OPmobility SE (OPM) Earnings Call Transcript

Good afternoon, and welcome here in Plastic Omnium. Welcome also for those not being here, but being connected. I hope that the people who had the opportunity to visit the showroom before did see that many things changed during the last months, basically. And that is the reason why we want it with Marc Perraudin, with Kathleen to show you how we are moving forward with hydrogen, which is becoming more and more important. We are convinced about that, and we will show you that later on that it is the technology, which is going to play a very important role in the mobility of tomorrow. Marc Perraudin is here with me. He is the CEO of New Energy, and he will present a big part of the presentation, I will make the introduction. And Kathleen will join me at the end for the Q&A session. We have scheduled 45 minutes presentation, and I'm hoping that you will have a lot of reaction question on hydrogen. Before talking about hydrogen, just a wrap-up about what did happen in the last months regarding PO because 2022 was also a very important year for Plastic Omnium. That is the new PO in terms of product offering. We have now 14,000 employees, which is the result of the growth of PO in the last years, but also the acquisition we had last year. We have 5 divisions, and that is the way we are managing the business. That means 5 P&S, 5 strategy and a lot of synergies between the division. But first of all, the historical division, which is IES, bumper tailgate #1 in the world. We have the middle -- the lighting division, which is a new acquisition, the new creative division end of last year after the acquisition of AMLS, OSRAM and Varroc, 1.2 billion of sales being one of the major player in lighting and even more important, being one of the top in lighting for BEV for electrical cars. Then we have the modules where we are also #1 in the world, 100% PO North after the fact that we did purchase the shares of Hella. This part is the exterior path that this we are able to provide to our customers different solutions, but also to integrate those solutions and that is the unique offer of PO that means to integrate, for example, the lighting into the bumper and so and so on. Then we are on the right side, a key energy system that is the fuel system storage and the depollution system, which is a business, which is bringing a lot of value to the company, and we are convinced that in the next 20 years, there will be still a lot of combustion engine in the world and that the market is going to consolidate around the biggest one, and we are the biggest one. Therefore, we are convinced to be able to stabilize the business at a very high level of turnover and margin as well in the coming years. And new energies, that is the division regarding hydrogen, which is new for sure, since 1 year and 4, 5 months now with the ambition to be now well in the world. And that is already what we do see with the order intake we will show you later on. New as well in PO, OP'nSoft, that is the software touch of PO. Our products are becoming more and more connected with the rest of the car. We had always some software competencies within the company in each division, but we have decided to organize it much better than in the past, that means to have one organization for software, serving the division, serving our customers because the need from our customer is increasing in terms of software. We're talking about 60, 70 people right now, and it will increase in the coming years. That is the new PO after this '22 very important year. Now moving to hydrogen. We believe in hydrogen because, first of all, hydrogen is for sure carbon neutral. It's like battery vehicle. Hydrogen is basically also electricity. It's always important to talk about that. It's just the way to store the electricity is different, the energy. It is stored in hydrogen, it is transformed in electricity, and then the rest is pretty similar. The advantage of hydrogen is for sure you can have the same range like with the combustion engine. You have the same charging time, rescheduling time is the same like we obviously reaching as well. It's much more lightweight solution that battery, for example, and competitive cost is not the fact today, but it will be in 2030, we are sure competitive compared to the combustion engine. Therefore, a lot of potential applications, and that is the reason why we believe that hydrogen will play a very important role in the coming years. It's not only what we do believe, and Marc will talk about what many customers OEMs are doing in terms of hydrogen. That is also the investment in hydrogen in all kind of topic, it is infrastructure, it is production of green hydrogen, for example, industry. And the investment in hydrogen are increasing very fast. You see the number of EUR 320 billion. It was 6 months ago, EUR 240 billion. That means it is increasing a lot. A lot of new programs, a lot of new subsidiaries, brands from diverse governments to invest in hydrogen and for sure that will create a momentum for the infrastructure and for the mobility for the market we are in. For us, hydrogen, it's not only a way to have some growth in the future and to benefit from the decarbonation of the mobility. It is also a way for us to be present in a different part of the mobility. You know that PO was traditionally focusing on passenger cars. We are convinced that the mobility of tomorrow will be much more diverse and multiple, and we want to be part of the mobility in a roll and not only the passenger cars, and therefore, hydrogen is also the opportunity to be present in buses, in trucks, in trains, mainly the commercial and heavy mobility and Marc will show you some examples, therefore, also to diversify our portfolio and to reduce the risk for the company. And that will be a big part of the hydrogen order intake in the coming years will be coming from this kind of mobility. That was about the introduction, PO hydrogen, why we believe in it. And now I'll hand over to Marc, and Marc will explain to you a lot about what we are doing to be #1 in hydrogen.

