Piaggio Group’s Q1 2025 earnings call highlighted a challenging market environment, with declines across several key regions, including Europe and the United States. Despite these difficulties, the company maintained a strong gross margin of 30.5%, up from 25% in 2022, while achieving impressive revenue growth of 30.5% over the last twelve months. The stock, however, experienced a significant drop, falling 8.17% to 1.775 as of the latest trading session. According to InvestingPro data, the stock is now trading near its 52-week low, with a P/E ratio of just 5.81, suggesting potential undervaluation. Piaggio remains focused on cash management and strategic investments in both thermal and electric engine technologies.
Key Takeaways
- Gross margin improved to 30.5% from 25% in 2022.
- Stock fell 8.17% amid market challenges.
- Focus on cash management and technology investments.
- Market declines in Europe and the US; growth potential in India.
- Transitioning to Euro 5 plus vehicles.
Company Performance
Piaggio Group navigated a tough Q1 2025, marked by market declines in Europe, the US, China, Asia, and India. Despite these challenges, the company improved its gross margin to 30.5%, reflecting effective cost management and strategic focus. Piaggio aims to maintain its competitive edge through investments in both thermal and electric engine technologies, while focusing on product upgrades instead of entirely new launches.
Financial Highlights
- Gross Margin: 30.5%, up from 25% in 2022.
- EBITDA Guidance: Around €290 million for the full year.
- Net Debt Target: Below €500 million.
- Inventory Reduction: $20 million compared to last year.
Market Reaction
Piaggio’s stock fell 8.17% to 1.775 following the earnings call, reflecting investor concerns over market declines and potential tariff impacts in the US. The stock is trading closer to its 52-week low of 1.611, indicating a challenging environment for recovery.
Outlook & Guidance
Piaggio remains optimistic about market stabilization in the second half of 2025, with a focus on cash management and controlled capital expenditure. The company plans to explore expansion opportunities in Africa and expects potential market recovery in Europe following the Euro 5 plus transition.
Executive Commentary
Michele Konanino, CEO of Piaggio Group, emphasized the importance of cash management, stating, "Cash is the priority for everybody around the world." He also highlighted the company’s commitment to innovation: "We will continue to invest in all the technologies, so, thermic engines, safety, electric engines." Konanino sees Africa as a promising market, noting, "Africa could be the next India for our business."
Risks and Challenges
- Market Declines: Continued weakness in Europe and the US could impact sales.
- Tariff Uncertainty: Potential US tariffs may affect profitability.
- Currency Fluctuations: Hedging strategies are in place but remain a risk.
- Electric Mobility: Low margins in India’s electric segment could strain profitability.
- Supply Chain: Restructuring in China may pose operational challenges.
Piaggio Group’s Q1 2025 results underscore the company’s resilience amid global market challenges. The strategic focus on cash management and technology investments positions Piaggio for potential recovery and expansion in new markets.
Full transcript - Piaggio & C (PIA) Q1 2025:
Mr. Dufotto, Conference Call Moderator, Piaggio Group: Thank you very much. Hello, everyone, and welcome to this conference call concerning the first quarter of twenty twenty five financial results. Today’s conference will be hosted by Group Chief Executive Officer, Mr. Michele Colanino and the Group CFO, Alessandro Simonotto. Today, we have also the pleasure have with us, Piagio Group Executive Chairman, Mr.
Masteur Konanino. You can access the slide supporting this conference call on the Internet at Piagio Group website. As usual, before starting the presentation, I need to remind you that during today’s conference call, we may use forward looking statements based on Piagio’s current expectations and projections about future events. By their nature, forward looking statements are subject to risks, uncertainties and other factors that can cause actual results to be materially different. As mentioned also in the Safe Harbor statement included on Page two of today’s presentation.
Also, I remind you that the press has been invited to participate in this conference call in a listen only mode. With that said, let me turn the call over to our CEO, Mr. Michele Konanino.
