Stellantis NV (STLA) 2007 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to today's Fiat 2007 third quarter results conference call.

(OPERATOR INSTRUCTIONS)

At this time I would like to turn the call over to Marco Auriemma of Fiat's Investor Relations Team. Mr. Auriemma, please go ahead, sir.

Thank you, Elaine. Good afternoon to everyone and welcome to Fiat's third quarter 2007 results webcast and conference call. As usual, Sergio Marchionne, our Chief Executive, and Maurizio Francescatti, our Group Treasurer, will host the call. All material that will be used today has been posted on our website. After the introductory remarks we'll be ready to answer your questions.

Before moving ahead I will remind you as usual that any forward-looking statement we might make during the call is subject to the risks and conditions mentioned in the Form 20-F which will be filed with the SEC.

And now I will turn the call over to Sergio Marchionne.

Good afternoon and apologies for the slight delay, we were making our way back from Maranello where we had the Board meeting this morning. You've seen the numbers in the press release, I think we're relatively satisfied that we've had, in the sequence of quarters since 2004, certainly an outstanding quarter. We were able to grow top line by 17.4%, all of the major sectors were up more an 15% quarter over quarter and especially at CNH, which as a result of translation issues, was actually up 31% in U.S. dollar terms.

So we feel comfortable we've been able to grow all the major businesses in a relatively healthy way across all geographical regions and we'll get more into details as we go through, especially on the CNH side where we see weakness in the market.

Trading profits was up 75% compared to Q3 '06. We're now at 5.4% trading margin, which is well above the trading range we indicated for 2007. Fiat Group Automobiles more than tripled its results to EUR185 million, CNH was up 64%, Iveco 22% and Components were up 46%. So we've had significant earnings growth across all the businesses.

Net income is up 130% to EUR454 million. The net industrial debt number, which some of you expected to be slightly lower than this, has come in at EUR1.4 billion. All of this is totally attributable to the seasonal working capital build and will reverse in Q4 and therefore it's allowing us to raise our year-end projections to about EUR0.5 billion in net debt, trading profit of roughly EUR2.9 billion to EUR3 billion and net income between EUR1.8 billion and EUR1.9 billion.

We've had, as a said, a good operational quarter. All of our launches, and you can see on page 3, three of the main launches that were carried out, the Fiat 500. The success of the Stralis in the heavy end of the market for Iveco and the launch of the Puma tractor for Case IH, which follows the introduction of the New Holland T7000 tractor that happened in the prior quarter. These are all things that were significant in terms of the repositioning of the brands.

Notwithstanding the significant pressure that we're experiencing of raw material price hikes, we've been able to contain the impact of this product cost effectively for the quarter. We've had a net saving quarter over quarter. The world-class manufacturing initiative continues to be rolled out. We've got two plants in the other two main sectors of Iveco and CNH, which have now been enrolled in the program. We expect them to be fully rolled out within 2009 and 2010 across the whole Fiat organization.

We did sign two new alliances, an MoU with Chery to reposition the Fiat and the Alfa Romeo brand in the Chinese market. And Magneti Marelli signed an agreement that follows the agreement that we signed with Chery. We did finalize a 50/50 joint venture with Severstal in Russia that includes the ownership of both the manufacturing and commercial distribution of the Fiat commercial vehicle and passenger vehicle side of the business.

Slide 4 just graphically points out the quarter-over-quarter growth. Q3 has been the most significant in terms of the growth pattern for the first nine months of this year. And if you turn on to slide 5 you can see that all sectors again have contributed again to the profit improvement quarter over quarter. The biggest driver of this for the quarter has been, obviously, and continues to be the car side, which is well on its recovery path. CNH contributed EUR88 million to the improvement and Iveco and the Components business did their share.

Just to deal with the issue of raw material price hikes and the impact on our product cost and we'll deal with the quarter and our full forecast for the year. Just for the year we're expecting more than EUR400 million in raw material price hikes and product cost increases, all of which have been offset by commercial and technical savings of about EUR700 million. So for the year we expect to post a roughly EUR300 million improvement over '06, for the quarter itself it's been about EUR60 million.

Turning on to slide 6 which deals with Fiat Group Automobiles, the highest Q3 volume in a decade. Passengers car were up 17%, Light Commercial Vehicles 26%. The Brazilian market continues to grow quite strongly. It was at levels of 168,000 cars for the quarter which is up 34% over the prior year. So in terms of volumes, we've had a very good quarter.

If you move onto slide 7 you can see the profit reconciliation. All of this has translated itself into the green bars that you see on the chart, in which effectively impact all categories, volume, price and mix. As I made reference to earlier, the purchasing savings of EUR35 million out of the total EUR60 million for the group. The impact of increased volumes on fixed cost and manufacturing overall were EUR34 million and we continue to invest significant amounts of money in terms of selling expenses, especially the launch of the 500 has been a relatively expensive endeavor. But it is a number that will continue to show, in our view, probably as being, not necessarily of this caliber for any quarter, but it will reflect a significant over-spend, which is part of the repositioning of the brands that we're carrying out.

If you move on to slide 8 you can see what's happened in terms of market share. We're at 30.9% for Q3 including 7.4% for the Western European market. This is for the quarter and year to date. We're about 8% in terms of Western European and this reflects our commitment to achieve a level of roughly 8% for the year.

I made reference to Brazil. Brazil continues a very strong performance that started last year. It's probably been, I haven't gone back to look at historical records, but it must be one of the highest quarters in its history. It has now undisputed market leadership in the Brazilian market of roughly 26% and is totally consistent with what we've been able to do in the Light Commercial Vehicles with a market share of roughly 27. Just to clear up any issues, the car operations ex Brazil are still earnings and cash positive, notwithstanding the absorption of working capital in Q3, which obviously has thrown the calculations into a negative number for the quarter. But it is totally line with seasonal expectations.

We continue to work very hard and very diligently at rebuilding the dealer network in Europe. We've done more than 210 new mandates in the first nine months of this year. We have done 50 appointments alone just in Q3. We've got 20 outlets now, as an example, in the Paris area, some of which are company owned, and we continue to focus our efforts on strategic cities across Europe to try and rebuild the strength of the European network to allow us to achieve the double-digit margins that we set for 2010 for the car side.