Thank you very much. Good afternoon. Very happy to be with you again to talk about our hydrogen adventure. I think Laurent has set the tone in terms of business. Thank you, Laurent. Development in terms of market access and new segments. I will focus this afternoon on what has changed also since we discussed the last big meeting between us was in October of last year. And there was a change and there was a shift, I would like to highlight, which is important. It's one of the starting point of this meeting this afternoon. Just reminding that our global vision and the market evolution for hydrogen mobility has not evolved much. By the way, we are not reviewing it every 15 days because we think it would be a bit arrogant to think that we'll predict what will be the hydrogen market in 2030. We are still maintaining our vision around the midpoint between the most optimistic and the most pessimistic views that exist from people saying that hydrogen mobility will not happen at all, people believing that it will happen faster. So globally, 2% of the market within number of units on the left, not value. The split, which is 1/3 for passenger cars, 2/3 for commercial vehicles in 2030. If I were to do that in this type of breakdown for the coming 5 years, it would be even completely different with very few numbers for passenger cars and automotive market and of course, at 90% plus for commercial mobility. Hydrogen will be about commercial mobility in the next 5 years, definitely for topics related to infrastructure development. But on the right, the picture is new. It's not what we showed, what I showed a couple of years back when we believed at the time that probably 2/3 of the market were developed in Asia. You all know that the pioneers of hydrogen in mobility are Toyota in Japan, Hyundai in Korea, so Eastern Asia, China has always put a lot of momentum in hydrogen development. And our focus was to say 60%, 65% in Asia in 2030, probably 25%, 30% of the business in Europe and a very marginal and minor share for America. Change of administration in the U.S., President Biden's administration has now pushed the inflation reduction at, which is impacting a lot of industrial fields and activities. And of course, it is touching deeply the hydrogen and positively hydrogen well, because there are a lot of subsidies available for the production of green hydrogen. And of course, it triggered immediately American style with a lot of dynamism here also, a lot of momentum and a lot of new projects. So basically, it is giving us this new perspective, 40%, 30%, 30%, let's remember perhaps 1/3, 1/3, 1/3, which is fantastic, by the way, because it will bring better balance in terms of business for us in terms of capacity investment and mitigate also the risk of ramp-up of the volumes of hydrogen mobility. I was talking about units. I could talk about value. 1/3 of the market down the road in automotive does not mean 1/3 of the value of our EUR 3 billion down the road. It means probably a bit less because, again, it's a rule of thumb type of table that we have established. If I come back to the usual values we are displaying which are reasonable for passenger cars down the road, you need probably 6, 7 kg of hydrogen to run a car with a decent range, which would be worth around EUR 2,000, $2,000. The fuel side itself and the system should cost down the road, something around EUR 5,000 or $5,000 again. So I'm in the range of EUR 6,000, EUR 7,000, EUR 8,000 for the complete electric hydrogen powertrain to be competitive. And this is one of the challenges, of course, of the scale-up of our activities. If you go to light commercial vehicles, a bit heavier, a bit more expensive because expectations from customers in terms of durability of the system, expectation also in range and a bit more storage. So the EUR 6,000, EUR 7,000 becomes EUR 10,000. And if you go again above and I will stop there and you go to heavy-duty truck order of magnitude again, the big truck makers today, they want 60 to 80 kilograms of hydrogen to run a truck for a decent 600 miles, 1,000 kilometers. And of course, they require 300 kilowatts of power and there's a hood. It's not under the hood anymore, most of the time, but whatever. So globally, ballpark figures are in the range of 60, 80 kilo euros or kilo dollars. So multiplied by 10 by 15 compared to a passenger car. So if I say that in 2030, 1/3 of the market could be in units passenger cars, it's way less in value. So again, I don't know what it will be in 2040. And again, I don't want to play a crystal ball game, there are to guess. I think it will accelerate and probably grow also in the passenger car market, not for all segments, but for the heavy, SUV, luxury type, et cetera, with a lot of expectations in terms of range. But globally, in the next years, anyway, most of the business will be done with commercial activities and public transportation. Laurent talked about the project. There are a lot of subsidies in the market. Germany, France, we are in Europe today are bringing a lot of fresh money into the development of all the infrastructure activity, green hydrogen production. It's not new. It's coming in the U.S., I said it. We are probably undermining the figure in China by far. It's way more difficult for us from Europe also to collect all the subsidies and supports, which are put on the table by the provinces in China supporting the growth of hydrogen. But anyway, big promotion is done and a lot of government money is brought to the hydrogen development. On the right-hand side, 2 examples only, but there are many which are important of OEMs, joining forces with energy company to bring a global offer to the commercial market. For example, I think Daimler Truck and BP, it's in U.K. to develop a network of something like 25 hydrogen refilling station and to really develop and allow the market to grow. Stellantis and Engie, I think, have wrote recently an announcement telling that they will offer together total service, a global service. Stellantis will bring the vehicle, the light utility vehicle and Engie would bring the refueling station and the green hydrogen. So altogether, they are making things possible. One footnote on this slide, which is quite important and probably a bit too tiny because it's important. Europe came to an agreement a couple of weeks ago to establish the fact that by the end of 2030, there should be one hydrogen refilling station every 200 kilometers on what they call, I think, the TEN-T in Europe, so the big highways. I don't know if some of you were with us in the last meeting, but we were taking a little bit this example of to allow hydrogen to happen, it's not like electricity recharging stations. It's less dense because the refilling time is, of course, way shorter. So with this regulation coming into play, that means that by the end of 2030, all the highways in Europe and the 27 members of the union will be equipped with refilling stations, which would also trigger the capacity to ramp up passenger car mobility. About the refilling station, these are the figures. And they are quite shy today, to be clear. Was 3 -- sorry, 550 in 2020, it has roughly doubled in 3 years, which is not yet the rate we expect for the coming years because you see that the predictions, if you cover all the products and going is to be above 7,000, which would be a great coverage at that time. If you compare that to the ramp-up curve of the charging stations available for the battery electric vehicle, but of course, we need to get back to -- and we found the document showing the evolution between 2015 and 2021. It showed that at the time, back in 2015 before it was also doubling year-on-year for a couple of years. And then, of course, there was a strong and steep ramp-up in terms of equipment. And I think when you superimpose the 2 curves of refilling station hydrogen and battery charging points, not with the same number of units, but you have roughly the same S profile, which is starting to happen. And of course, which is key for the growth of our business, nice transition with the business insights. In fact, this is the offer. We have added compared to the previous sessions, we have added the service part, which is important. We are talking about commercial mobility. In commercial mobility, the customers are expecting the extra mile not only a 0 kilometer component like we used to deliver, but also a warranty service maintenance. So this is also a new segment of growth. Laurent was talking about the fact that PO for hydrogen, the other activities is entering into commercial mobility segments and growing the business with new type of vehicles. We are also accelerating