Michele Konanino, Group Chief Executive Officer, Piaggio Group: Thank you, Mr. Dufotto, and good afternoon to you all, ladies and gentlemen. Thank you for joining our conference for the first quarter of twenty twenty five. Let me briefly summarize what characterized the first ninety days of the year. Given that as you all can see, overall markets in the world has shown decline numbers for the business for the mobility of two wheel and four wheel business in Europe, USA, China, Asia and India.
Even that markets go up and down and we are present in all those countries, I would like to outline that we are at the peak level or at the gross margin level. It means that, well, I’m very satisfied and proud of this, because given the fact that revenues are down and this is effect, we have maintained a 30.5% gross margin. I would like to also underline that we started from 2022 that we were at 25% of gross margin and we continuously improved our processes and productivity management even if we showed this year decline in revenues. It is particularly important to say that our, let’s say, generation of new processes to maintain and control day by day what happens around the world in our production plans, in our purchasing processes and in all the numbers around the production of vehicles is very satisfying. At least, we have confirmed what we told you last year that the productivity and the margins would have been the drivers and the strategy around what Piaggio would have managed both 2024 and 2025.
Markets are down and we are in a situation in Europe where we still have transition from Euro five and Euro five plus that’s normal. It is every time you have a new introductions of lows and the regulations for pollution, safety, drivability and it is totally a consequence of having a stock dealer stock that is going to zero from what it was at the end of the year for the Euro 5 and we are now at the end of the process introducing Euro five plus vehicles. I told you that April will have been the last month of introducing to the dealers network our new vehicles. USA, USA is down by 10%, the market. Well, USA is especially patient waiting to see what would be the impact of eventual, we don’t know.
We see some difficulties in understanding what we go on for the next months regarding tariffs. As I had the opportunity to point out some weeks ago, we will manage the situation. It’s our job to mitigate tariffs and we have done exercise and taken decision to reach the goal of mitigating the process, mitigating the problem and don’t have impact or let’s say big impacts on USA profit and loss statement. Asia, Asia is down. The consumer market is not recovering, especially in the premium market, even though we saw Vietnam in the last quarter that has shown, let’s say a plus, even it is a small plus, it is a plus compared to previous quarters.
And Vietnam is very important for us, because it’s a good market, it’s a rich market and it’s a high margin market. China is still suffering. You can see in every day press launch that the automotive that it’s not our market, but it’s a mobility market is showing low numbers for imported vehicles. Even though we have a production facility there that we are restructuring and that will be at the end of twenty twenty six, let’s say, quite new and we will think and we are thinking of launching dedicated products for China market with our brands, but following what’s going on in China that is one of the biggest electric mobility business in the world. So we will invest in those kind of vehicles for the Chinese markets.
For the timing, it’s not for exports because outside of China that business is still very, very low. You know we are investing, we will continue to invest in all the technologies, so, thermic engines, safety, electric engines, because we think, I think that the market will evolve. It could take times, but we will be ready to fulfill the needs of the customers, whether it is thermic or whether it is electric. Let’s say India is a place where we are growing at an EBIT level, because we are happy of being there. The market is still going well.
Electric mobility in India in three wheeled and two wheeled business is a low margin business. We have the vehicles, but we are not pushing, just waiting to have a better purchasing power and reducing costs in the country. I’m positive in India, you know. I think it’s a good place to be. It’s an enormous opportunity to be there and we will start in June evaluating the results of our studies about introducing new vehicles for the two wheeled business there as we see that we can match the competition now given that the GDP per capita is growing and we think we are now able to compete with other brands in India.
We will launch electric vehicles in the next years and we will continue to launch also vehicles in India in the next years. As far as other markets are concerned, let’s say we are thinking about going into Africa as you know from India and I confirm to you that strategically in the medium to long term is a good opportunity for us. And I think that Africa could be the next India for our business. As you can see, the first quarter of the twenty twenty five has shown reducing value in our inventories, it is positive minus $20,000,000 compared to last year. We are managing the cash flow in the proper way.