The Abarth brand has taken off well, we've got 32 showrooms open in the Italian area and I've met with some dealers and the initial reaction to the introduction of the sports brand are quite good. Along with the commitment that we have made to rebuilding the network, we've also seen some positive signs at dealer level from the increased volumes that are coming through the dealerships. The top 25% of our dealerships now are achieving about 2.5% EBIT margins, which are probably best-in-class margins for the (technical difficulty).

Slide 9 which deals with certainly the most recent launches, the 500 has done well, we've got over 90,000 orders and we just opened the German, Belgium and the Swiss markets. The 90,000 orders reflects, fundamentally, the drive out of Italy and France. We've got 24,000 units that have already been sold September year to date. So the car continues to be in very strong demand and we have now planned a capacity increase that will take us, in 2009, up to about 190,000 vehicles.

We will turn that capacity on if and when required. We've found ways to debottleneck our plant in Poland to get that done. We feel relatively comfortable that we'll be able to respond quickly to market demand. The Punto car which was launched in 2005, we continue to hold a commitment to 360,000 vehicles for the year. We've introduced two new versions, the 120 horsepower gas engine plus the Abarth version, which was shown in the Frankfurt Auto Show.

And on slide 10 which deals with the other two cars that were launched this year, the Bravo continues to perform well in Italy and totally in line with expectations. We have had a weaker than expected response from the rest of the European market, most of which I think have been driven by the fact that we did not have the right engine in the car at the time of launch. We have corrected that now with the introduction of the 1.4 T-Jet engine which comes in two versions, 120 and 150 horsepower versions.

The car is being reworked and remarketed in the European market and we're confident we'll be able to achieve a full year number of 120,000, which was built into our projections and, in terms of investments, the '08 target of 120,000 going forward. Linea has gone well. Launched in Turkey in Q2 of 2007, it continues to progress well and certainly in line with the 27,000 objectives for the full year.

On slide 11, I think that one things that we continue to work on, especially in view of the continued pressure that is being put on this industry as a result of the pending introduction of CO2 limits in Europe car at the Frankfurt Auto Show. It is an indication of the type of combination of technologies that we can apply to vehicles. This car delivers 69 grams of CO2 per kilometer. And there are a number of things that we have now initiated within the group that will allow us to accomplish two things. One will allow us to achieve the 2012 targets, whatever they may be, that have been set by Brussels.

And certainly the other commitment that we made is that by the same date we will have a fleet of cars that will exhibit the lowest CO2 emission per kilometer than any other European car manufacturer. We feel comfortable that we have the technology on hand to accomplish this. It's always been my view, and certainly it's a view which is reflected also at a sale level that there is not a single solution to the CO2 issue and that we must allow the automotive industry to try and apply any one of the tools or the combination of those tools to try and achieve the reduction.

Slide 12 which deals with our luxury car brands, there's really not much to add, Ferrari continues to do well with significant volume growth and margin expansion. Maserati has had their second consecutive quarter of earnings, we do expect the year to be closed in the black and therefore to have permanently reversed the history of losses that have been plaguing this business since we acquired it in 1993.

Turning on to slide 13, it's probably -- it's a boast slide but obviously we won the F1 Championship on Sunday. Both the constructors and the driver's series, which has been done now for the fifteenth time, and something that obviously is going to impact well on the reputation and the marketability of the Ferrari brand.

Slide 14 which deals with ag and construction equipment, significant quarter-over-quarter growth. This is notwithstanding a very sluggish construction equipment market in Q3, which is a continuation of the trend that we've seen for the whole of '07. We have been able to remedy that shortfall by significant growth in Latin America and Europe. The more important thing is that we've been able to expand margins from 5.9% to 8% for the quarter and we're confirming a commitment to deliver a margin between 8.9% and 9.7% for the full year.

If you turn to slide 15 you can see the most of the improvement of earnings that come from volume of mix, with price having very little impact on the results for the quarter. And we continue to spend, I think, on research and development as we keep on forming up the product portfolio for the four brands that we're managing. One positive thing is that all the work that we've done on quality inside CNH for the last six, seven quarters have begun to pay off. The warranty cost visibly came down and something we expect will continue certainly for 2007 and for 2008.

Slide 16 which deals with our market share positioning, I think the important thing to realize is that we have grown share, we have reversed what had been going on up to 2005 as sort of the gradual erosion of market share in both construction equipment and ag. And we have been able to reconquer a big chunk of that market share loss throughout the whole of 2007 and certainly in this quarter. We expect the year to continue strong, I think the fourth quarter is going to be especially strong on the ag side.

All of this is driven from very, strong commodity prices in the agricultural business, which is driving up demand for large equipment. And I think we're well positioned both in terms of our production capabilities and in terms of our market coverage to try and benefit from all of this, because the biofuel issue is something which is impacting all geographical regions. And we're seeing the impact of all this, especially in North America and in Latin America.

There's a slide on page 17 which shows the last introduction in terms of tractors. This is the Puma tractor which has been relaunched, as I said earlier. It is the sequel to the introduction of the T7000 tractor for the New Holland brand. Significant improvement in both quality and reliability of the tractor, which has been one of the big issues that has impacted this range of horsepower tractors.

Slide 18 which deals with -- this is again probably the other brag slide, it is the best Q3 in CNH history and it's allowed us to raise guidance. This is done under U.S. GAAP conditions, but it allowed us to raise guidance up to $2.55 to $2.60 a share. And you can see the sequential trend of earnings improvement which started in 2006 upside and it continues well into 2007.

On slide 19, trucks have had a good quarter certainly in terms of volumes. We have been able to and we continue to succeed in repositioning the heavy end of the product portfolio in Europe. We've got 10.5% market share which reflects a combination of things and which is driven by a slight decrease in the light segment, all of which has been triggered by a desire on our part to retain margins and pricing. But we have been able to bring the growth share in both the medium and the heavy segment. We're up in terms of trading profit 22% for the quarter and we're now at 7.1% margins.

And when you look at slide 20 and you see the reconciliation of our profit growth, most of this comes out of volume and mix. And we have chewed up some of these benefits as a result of the efforts that we're now applying to the internationalization of Iveco. Especially the efforts that are going on in China in terms of the joint ventures that we have set up and which are requiring a substantial amount of commitment of Human Resources and other costs to get them up and started.

If you look at slide 21, as I said earlier, the repositioning of the brand continues. I think the association of Iveco with the New Zealand All Blacks has worked well and notwithstanding their loss of the World Championship in rugby. But we do have what we consider to be a very competitive product offering at the heavy end and so we're beginning to see the benefits of the efforts that were started in the latter part of 2006 that allowed us to successfully launch the Stralis in January of 2007.