in this field, which is to provide aftersales service, warranty, maintenance services for the fuel cell systems, but also for the maintenance activity and the changeover of some components in commercial mobility. The ambition here still maintained. We have even amended slightly the one on the left. We said 20%, 25%. Now we sell above 25% market share in high pressure systems. The market is not established today. So it will be very difficult because some of you will probably ask us what is our market share? I don't know because the market is growing like crazy and the order book is evolving every day. The impression we have is that we are way above this value today in terms of acquisition of business. I will get back to that, probably above 50% even. This is not something that we think we could maintain over time, of course. There will be competition in all regions. But today, we are very optimistic on the fact that we could exceed 25% in hydrogen storage. And we are maintaining our targets for the fuel cell stack and for the systems that you have seen on the floor outside reasonably also because the market is completely different, also because some OEMs have decided to integrate the fuel cell system, the fuel cell stack depends. Some will buy components from us, some will buy stack, some are doing their systems. It is the case for Toyota, for Hyundai. It is the case in the truck business with cellcentric, the JV between Daimler and Volvo Truck. They are developing their own system. So of course, a portion of the market is not accessible and the configuration is a bit different. So we maintain our market shares, and we are very positive with the recent evolutions of the order book of KPO that will reach this value. Very happy about this one, a lot of info on this one. I'm always talking about the S curve. We are in a growing business. But when you are on the S curve and you sell it to your shareholders or to your buzz that you are on an S curve market, of course, they are expecting the S really to start because when you stare the bottom, you make promises. And it's starting now. We put on the graph everything we have some of the customer names who are not allowed to display today. But as we said with some of you during the -- before the presentation, we have acquired 2 months ago, a very large order with an American OEM that I can't name for confidentiality reason, which is in excess of EUR 2 billion, in fact, close to $2.5 billion in value of order intake for both PO and KPO for storage and for fuel cell components. It will pave the way for a new plant in the U.S. that's bringing us back to the comment I did before on the balance of the market, 1/3 for every continent. And again, allow us to develop one plant in France for the European market, one plant in the U.S. for this customer and 1 plant in China to acquire and target the local business. So 2 years ago, I was very proud to announce to the market the first order, the first big order that we got, which was the Hyundai Nexo at the time. It was a couple of dozens of million euros, the value, whatever, it was EUR 40 million, in fact so it was EUR 40 million for our new business was something amazing. The year after, we announced that we got the Stellantis and Renault, Jaguar business for light commercial. It was in the range of hundreds of millions. So it was a 0 more 40 to more than 500 in total, Stellantis and Jaguar together. And this year, we got at the beginning of the quarter 1 in order, which is $2.5 billion. So again, changing and, of course, promoting this S curve in the order book, which is helping us today to visualize really the business plan that we had predicted. Quick transition also to comment on the right. What I said on passenger cars balance in value this time versus commercial is visible here in my order book today, I have 1%, 40 million in day of passenger cars and all the rest is in commercial mobility. So commercial mobility is the name of the game for the next 5 years and all the investments that we are implementing and developing are dedicated to commercial mobility. Another element, which is not minor either, and you can find that back on the bottom left is the fact that we started also with a couple of pioneers, and we are very proud to be partners with, for example, our friends of Safra, bus maker, French bus maker, a pioneer in hydrogen mobility. But a lot now of our order book is coming from blue chip from traditional OEMs, the names that you have at the bottom, some of them are missing again for confidentiality reasons, which is also making us believe that hydrogen is really happening in heavy mobility, mid-duty mobility on all continents. And this is also, I think, substantiating a lot the objectives that we have set up for the activity down the road. Okay. You guys know better. I don't want to comment on that. I was talking -- Laurent was talking about the momentum in projects globally across the planet, in hydrogen projects for mobility, for industry, for building applications, for green hydrogen and renewable implementation, okay. But there are also a lot of communication talking about the major OEMs -- you see all the big names behind my back here on the presentation, investing in hydrogen and pushing to develop the technology. So there is no doubt for us that hydrogen is getting there. It's visible in our order book. It's visible with the big names associated to hydrogen now and who have declared they want to enter in this new field of mobility. Let's talk about us now. What are the assets of the division. This is the portfolio you were outside. You've got great explanation. I'm sure about all the project offers. So I won't come back in details about that vessels, hydrogen, high pressure storage and system associated with all the design, unique design capabilities and testing capabilities. We have established in Genk, Belgium, a new facility, which started 18 months ago, which I think is probably the biggest in Europe, technical center for development, prototyping and testing of hydrogen vessels and storage system, brand-new site with a lot of capabilities, quite impressive. I hope one day we will be able to bring some of you there to visit it. And of course, we are working a lot to accommodate all the regions. Here, this slide is a bit difficult to read. So don't try and read it. It's just to explain to you that the certification, the security and the norms were the regulations are getting there. In some countries, you have specific regulation. There is a global one which is coming from the United Nations, which is called GTR 13. It's a working group from the UN. And globally, most of the regulations on the continent, Europe, China, Korea, are deriving from this referential. So it's getting there. It's converging a lot and there are now a lot of uniformity brought to the technical field of certification. Because of certification, we do a lot in our tech center, in our development and of course, this is mandatory. I don't have to remind you that hydrogen storage systems are safety products like the fuel tanks we develop. So of course, a lot of testing and a lot of different testing during the development, but also during the production. Just to go fast and to give you a couple of figures, but I would be happy also to answer your questions, if any, on this. Each and every hydrogen vessel is tested with a safety factor of 2.25. This is the baseline of the certification R134 in Europe, for example. So if you are selling a product which is compliant for 700 bars refilling, you need to prove to the certification body that it is able to burst not below 15, 75 bars, 2.25 working pressure. That's what you need to do to certify the product before putting it in production. And when you are producing, you are not done with a certification body because each vessel, each vessel which is produced and delivered has to go through a nondestructive proof test, obviously, not at 2.25-plus otherwise, it would explode and would have nothing to sell. But it's still a 1.5 burst factor. So each vessel, which is put on the road, put on a vehicle is compliant with the certification and the resistance and the big coefficients of 2.25 and each product sold has gone through an hydraulic test, it's a test with water, not with hydrogen with the pressure of 1,050 bars -- 1,050 bars when it's a 700 above product. Quite important also, we are also validating certifying the fully assembled system for leaks, for high pressure with the same type of safety factor. And I think it's important, of course -- sorry, I wanted to get back to understand that all these certification bodies are produced and controlled, which