We have done better cash absorption compared to the first quarter of last year. So I think that from an operation and cash management point of view, Piaget is doing a good job. Obviously, we wait from some stability in the world, given that the geopolitical situation is not recovering. But given that we are managing the cash and investments as we targeted, I think that we will continue to reduce and work to reduce our inventories in the next quarters and to manage as in the first one, cash and CapEx. We wait to see a reburn of the Asian markets.
As I told you, there’s some slightly positive event in Vietnam. Thailand and Indonesia are still interesting for us obviously. And so given that the end of the year, it’s difficult to forecast if any other geopolitical or extraordinary events will come on the table, given that it’s enough what we are managing. I think that there could be by the end of the year, that the second part of twenty twenty five, we forecast a better results compared to 2024 that has been slightly negative. So I’m not negative on the year.
Well, markets are what they are, The business is what it is, but we can still see some number around two ninety million dollars at the end of the year EBITDA. It is difficult, yes. Many, many, many challenges are on the table for everybody, not just for Piaggio Group, but with the strength of our brands and with the launch of the new products that we are doing all around the world, I think we can still work on it. Obviously, first priority is to continue to, as I told you, to manage cash. Cash is the priority for everybody around the world, given that it is difficult to forecast what happens around markets on new vehicles purchasing in Europe and U.
S. For sure, what we are doing, it’s very positive for the gross margin even for the next coming quarters, because we have in place all the processes that are necessary to maintain this kind of numbers and to be in line with the EBITDA percentage compared to the first quarter of this year. Obviously, we will not increase the or push the accelerator for capital expenditure unless we see some stability in the markets. This is another consequence of managing cash. That’s what I can say about ninety days of the year at the beginning.
And I’m very satisfied of the people. They are doing their job. We are doing our job. And I repeat that Page number seven, I guess, where we show the gross margin number six, sorry, the gross margin compared to last year’s, it is notable the job that has been done. Considering that this year, the revenues are down.
So, Rafael, I think that this is mainly what happens in the ninety days of 2025. I’m ready for Q and A or whatever you need from us.
Mr. Dufotto, Conference Call Moderator, Piaggio Group: Okay. Thank you very much. So I’m speaking to the operator. We are ready to start the Q and A session. Thank you very much.
Chorus Call Conference Operator: This is the Chorus Call conference operator. We will now begin the question and answer session. The first question is from Monica Bosio from Intesa Sanpaolo. Please go ahead.
Monica Bosio, Analyst, Intesa Sanpaolo: Good afternoon, everyone, and thanks for taking my questions. I have three. First of all, thank you for the EBITDA and EBITDA margin indication for full year. Now coming back to revenues, I know it’s difficult to predict, but the first quarter was hit by a decline in market demand and on top we had the shift to Euro 5 plus in Europe and in Western markets. So can we expect a reversal of this trend, of the negative trend of the revenues in 2Q in the second quarter, particularly in Europe?
The second question is on the free cash flow generation. You did very well on the inventory side. Cash generation is a top priority. So are you confident with consensus expectations, flagging net debt at roughly EUR $480,000,000 or maybe we can do something better? And the very last question is about strategy.
In the past year, we have seen a strong focus on motorbikes, both in terms of product launches and marketing. In contrast, maybe I’m wrong, there haven’t been any major new scooter launches. How should we see this? Is it permanent strategic shift for the group or what else? I’m just asking because the scooter segment is the most profitable and cash generative.
So any flavor on this would be very helpful. Thank you.
Michele Konanino, Group Chief Executive Officer, Piaggio Group: Thank you, Mrs. Bosio. This is a situation where it’s difficult as you said to predict the revenues by the end of the year. And net debt is a consequence of that element because cash flow is generated by revenues. Having said that, well for the second quarter of the year, I do not expect a jump in sales given that we are in April and the season especially in Europe is just entering the high peak season.