We continue to work on the quality of the network. We've done substantial restructuring on the UK side. And we've begun the product of repositioning the brand in Latin America starting at our Brazilian operations, which have been neglected for a long period of time at Iveco and which have been given new leadership, an area in which we expect to see a significant improvement in terms of performance.

I will skip over slide 22 which deals with what has been in launched in 2007 for Iveco and deal with the Components side on the Fiat Powertrain Technologies. These are our engines and transmission business. The performance of this business in Q3 of '07 has confirmed the wisdom of the separation of the business from the rest of the activities. We have been able to drive a significant amount of cost out of the organization and bring down unit cost, as you can see, from the EUR32 million that we recorded in 2006 to the EUR63 million in 2007. The largest portion of that improvement comes out of a reduction in product cost. This is partly due to volumes but it's also been driven by almost a maniacal tendency on the part of FPT to drive cost out of the business than reducing the cost.

Under the agreements that we have with the other sectors within the group, part of that saving is being passed on to the rest of the Fiat Group. And you can see that is reflected in the EUR18 million price reduction that has been conceded to the rest of Fiat. But the bulk of the saving has been retained by FPT and we have nearly doubled operating profit quarter over quarter.

Components on slide 24, there's really nothing to say about this other than the fact that Comau has now turned a corner. We've posted a positive number totally in line with the restructuring and the reshaping efforts that we applied to this business back at the end of 2006 and the early part of 2007.

Move on to slide 25, which deals with the reconciliation of trading profit to net, you can see from the note explaining the movement in net financial charges and the fact that the unusual items, including the EUR118 million gain from the sales of Mediobanca stake have been offset by restructuring charges, mainly at CHN, and other one-off expenses, some of which related probably to the final stage of the rationalization of the supplier part, especially the strategic suppliers that had put the industrial viability of our business at risk. So I think we probably finished carrying out most of this restructuring, there may be one more business that we need to deal with, which is not going to be of significant size. But most of the reshaping and the restructuring of that business has been done.

I'm going to deal with slide 26 which deals with cash flow and I'll get Maurizio to step in if he wants to. But I think we've had a good quarter before CapEx, we delivered about EUR200 million worth of cash flow for the year, that number is about EUR2.5 billion. The performance of the cash flow statement is totally in line with our expectations and it's reflective of the working capital build that we experienced in Q3. All other working capital build will be reversed and more within Q4 and therefore we are confirming a commitment to bring debt levels on the industrial side to roughly EUR0.5 billion for the year.

Slide 27 which deals with guidance, we are revising guidance up to EUR2.9 billion to EUR3 billion (technical difficulty) and net between EUR1.8 billion and EUR1.9 billion. I mentioned the debt target and I think that for the time being we're confirming 2008 targets. I think we'll wait for the completion of '07 to get a much better read of market conditions before we touch these objectives. We are confirming them for the time being and there is absolutely no intention on our part to try and [realize on ours], but we'll look at them again at the conclusion of '07 and give you a more informed view as to where we see them going.

That pretty well concludes the presentation. I think that we're ready to take questions.

Thank you, Mr. Marchionne. Now we're ready to start the Q&A session. Elaine, please repeat the first question please.

Thank you. (OPERATOR INSTRUCTIONS) Our first question today comes from Massimo Vecchio of Mediobanca. Please go ahead.

Good afternoon to everybody, I have a question on Fiat Auto. The third quarter was very strong because in euro million and also in percentage terms was in line with second quarter and I don't remember anything like that, usually seasonally the quarter is much slower. I was trying to understand if there was something that's changing in a way this year seasonality. For instance, I see that in the third quarter you delivered more cars than you registered. Can we expect a fourth quarter which is this time not much better third quarter or even in line with that? Thank you.

I'm not sure you missed much in terms of seasonality. I think that there are a couple of reasons. One, I think that Brazil continues to perform quite strong and I think it's impacted on the absolute value of the reported Q3 trading profit number. I think that we continue to face, and I'll make this a general comment, but I think we continue to face an incredibly competitive market in Western Europe on the car side and I think that we need to see how the quarter shakes out.

But I think that we are seeing, notwithstanding this incredible demand that we have seen for the 500, it is something which has not applied to the whole range of the Fiat group, automobile vehicles. I think that we need to be very careful on how we manage share and the positioning of these businesses in Q4. And I think that if you want to use the Q3 number as indicative of Q4 performance, I think it's quite safe but I think we need to see the conclusion of the year. I think it's very difficult to predict and therefore I'm not moving guidance on the sector itself until the conclusion of the year.

Overall, I think that we feel comfortable that the group can deliver EUR2.9 billion to EUR3 billion, I think it's evident from the fact that we've been able to accomplish almost EUR2.3 billion in the first nine months of this year. The caliber of the delivery of trading profit at group level is going to be certainly in excess of the Q3 number and therefore I think we need to be realistic as to what the group will deliver. And therefore the EUR3 billion number is within range. I continue to be particularly concerned about the level of competitiveness on the European side and I think we need to manage the position carefully on the car side.

Thank you very much.

Thank you. We will take our next question from Max Warburton of UBS. Please go ahead.

Yes hi, good afternoon, three questions if you don't mind. The first one just on CNH, Mr. Marchionne, at Q2 when the margin in construction equipment was particularly problematic you actually said that was the bottom. And true to your word, Q3 has shown a big improvement in construction at CNH, despite obviously ongoing issues in the States. Could you just give us your view on how that business is developing? I mean it seems that non-U.S. revenue growth is more than compensating for North American troubles, are you pretty comfortable that that can continue, actually even get better as we go forward? That's question one.

Question two just on Iveco, if we look at the revenue development, it's been phenomenal this year, far in excess of the original guidance, but the margin is coming in at the bottom end of the range. Could you just help us understand a bit better why there seems to be so little operating leverage in Iveco and whether maybe there's some potential for that to improve into next year?

And then just a final question, really thinking about '08, I think you said to some reporters earlier today that '08 was not a difficult year. Could you give us a feel for in which of the three main businesses that the biggest risks lie? I mean based on your comments just now, it sounds like auto in Europe is a bit of a concern, but could you be a bit more specific on kind of the level of difficulty in each of the three main businesses versus the targets in '08? Thanks.