are very safe today, forcing us to test and to cycle the vessels between minus 40 and plus 85 degrees, forcing us to put sodium ethoxide, there should sulfuric acid, methanol and blue on the vessels, chemical degradation and attack to drop the vessels from 5 meters high, et cetera, to put them in a bone fire to test the fire resistance. So all of this is part of the certification system. Hydrogen is a fuel. It contains energy. I'm sorry, but I think when you want to have energy, it's like in the gasoline, it's like in natural gas. Of course, you have energy, and you need to contain that. This is what PO does for a living with the fuel system. And this is what is also protected by worldwide regulations and referential, I can tell you that this is taken very seriously. Learning from the past experience of different GPL or LPG or whatever application, you have safety valves on each vessels and each systems. You have trigger temperature and pressure release device, which are activated when there is a fire on the car. You have a mechanical resistance, which is intrinsic to the product. So all of this, of course, is the object of what you could see in Genk, if one day we organize an event and of what we do. Of course there is an order book, so there is a capacity needed. So these are the capacity in the different 2 fields, capacity in high-pressure vessels and system in all the continents. Of course, the big buildup is between now and '25, '26. The first big SOP is in '24 next year for Stellantis and for Jaguar at the end of the year. Of course, the big, big order I was talking about at the beginning for an American OEM is SOP in '26. And then we have, of course, a large scale up, which is happening over time with capacities, which are being built. And this is the illustration of what we are building. So new dot on the map, the mega plant in the U.S. Last time, we told you that we were installing in Adrian, Michigan in an existing Plastic Omnium fuel system plant what we call a pilot line, which is a minor or small capacity that we developed for Ford in that case and which will be able to deliver 5,000 to 10,000 vessels per year. So it's small quantities. But of course, because of the acquisition of this new deal, we are building also Omega plant somewhere in the Midwest, most likely, not having selected yet the future location. Of course, winning strongly on our side to take also advantage at PO level of the IRA, federal subsidies and systems coming from the Department of Energy, going to local, playing a little bit competition between the different states and government. Laurent Favre, Felicie Burelle were recently with Governor Whitmer, the Governor of Michigan. But of course, we are visiting all the states and discussing with them what they can provide in terms of support, training cost, development cost, local facilities, subsidies, et cetera. So this is the U.S. France, you know, it is a project which is this time, heavily subsidized by the French government. This was the purpose of the visit of Prime Minister Elisabeth Borne a couple of months ago, EUR 74 million in total subsidy to develop this site and facility. And definitely in Korea, China, so in Eastern Asia, in Gyeongju, Korea, we are putting together that was also recently a communication and the groundbreaking of this new site, we are developing a plant for Hyundai, very close to Hyundai facility, in fact. And we are, at the same time, implementing a new footprint in the Shanghai province, in Anting. I will come back to that in a couple of slides because we have also launched this year a new joint venture with a fantastic partner, which will support the development of the Chinese business for hydrogen. And of course, there is a KPO present and coming with us also in the Shanghai province in Suzhou, developing around the ElringKlinger site facility to localize the production of bipolar plates and fuel cell stacks, important to access the Chinese market. So in short, big order intake, more than double since the last time, which is important, mostly and most balance and better balance between the continents. So building a footprint which is adapted to the configuration of the order book, but also putting parallel capacities on the 3 continents, Europe, Americas and Eastern Asia. And globally today, a good visibility on the order book, substantiating against the ambition of the division. Investment is key. We have spent a lot. We are spending a lot. We announced a couple of years back, an ambition to invest EUR 100 million per year on average. I'm happy to tell you, Laurent, that I'm meeting my target. Definitely, this is the money we need. Of course, it's capital intensive. There is a lot of development in orders. But when you have orders, you have also responsibilities to build the capacity. What is important for us is to be reasonable. This is PO. So one foot on the accelerator, but also one foot on the brake. Capabilities to build a standard design for our plants, which will be possible to stagger across the years. So we will build the first tranche of investment. We will then see the evolution and the ramp up of the volumes and then add a second tranche. So selective spots, pieces of land, building, which are expandable, capabilities which are expandable. This is also, I think, a differentiating factor for the next 5 years to be able to follow the capacity, the actual capacity and speed of the market. Today, we know for a fact that we have theoretical volumes, which are great, looking great. But we don't know at which speed the hydrogen -- the green hydrogen availability will evolve and that which feeds the infrastructure will evolve. So we are protecting the assets and the exposure in terms of cash and CapEx as much as possible. And of course -- and this is probably something that Kathleen, Laurent will comment a little bit more. We are using all the tools and the leverages we have to finance this growth and activity. Of course, I told you before, I think I feel a little bit like a teenager living at home with my parents. So I go to the fridge, and I take some food for myself. So the strong cash generation of the historical activities of PO are feeding me in the growth of New Energies. That's number one. But we are also fighting to gain access to large subsidies. You see the amount that we have written here, which is really what we have in the radar so far. So of course, it's a large contribution to the CapEx. And we are also gaining access to JV partners. I will take this example in a minute for China, where we have established a 50-50 joint venture that we consolidate from an IFRS point of view. But where, of course, 50% of the cash will come from the partner. It will not be reflected in the free cash flow because we will consolidate, but I can tell you that in real money and in depth, of course, it will impact positively the spend. All in all, pricing is very important. I think we said that commercial mobility, the content per car is amazing. Even if I go to the lower segment in terms of value, EUR 2,000, I said for the storage system of the passenger cars, it's 20x, 15x the value of a gasoline fuel system, which is costing between $100 and $150 per car. So definitely increasing the content, increasing the access to new segments, not only passenger cars, but commercial mobility. Competitiveness will be the name of the game in commercial mobility. We learned that -- it's not about the initial price of the component. It's about the total cost of ownership, so definitely access to global solution, which is affordable in terms of initial cost and price, obviously. This is one of the fights of the hydrogen world and to divide by 5, 6, again, the fuel sales tax price. Today, it's way too expensive. It has to go down. It's the same for the carbon fiber. It is the same for the storage solution, but of course, also to optimize the consumption of hydrogen and the performance, intrinsic performance of our solutions for them to be affordable compared to competition compared to battery electric and even compared down the road, of course, to ICE solution for review mobility. Industrial capacities, I have commented widely on the 3 continents, security and certification. This is what we do for a living. This is PO DNA in terms of product development, energy storage. And sustainability, I will come back to that also in a minute to detail to you our road map and our focus, especially in 0 carbon emission manufacturing. I was talking about partners to JVs, the one you know already, which was established technically 1st of March 2021, signed in 2020, at the end of 2020, covering, of course, the fuel cell stack development. Some