Remember that last year, second quarter was quite positive. I would say that by the end of the year, we can have some positive well, we can have positive results in revenues given that the second part of last year has been affected by declining volumes. So I don’t see that we have to tell whatever happens in the next weeks or two. We are foreseeing at the end of the year for sure, because it’s totally unpredictable what happens in the markets. Cash generation, I repeat, it’s totally a consequence of revenues.
You asked for €480,000,000 I would say that the target is to be around 500,000,000 lower than 500,000,000 but not higher than 500,000,000 This is what I have in mind in a tough situation. The situation is not easy, but not for Piaget, not for scooters, not for bikes, it’s because the consumer is waiting for some stability. Everybody has a family and they continuously have been affected by news, negative news coming from around the world. So I think it’s just a momentum where people are waiting. It’s not they don’t want they don’t have money or they don’t want to buy.
They’re just waiting. U. S. Especially, if you see U. S, for instance, the market is a big market for medium bikes.
We are just launching our new four fifty seven bike in U. S. And I think that as we can manage the price list in the proper way, the American market is interesting. Yes, you are right, we invested in bikes. We have done a good job, given that the new bikes we launched has totally given us the return in revenues substituting these appearing markets such as the 50cc scooters around the world.
So we have maintained our value even if some market has disappeared. For scooter strategy, well, it’s not true with not launching new scooters, because we don’t have to put on the market too many vehicles. We have enough vehicles. I consider the new Liberty as a new vehicle, even if it is a Liberty, but the upgrading of the Liberty, of the Medley, of the Beverly, of the MP3, of the Vespas are more than enough for our dealers in the markets of today. If you see our competitors, perhaps they have lower numbers of vehicles their pricing pages.
But everybody is continuously updating the technology more than the hardware. The hardware of a vehicle, there is the frame or some design upgrade, it’s what you have to do. It’s not necessary to put on the market totally new vehicles. We will introduce totally new vehicles as I told you in India, because India is a different market. But for Europe and U.
S, I don’t see the necessity to introduce totally 100% new vehicle. It’s an ongoing evolution of the actual product range. But also in motorbikes, as I told you, we invested in motorbikes because we had to fulfill some gaps. We had the gaps with competitions in some medium engine vehicles and we fulfill the gap. But now, as in scooters, and that’s why I told you, I don’t remember if in September or in December, that our capital expenditure in new product will decline in the future as a consequence of not being obliged or not having gaps compared to the competition in displacements or technology.
So it is more, let me call it maintenance, even if it is not maintenance, but it’s an upgrade of the technology installed on our bikes and scooters obviously. In future, it doesn’t mean that we will not launch new vehicles obviously, but you know, Vespa is a Vespa. We will have upgrade, perhaps some new design, perhaps some new software, but Vespa is Vespa.
Unidentified Speaker: Okay,
Monica Bosio, Analyst, Intesa Sanpaolo: got it. Thank you very much. Thank you.
Chorus Call Conference Operator: The next question is from Nicolas Torel from Kepler Please go ahead.
Nicolas Torel, Analyst, Kepler: Hi, good afternoon and thanks for taking my two questions. The first one is on gross margin. If we look back at Piaget history, usually, they’ve always had a stronger Q1 and then on average, a deterioration in the coming quarters. So is it reasonable to expect this to happen also in 2025 or things have changed and so we might expect to keep high levels throughout the years. The second question is related to currencies movement that we have been seeing, and in particular, S.
Dollar. If we have to imagine to leave from now on in a world where U. S. Dollar is structurally weaker, which could be the impact on your profitability? Thank you.
Michele Konanino, Group Chief Executive Officer, Piaggio Group: Thank you, Mr. Zor. Well, for the gross margin dynamic, I would say we will be around what we have achieved in the first quarter. Then if it is a 0.2 better or worse, I’m not able to tell you today, but we are working to maintain this kind of number. Obviously, now this kind of number is also affected by some logistic costs that we have, given that the timing of logistic due to the Suez Canal, due to the wars around the world, it’s slightly worse comparing to prior years.