I'll try and give you as exhaustive an answer on the construction side as I see it. We seen the biggest competitor in this industry report earnings last week and in fact, downgrade their estimates for '07 on the basis of continued weakness in the construction market in the U.S. And I think it's reflective of a fundamental and structural slowdown of the industry in the U.S. market, which had been driven by housing starts, all of which have got -- it's like discussing the question of [about the check and Diagos] to whether it was connected to subprime or whether it started earlier.

I actually think that the cracks in this industry were visible before and I think the subprime issue did not help. And I think we are going through a bottoming out process in this market, which will not finish until well into 2008. I'm [not] at all hopeful that 2008 will show a significant recovery against '07. I think we're going to continue to see a declining market throughout '07, I think that we'll see the volumes down 10% to 15% year over year, I think there is some view that they might even be as high as 20%. And my internal view is that the U.S. market will be down again in 2008, obviously not by as draconian an amount as 15% to 20%, but it will be down against '07. I sincerely hope I'm wrong on this issue, but the indications are not helpful.

One of the things that happened as a result of the unbundling of the brands that we carried out in 2005 is that we effectively liberated the construction equipment brands, Case, New Holland and Kobelco, to try and deal with their own destiny in the marketplace, which is much bigger than the North American market. By the changes of leadership that we have made and by refocusing our efforts on non-U.S. markets, we've been able to grow significant share in Latin America, which continues to show [more] market conditions.

We have been able to reposition these brands in Europe and correct what I consider to have been a structural problem with the construction equipment side of CNH for a long period of time. These businesses are now profitable in Europe, which has been a significant turnaround from what we found in 2004.

And we continue to seek opportunities in what are considered to be non-traditional trading areas such as Eastern Europe, Russia, the Eastern Block, Africa and Middle East. And I think that we continue -- I think the big challenge for this businesses in 2008 is to continue into the expansion and the penetration in these markets to offset the weakness of the U.S. side. And that's why I think, even in terms of 2008 performance, I am expecting an improvement of (technical difficulty), most of which is going to be on the back of volume which is not of U.S. origin.

On the Iveco side I'm as disappointed as you are in a sense by the fact that we were unable to turn on operating leverage higher than we did and we ended up with margins which are in line with the prior year, notwithstanding the fact that volume increases have been achieved of the caliber that we have achieved. It is an issue that we are looking at. I think that we are paying the price for this ramp up in production and there have been undoubtedly manufacturing inefficiencies, some of which are supplier related which have caused a bump up in cost of the units produced and which have depressed margins.

I don't think that this is indicative of the earnings potential of this business going forward, I think that we have set targets which are close to double-digits for 2010. I think we do intend to achieve those by that period of time and I think we do need to carry out exactly the same type of work that we've carried out in CNH, that started at the end of 2005, on Iveco to try and unleash the earnings potential of the business.

In terms of '08 and the three main businesses, if it has been reported that I suggested that '08 was a slam dunk, it's a misread. I never suggested it was going to be certainly a walk in the park. But let me try and take you through the pieces. I expect the ag business of CNH to continue to be strong and there to continue to be significant demand for heavy equipment, both in tractors and in combines. And this is going to continue even in the North American market as long as commodity prices hold. We have seen no let up in terms of the commitment that is being made to the biofuel industry. Certainly in Latin America this is an issue that is being pursued aggressively and strategically from the government. And we do see significant opportunities for volume both on the back of industry growth and market share gains in the ag market across all trading regions.

Construction, as I mentioned earlier, is going to do well, notwithstanding the weakness in the U.S. side. Iveco is looking at a strong year in 2008. I think that even the volume growth that we've experienced this year was not something that we'd expect we are, certainly in terms of top line numbers. We're pleased with what we've seen. I think we need to see much more of this turn itself into margin generation. So my expectation is '08 will reflect a moderate top-line growth and a significant move forward in terms of margin progression for Iveco.

The car side is a more difficult issue. I think that I continue to be absolutely comfortable with the state of the industry in Latin America, especially in Brazil. I think we will see continued strength in that market and operating numbers, which are in line with '07. I think that we are facing a tough battle in Europe, not because of any structural weakness with Fiat Group Automobiles, but because of the intensity of competition in this market. It has been traditionally a very competitive market. As long as we continue to see a flat demand in Europe I think we're going to see increased competition and I think we need to be ready to become much more efficient in terms of the positioning of the brands and then move forward in terms of the achievement of higher market share in Europe.

Having said all this, I think that the '08 targets that we've put forward are achievable based on what we know today. And I think it would be incredibly reckless on our part to try and move those numbers in October of '07, even before '07 has been completed. I think we need to take a look at the completion of the year and reaffirm our readings of the various markets in which we operate before we try and move them forward.

That's great. Can I just have just one very quick follow-on question on Auto? Could you just give us your official view on the Italian market next year, which is obviously the critical one, and the incentives that the Italian government has provided, your view on those in '08? That's my final question, thanks.

I think it is our view, and we have no indication to suggest that the incentives that have been provided in terms of the renewal of the fleet will continue in '08. To the best of our knowledge they will expire as expected within Q1 of '08. And I don't think that our projections are hinging on the continuation of this fleet renewal initiative on the government side. We've met with our dealer network over the last two or three days and I think that we feel relatively comfortable that we have a product portfolio to try and deal with a maintenance, of a market share at or around 30% on the Italian side.

The real issue for us is how well we execute I think is on the repositioning of the brand, that side of Italy which is our strong market. And that's the issue that really remains the unaccomplished objective at the end of '07. Because, notwithstanding our investment, and you can see the fact that we've assigned 200 new mandates on the car side in '09 for the first nine months, we have not been able to see a significant ramp up in terms of market share gains in the rest of Europe. And so we need to continue to work on this. Some of those mandates obviously are a replacement of suboptimal representations that we've had outside of Italy, but it continues to be our work in process and probably the most difficult objective that we have going forward. But I feel confident that we'll be able to make the numbers.

Great, thank you.

Thank you. We'll take our next question from Martino De Ambroggi of Euromobiliare. Please go ahead.

Yes, good afternoon and good morning, everybody. My question is a general question on the buyback because we saw a sudden stop of your buyback, even if the market price was well below the EUR21 per share you paid for the stock you purchased. So just to try to understand what's the reason of your sudden stop and what's your projection for the buyback for the rest of the year, considering that we feel, myself, at the beginning that the 1.4 billion could have been spent in the current year.