of you have visited our fantastic plant in Dettingen an der Erms in Germany, production capacity of roughly 10,000 units per year today, which I think is still the biggest capacity existing in Europe, fully automated and robotized. And the new one, the new baby, which is newly born really created in the first days of 2023 officially, but which has just been incorporated in fact, 3 weeks ago on April 28, we received the business license from the Chinese government. So JV exists, it's going to be called PO Rein. Rein is a subsidiary of a large energy company called Shenergy. Shenergy is the #1 of gas and electricity power in the region in the province of Shanghai. So it's a large corporation. They are doing electricity, natural gas. They are doing a lot of investment in the renewable energy, deploying wind turbine field, solar panel fields and developing also hydrogen ecosystem, production of hydrogen through electrolysis and being embedded in most of the components and activities around hydrogen through participation. It's the case of Rein, very interesting partnership because obviously, Rein has already an interesting market share and positioning in China because they have a historical activity on the Chinese market and hydrogen storage, transportation, not only for mobility, it's a global vision. But for example, they are the worldwide specialists of 2 trailer shipments and H2 transportation. They have a large capability to address the commercial market with H2 storage cylinders. But what we call the Type 3, remember, the steel version. So Plastic Omnium is bringing the Type 4 technology, which is new in China, newly accessible. It has been open to the market in September last year. And of course, this combination of Rein being local, knowing the local market with the push of a large energy corporation, Shenergy is SOE, it's a state-owned enterprise, belonging to the SASAC Shanghai, so belonging to the government, helping us to be introduced in the best network in terms of commercial and market access. So this is created now. It will -- all the assets and all the projects that we have in China will be transferred to the JV. This JV activity is restricted to People Republic of China first. So there is a territorial limitation restricted also to the commercial market -- commercial vehicles market. Passenger cars are not included. But of course, we will boost this and we will take advantage of this great partnership to accelerate our penetration of the Chinese market. Brings me to people, which is one of the assets, but one also of the differentiating element in the market, hiring a lot of people. End of '21, it was 300 people roughly at many in total, including EKPO today, yesterday, it was 600. I think we'll end the year above 750, growing very fast, obviously, so integrating a lot of new skills, some coming from the automotive, some coming from other fields, energy, hydrogen, gas systems, software, electronics for the fuel cell system. So people who don't know exactly how the automotive business and how the mobility business is working, so a lot of effort. To be very honest, we have a good attractiveness today because we are in hydrogen in the 0 emission mobility. And I think in a field, you have seen outside the technological content, which is fantastic for the young engineer. But of course, bringing that together, incorporating that into the Plastic Omnium culture is an important challenge, which is there today, which will be there in the next 5 years because we will continuously grow the activity and at the same time, make it more global and grow the headcount at the same time. I was talking about ESG. I was talking about 0 emission in production. Important, of course, to look at that. These are the commitment taken by Plastic Omnium Group for 2025, respectively, in 2030 and Scope 1 and 2, what we master a PO, which is what we emit in our processes, in our plants. Our objective is to be neutral in 2025. And for Scope 3, which is the rest of the world, which represents a very large share of our global emission. The name of the game here is to reduce by 30% by 2030. This is the corporate commitment, the global one. And of course, for Scope 1 and 2, if I focus on that, 3 legs, I would say, to the strategy. The first one, which is the obvious one to reduce the energy consumption, to switch off the light when you leave the office, to turn down the temperature of the ovens when it's not necessary, et cetera, et cetera. The second one, of course, is to replace the fossil energy with the usage of clean energy, green energy. And this is purchasing activity, which is involving a lot of our energy suppliers. And the rest, of course, is going through compensation, which is PPA, as we call that. Of course, the name of the game will be to increase the 2 segments on the left and to decrease the segment on the right. But these are the 3 activities that we are entertaining to get there. For New Energies, we have established a plant model. I said that a bit before. So all the plants will look the same. You see segments on the picture at the top right. These segments are, in fact, the tranche I was talking about. Each tranche is roughly depend on the size of the vessel is roughly capable of doing 25,000 to 35,000 vessels. So each time I have to put a new tranche, I have a big box, and I am able to put new tranches of investment and to scale up the CapEx and the capacities according to the business model. So this plant will be the one will be -- which we will deploy in Europe, in Asia and in America. And of course, we will focus a lot on what we do. Our commitment is, of course, also to be 0 emission at SOP, which is next year for the first one. We are building specific facilities and buildings, in fact, with renewable energies on site, trying to implement wind turbine and of course, solar panels on the roof everywhere. Of course, we use PPAs when necessary, but we are also within the building using new strategies that we are designing with our architects and building specialists to be able to reuse the energy. We have a process which is a bit strange for high-pressure vessels in particular. We cure resin so we have ovens, so ovens are using a lot of energy. So we are trying to reextract the energy that we don't use in the oven and to recirculate it for other tranches of the process, with heat pumps and stuff like that. So specific methodological strategy to set up the buildings with the best condition possible to reduce the energy and to limit the waste. And of course, there will be a last very important topic, which is recycling. Recycling is the name of the game, especially for hydrogen storage. Carbon fiber is one of the core elements of a hydrogen vessel and hydrogen tank. And we are developing specific activities with a couple of start-ups with a couple of PGs right now to really be able to recycle in full the content of an hydrogen vessel. I'm talking about unwinding the carbon fiber, separating first the epoxy resin from the carbon fiber in the product and then unwinding and rewinding with the same carbon fiber. This is a project which is a bit long term. But by the way, the end of life first generation of hydrogen products will not happen before 2035. So we have a couple of years to prepare ourselves. But what we'd like to believe in is that we will be able to reuse a good portion of the carbon fiber, which, by the way, is good for environment, but which will be good also for the affordability, I was talking about because carbon fiber is an important element of the bill of material and the cost of the product. So of course, all this contribute globally to the strategy, the ESG and the taxonomy strategy of the group. It's very important. I think we are developing 0 emission vehicles and enabling the remission mobility, which obviously is very important. We are increasing, and we will increase the hydrogen revenue and the share of hydrogen revenue in the total growth of the company, not difficult. It started from 0 a couple of years back. So of course, it will grow and change the configuration. At the end of the day, of course, the share of the economical revenue of the group, which will be eligible to gain activities will increase over time and reach 19% that is written there. There is, of course, we hope, more interest also longer term for investors. And the contribution that we are doing for sustainable mobility is a virtuous circle that we value a lot in the global offer. That was it. I was as fast as possible. I will hand over to Laurent for the conclusion. I will invite Kathleen to join us on stage also for conclusion for the Q&A. Thank you very much for your attention.