So it could also happen that if we have some relief around the world, we can confirm as you said the 30.5%. But let’s say we will be around 30%. Currencies is an interesting question. Well, we decided as we do all studies and we do all our analysis, we took the decision to cover some international currency whenever we saw the possibility and the window to maintain the gross margin. So whatever we see the possibility to have no problems related to U.
S. Dollar, Chinese renminbi or Indian rupees that are somehow is tariff in this kind of situation. Whenever we see the possibility to ensure the margin, we took without any speculation obviously the possibility to hedge the currency. I don’t know if it will be weaker or not. Everybody in international banks and international studies said that after the new administration came in, the dollar would have been stronger, it has been the opposite.
So, we follow the situation, we take the opportunity, the market offer some opportunity without having hysteric movements on currencies. Currencies are not our business. If you can cooperate with hedge, it’s better to do this. Then perhaps you lose some opportunities, but this is speculation. This is not managing a production business.
Nicolas Torel, Analyst, Kepler: The
Chorus Call Conference Operator: next question is from Emanuele Galazzi from Equita. Please go ahead.
Unidentified Speaker: Two couples from my side. The first one is on Europe particular in the competitive environment. I was just wondering what you are currently seeing in the market in terms of, let’s say, commercial policy from your competitors like Discount? And the second one is on the APAC. Clearly, the visibility is low.
The premium segment was still down in the first quarter. But just to understand what kind of situation you have seen in April with U. S. Tariff kicking in and if you have seen any change in your client attitude there? Thank you.
Michele Konanino, Group Chief Executive Officer, Piaggio Group: Thank you for your question. Well, Europe is obviously a competitive market given that it is by value still the biggest in the world. So everybody is interested in coming in Europe. What I think we have done properly is not reducing our pricing point, but maintaining our pricing point and not entering in big discount where I’m speaking about Europe. And we will continue obviously, we will manage with our dealers, some promo, some opportunity given the situation in special countries.
So commercial opportunities on the table, will take opportunity to participate. But it’s I think it’s wrong, it would be wrong to enter in a price war, given that the competition is not 100% balanced with Chinese markets coming to Europe. Players doing big discounts, but I don’t think we would benefit from it. The market is there and it is still lower than last year. So the risk is that you discount, but the number of vehicles is not increasing so much.
So it’s better to maintain the pricing point and to continue to invest in our brand equities instead of showing a lower price to the customer. APAC is the same. We are maintaining the price. We are not reducing our investments. As you know, I’m positive on APAC for the medium to long term period.
The curve is positive for sure. Money up there. So I hope that this situation of the business is quite difficult as you said, I agree with you to predict from tomorrow morning what happens, but I’m positive. U. S.
Tariffs, I said we will manage and we will manage through commercial deals with our dealers through our dealers to reach the customer. We have a correct pricing point there now, if and when and how tariffs will come on market. For sure we will have to study some new commercial policy for being competitive in the market. It is a big market, especially in the bike market, medium sized market is very interesting for And that’s what I can foresee for U. S.
Market. Are in a wait and see position. Some customer is buying, predicting that tariffs will come. So you asked me April, well, we don’t disclose a monthly review for our business, but April for instance in The U. S.
Has gone well. But because it’s just a psychological situation where some customers said, hey, it’s better to buy now instead of having 25% increase in June. But numbers are not so big for us, especially in the scooter market. So the impact very low, let’s say like this.
Unidentified Speaker: Very clear. Thank you.
Mr. Dufotto, Conference Call Moderator, Piaggio Group: Thank you.
Chorus Call Conference Operator: The next question is from Ana Frontini from Berenberg. Please go ahead. One from my side. If you can please confirm the expectation for the absolute EBITDA for 2025, please?
Michele Konanino, Group Chief Executive Officer, Piaggio Group: Sorry, I told you perhaps you didn’t listen or was not so clear. We expect now as we are speaking to be around $290,000,000 by the end of the year, million euros up.
Chorus Call Conference Operator: The next question is from Gianluca Vertozzo from Intermonte.