And the second question is on the Latin America contribution on your upwards revision estimates. I know you don't like to give us the contribution of Brazil or Latin America on a divisional level, but I've tried to guess on the consolidated figures, I guess that 70%, 80% of the revision is due to Latin America contribution.

Just let me deal with your last question first. If your reference to the Brazilian operation is only in terms of the car side, the answer is not. It is not 70% or 80% of the upward revision of the group estimates. It does account for a chunk but it is well below 50% of the revision. That's the first issue.

The second item is in terms of the buyback. I am not trying to avoid your question, but you need to understand clearly that I have never discussed what our buyback strategy is, nor have I ever discussed the timing of the execution of that strategy because you and I on this issue are not on the same page. I have different objectives than you do. And therefore the advertising, timing and the manner and the strategy of execution of our buyback is incredibly unwise.

I'm just going to be fueling positions on people that currently hold the stock to try and cite a response on the part of Fiat and Fiat will not respond. I mean Fiat will do whatever it thinks is appropriate and therefore your question about why I did not execute below EUR21 is something that I can't answer. I mean there's only two options, right? Either I have a different view about what levels I should be buying back at or I fell asleep at the switch.

Okay.

And the second option is (technical difficulty).

Okay. If I may, a follow up on the net purchasing savings that you were mentioning concerning raw materials, could you quantify it?

Yes, I mean gross savings are about EUR700 million, we've had raw material price hikes of about EUR 400 million for the year, net-net we'll be saving about EUR300 million.

Yes, how much in the first nine months?

I give you about EUR240 million.

240, thank you.

Net, net of raw material price hikes.

Thank you.

But that's in the forecast. Before you go out there and you add it on to the forecast, it's in the forecast.

Yes.

Thank you.

Thank you.

Thank you. We'll now take our next question from Adam Jonas of Morgan Stanley. Please go ahead.

Hi. thanks. Good evening, Adam Jonas from Morgan Stanley. First, I'd like to congratulate you on the Constructor's Championship, well done.

Thank you. And on the numbers.

Sure yes, well, we're used to that now, too. On the capacity utilization, a question on Fiat Auto. Now from memory, and I can reference your material that you've given us over the years, but your utilization, at least in Europe, was kind of well deep into the 60s. Your global volume is up about a third in just two years. Can you give us an update on where your utilization is, roughly, within your Western European plants, or Pan-Europe or however you would like to answer the question, and perhaps globally, just so we can get a sense of kind of how high you're running? Because certainly you've grown a hell of a lot faster than even Toyota over the same time frame, I believe you've been the fastest growing major car company in the world, so an update, I think, would be in order.

And then, a question on the Russian side. You've obviously had a lot of activity in terms of the MoU for MoU or the joint venture formation with Severstal. Now you're obviously farther along in the latter and you'll start producing the Linea Q1 of this coming year. But can you give us just a bit more perspective of how the two partners match up with each other in terms of volume, timing and type of product or anything else that you think is worth elaborating a little on? Because forgive me, but the detail that at least you had in the brief press releases just kind of begs a bit more elaboration. If you're able to do that that would be great. Thanks.

Let's start back with Brazilian plant, 100% manpower and physical plant utilization, the Argentinean plant zero for 2007. That's going to ramp up as we (technical difficulty) America. And we will bring it to full utilization of the plant within 2009. In terms of the European side, let's assume that the 60% number that we're talking about is correct. Manpower utilization is roughly 100%, this in terms of both permanent and temporary employees. In terms of physical capacity, they produce, we're probably running anywhere between 73% and 75% of physical capacity utilization. I'm talking about the Western European plants exclusive of Poland. Poland is running at 100% utilization, physical and manpower.

The other question that you have asked me in terms of the Russian side, the reason why we were -- and I accept your evaluation of the press release as being somewhat general. The intent with Severstal was to create a very specific joint venture for the positioning of the Fiat and Fiat Professional brands in Russia. And so we are now 50% partners with them and we're going to develop the Fiat brand as we know it and understand it today in the Russian market.

The agreement that we signed with Severstal is a much wider type of agreement that deals with Fiat Group providing engineering and technical support to the development of AvtoVAZ and to explore any other possible area of cooperation. It does not imply that the Fiat brand will be at all neutralized by Severstal, it does imply that potentially platforms that currently exist within FGA or Fiat Group Automobiles could be shared with AvtoVAZ. It does imply that we would be in a position to provide them with engineering help on the development side of the vehicles. It does suggest that we can provide engine know-how and engines to AvtoVAZ to try and develop their business.

And therefore, these two deals are not at all conflicting. They're complementary for the positioning of Fiat. One deals with our own brand which is Fiat, the other one deals with the association of our technical expertise, engine know-how, transmissions and potentially platform sharing with another partner in Russia. They're going to be a viable player in Russia anyhow and I think we have taken the opportunity to try and join up with AvtoVAZ, I think it goes back apart from the historical roots of the association of Fiat and [Toiatigrad]. It does go back and re-establish a connection that has existed for a long period of time. We feel comfortable that they will be able to benefit from what we've got to offer and to help us along in this alliance strategy, which is a single objective that of breaking down the capital cost commitment to the development of our car business.

And so we do see them as being quite complementary in terms of the development of the Russian market. And it is a market which, certainly as a result of the assessment that we've carried out in the last 12 to 18 months, is probably one of the most promising markets that Fiat group as a whole is (technical difficulty) going forward.

Great. Thanks, very much.

You're welcome.

Thank you. We'll take our next question today from Paolo Mosole of Intermonte. Please go ahead.

Good afternoon to everybody, I have three questions if I can. The first one is on Iveco, you mentioned that you expect a gain moderately up in terms of sales. I remember that you said about one year ago that Iveco has a strategic capacity of 200,000 units per year, so I'm wondering whether you are sort of short of capacity going forward, first of all?

The second question is on the 500, I would like to know whether the 190,000 units targeted for 2008 and 2009 speaks with the 150,000 units potential upgrade in 2008. And the third question is on the guidance, which on the trading profit implies a trading profit in Q4 which would be in line or even lower to Q3 trading profit. I'm wondering why that, and because I assume that the 500 will have a higher impact in the (technical difficulty), as well as the Brazilian market which is seasonally higher in Q4. Are there other elements in Q4 apart from that?

