau, Handelsbanken Capital Markets AB, Research Division – Automotive Analyst [4]

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Is there like the overstocking that was related to the introduction of the new truck from MAN? It’s definitely the goal now? Or do you still need to carry more stock?

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Matthias Grundler, Traton SE – Chairman of Management Board [5]

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Hampus, I would have loved to say yes, but the problem is, I mean, they introduced the truck in February. It was well perceived by the market. They were in the middle of the ramp-up as the COVID pandemic came, so we needed to ramp down all the plans, also those of MAN. So basically, what they did now is they need to do a second ramp-up. And the problem is that the capacity utilization is not on a level like it was pre-COVID. It has — given all the measures you need to have with distances of 1.5 meters and everything, it’s basically not really efficient to do that at the moment. Of course, we are also improving there, but MAN is not yet through the ramp-up. The opposite is the case. They do it now for the second time, and it was, for them, of course, a very unfortunate timing to release a new truck after 20 years in this environment. But they are doing it very well.

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Operator [6]

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The next question is from Klas Bergelind, Citi.

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Klas Henrik Bergelind, Citigroup Inc., Research Division – Director [7]

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It’s Klas from Citi. A couple of questions from me. First of all, thank you so much for the unit sales by month there on Slide 6. And obviously, totally get that the outlook is uncertain. But if I heard correctly in the morning, I think Scania had positive sales growth in June. And that’s good but also suggests that we are delivering out to the backlog quickly. So how about new orders for deliveries in July? Obviously, book-to-bill was positive through the quarter, but are we also having a positive book-to-bill now in the beginning of the third quarter? I will start there.

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Matthias Grundler, Traton SE – Chairman of Management Board [8]

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Well, we see positive tendencies. It’s too early to say if this — since today is the last day of the month, it’s also for August and September, but we, as you have said, do see some positive signs, but it’s too early to say that this is a trend just a couple of days.

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Klas Henrik Bergelind, Citigroup Inc., Research Division – Director [9]

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Okay. And then a follow-up to that. Obviously, to get new orders going into the second half, we have the stimulus that we got in Germany. And there are obviously hopes that this can be implemented at the European level and the shift from Euro 5 to Euro 6 in particular. What are you hearing, Christian? Are you — on the stimulus per se, are you optimistic that it can come through, obviously, Germany holding the EU presidency? And can you tell us about likely timing and so forth?

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Christian Schulz, Traton SE – CFO & Member of the Executive Board [10]

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Well, first of all, it would certainly help. I mean if you get 10,000 or 15,000, depending on the emission grade of your truck as a support, that will — would certainly help all of us in the industry to sell new trucks and also help the environment by getting the, really, Euro 6d trucks into the system. I know that there’s extensive discussions with [ASEA], with (inaudible), with the German government and that the German government is lobbying also there in Europe. We haven’t yet heard any results. Quite honestly, it needs to come sooner than later because, obviously, if such an impact would come somewhere next year, it would not have as much as it would have now, right?

But I mean, I can assure you, Klas, we all — and also our fellow colleagues in the industry are speaking up there. And we — of course, we hope that this will happen. And Germany is, of course, there, doing its fair share. I think they’re doing the right things. Let’s see.

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Klas Henrik Bergelind, Citigroup Inc., Research Division – Director [11]

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Okay. Then my final question and for you, Matthias, actually, 2 in 1. So one quick one on Navistar. Sorry, I have to ask you something here and then on the strategy of the group. So Matthias, you’re the architect behind Navistar and the initial stake. So what happens now? Do we start a new due diligence process under yourself? Or could you move ahead relatively quickly with the bid? Obviously, with the caveat that the market is still stabilizing. So that’s number one.

Number two, on the strategy of the group and on the synergies, the EUR 700 million. Obviously, corona is delaying things, but the need to change the CEO signals an internal struggle, if you like. And so what is your view on balancing the need for Scania to operate in a decentralized way at the same time as securing the synergies throughout the group?

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Matthias Grundler, Traton SE – Chairman of Management Board [12]

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So Rolf tried very, very hard on that Navistar thing, but it seems like it didn’t work. So I’m very sad but I don’t really have new information for you in regards to Navistar.

When it comes to synergies, I think trading in the past years, the big steps in regards to synergies and the overall setup of the business. And I promise you there will be further steps in the future to come. So I’m very positive on that. But I’m still in my analyzing phase and I will still work a lot in detail with the Truck Board. And therefore, later, I can give you some more details, not now.

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Operator [13]

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And the next question is from Demian Flowers, Commerzbank.