Gianluca Vertozzo, Analyst, Intermonte: I have a question on Europe and in particular about the stock level here. Are you happy with the stock level? It has increased or decreased compared to fourth quarter or remained stable? Because I saw you had lower market share compared to last year in a declining market. So maybe if you can elaborate on that, it would be helpful.
Thank you.
Michele Konanino, Group Chief Executive Officer, Piaggio Group: Well, it’s also written on papers. The declining market share is not relevant in the first quarter of this year in Europe, given that we have Euro 5 to Euro 5 plus transition. So you have used vehicles or Euro five markets that is going down. At the moment, we are selling to dealers the new Euro five plus vehicles. So the first quarter is not relevant, so relevant for the market share for scooters and bikes in Europe.
As far as you asked for the stock, dealer stock is down compared to last quarter of twenty twenty four.
Gianluca Vertozzo, Analyst, Intermonte: Okay, thank you.
Chorus Call Conference Operator: The next question is a follow-up of Monica Bosio from Intesa Sanpaolo. Please go ahead.
Monica Bosio, Analyst, Intesa Sanpaolo: Yes. Thank you. Just a question on India. The electric freewheel market is growing a lot, if I’m not wrong. And if I’m not wrong, there is a lot of competition from local players.
It’s a low margin business. You say that in India, the company will continue to invest both in thermal and in electric. I was wondering if you are seeing any market share decline in or if you see a thrift in the market share as for the LCV in India due to the aggressive push of low margin producer? It’s just a micro reality. Thank you.
Michele Konanino, Group Chief Executive Officer, Piaggio Group: Well, the three wheel business in Europe, in India is the same for everybody. You can say that Piaget is a local producer. They have seen more than four years. So I think it has been the first producer of three wheel vehicles in India. So we are the same of our competitors.
We have 2,000 people there in a big factory. Given that, the three wheeled electric vehicles market is a subsidized market. So the state is putting money for this. We have the vehicles, no problem. The margins are lower for everybody.
It’s not that Piaggio has lower margins compared to the competition. We will push mostly in big cities for downtown, so not for the rural area where the electric market is zero. Given that we have done the investments and we have the vehicle, we will be on the market. Obviously, we are happy about the thermic engines that are more rural in India and we are gaining some market share over there the specific segment of thermic engines.
Monica Bosio, Analyst, Intesa Sanpaolo: Thank you very much. Thank you.
Michele Konanino, Group Chief Executive Officer, Piaggio Group: Thank you.
Chorus Call Conference Operator: Next question is a follow-up of Nicolas Tore from Kepler Cheuvreux. Please go ahead.
Nicolas Torel, Analyst, Kepler: Yes, thank you. Can you please share with us which are the assumption you are currently making for Western countries sales in the remaining part of the year to get to the $290,000,000 EBITDA? In particular, if you’re assuming
Mr. Dufotto, Conference Call Moderator, Piaggio Group: a sell
Nicolas Torel, Analyst, Kepler: in going hand in hand with sell out or if you are assuming to get to $2.90 with maybe some restocking if needed and if the markets are not developing particularly well? Thank you.
Michele Konanino, Group Chief Executive Officer, Piaggio Group: Well, the dealer stock dynamic is obviously linked to the seasonability of the business. So you have a moment where you stock something and it’s from now to June and then you maintain or reduce tend to maintain or reduce the dealer stock. No, we will not push for stocking because it’s just tomorrow morning business. So it’s not safe to make money on stocking network. What we see is that the European markets can recover after this Euro five plus transition.
And compared to last week to last year, where we around the world, it’s not just Europe, the second part of the year has been weak, we see some positive trends not just in Europe.
Chorus Call Conference Operator: Management, there are no more questions registered at this time.
Mr. Dufotto, Conference Call Moderator, Piaggio Group: Okay. So thank you very much. We can conclude now the conference call. And then if you need other info, you can call me later. Thank you very much for attending this conference call.
Michele Konanino, Group Chief Executive Officer, Piaggio Group: Thank you. Ladies
Chorus Call Conference Operator: and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.
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