Just in terms of the issues that we are facing some manufacturing bottlenecks and supplier bottlenecks in terms of the potential to expand our Iveco business going forward. I think that we are being realistic about what '08 could possibly deliver in terms of top-line growth, especially as a result of the significant rise in volumes that we've seen in Iveco in 2007. I think our primary objective in Iveco is to improve the margin generation from the business. It is an issue which, especially in view of Q3 performance, we need to address and address quickly because we have not been able to benefit, I think, fully on the ramp up in volumes.

In terms of the 500, I think there is going to be a gradual (technical difficulty) for capacity between now and January 1 '09. I think we will enter '09 with 190,000 capacity but to be honest I don't know what the average output is going to be for 2008. But the (technical difficulty) between 140,000 and 190,000, but it's going to have to be -- it depends on when the debottlenecking takes effect. We're also working on the launch of the Ford car in the same plant and we need to be careful to respect the commitments that we have made to our partner, Ford, in terms of that asset. So we'll see. And the other thing that we need to be very careful about is properly managing this car in the market because of the uniqueness of the product and the fact that we want to retain as high a margin on our business as we possibly can.

The third question you raised in terms of guidance, it's driven, if you replicate Q3 wound up with a EUR2.9 billion to EUR3 billion. This house, at least since I've been here, has taken a very prudent view of forecast. I think that we will continue to take that approach. I think that we need to see what Q4 delivers. We are sitting on some pretty strong industrial dynamics in terms of CNH ex construction business in the U.S. The car side in Europe continues to be a very competitive market, as I mentioned. Brazil, I agree with you is going to continue to perform well in Q4 and Iveco should have a decent year with a strong fourth quarter.

It may be that the number will be in excess of the indicated target, but I think we need to see where we are at the end of December. I think we're being cautious and I think we need to maintain the same type of posture that has guided us this far in terms of making earnings forecast a commitment to deliver.

Okay, thanks.

Thank you. We'll take our next question from Arndt Ellinghorst of Credit Suisse. Please go ahead, sir.

Good afternoon, everybody. Just a very quick follow up on the share buyback if I may, Mr. Marchionne. I understand that you're not giving any indication of when you're buying back your own stock, but if I understood you correctly, previously this year, you mentioned that you want to execute the stock buyback until the end of this year. Could you please clarify on the timing at least of the buyback? Thank you.

Yes, I was trying to get some details on the legal issues surrounding the buyback. I think our indication has been that we will conclude the operation by the end of this year, but the intent to execute the buyback can be renewed. So in all likelihood we will extend it into 2008 since we have the legal authority to do it.

Okay, thank you.

Thank you. We'll take our next question from Monica Bosio of Banca IMI. Please go ahead.

Good afternoon, everyone. I would have two questions. One is -- the first is related to Brazil. I understand that you see -- you still see a positive trend in Brazil, more or less in line with 2007 for 2008. I was wondering if you see higher competition in Brazil and if you believe that your market share could be sustainable also in 2008 as far as passenger car is concerned?

And the second question is related to Bravo. Is it possible to know the cost of marketing on the Internet on the dealer network outside Italy?

I'll give you the amount, I'll answer the last part, I think we'll give you the amount that we've -- that we've committed to. I think that we're talking about a EUR900 million to EUR1 billion number on network development between -- in the period up to 2010.

So it's a significant amount of money and it reflects the commitment that we're making both in terms of human resources and capital to create a viable network outside of Italy. The number that I made reference to also includes the Italian number, but obviously reflects a much stronger commitment to the development of the business outside of our main trading area.

The other issue that you raised in terms of the strength of the Brazilian market, I mean I was there probably four or five weeks ago and I will be back there in the market about -- in a couple of weeks, right? Our indication is that '07 is a strong year, '08 is actually going to show in absolute numbers, an improvement over '07 and it will be coupled with a market share retention by Fiat. So I think that we are looking at a good year in '08 and I don't think we're concerned about the loss of market share especially in a market which is going up as strongly as the Brazilian market is going.

Okay. Thanks.

You're welcome.

Thank you. We take our next question from John Buckland of MF Global. Please go ahead, sir.

Good afternoon, thanks very much. I just got -- talk about the importance of the Italian market again. You said you're not expecting the incentive to be renewed. But you also said that you thought that the -- you're strong enough to deal with a decline. And does that imply then that you will have to increase market share in Italy to meet your numbers? And that's the first question on Italy, particularly.

And then last quarter you talked about, you weren't happy with development of Alfa Romeo, not being turned around quick enough. And I wondered if you could tell us whether that's improved and that's part of your better confidence in Italy?

And then the third one is on the Bravo, could you just be a bit more specific about what you changed on -- you said you didn't think you had the right engine, what have you done? Are these new engines higher horsepower, more diesel, less gasoline? Exactly what is it that specifically that gives you the confidence now that the customers in -- outside of Italy really will want to buy this car?

Let me deal with the last question first. I mean I think that the 120,000 number projection for the Bravo is, given the fact that the C-segment is the single largest segment of the European market, and it accounts for over 3 million vehicles. I -- the ability to try and achieve a 120,000 number in that size of market is not -- isn't by any stretch of the imagination a realistic target.

I make reference to the fact that I think our efforts in terms of making available the right engine -- of making the right engines available for the model, we needed to deal with particular market coverages by competitors in that horsepower segment.

And the comment I made in the reference to the slide about the 120 and 150-horsepower engines becoming available in Q3 '07 are indicative of us positioning the car in the right place, in the right place in the matrix of engine offerings in the C-segment. That is certainly a large portion of a market, which we were not able to cover with engines that were introduced in 2007.

Having said this, I mean, the question about what makes us comfortable with the success of any car that we launch is really a function of how well we market the product. We are confident of two things. One, that the product itself today is at quality levels which are at or above the competitive levels in Europe. And secondly, that there's sufficient appeal, both in the brand and in the vehicle itself to be placed properly in the marketplace.

I think we need to allow our market guys to continue the work that they've done and we will see, hopefully, the results within the first six months, in the next quarter and the first quarter of 2008.

In terms of the Italian market share, I think we've been very open about the fact that we expect to grow market share in the Italian market between now and 2010. I've made reference to the fact that overall between now and then we should get to a 35% market share of combined brands, but obviously will also hinge on our ability to offer additional models, which extend the coverage of these brands today. We do have some significant product launches in 2008, which are planned for Alfa and for Lancia. And we -- and there's continues to be a significant rejuvenation of the model offering inside the Fiat brand, including the launch of a new -- of a restranding of the Croma in the latter part of this year.