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Demian Mizupho Flowers, Commerzbank AG, Research Division – Team Head Automotive [14]

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Welcome, Matthias. I’m going to try and ask a sort of follow-up question there to you, Matthias, in a similar way on MAN and Scania. I mean I know it’s early days for you so I apologize. But as you take over, do you think that more needs to be done to integrate these businesses operationally? I mean they’ve been run very much like separate companies, not like separate brands really for many years, for half a decade now. Is there something more fundamental that maybe your arrival may signal in terms of the way the group thinks about the organization of the whole? That’s my question to you.

And then Christian, on Q3, I know people have tried to draw you on your full year comments regarding the operating profit. But is there any visibility that you can talk about into Q3? And can you also maybe contextualize that? I mean you’ve talked a lot about job cuts. There are obviously some restructuring costs coming. Is there anything you can say about the timing or magnitude of those? And presumably, they are excluded from many comments that you make about the operating result into the end of the year. Could you just confirm that?

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Matthias Grundler, Traton SE – Chairman of Management Board [15]

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Thanks for the question. I was part of the strategy of the Global Champion Strategy, which we have developed. And the Global Champion Strategy is still valid, yes. And we started pushing for those synergies and we will continue to do so. There is always more you can do, which doesn’t mean that it was bad, what was done in the past. So I will continue further pushing synergies and have intelligent integration of the brand where it’s possible. And this will definitely be the case also in the future. So I’m quite positive and quite motivated to actually work in that direction.

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Christian Schulz, Traton SE – CFO & Member of the Executive Board [16]

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And to add on your other questions on the Q3. I mean, look, now is that vacation period. And if you look into the news, people go on to the beaches and they have parties, they come back to Europe. And hell knows if there is a second or third wave or whatever. So we are very, very careful on the Q3, just for that reason. I said before how I see June and July, and the rest, please understand that we’re just prudent people for Q3, yes, and for the remainder of the year.

When it comes to the second half of the year, obviously, Matthias has said before and I also referred to that, there are discussions ongoing between Mr. Tostmann and his team, which we’ll then discuss with the unions in the beginning of September. If there is an agreement and if there then is a reduction of headcount involved, of course, then there will be also discussions. But this is all if and when they need to discuss now. We cannot comment on it, and we will find out in Q3 when we talk again.

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Operator [17]

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And the next question is from Nicolai Kempf, Deutsche Bank.

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Nicolai Kempf, Deutsche Bank AG, Research Division – Research Analyst [18]

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It’s Nicolai Kempf from Deutsche Bank. And welcome back, [to second]. We’re happy to have you on Board. So my question would also be on the strategy and maybe alternative powertrains. So we’ve had a lot of news from Nikola on fuel cell, also on the cooperation of Daimler and Volvo on that. Would you also consider fuel cell for the key item if powertrain going forward? And would you also cooperate [in front of them or] partner?

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Matthias Grundler, Traton SE – Chairman of Management Board [19]

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Actually, we believe that alternative drivetrains is of the utmost importance for our future. We still believe that the major — or the majority of volume will be in battery electric vehicles. But the fuel cell also will have a certain play in the overall setup of the business. Therefore, we have actually intense discussions with Hino, which is our partner on that side when it comes to fuel cell, and this is actually a very positive development on that side. Okay?

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Nicolai Kempf, Deutsche Bank AG, Research Division – Research Analyst [20]

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Yes.

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Operator [21]

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And there are no further questions at this point, so I hand back to the speakers for closing remarks.

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Rolf Woller, Traton SE – Head of IR [22]

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Well, thank you very much. And that was quick and crisp.

I should make one final remark on behalf of our colleagues from Audi because their virtual conference is running a little bit longer than planned, and I should send best regards. But the conference call for Audi will start at 6:00, and everybody who has dialed or has already obtained any dial-in numbers will get and receive new ones so that you can follow up the Volkswagen day-to-day after the Volkswagen Passenger Car call. And now TRATON, you can basically finish your evening then with the Audi call at 6:00.

With that, I’ll conclude today’s call. Wish you a very good summer break. I hope you can find a cool spot anywhere in order to enjoy it really. And we are very much looking forward to speak to you again then on November 10 when we are going to present our 9-month results. And if there are any questions left, please don’t hesitate and reach out to the IR team, which is happy to receive all remaining questions. Thank you very much, and goodbye.

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Matthias Grundler, Traton SE – Chairman of Management Board [23]

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Thank you. Bye.

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Christian Schulz, Traton SE – CFO & Member of the Executive Board [24]

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Bye.

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Operator [25]

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Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.