Thank you, Marc. I don't know if it was fast enough. I hope you've got all the information you wanted to get about hydrogen. I try to sum up, but everything was mentioned. I think the last time we met, we were showing you what we have the intention to do now is becoming reality. We got a lot of orders, 4 billion orders. It will be much more in 1 year. You will see that. We are building factories. We are building capacity. We are investing that it is really becoming reality, and we do see a lot of acceleration in the market on all the markets. What I like the much, the most basically is really that we will invest in all the big regions of the world, that is in Asia and Europe, in the U.S. because it just shows that the world is investing in hydrogen for the mobility. We have, for sure, the ambition to be #1 because in everything we do, we have always the ambition to be #1, and we are good on track. That means you do see the market shares we are targeting. And with the order book we have today, we can just confirm those market shares, I believe, will be even higher, EUR 4 billion order intake, should be growing in size in 2030 and that's just the start of a journey. For sure, the momentum won't stop in 2030 because we aim for much more. And we see, again, many players entering into the hydrogen world. That was our presentation. Now we move to the Q&A. We have the support of Kathleen for all the financial questions all the rest, if you want, and Marc and myself, and I hand over to you.

The question is always, is it Thomas or Akshat. That is Thomas.

[indiscernible]

Now regarding the breakeven, the target margin, first of all, the target margin, we are targeting basically a higher margin than what we have today in a normal pure world, which is what we need in order also to have a payback with the investment. The ratio investment to sales is not different than what we have in other activities, by the way. We are just -- we just need to put in capacity in place, capacity we are going to use not only for one program, but for much more. But what we are targeting in terms of margin is for sure when the volumes will be here, is for sure higher than the average margin of the group. It has to be contributive to the group performance and to the valuation of the group, therefore, the target is higher than what we have today. The breakeven for 2025 is our target, remain our target, will depend on the volumes for sure. But as of today, there is no reason to change that and we are putting the capacity in place. And Marc did explain that what will be very important for us is for sure to invest but to be pretty cautious and that is the reason why we have been developing and that is what Marc showed before, scalable facilities. Therefore, even if the customers say, it's 100,000 to invest step by step, that's what we mitigate the risk, the exposure, which is important for the free cash flow, for sure, but also for the breakeven because we will have less -- also less depreciation. And therefore, we are still targeting the breakeven in 2025. Regarding Hopium, Hopium was first of all, was not a start-up production before 2025. There is no impact on 2025. And then in the way we do assess the order intake, we always discount depending on the maturity of the customer. If you have Stellantis, it doesn't mean that we believe everything what they do announce, but we discount a bit the volumes because it's normal. It's a new technology. It can be 10% to 20%. If it's a newcomer like Hopium, because nobody knows if they are able to produce a car, we may discount 90% to 95% in our investment, in our assessment of the business. Therefore, there is no impact on 2025. And basically, we wanted to use the same capacities than the ones we are putting in place for Stellantis and Hyvia. Therefore, there is no impact for us, Hopium basically. [indiscernible] that's a French player cannot play an important role, but maybe they will, they will find a way to make it happen. And by the way, the issues they are facing are not linked to hydrogen, Hopium, they are just realizing that if you want to produce a car, you need to invest at least EUR 1 billion or EUR 2 billion and not EUR 200 million, it doesn't work. That is the reason. No matter of battery, hydrogen or combustion engine, that is, I believe, the main topic they have. The competitive landscape, I mean, first of all, we have today in the fuel system, we are more or less 25% market share, which is a very mature market, a lot of players since many years, and the big part, which is still produced by the customers themselves. Therefore, to target 25% for us, it was logic for hydrogen, new technology and less players and no intention from our customers to produce high-pressure vessel internally, except Toyota today, but they will probably change their strategy [ tomorrow ] therefore, the size of the market, which is addressable is even bigger than the one in [indiscernible] system. As of today, difficult to know, but for the big volumes, Marc was saying that we are probably more than 50% market shares. Are the others sleeping? I don't know. I'm not with the others. But I know that we are not sleeping that the team is doing a fantastic job. And I think we have really a great advantage in terms of technology. Marc did explain, you saw that before that inside the vessel, you have a plastic part, the blow molding part, which is very important for the competitiveness and the performance of the high-pressure vessel, and that is something we are doing since many years for the fuel system. That means it's coming from the same technology. And that is something the competitors don't have. They are not able to produce those kind of big parts out of blow molding, there are different technologies, and they are less competitive in terms of cost, but also in terms of safety, basically. On top of that, in terms of carbon fiber, we are the ones having invested in Composicad, which is the company developing the software to optimize the way you use the carbon fiber around the vessel. Therefore, I think in terms of technology, we have great assets. And I believe that the team is very agile to work with the customers to convince them and to try to combine what we have today as I said with the CES solution in business and to invest in new technology. Therefore, I strongly believe it's because of our performance much more than because of our -- of the competition, which is not diving. And in terms of hydrogen storage, do we want to explore new opportunities of market, it was not the main priority because the big volumes are, first of all, in what we saw before. And the order book is about EUR 4 billion. The order book -- potentially, the order book could double in the next 12 months and basically with all the activities we have. But we believe there is probably a market which is going to develop -- to develop the infrastructure, not for the stationary one, but for the ones you may need to refuel some [indiscernible] and that is something we are going to investigate probably in China, for example, because that is what our partner is doing in China. And that will be a good market for us because for that, you need to have also a different sales force and so on you are addressing that to different customers. But as Marc explained, we are extremely happy of the partner we have in China because the Shenergy Group is a huge company. They do provide 90% of the gas in Shanghai, 90% is a lot and 35% of the electricity. Therefore, they are the energy provider of the Shanghai region and they are investing in the complete ecosystem of hydrogen from production, infrastructure distribution and being their partner for the mobility segment will open us a lot of market in China, not only for the mobility itself, but what you've been mentioned before. Thank you.