So the question as to what number we're targeting for '08 is not really something I'm willing to answer, other than the fact that by the time we finish with this exercise, we'll need to own roughly 35% of the Italian market.

The comment you made earlier about Alfa Romeo continues to be the issue for me. I think that we have done good work in the UK, we have now done and beginning to do some decent work in Germany in terms of early positioning of the brand. I think all of this needs to be coupled with a successful rejuvenation of the product offering that we have on Alfa, which is going to be in -- with the introduction of the Junior or the B-segment car in Q2 of 2008, and so, I -- probably Q2 or Q3.

But I think that the real -- this is going to be quite a lot of diligent, meticulous work in terms of the establishment of the brand because of the fact, as I made reference to in my earlier comments on the Q2 conference call, the real competitive framework for this brand is being set by the German car brands. And they've had obviously a much longer time to position the brand and their credibility in the area, significantly higher than ours.

So we continue -- it's the hardest asset that we have that we have to work. It is the one that if we're successful in positioning is probably going to give us the biggest benefit from a margin standpoint, but it continues to be an area that is being addressed aggressively by the group. I think that we just started -- we started the exercise, but I think we need to see the full range and the full rollout of the program until 2010 to see some realistic results from the repositioning. I -- the 300,000 car target that we have by 2010 is doable, but only if we execute flawlessly on the plan that we have ahead of us.

Thank you very much. And just on the -- your statement about the CO2 challenge, are you saying, just to clarify, are you saying you will meet the EU targets, whatever they are, independently? And therefore if you -- there's no compromise needed to help you out?

I don't -- I -- the -- I -- let me give you the -- my view as the President of ACEA. I think we've been absolutely clear with the Commission that the imposition that is being applied to the car industry as a result of the establishment of 130 grams by 2012 is something which the industry in and by itself, given its makeup and its structure isn't capable of dealing with.

It is certainly undesirable to impose these limits on the car industry. Because it will cause distortions in terms of the industrial development of these businesses and the commitments that we're going to be making to some level of technology, which -- neither optimal, normally would be -- nor would it be the most efficient way to bring about a reduction in CO2.

So that is the industry view. We continue to work with Brussels to try to bring about a more reasonable approach to this. We have made reference publicly to the fact that the Japanese example of having 137 by 2015 is a realistic target and a good process to try and emulate. Because it certainly is supportive of the development of the car industry in Japan, which is a significant part of the economy.

Yes. I --

The second -- then if I can just go back and I'll connect it back up to the Fiat story in a moment.

We have made a commitment policy that by 2012, we will have a fleet of cars, which will exhibit the lowest level on a weighted average basis of CO2 emissions per kilometers of any European car manufacturer. What is implicit in that statement is the fact that to the extent that we are -- that we're going to be able to meet -- we're going to be able to meet the target, whatever the final negotiated target will between us and Brussels. Because we will have no choice, one.

But secondly, because of the commitments that we've made to alternative strategies in terms of bringing down CO2 emissions and [premium], the commitment to CNG, downsizing of engines and the application of turbo charge structures. All of these are designed to deliver engines that will deliver lowest weighted average CO2 emission per kilometer of any European car manufacturer.

Okay. Thank you.

So I'm not trying to avoid your question as to whether I can meet the established rules today, but it is certainly contrary to what the ACEA view would be under any circumstances. The interest of this industry, and my interest as the President of ACEA is to ensure that we maintain the diversity of car producers that we have in Europe and that there are no measure which are brought about, which are going to be dysfunctional to the development of this industry going forward.

Thank you.

Thank you. We'll take our next question from Andrew Lobbenberg of ABN AMRO. Please go ahead.

Oh. Hi there. Just a quick one. At the last conference call you spoke about progressing Iveco and its opportunities in the U.S. or moving it into the U.S. Where are your thoughts on that, in particular given the progress of the U.S. economy?

Well, I mean '08 -- I'm sorry, '07 has been a disastrous year for truck manufacturers in the U.S. and it certainly follows the introduction of new emission standards in '06, which have really -- totally predictable. I mean this is a totally cyclical business in the U.S. And it's -- '07 is not expected to close off with a bang.

Having said this, I think our commitment to the truck industry and to the development of the Iveco brand in the U.S. continues unabated and I think that we will come to a resolution of the manner that we will follow into the U.S. market. The more I look at that market, the more I realize that perhaps the Fiat Group has (technical difficulty) strength by entering that market alone rather than through acquisitions. And I -- we're looking at decision now. I think it's premature for me to give you a final view. But I feel comfortable we probably have the engine makeup, and the ability to design products that are totally consistent with the demands of the U.S. market.

The answer will also hinge on the ability and the speed with which we'll be able to localize production in the U.S. market. It's something that we're looking at right now and it's certainly something that we could bridge in terms of European production for a period of time. But ultimately, in order to be successful in the U.S. market, we must be able to produce both engines and vehicles in the U.S. that will deal with local market requirements. So we'll have a view, hopefully by the end of Q1 of '08 as to what the right approach is for the Fiat Group going forward.

Okay. Cool. Thank you.

Thank you. We'll take our next question from Thierry Huon of Exane BNP Paribas. Please go ahead.

Hi, good evening. It's Thierry speaking.

I lost you. Operator?

It should be less than double of the one we had in Q4 '06, when we had the double, at least, of what we had in '06 for all the other quarters. Does that mean that you expect a margin of say in H2 stabilize --

Thierry, can I stop you. For whatever reason, 90% of what you said was killed and I heard nothing. So could you repeat the question for me?

Okay. If we look at page 18 of the presentation.

Yes.

You provide quarterly basis earnings of CNH and the implied Q4 earnings, if we make the sum of the first three quarters, minus the guidance for the full year, it comes something like $0.42 EPS. So it's roughly in line with the one we had in Q4 '06, when for the previous one we had at least a double of what we had in '06. I'm just wondering if the -- you expect a stabilize of the margin in Q4?

I expect to provide earnings in line with guidance that we've provided. The problem that we have with this, I mean, there's no doubt for the group -- for CNH to have made a commitment to $2.60 it must feel absolutely comfortable that it can deliver the number.

Okay. Okay.

And I think I leave it to you to draw whatever other conclusions. We're supporting S2.60 as a number that we'll die by. Take it as the lowest possible level of achievement for the business.

Okay. That's clear. Thanks.

You're welcome.

Thank you. Our final question today, from Philippe Houchois of JP Morgan. Please go ahead.

Good afternoon. Philippe Houchois from JP Morgan. The first comment I have is you seem to cause a fair amount of confusion with your comments on the buyback. I mean your stock right now, on my screen, is down 5% and that's a good sign for the worse after your comments on the buyback. My first question is, would you care to clarify what you mean by the buybacks will be completed by the end of year? If you could be a bit more clear on this that would be very helpful.

The second question is about the announcement of extension of capacity for the 500, which is very welcome. I just want to make sure that, one, it is still in the Polish plant two, that is not necessarily coming at the expense of Panda volume, which has been amazingly resilient? If you could confirm that, that would be helpful.

And the last comment would be, in the context of what you said about CO2 et cetera and do you think that there is an opportunity for you as a group, Fiat Group, to -- or Fiat Auto to discuss opportunities with other car makers to monetize your small car expertise with other Western carmakers? And do you think it's an asset for Fiat Auto today? And I mean, beyond what you're doing with Ford and the [car]

The answer to your last question is absolutely yes. We do consider it to be a strategic asset of the group, which is potentially available to other car manufacturers in Europe to try and deal with the issue of CO2 emission. So I've been public on this. I think that my colleagues, the other CEOs of the car companies in Europe are fully aware of our capabilities and they may form the basis for additional alliances going forward. If there are any, we'll announce them at the proper time.

The issue of the buyback, I mean, I 'm going to try and give you my understanding of this. We -- let's go back to square one. We want to initiate a buyback program, which as I understand it has got a maximum capacity of 1.4 billion. Under the rules, this program is going expire on December 31, 2007.

Have I lost the connection here, or --?

Just a moment. We're checking this.

Oh, all right. Thanks.

Okay. The program is technically part of December 31, 2007. It can be renewed for up to 18 months from the time that it was first decided upon, which means that it's potentially extendable into the majority of 2008. Am I right? So we just have to renew the program on or before December 31, 2007 to make it available for us to execute on in 2008. Is that clear?

It's clear to me. I mean you speak English better than me, but to me completing the share buyback would be completing the 1.4 billion by the end of the year, which is not the case?

No, but we -- I don't think, to be perfectly honest, I think that we've got authority to buyback up to 1.4 billion.

Yes.

And I think I've always been clear that the buybacks -- the buyback program was always [subject] to our determination that the acquisition price of this shares was going to be value accretive to Fiat.

Yes.

And therefore the manner, the method, the strike price on the buyback program was going to be totally within the discretion of Fiat and if effectively the share price never reflected conditions that we consider to be value accretive to us, that we have no obligation to execute on that buyback.

So do not take the 1.4 billion as being a mandatory, executable buyback number. It is the authority that we received that we can buy back up to, but it is not something that needs to be delivered.

Yes. No, I think I understand your message.

Am I being clear?

You're very clear about the value accretion. A last question, if you can clarify about the capacity expansion that -- the 500, that would be great.

I'm sorry. I missed that question while I was trying to get the date from this stupid program.

The -- I think you -- if I heard right, you announced that you are going to raise capacity on the 500 to 190,000 units per annum.

Starting in -- available Jan 1, '09.

Oh, okay. And that's, I assume, still in the Polish plants. You're not looking at creating a second site for the --?

Correct.

Okay. Do you think that is -- that volume is going to come at the expense of the Panda or are you able to expand the capacity of Tychy

I think that we're going to be able to apply debottlenecking investment to our existing infrastructure to deliver both the volumes required for the Panda, the Ford car and the Fiat 500.

Okay. That's great. Thank you very much.

Thanks.

I would like to turn the call back over to you sir for any additional or closing remarks. Thank you.

Yes, there's one more question, Operator, that I see on the charts here. Do you want -- the gentlemen from Goldman Sachs.

Thank you sir. We'll take this question from Stephan Burgstaller of Goldman Sachs. Please go ahead.

Hi there. Just to follow on this debate on the share buyback and what you're saying and what you're meaning. Am I right to conclude that you're not saying that you consider your shareholder value? Am I right to conclude that you're saying that a share buyback is not accretive to the earnings per share?

What I am saying, let's go back here for a moment, again, and we need to clarify this because we're going to create enough confusion. We have authority to buy back up to 1.4 billion shares and that authority expires December 31, 2007. It is renewable for 18 months from the date at which the original authority was given, therefore it will run well into 2008.

The decision of how we buy back these shares, what's the right price, the timing of our entry into the market is something which we do not discuss. Because on this issue, the -- we are buyers of our own securities and therefore it would be incredibly stupid on our part to try and advertise a purchase strategy, which is going to meet with a particular strategy on behalf of a seller, which you may or may not be representing.

And therefore, on this issue, it's not a question of lack of clarity. I think it will be unwise for Fiat to exercise full disclosure on this issue and tell you when and how we'll be buying back and on what levels. We don't do that. I've never done this in my life, it's not the first share buyback I've carried out.

The issue about when we execute on the share buyback is dependent on a variety of conditions, including our assessment as to what the share price will be in the future, based on what we understand to be the earnings capability of this house and its cash flow generation. It's contingent on a whole variety of issues, including those and including what (technical difficulty) of Fiat is (technical difficulty) point in time. And we will execute on this without advertising the event. We will do this and disclose the acquisition post-acquisition, but we will not disclose it pre-acquisition. We can't do this.

The only thing you need to know, fundamentally, is that this house is ready to buy back up to 1.4 billion of stock (technical difficulty) that it finds these accretive to Fiat in some fashion, which may be reflective on the share price, it may be reflective as our understanding of where our future will be, it's reflective on a whole pile of things. But it's our assessment, and it can't be -- to be perfectly honest, it will be trading against our own interests and we cannot do this.

Okay.

Well, the capacity is to do it, the ability to execute it legally is there, the manner, timing and the pricing of that intervention is going to be at the discretion of Fiat.

Okay. Thanks.

Thank you.

Thank you, sir. I would like to turn the call back over to Mr. Marchionne for any additional or closing remarks.

No additional or closing remarks so I'll pass it on to Mr. Auriemma.

Thank you very much, Elaine, and thank you all for participating to the call. Please feel free to (technical difficulty) follow-up questions. Bye.

Thank you. Ladies and gentlemen, that will conclude today's conference call. Thank you for your participation and have a good day.