3 questions from me as well, please. The first one on China. In your analysis of the market and when you're creating this JV, can you just talk about the competitive landscape in the market today? How many players are competing in fuel cell stacks, fuel tanks? What do you think is a market share that is actually achievable in that region going out to 2030? So that's the first question. The second question is on your total investments. I know you talk about average EUR 100 million per year. Do you have a more concrete plan in terms of how much do you plan to spend now in '23, '24 and '25 based on the order book that you already have? And the last question is more on your CapEx strategy and how you think about retooling your plants, i.e., pilot facilities versus mega plants. Because now you have a big order in North America, you're spending money on a mega plant opening that facility for that OEM. How do you hedge your risks there if the volumes don't match up to your expectations or if the market is slow in coming up?

Maybe I answer the second -- the last question and Marc will answer the first ones, which are very specific to the market. In terms of investment, we try as much as possible to reuse what we have today. We started in Europe in [indiscernible] which is an existing facility, producing SCR system, fuel tank, and then we did -- we'll use the surface to make the first production of high-pressure vessel and we are investing in more capacity there because we can reuse people, potentially equipment, we can share the costs and so that is very, very efficient. That is the same way we have been starting in the U.S. with the [indiscernible] factory that Marc was mentioning. And in Korea, we are also trying to be very close to an existing factory. That is the most efficient way to start. Now when we are talking about big plant, mega-plant, we are mentioning, like in France in Compiegne. In Compiegne, we had the possibility either to reuse an existing facility for fuel systems because we are there to set up a new factory. But because we want to be also carbon neutral in the production, it was even more costly to renew a 40 or 50 years factory instead of being up a new one. Therefore, we are close to the existing one. We can reuse the people, which is good for the people, which is good for the social cost as well. But we start from scratch because in terms of efficiency, it's much better. In the U.S., we have the group problem that our facilities are all fully booked. That means we have not only booked big orders for hydrogen because for the fuel systems, you may have heard that with the same OEM, which is good for our strategy because it does demonstrate that is exactly what the customers are expecting from us. That this big American OEM gave us a big business on hydrogen, but also is consolidating the fuel system business around us, killing the competition and giving us much more business that what we had in the past. Therefore, our facilities are fully booked in the U.S. We don't have space. Therefore, for Marc, there is no possibility to reuse some space, but as much as possible, we try to reduce. Do you want to answer on the China topic?

Yes. Small component also to this point of the pilot line and the mega-plant, the pilot line we are using, the ratio between the 2 is 1 to 10 roughly in CapEx, 1 to 10. So the pilot line investment is way lower in capacity. And if this capacity remains, it will be kept also for the smaller customers in volume, trains, buses, companies, et cetera, we stand our products. So I think we have really 2 segments of our activity. One which is in volume is marginal, this type of buses, public transportation element that we would keep in the pilot line dedicated to this type of customers. And of course, the large OEMs, the blue chips, where we would have the mega plants and the way larger volumes. So this is the way we could also segment by continent these 2 facilities. For your first question about the competition in China, really different from the 2 product lines. For the storage hydrogen, there are basically 5, 6 companies in China, well established today sharing the market. But on the Type 3 technology and the former technology, which is the metal, the aluminum liner. The Type 4 has been recently introduced to the Chinese market. And of course, Plastic Omnium, but also for FORVIA but also [indiscernible] they came to China, partnering with companies. This is what we did with Rein. This is what our key competitors I just mentioned have done also with a few of the local players. Now switch to the new technology is the name of the game. Speed is the name of the game. So there are a lot of competitors, but the technology of Type IV is brought by western companies and players today and the introduction of those new facilities that we are building and that probably the competition we'll try to build will be the new setup of Type IV technology, which will little by little replace completely the old technology. So investing quickly in China is probably the name of the game to acquire the new market shares of the changeover around the technologies. That's my vision for storage. And for fuel cell stacks, it's crazy and fantastic market in China, lot of activities, lot of great companies also. You have first OEMs willing to introduce their own technology and developing it. This is a case of gradual for FTXT, which is our subsidiary, developing a fuel cell stack and assistance technology. SAIC does that also with SHPT, Shanghai hydrogen powertrain. You have a great company called [indiscernible] which is Chinese developing great techno. Here again, China has been closed for a couple of years for obvious reasons. I think to our disadvantage, we are not able really to connect with those companies and to see where they were. Now we are getting back to China, being able to realize what has been done over the last 3 years. The good news for us is that they were not allowed to get out of their country during that time. So the race is starting again. I think there is very good techno. Our target and our technology today is EKPO based, in Suzhou, Shanghai province, we are locating today. We have manual assemblies of stack. We will localize bipolar plates production over time to be able to have local content. It's very important in China to have local content. I'm very confident with the quality and the performance of our stack, but we need to make it local to succeed in China. So this is the name of the game.

And I think the Chinese market is much more [ crowdy ] as Marc was mentioning for the fuel cell stack than for the storage system. Therefore, I think we can be confident to have the 25% market share on storage plus because also we have the right partner. That's important, not only for the technology, for the fuel cell stack is much more crowdy because there are a lot of great players and therefore, it will be difficult to say how much we can achieve, but it will be much more competition on that.

And just coming back to the -- to the total investment and the profile of investment that you referred to. So as we said, roughly EUR 100 million per year on average. And so when we announced our hydrogen strategy in 2020, projected to 2030, it's not very difficult to say roughly what the scale up will be. So it will be around EUR 1 billion, EUR 1.1 billion in total investment. And as you can see from the ramp-up of the volumes that we showed in the slide, the peak of the investment with what we see today with the orders that we have today and the visibility that we have today, will start this year, but it will essentially be between 2024 and 2027. As you saw the start of productions will be from next year onwards with a big portion in 2026. And so from the order position today that we have, as of 2028, should go down again unless we win new orders, of course, and then it's another story. But based on the current situation today, that's the profile.

And if I can complement a little bit to make it very simple. You have seen that we are building 4 plants right now, Korea, China, U.S. and France. We have those pilot lines. But again, the entry ticket for the CapEx is way lower. The ballpark figure for one big plant of HPV is around EUR 100 million. So with the spreads that Kathleen explains, spending the money from today to 2027 and with the subsidies impact that we are getting, this is also mitigating a little bit our CapEx because we are not only spending in the steel CapEx, we're also spending cash on technology. But globally, the ballpark figure of EUR 400 million per year makes sense.

Pierre, Stifel. 3, if I may, on your profitability roadmap, do you still have the same assumptions regarding new energy vehicle losses for 2023, which should be around minus EUR 35 million, if I not mistaken, first one. Second one, regarding free cash flow, when will you start cash absorption and which free cash flow breakeven, should we think about 27%, 28%? And last, maybe more to Marc Perraudin. What's your unique saying point in the hydrogen business versus your key French competitor? What makes you different from techno, the cost? And maybe a follow-up on that one. Regarding shareholding structure, would you be happy to welcome an OEM on board.

Because I know where it is coming from, no, we were of nothing against OEM, but I think for us, it's important to -- it's a long-term strategy in hydrogen. We believe in 20 years, there will be a lot of kind of mobility being part -- I mean heavy hydrogen, sorry. And we don't want to take the risk to lose the independency to address the complete market. Never say no, nobody knows what can happen. But for us, it's much more important to keep the market addressable as big as possible, instead of having maybe a strong partner, giving us opportunity on short notice, but preventing us to have other opportunities in the long term. And therefore, it's really not our strategy. Could we find another partner giving us other opportunities to grow or supporting the growth, opening markets, different kind of market, why not? But it has to open us markets and not to close us a big part of the market. And therefore, the OEM is for sure not the profile of the company would like to have with us to develop the hydrogen business.

Coming back to your first question, Pierre-Yves, if you would allow me, it's not facetious, my answer. But we're not making losses. We're investing in the future. And there's a distinction between what is eligible as CapEx and OpEx, but it really is an investment. And why? Because the essential part of that investment is linked to the ramp-up of the staffing that we showed you before. And you have the right ballpark figure in mind for 2023, which is fairly stable. It's basically the same amount as in 2022. So as you can see, we're really mastering the situation and looking for productivity even in these activities where if we can, I'd say, more synergies with the other activities and the competencies, the shared services that we have in the group. In terms of free cash flow, the cash absorption, most likely will probably be 2027, 2028, as you could see, where we've got the more leverage in the ramp-up of the volumes. But keep in mind, we want this to be a growing business. So if it does continue to grow, in particular beyond 2030, if we start looking at the passenger vehicle segment and things like that, there may be a new campaign of investment that's required, but that's the current situation.

Question number 3, I will take this one, competition. Of course, I won't comment and I won't say obviously that I'm better than them. What we sell that I can comment. Laurent mentioned it. I think we have a core technology of storage of energy, which is giving us an edge when it comes to hydrogen storage solutions. It derives from our capability to master and to be credible with customers and safety products, implementation, certification, production. It also derives from our global background of technology in blow molding of the liners. It's not minor. It is the plastic envelope that you have seen outside before the carbon implementation, but it's not nothing, because we do millions of fuel systems every year. So we know what it means to scale up this type of technology, where the alternatives in process are more adapted to smaller volumes or more expensive or creating more risk. So I think the background and the techno of Clean Energy Systems division brings a lot of value and credit to our offer, and we have invested since 2015 in unique design tool. Laurent was also mentioning Composicad, I think in terms of developing, putting in place technical facilities, I mentioned the one in Belgium. We are doing the extra mile, and we are focusing and Plastic Omnium has been focusing on hydrogen development. And I think that is starting to pay back. In fuel cell, we have a fantastic product. I was very proud to bring some of you a new player in Dettingen last year. I think what you have seen makes a difference when it comes to customer, it was not well known, 2021 when we created the JV, but I think the more customers are coming to us and visiting the facility, the more they realize that the offer that we have is more industrial, more advanced, more powerful than some of the alternative offers. And I think the product quality pay is also in that side. Of course, we need to maintain this advantage and to continue to develop. We are just at the beginning of the hydrogen story. The generation -- the current generation of products will not prevail in 2030. So it's still a lot of technical development coming up. But I think this is what I would call our competitive advantages.